From the course: Leading with Innovation

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Frugal innovation

Frugal innovation

From the course: Leading with Innovation

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Frugal innovation

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- Rollin King, Herb Kelleher, and Lamar Muse co-founded Southwest Airlines in 1967. Their value proposition? At least 60% lower fares than the average of other airlines. They would serve customers who were being viewed as non-viable by other airlines. That is, extremely price-sensitive customers who would otherwise travel by car, rail, or motorbike, or not travel at all. Southwest's success has wildly exceeded the founders' expectations. Its market value remains higher than United, American, or Delta airlines. In many years, it has exceeded the combined market value for all three. Southwest's business model has also been copied by a number of airline startups worldwide, including JetBlue in the U.S., AirAsia and IndiGo in Asia, and Ryanair and easyJet in Europe. Southwest figured out how to achieve dramatically lower costs despite flying the newest airplanes in the industry with the best-trained pilots and a…

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