The Secret to the Success of Southwest Airlines, Google, and Ritz Carlton: It’s Not What You think

It all begins with answering a crucial question: What makes your business unique?

Southwest Airlines, Google and the Ritz Carlton are three of the most successful companies around. But what makes each of them so successful?

The answer is that all three of these companies have a crystal clear understanding about what their basis for competition is and have completely aligned their business around that.

Let me explain, with a nod to Michael Porter and Brian Tracy. join_now

It all begins with answering a crucial question: what makes your business unique? This is one of the first questions I ask all of my CEOs clients because it gets to the root of what separates your business from all of your competitors. What is the one thing that makes you different enough for a customer to come and buy from you?

Another way to frame this is to ask what is your Mafia Offer, which is the thing your business offers that a customer cannot refuse?

The truth is that no matter what answer you came up with, there are only three strategies that can distinguish your company from your competitors:

  1. Cost leadership.
  2. Innovation.
  3. Customer intimacy.

And the best companies in the world know exactly which of these strategies they are best at and everything they do helps support it.

Cost Leadership

Being the cost leader in your space means that you can offer the lowest cost products and services in the industry. Now cost is different than price, which means you might be the cheapest option in the market, but also the most profitable. This is exactly what sets Southwest Airlines apart from its competition. The company is fanatical about keeping its costs in check by buying all the same airplane (Boeing 737), for example, so that they can cut the cost of maintaining and outfitting the planes since they are all alike. Southwest also has motivated union flight crews who begin cleaning a plane before all the passengers have even gotten off the plane as a way to help ensure quick turnarounds at the gate (They’ll even let you help if you want!), which means more revenue for the company. Even the pace of boarding a Southwest plane is faster than the competition because they understand that they only make money when their planes are in the air. It’s no surprise that even while all the other airlines have seen major financial difficulties over the years, Southwest has been profitable for 44 years in a row.

Innovation

When you think of Google, you don’t think about anything low-cost. Everything from the type of talent they hire to the kinds of projects they tackle – think driverless cars – is incredibly expensive. But that’s because Google’s goal is to push the leading edge of innovation even if they don’t always completely understand how they’ll make money from it. You could also consider other companies like Apple and 3M who strive to establish a competitive advantage through innovation.

Customer Intimacy

Ritz Carlton is a business that seems to understand its customers better than they might know themselves. The hotel chain has developed sophisticated information systems to help them gather information on their customers to help create the experience of being at home. They know, for instance, if you like feather or foam pillows. They know if you prefer a piece of chocolate or an apple on your pillow. They even know the name of your dog and his favorite treat. Of course, it’s not cheap to stay at the Ritz. But their hyper-focus on building customer intimacy is underlined by their mantra of: “Ladies and gentlemen serving ladies and gentlemen.”

Now there are times when a company’s strengths can overlap between one of these three strategies. The company Lock Tite, for instance, is in the business of designing custom adhesives to solve whatever problem their customer might bring to them. While you might think that it’s their innovation capabilities that set them apart, it’s really their devotion to building customer intimacy and knowing everything they can to help solve that problem. They know that’s what really sets them apart.

You could also consider how the Ritz Carlton is quite innovative in its use of information systems. But, no, everything they invest in is designed toward building that customer experience.

So when it comes to your business, what’s the thing that really makes you unique? It should come down to one of these three strategies. And if it doesn’t, it’s time to reassess and find that one basis of competition that truly sets you apart.

 

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