and otherwise do violent harm to established economic models? Who could, in the dot-com-driven lingo of the era, “Amazon” their rivals or “Napsterize” their industry?
No book better summed up this revolutionary fervor than the aptly titled Leading the Revolution by Gary Hamel, the celebrated strategy guru. Hamel is one of the most influential business thinkers of his generation, a brilliant speaker, consultant, and professor who’s been affiliated with the London Business School and the Harvard Business School. Hamel’s core constituency is senior executives in the world’s most powerful companies, and his book took these power players to task for the groupthink that afflicts so many of them in the executive suite. “Most people in an industry are blind in the same way,” Hamel warned. “They’re all paying attention to the same things, and not paying attention to the same things.”
So what’s the solution? Revolution! Hamel urged aspiring “corporate rebels” and “gray-haired revolutionaries” to “start an insurrection” in their industries. “You can become the author of your own destiny,” he thundered to his readers. “You can look the future in the eye and say: I am no longer a captive to history. Whatever I can imagine, I can accomplish. I am no longer a vassal in a faceless bureaucracy. I am an activist, not a drone. I am no longer a foot soldier in the march of progress. I am a Revolutionary.”3
Phew! Of course, this period of explosive innovation ended the way most revolutions do—badly and bloodily, choked on its own excesses. Some of the most celebrated business revolutionaries of the 1990s—Enron and Worldcom leap to mind—became some of the most notorious corporate outlaws of the early 21st century.
This is the backdrop for the emergence of a new generation of maverick companies and the arrival of what we believe is the next frontier for business strategy. The logic of competition has evolved from the imitative world of products versus products to the revolutionary fervor of business models versus business models to, now, the promising realm of value systems versus value systems. Call it strategy as advocacy: Who can redefine the terms of competition by challenging the norms and accepted practices of their business before disgruntled customers or reform-minded regulators do it for them? Who has the most persuasive and original blueprint for where their business can and should be going—not just in terms of economics but also in terms of expectations? Who can unleash a set of ideas that shapes the future of their industry and reshapes the sense of what’s possible for customers, employees, and investors?
To be sure, these questions are hardly without precedent. More than a decade ago, Jim Collins and Jerry Porras published Built to Last, which became one of the best-selling business books of all time. As Collins and Porras examined the success of venerable companies such as Johnson & Johnson, 3M, and Procter & Gamble, they discovered a sense of purpose at each of the companies, a “set of fundamental reasons for a company’s existence beyond just making money.” And this sense of purpose, they added, tends to be timeless and enduring—“a good purpose should serve to guide and inspire the organization for years, perhaps a century or more.”4
Each of the maverick companies you’ll meet in the next two chapters exudes an undeniable sense of purpose. But it’s a sense of purpose that provokes: each company’s strategy tends to be as edgy as it is enduring, as disruptive as it is distinctive, as timely as it is timeless. In an era defined by the business, cultural, and social hangover from the excesses of the nineties boom—a period of Wall Street scandal, CEO misconduct, and unprecedented levels of mistrust between companies and their customers and employees—the most powerful ideas are the ones that set forth an agenda for reform and renewal, the ones that turn a company into a cause.
Roy Spence, cofounder and president of GSD&M, the free-spirited ad agency based in Austin, Texas, is a colorful and charismatic voice on the future of business strategy. Spence has been a guiding force behind some of the most visible brands and high-impact organizations in America, from Wal-Mart to the PGA Tour to the U.S. Air Force. But the client that first put his agency on the map was Southwest Airlines. According to Spence, Southwest’s remarkable climb to industry leadership (it carried more domestic passengers in 2005 than any other airline) is not just about low-cost economics or high-touch service. Ultimately, it’s about the edgy and disruptive sense of mission that drives every aspect of how it does business.5
Southwest has become such a mass-market icon that it’s easy to lose sight of the utter distinctiveness of its approach to the airline business. The company’s direct point-to-point route system avoids the high costs and endless delays of the hub-and-spoke system around which the mainstream industry is built. The company has never offered first-class service or assigned seating or in-flight meals, and it was a late (and reluctant) participant in frequent-flier programs. Southwest’s no-frills approach to interacting with customers keeps fares low and makes for easy-to-understand offerings.
Yet low fares don’t mean sullen service. Quite the opposite: the company’s gate agents, flight attendants, even its pilots, are famous for their flashy smiles, showy personalities, and corny sense of humor. Anyone who has flown Southwest on Halloween, an almost-sacred holiday at the fun-loving airline, and marveled at the costumes worn by everyone from baggage handlers to mechanics, understands that this is an airline that flies on a different kind of fuel from its competitors. Indeed, Southwest may be the most colorful and instructive example ever of the power of strategy as advocacy. This is a company whose distinctive value system, rather than any breakthrough technology or unprecedented business insight, explains its unrivaled success.
GSD&M signed on with Southwest in 1981, back when the ten-year-old airline, cofounded and run by Herb Kelleher, a gutsy, chain-smoking, whiskey-swilling adopted Texan (one of the Lone Star State’s most legendary entrepreneurs was born in New Jersey), was considered a flighty sideshow to the blue-chip companies that ruled the sky. Today, in an industry that hovers on the brink of disaster (the old guard lost a collective $30 billion from 2001 to 2004), Southwest soars alone as a consistent moneymaker and fast-growing enterprise. A few years back, Money celebrated its 30th anniversary by identifying the best-performing stock over the magazine’s three-decade history. The winner wasn’t General Electric, IBM, Merck, or some other revered name. It was Southwest Airlines, a maverick force in one of the least attractive industries in the world. (It does pay to be a maverick. According to Money, a $10,000 investment in Southwest shares in 1972 was worth more than $10.2 million 30 years later.)6
Spence is adamant about the strategic lessons behind his client’s remarkable flight path. Southwest didn’t flourish just because its fares were cheaper than Delta’s or because its service was friendlier than the not-so-friendly skies of United. Southwest flourished because it reimagined what it means to be an airline. Indeed, Spence insists that Southwest isn’t in the airline business. It is, he argues, in the freedom business. Its purpose is to democratize the skies—to make air travel as available and as flexible for average Americans as it has been for the well-to-do.
That unique sense of mission is what drives Southwest’s business strategy, from the cities it serves to the fares it charges right down to whom it hires and promotes. There is, Spence argues, a direct connection between the economics of Southwest’s operating model, the advertising it aims at its customers (“You are now free to move about the country”), and the messages it sends to its 30,000-plus employees (“You are now free to be your best”). Spence explains the connection this way: “Business strategies change. Market positioning changes. But purpose does not change. Everybody at Southwest is a freedom fighter.”
Obviously, all this talk of freedom is in part an exercise in product marketing and employee morale-boosting. But anybody who’s flown Southwest understands that there’s more to the airline’s
