Written in conjunction with www.Stratology.com, how can the lessons learnt making Southwest Airlines the world’s largest and most profitable, short-haul airline, translate to your law firm.
Maximum Resource Utilisation
How do you become a millionaire? By being a billionaire and buying an airline.
Southwest Airlines is the world’s largest and most profitable, short-haul airline. It operates in an industry so competitive it makes Warren Buffett joke about being an ‘aeroholic’ and needing an 800 number to talk him out of investing in it. Some of the reasons that make the airline industry so tough should sound familiar to lawyers. But there is light at the end of the fuselage.
Let’s examine some pressures on Southwest Airlines, and how they might translate to law firms, by looking at the tables below. There are some challenges focused on price and costs. You have airlines, and how those challenges present themselves, and you have what those problems and challenges might translate into for lawyers.
Challenge: prices are kept low
Challenge: costs are high
With those similarities in mind, an examination of how Southwest Airlines beats the competition will highlight ways in which lawyers can do the same.
Let’s start with the customer. When you chose flights, you probably chose based on price and time. You don’t want connections, do you? You might say you pay to get from A to B as quickly as possible. You might say you pay for in-flight entertainment, comfort, and food.
But you probably wouldn’t say you pay them to taxi you around the airport and spend as much time on the ground as possible.
If Southwest Airlines get paid for getting passengers from A to B quickly, it stands to reason the company should focus on keeping the proportion of time its planes spend on the ground to a minimum. It uses its most expensive assets, the aircraft and the pilots, more efficiently than its competitors. By ensuring its planes and pilots spend a greater proportion of their time flying than they do on the ground the airline is able to maximise the utilisation of its resource.
How does Southwest Airlines do it?
It makes best use of its organisational assets. It agrees favourable agreements with airports. Because it flies to secondary airports, Southwest Airlines’ planes fly to less congested airports and its planes spend less time waiting and taxiing.
It makes best use of its organisational processes. It has implemented fast turn around times to ensure that when the planes land they are quick to get to the gate, refuel, get arrival passengers and bags off, and departing passengers and bags on, all so the plane can take off as quickly as possible.
This means the human resource (the pilots, cabin crew, and ground crew) is trained in, and complies with, the fast turn around requirements.
The physical assets of the airline are standardised (only Boeing 737 planes are used) such that the crew and technicians are proficient with the aircraft and staff members can be substituted in and out of service more easily.
The net effect of this maximum resource utilisation is that Southwest Airlines can address each of the challenges they face, as outlined above. It is able to keep its costs to a minimum, which helps it keep its prices down while maintaining profitability. Low prices mean it attracts customers and it can undercut competitors. Its agreements with secondary airports help raise barriers to entry and the fact that the airline can provide low cost, frequent flights, helps it to offer an attractive alternative to other methods of travelling.
How might this translate to your firm?
Start by using your most expensive assets, your lawyers, more efficiently than your competitors. Doing that will depend on a number of internal factors such as the work those lawyers do, and the tools they are given to do it. But it also depends on the external forces on your business.
There are several questions to ask yourself, but a few might include:
Human Resource – are your most senior associates being used for the most complicated jobs, or most complicated aspects of more routine jobs? Or are those senior associates working on less difficult jobs for which less technical expertise is adequate? Even if you make a profit by using senior people on routine jobs, your cost of delivering those jobs can still be reduced by allocating the work at the proper level. Remember also that not all lawyers have the same skills. Some are technically better than others. Some are better at training and mentoring junior colleagues. Don’t apply the same metrics to all lawyers. Apply the lawyers to the metrics. Let your rainmakers do the deals, free from distractions like accounts meetings, business development and training. Maximise the utilisation of your resource.
Organisational Processes – if your staff are not doing the work to which they are best suited, does your firm have the proper delegation processes in place? Are the right people sitting with one another?
Physical assets – are the most closely connected departments situated close together? Do your lawyers spend lots of time walking to pick up printing or making tea? Can you lawyers record their time on their mobile phones so that matter related hours can be recorded while on the move?
Organisational assets – do your lawyers have the best software available to ensure they can deliver the work in the most efficient manner? Are they wasting time searching for precedents and drafting documents that can be automated?
Ultimately, your firm is paid to deliver legal advice to it customers. So focus on how that can be achieved. Your greatest asset, and only reason you can charge clients for money, is your people. Your lawyers that can charge 8 hours a day should be free to do so without interruption. Don’t allow distractions into those 8 hours. If your clients are prepared to pay you to get their deals from A to B as quickly as possible, fewer stops will help. Let your pilots focus on that journey, free from discussing the food menu and in-flight entertainment with your support staff. Distractions don’t make for higher profits.
You can’t change the distance between Dallas and Denver, but you can upgrade the plane that will make the journey faster. In the same way, you cannot produce any more hours in the day, but you can upgrade your technology to allow your lawyers to produce more work in less time.
Please contact Stratology to discuss how your business can maximise the use of its resources most efficiently.