| What does the following list of companies
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| | utilized a business model that reflected
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| have in common?A&P
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| | the changing landscape in providing air
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| Hudson Motor Car Co.
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| | service. The major carriers utilize
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| Montgomery Ward
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| | complex pricing models that try to
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| TWA
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| | maximize seat yield revenues. Southwest
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| Horn and Hardart
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| | posted one low price for every seat on a
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| Studebaker
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| | flight. The major airlines were totally
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| Indian Motorcycle
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| | union shops. Southwest was non-union. The
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| Bonwit Teller
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| | major carriers flew a mix of plane types.
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| Woolworth
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| | Southwest flew only the Boeing 737 (this
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| Bethlehem Steel
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| | streamlined service and parts
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| Polaroid
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| | expense).Very quickly the flying public
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| LTVThese Companies were successful,
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| | recognized that a Dallas to Phoenix
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| recognizable brands in their respective
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| | flight that was $579 on American, and
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| categories. They were publicly traded and
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| | $149 on Southwest, was a no-brainer.
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| a number were in the Nifty Fifty in the
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| | Southwest remains ahead of the curve with
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| 1970's and/or the Dow Jones Industrial
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| | standardized policies, simple
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| Average. The element they all have in
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| | restrictions, a feel good fun loving
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| common (and with hundreds of other
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| | staff, hedging contracts for jet fuel
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| equally recognizable names) is that they
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| | purchases and the promise of value for
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| did not innovate. They created a static
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| | money on each flight.Southwest
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| business model and did not anticipate
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| | capitalized on the changes it recognized
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| that there were newer, better ways to
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| | was coming in the air travel universe.
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| implement new technology and
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| | Today, there are a number of airlines
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| strategies.Let's look at two old,
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| | utilizing some or/all of the Southwest
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| established retail categories and how the
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| | model and virtually all are successful.
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| ability to innovate has determined
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| | Easy Jet, Jet Blue and Ryan Air in Europe
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| contemporary success or failure.Music
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| | are booming while the old-line giants all
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| Stores
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| | over the world are in desperate
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| Recorded music retail has always been a
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| | straits.Proctor and Gamble is a wonderful
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| competitive market. Tower Records
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| | example of an old alpha enterprise that
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| followed the national chain concept,
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| | is constantly re-inventing itself to
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| offering a broad range of music styles
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| | reflect changing market conditions. Dell
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| and competitive pricing. Mass marketers
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| | Computer, MicroSoft, Intel, Research in
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| such as Target and Best Buy offer music
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| | Motion, Nokia and many more are examples
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| as well, typically only the more popular
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| | of businesses (all little more than 20
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| artists, narrow and deep. Every city had
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| | years old) that innovate, change,
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| a local shop, sometimes specializing in a
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| | anticipate and succeed. They were all
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| specific area of musical taste. The
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| | small startups only a few years ago.For
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| underlying similarity was that a customer
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| | entrepreneurs, the ability to innovate
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| came into the store, made a selection and
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| | and keep ahead of the field is crucial.
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| the purchased the disc.Then along came
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| | When analyzing the potential for a
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| the inter-net. The ability to protect
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| | successful market placement the ability
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| trademarks and copyrights was believed to
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| | to create a cutting edge business model
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| trump this technology. Artists and record
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| | is so important. If your goal is to open
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| companies believed that legal protections
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| | a male clothing shop and one already
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| would enable them to continue as always:
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| | exists in the area you have chosen, you
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| selling an album, with one or two hits,
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| | have a problem, unless you can
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| for $20 to $30. Software was written
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| | differentiate your unique selling
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| enabling the music consumer to cheaply,
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| | proposition. Maybe this can be
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| or for free, download specific hit songs
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| | accomplished by offering a tailoring
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| while avoiding the filler cuts. The
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| | operation for hand cut suits, or
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| Napster effect has revolutionized the
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| | specializing in formal wear.Whatever your
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| music industry.Napster is a disruptive
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| | product or service, define a business
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| technology. The world of music retail was
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| | model that separates you from your head
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| stood on its head. Legal fights and
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| | to head competition. Do not play the
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| challenges are still being fought.
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| | price game. Lowest price is almost always
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| However, chains like Tower Records are
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| | a temporary benefit, someone will come
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| gone. The marketplace did not allow for a
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| | along that can produce cheaper, faster,
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| rigid system to thrive in the face of
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| | better. Your goal should be the offer of
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| innovation. Tower did not stay flexible,
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| | a benefit that the customer will value,
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| anticipating technology advances and
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| | desire and not find immediately
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| changing tastes. Trying to sell albums
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| | available. Then back up the benefit with
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| with 15 cuts, when the consumer only
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| | superior service and the promise of
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| wants to hear and pay for two hit songs,
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| | continued new cutting edge innovation.
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| is an obvious loser.Airlines
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| | Innovate or die!Geoff Ficke has been a
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| Until the late 1970's the airline
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| | serial entrepreneur for almost 50 years.
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| industry was protected by Federal
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| | As a small boy, earning his spending
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| Government regulation. This enabled the
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| | money doing odd jobs in the neighborhood,
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| airlines to artificially inflate fare
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| | he learned the value of selling himself,
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| pricing. Hub and spoke systems were
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| | offering service and value for
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| created. Each major carrier had a
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| | money.After putting himself through the
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| geographic area of strength (Delta the
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| | University of Kentucky (B.A. Broadcast
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| southeast, USAir the middle Atlantic,
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| | Journalism, 1969) and serving in the
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| American the mid-west and Latin America,
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| | United States Marine Corp, Mr. Ficke
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| etc.) that they dominated. Unions were
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| | commenced a career in the cosmetic
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| aggressive and the carriers were
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| | industry. After rising to National Sales
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| profitable so the need to squeeze costs
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| | Manager for Vidal Sassoon Hair Care at
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| was not urgent.When de-regulation
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| | age 28, he then launched a number of
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| occurred in 1978 the major carriers did
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| | ventures, including Rubigo Cosmetics,
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| not anticipate the radical disruptive
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| | Parfums Pierre Wulff Paris, Le Bain
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| innovation that was just around the
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| | Couture and Fashion Fragrance.Mr. Ficke
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| corner. An aviation pioneer in San
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| | and his consulting firm, Duquesa
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| Antonio named Herb Kelleher did. He
| |
| | Marketing, Inc. ( has assisted businesses
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| watched as fares plummeted without
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| | large and small, domestic and
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| government regulation protection.
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| | international, entrepreneurs, inventors
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| Competition for gates, destinations and
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| | and students in new product development,
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| expansion resulted in many regional
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| | capital formation, licensing, marketing,
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| carriers (Republic, Piedmont, etc.) being
| |
| | sales and business plans and successful
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| gobbled up by the majors. Out of the
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| | implementation of his customized
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| changing landscape for air travel Mr.
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| | strategies. He is a Senior Fellow at the
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| Kelleher saw opportunity.Mr. Kelleher
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| | Page Center for Entrepreneurial Studies,
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| created and launched Southwest Airlines
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| | Business School, Miami University,
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| to address a gaping need. Southwest
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| | Oxford, Ohio.
|
