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The Idea in Brief

Southwest Airlines keeps soaring. Its stock price rose a compounded 21,000% between 1972 and 1992 and leapt 300% between 1995 and 2000.

Why does Southwest succeed while so many other airlines fail? Because it sticks to its powerful strategic principle: "Meet customers' short-haul travel needs at fares competitive with the cost of automobile travel." This pithy, memorable, action-oriented phrase distills Southwest's unique strategy and communicates it throughout the company.

An effective strategic principle lets a company simultaneously:

• maintain strategic focus,
• empower workers to innovate and take risks,
• seize fleeting opportunities,
• create products and services that meet subtle shifts in customers' needs.

In today's rapidly changing world, companies must integrate decentralized decision making with coherent, strategic action. A well-crafted, skillfully implemented strategic principle lets them strike that delicate balance.

Read the full article on Harvard Business Online.