In chapter 4 of his book Essentialism: The Disciplined Pursuit Of Less, Greg McKeown discusses the critical issue of continuous ‘trade-offs’ in our personal, professional and organizational lives.
To make his point McKeown summarizes the hugely successful story of Southwest Airlines and how its leadership, led by Herb Kelleher for many years, has produced amazing financial results, year after year. McKeown writes:
“Imagine if you could go back to 1972 and invest a dollar in each company in the S&P 500. Which company would provide the largest return on your investment by 2002? Would it be GE? IBM? Intel? According to Money magazine and the analysis they initiated from Ned Davis Research, the answer is none of the above. The correct answer is Southwest Airlines.”
How did Southwest Airlines do it? By making very intentional and deliberate decisions regarding difficult trade-offs:
“Rather than try to fly to every destination, they had deliberately chosen to offer only point-to-point flights. Instead of jacking up prices to cover the cost of meals, he decided they would serve none. Instead of assigning seats in advance, they would let people choose them as they got on the plane. Instead of upselling their passengers on glitzy first-class service, they offered only coach. These trade-offs weren’t made by default but by design.”
Were Southwest Airlines and Herb Kelleher second-guessed and highly criticized? Absolutely! Many people thought he was nuts (no pun intended). Did they risk alienating customers who wanted a broader range of destinations and onboard choices? Absolutely! “But Kelleher was totally clear about what the company was—a low-cost airline—and what they were not. And his trade-offs reflected as much.”
How about you and your leadership within your organization? Like all leaders, you are faced with difficult trade-offs every single day. Like Herb Kelleher, are you crystal clear about what your organization is, and what it is not?
Trade-offs. Your destiny and legacy, and the destiny and legacy of your organization, lies in the balance!
