Episode 3: Bags Fly Free

Originally released on September 27, 2020, Episode 3 features Marianne Malina, President of GSD&M telling the story of the fateful 2009 board meeting where Southwest Airlines CEO Gary Kelley chose to reject the tradeoff choice that led every other major air carrier to begin charging for the 1st and 2nd checked bag. What was pilloried by analysts at the time as an inexplicable rejection of much-needed cash, proved to be the smartest bet in the industry by the end of the year. It wasn’t just luck either. There is a method to Southwest’s “madness” and that is the 3rd thing you should know about stakeholder capitalism.

The key is deliberately endeavoring to create value for each of your company’s stakeholders and then rejecting the framing that leads to what appears to be a tradeoff choice between stakeholders. Do that well, and you’ll find opportunity after opportunity for innovation. The tool we mentioned in the episode that can help companies learn to do this is a simple framework developed by Tim Kelley and Nathan Havey that helps a management team to self-assess how they are doing with stakeholder engagement.

If you’d like to see some of the early television ads from the campaign there are two versions (pirated I’m sure) available on YouTube here:

This story is more than a decade old, but Southwest is still at it in many ways

You can listen to more music by the artists we featured in the episode here.



Analog Heart

Mr. Moo

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