Stacking Innovations at Southwest Airlines

In The Innovation Stack, Jim McKelvey explains how to “build an unbeatable business one crazy at a time.” He introduces a mindset and methodology that drive a process of stacking innovations. He focuses on four firms: Bank of Italy (later renamed Bank of America), IKEA, Southwest Airlines, and his own company, Square.

Here’s how stacking innovations worked at Southwest Airlines. The first of its “crazy” ideas led to 12 others:

1. Maximized Aircraft Utilization. Herb [Kelleher] began with Southwest’s central insight: “Planes make money in the air, not on the ground.” This might seem obvious until you consider how much time most planes spend on the ground. Southwest made a bet that the more flights it flew, the more profitable the airline would be. There was a point, for example, when Southwest was averaging twice as many flights out of each of its gates as its competitors. How did it manage that?

This first innovation required these additional breakthrough innovations: 2. Ten-Minute Turnaround, 3. Standardized Fleet, 4. Batch Boarding, 5. Open Seating, 6. Singe Class, 7. Fringe Airports, etc. You get the idea…

After the formal part of McKelvey’s interview of Kelleher, then chairman and CEO of Southwest Airlines, was completed, “Herb shared perhaps the greatest insight. How much fun it all was!”

The Innovation Stack was published by Portfolio/Penguin (March 2020)


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