In its early days, Southwest Airlines had to sell one of their planes or face bankruptcy. When most people get hit with a constraint of limited resources like this one, they either fall victim to the constraint and revise their ambition downwards, or they confront the constraint head-on and look for ways to brute-force it.
Southwest Airlines could have similarly fallen victim by accepting downsizing or they could have confronted the constraint head-on by knocking on many more investor doors. Instead, they chose to do something very different.
They found a way for achieving their goal of keeping their existing routes with three planes instead of four planes. They did this, not by brute-forcing, but embracing their constraint. Here’s how.
Constraints Create Space for Innovation
Instead of focusing on the obvious resource limitation (the number of planes), they turned their attention elsewhere. They noticed that the average gate turnaround time for their planes was about 60 minutes. During this time, the plane was cleaned, serviced and refueled while meals, luggage, and passengers were boarded. Every minute a plane (the bottlenecked resource) spent idle on the ground was costing them valuable time.
They calculated that if they could shrink their gate turnaround time from 60 minutes to 10 minutes, they would be able to fly all their current routes with one less plane. Further analysis showed that the passenger boarding process was the biggest contributor to this gate turnaround time. They took on the challenge and introduced a radical new boarding process with no assigned seating. As a result, they managed to keep all their routes with one less plane.
But they didn’t stop there. They continued to optimize for gate turnaround times even further – ironically, by imposing additional constraints upon themselves. While their competitors carried a diverse fleet of planes to support the varying lengths of routes they have to fly, Southwest Airlines made it a policy to only fly a single type of aircraft (Boeing 737s) and only fly short point-to-point routes. A diverse fleet brings with it maintenance complexity, which also contributes to longer gate turnaround times. A single type of aircraft, on the other hand, reduces both the time needed to service a plane and the cost of training mechanics. They also only started offering economy seats and no inflight meals (only peanuts and snacks).
Rather than viewing these constraints as limitations, Southwest Airlines turned them into a differentiated positioning statement:
“We are the only short haul, low fare, high frequency, point-to-point carrier in the U.S.”.
Did this differentiation matter? It turned them from an airline on the verge of bankruptcy into the most profitable airlines in the industry.
Constraints Are Gifts
The word “constraint” evokes a negative feeling in most people.
Constraint (noun): something that limits or restricts someone or something.
From a systems perspective, however, constraints are gifts. Every system always has one and correctly identifying that single constraint holds the key to practicing “right action, right time”. The biggest results come from just a few key actions. The challenge, of course, is identifying where to focus and more importantly what not to do.
When faced with a constraint, there is a third way: To embrace the constraint AND still achieve your goal. You do this by asking a key the following key propelling question:
How do I achieve “the goal” without acquiring more of the limiting resource (constraint)?
This mind shift is the first step towards breaking constraints.
Not convinced yet? Let’s see a couple more examples.
How do you win Le Mans without a faster car?
The Audi race team had the goal of winning the prestigious Le Mans race. Both their closest competitors, BMW and Mercedes, had won the race before which made the goal particularly worth pursuing.
The obvious way to win a race is by building a faster car. However, building a significantly faster car is non-trivial.
The chief engineer at Audi instead posed a different question:
“How can we win Le Mans if our car cannot go faster than anyone else’s”?
Audi won Le Mans that year.
Can you guess how?
They won the race, not by building a faster car, but a more efficient car. The Le Mans is a grueling twenty four hours race. During that time, cars have to be refueled multiple times. By putting diesel technology into their race cars, Audi reduced the number of pitstops their car had to make which was the edge they needed to win. Like an airplane at a gate, a race car at a pitstop consumes valuable time.
One final example.
How do you build what people want without a product?
Entrepreneurs with an “awesome” idea encounter this same dilemma of limited constraints. When hit with a promising new idea, they either rush towards building out their solution or rush towards finding people with bags of money — so they can acquire the resources needed to rush towards building out their solution.
Many entrepreneurs fall victim to limited resources and never move their idea forward. Others that manage to brute-force their idea into a product often find that what they built is not really what people want.
The number one reason why new products fail is not a failure to build what we set out to build, but a failure to find the right customers and markets for our products.
We simply waste needless time, money, and effort building something nobody wants.
Here’s the kicker: You don’t need to build a product first to uncover what people want.
As with the earlier examples, entrepreneurs need to similarly embrace constraints and ask themselves the following propelling questions:
How do I build what people want without a complete team (people)?
How do I build what people want without money?
How do I build what people want without a product?
Even if you don’t have apparent resource constraints (like in a large company), I find that you need to still constraint those resources as a necessary condition for driving breakthrough innovation.
So how do you build what people want without a product?
Here’s the key insight: Customer don’t care about your solution but your offer. Build that instead. You don’t need lots of time, money, or people to test an offer.
Starting with an offer, allows you to front load your riskiest customer and market assumptions, and define the right starting solution (or minimum viable product) to build next.
And no this approach isn’t just limited to high-tech or software products. It is just as applicable to no-tech, services, and hardware products. To put this last statement to test, I began running online bootcamps four times a year with a diverse range of teams from all over the world.
BOOTSTART: A 8-week intensive online coaching program to teach entrepreneurs how to go from idea to early traction (aka paying customers) without spending more time, money, or people.
As you can guess, the name is a play on bootstrapping (limited resources) and startups (big/world-changing ideas).
To date, we’ve put over 500 teams in 20 countries through this program. Some teams came in with just an idea, others had a built-out product. Teams also ranged from solo-founder only teams to complete startup teams and corporate teams.
Here’s what I found:
Entrepreneurs are everywhere
While we may look different and speak different languages, the persona of the entrepreneur is universal — we all want the same things, fear the same things, and often commit the same mistakes.
A build-first or investor-first approach is backwards
Investors and customers don’t care about your solution but early-traction. That should be the only focus.
Early-traction can be achieved in ~8 weeks
A common theme across all three examples is a prioritization of our scarcest resource – time. While money and people can fluctuate up and down, time moves only in one direction.
A bottlenecked resource’s time is the most valuable resource to optimize.
Over the years, we have collected a library of strategies and tactics (Lean Startup, bootstrapping, 10X launches, etc.) that can be adapted to every business model type. More importantly, they optimize the search of a working business model for the most valuable bottlenecked resource – the entrepreneur’s time.
Like clockwork, we repeatedly found that you can go from idea to early traction in about 8 weeks (or less) irrespective of the business model type — provided you are willing to put in the work. The corollary is also true. If you can’t get to early traction in this time frame, you should be able to clearly point to why. It could be a business model risk, market timing, or simply a bad idea. The key is getting to an evidence based go or no-go decision on your idea within a set time-box.
Life’s too short to build something nobody wants.
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