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Sticking to Core Purpose Pays Off

In Southwest Airlines Rule # 16: A Culture Has its Own Language, we looked at how great cultures brand their own language to help bring out their uniqueness. In Southwest Airlines Rule #15: Invent Your Own Culture and Put a Top Person in Charge of It, we looked at how great companies design their own cultures from the ground up so they become unique. So today we visit Southwest Airlines Rule # 27: See Your Business As a Cause.

Southwest Airline’s mission is Freedom to move about the country. Before Southwest, only 15 percent of adults in the United States had flown on even one commercial flight. By the end of the century, 85 percent had taken to the skies. A prime reason is the “Southwest Effect”—the phenomenon in which the entrance of Southwest into a market lowers the average fare on other airlines while dramatically increasing the number of Passengers.”

This is purpose. Why we do what we do, beyond just making money. As Jim Collins says, it is the secret ingredient in great companies. When you have purpose, or fight for a cause, it elevates you above the ordinary, and if you can stick to it, then over time, you become a radically different company. Like Apple. Like Starbucks. Like most of the “great” companies in the world.

I recently met Roy Spence, the author of”It’s Not What You Sell, It’s What You Stand For” the founder of The Purpose Institute. His firm was behind some of Southwest Airlines most successful advertising. He told me the story of Southwest’s decision to not charge for bags, like every other airline in the business was doing. (See “Bags Fly Free“)

A consultant came in, and told them they would drop $350 million straight to the bottom line by just following suit. Every airline was doing it. It would combat higher gas prices, and help stem the losses that were flowing out of airline companies.

But Southwest said no. We got into the business to give people the freedom to fly, and this goes against everything we stand for. So they didn’t do it.

And then they woke up one day and they realized they had made an extra $1.2 billion by taking away business from the other airlines for making this decision.

This is why Jim Collins calls purpose the secret ingredient in companies. Having a strong core purpose keeps us clear on what our priorities are. It keeps you focused on the important things. And sure, it has nothing to do with making money. But that is the secret. The companies, that stick to their purpose over the long term, actually end up making far more money. Funny, isn’t it?


Posted by: johndehart on October 28th, 2011

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