Making Lemonade: A Lesson on Being Bold From Southwest Airlines
Ever since COVID hit, the smartest companies have been agile and fast enough to shift with the changing business landscape. For some, those changes may be temporary. For example, in early spring, Unilever moved much of its focus from skincare to packaged food and surface cleaners as people stayed in more and worried about unwrapped food and contaminated surfaces.
But another kind of pivot is available to those who are thinking about how the moment might help them fulfill long-term plans in unexpected ways. I’ve been on the lookout for companies that are taking advantage of the moment to accelerate, not hesitate.
Consider Southwest Airlines. Even as air travel was stalled on the tarmac in the fall, Southwest executives were traveling across the country to scope out potential new markets, according to The Wall Street Journal. Four more cities were added to the Southwest network this year, including the Colorado ski town of Steamboat Springs—skiing being an activity that can more easily be done while socially distancing—and the airline has announced plans for another six in 2021. The company hasn’t added airports this quickly since integrating with AirTran Holdings, which it bought in 2011, the Journal noted.
It takes a certain amount of chutzpah to be so aggressive during uncertain times, and Andrew Watterson, Southwest’s chief commercial officer, acknowledges how unusual his approach is. “It sounds risky to go open a bunch of new cities, but the alternative is worse,” he told the Journal. “You could wait until COVID is over. But that’s far too long.”
Airlines have lost billions of dollars this year, and all—including Southwest—have cut down on the number of flights they offer. Southwest is among those that have warned unions that furloughs are inevitable next year unless workers will accept pay cuts or the government comes through with further stimulus funds for the industry.
But the company has a history of playing offense during the most challenging times. After 9/11, Southwest picked up market share when rivals pulled back, and it expanded into long-haul routes that had been the purview of larger airlines. Others retrenched after the 2008 financial crisis; in 2009, Southwest went into Boston’s Logan and New York’s LaGuardia airports. It added service to Minneapolis and Milwaukee. The result? Twenty percent of its 2010 revenue growth came from new cities.
In July, Mauro F. Guillén, a professor at Wharton, wrote in Harvard Business Review that in order for pivots to be successful during the pandemic, they must be “a lateral extension of the firm’s existing capabilities, cementing—not undermining—its strategic intent.” He highlighted Airbnb’s moves toward becoming a full-range lifestyle platform with online events, virtual tours and other activities, in addition to its traditional model as a connector between hosts and guests, as an example.
Airbnb went public on December 10, opening at an astonishing $146 a share, more than double its initial offering price of $68. The company had laid off a quarter of its workforce soon after COVID hit and was seen as potentially one of the biggest losers of the pandemic. But it came up with creative new ideas, retooled its image and pivoted its business. DoorDash, another company whose prospects looked bleak at the beginning of the pandemic but shifted its prospects by pitching itself as a hero to those trapped at home, raised an eye popping $3.4 billion on December 9, its first day of trading.
In his July piece, Guillén described Airbnb’s moves as the kind of evolution that can work. I’d add another critical requirement, one characterized by Southwest’s approach: boldness. It’s one thing to sit back, batten down the hatches and try to survive crises—hoping for the best while praying to merely get through it. What distinguishes smart companies, and in particular smart leadership, is the ability to roll with the punches, not resist them. Capitalizing on uncertain times—in essence, being bold, while competitors are looking for an easy panacea—can propel your value proposition ahead of your competitors. That is, if you’re willing to navigate the tempest.