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Disruptive innovation: the Southwest Airlines case revisited

Michael E. Raynor (Director of Research for Deloitte Consulting LLP. His previous Strategy & Leadership article was “End shareholder value tyranny: put the corporation first” (Vol. 37, No. 1). His third and most recent book is The Innovator's Manifesto (Crown Business, 2011))

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 5 July 2011

Abstract

Purpose

The standard explanation of Southwest's success is that it applied a low‐cost competitive strategy. This paper aims to address this issue.

Design/methodology/approach

The paper argues that Southwest was actually employing a disruptive strategy. Financial data show that Southwest's results were highly variable during the time it was growing into a national carrier.

Findings

The paper finds that Southwest's disruptive strategy of innovative operational cost reduction did not produce striking financial returns until it adopted more efficient aircraft, which made its fuel costs competitive.

Practical implications

Cost efficiencies alone do not make a firm a disruptor. What is required is the combination of a low‐cost business model and enabling technologies.

Originality/value

This paper points out that managers should learn to see operational innovations and cost savings in the context of disruption, not just price advantage.

Keywords

Citation

Raynor, M.E. (2011), "Disruptive innovation: the Southwest Airlines case revisited", Strategy & Leadership, Vol. 39 No. 4, pp. 31-34. https://doi.org/10.1108/10878571111147387

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited