Core objectives: Clarity in designing strategy

California Management Review

Volumn 47, Issue 2, 2005, Pages 33-49

  Chatterjee, Sayan ^a  

^a NONE

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EID: 14944340020     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41166294     Document Type: Review

References (18)

1. Sayan Chatterjee, "Delivering Desired Outcomes Efficiently: The Creative Key to Competitive Strategy," 40/2 (Winter 1998): 78-95.
2. The material in this article extends concepts developed by Sayan Chatterjee in Failsafe Strategies (Upper Saddle River, NJ: Wharton School Publishing, 2004).
3. Carol Hymowitz, "The Best Innovations Are Those That Come From Smart Questions." The Wall Street Journal, April 13, 2004, p. B1.
4. Michael E. Porter, "What is Strategy?" Harvard Business Review, 74/6 (November/December 1996): 61-78.
5. Ibid. Porter uses the term "straddle" to identify a strategy that is simultaneously one of low cost and of differentiation. To quote directly from Porter's article, "while maintaining its position as a full-service airline, Continental also set out the match Southwest on a number of point-to-point routes. . . . It eliminated meals and first-class service, increased departure frequency, lowered fares, and shortened turnaround time at the gate." [emphasis added] Continental did not fail because it also maintained its identity as a full-service airline but because it failed to do what Porter claims it did. It failed to shorten the turnaround time - the core objective of Southwest. In fact, it was precisely this failure to understand the core objective that doomed Continental.
6. JetBlue offers many more differentiating features than Southwest and yet it has been extremely successful because it can deliver the core objective of short turnaround time with a very different set of capabilities than Southwest.
7. Many famous strategies from Microsoft to Wal-Mart to Timex resulted from good fortune that their founders capitalized on. However, in explaining these strategies we often give the founders credit for foresight that they did not necessarily display.
8. There may be other ways of reducing costs, such as having airplanes that are more efficient to run. This is the strategy that JetBlue adopted.
9. Some of these are for illustration only. Turnaround time is used by Southwest.
10. Porter, op. cit., p. 68.
11. When Southwest first started its operations and had a 10-minute turnaround time, it would literally board departing passengers through the front door while arriving passengers exited the back door.
12. Once again the primary reason for not offering meals is not cost but the reduction of boarding time. Loading food takes time during departure.
13. According to twin brothers who pilot for Southwest and for United the training times are 30% and 60% respectively.
14. Porter [op. cit., p. 64] suggests that "a standardized fleet of 737 aircraft boosts the efficiency of maintenance." The efficiency of maintenance helps to reduce the cost - one key factor for the low-cost strategy of Southwest. This conclusion completely misses the point of having a standardized fleet. The primary reason for the standardized fleet is to facilitate the core objective of quick turnaround. From my conversations with Southwest operations, its maintenance costs are on par with other airlines. However, Southwest will never consider outsourcing maintenance even if it is cheaper than doing it in-house. However, this decision will not help meet its core objective of quick turnaround.
15. Compare the COAR methodology to that of the activity maps that Porter [op. cit., p. 71] drew to explain Southwest's strategy. Activity maps do not allow a firm to understand how the activities help a firm to deliver the core objectives ("internal outcomes" [Chatterjee, op. cit.]) and how the core objectives deliver the outcomes desired by customers. Further, separating resources from activities (Porter combines the two) allows us to develop the insight of how different resources can be used to deliver the same core objective, as illustrated by JetBlue. Southwest relies on its culture for quick boarding, JetBlue uses IT.
16. This case is based on Bridget O'Brian, "CALite's Pursuit of Southwest Reverses Engines," The Denver Post, January 15, 1995, p. G-1; "Continental Phasing Out CALite Service," Chicago Sun-Times, April 14, 1995, p. 39.
17. This case is based on Bridget O'Brian, "CALite's Pursuit of Southwest Reverses Engines," The Denver Post, January 15, 1995, p. G-1; "Continental Phasing Out CALite Service," Chicago Sun-Times, April 14, 1995, p. 39.
18. John A. Byrne, "The Fall of a Dot-Com," BusinessWeek Online, May 1, 2000.