Devoted to Managers and those that seek to improve their management skills

"...if you don't have a lot of capital, you can't fight a war of attrition."

One big mistake a number of business leaders make is to start a price war thinking they can take down their competitors. As Kelleher says, unless you're the one with the most money, it's a fight you can't win.

Intel (INTC) and AMD (AMD) did have been doing this and AMD has been hit hard because of the pressures to decrease costs while continuing to introduce new products and try to get their execution problems fixed.

Part of the reason for all of this is the superior vastly superior financial position of Intel and their ability to outlast AMD in a price war.

I've seen more than one unwise business leader take the same route in a fit of ego and drive a company to ruin.

When a busines is smaller, price wars can't be considered an option. We must have things in place that so differentiate us that price isn't the first consideration when our customers think of us.

This is the reason why serving a specific niche is so important. The niche itself should be a competitive advantage. If we've done our homework right, we should have something unique we're offering as a business or department that makes us different than our competition. If we don't, we're simply a commodity business that will be marginalized by someone with deeper pockets.

We must focus on differentiation and superior, creative service and services. Target (TGT) didn't go under because of Wal-Mart (WMT), but K-Mart did. K-Mart tried to fight Wal-Mart on their own turf and strength. They never had a chance. Target repositioned itself and is thriving in the tough retail sector.

While Kelleher did have low-price strategies, he also had a "spirit" in the company that couldn't be reproduced. So even though Southwest Airlines (LUV) had a strong financial position, they didn't try to use it to enter into price wars, although they were ready and willing to if they had to.

The only companies that can battle it out on prices are those with deep pockets. The rest should focus on what sets them apart from their competitors.

Even those with the deepest pockets can battle it out for long periods of time because of the pressure on margins, which AMD is experiencing now. Low pricing, for the most part, can't be the only consideration in our business strategies.

Other Herb Kelleher Sources:

Special Event

Leadership: The Essential Herb Kelleher

The CEO as Brand Guardian

Herb's way

Speeches and Presentations from Southwest Leaders

Southwest Airlines: The Hottest Thing in the Sky

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