PLEASE NOTE: This transcript has been created using fireflies.ai – a transcription service. It has not been edited by a human and therefore may contain mistakes.

00:03
Dom Hawes
We started this podcast, actually, because we wanted to write a book. We were pissed off opening the pages of best selling business books to find that the companies referenced were Silicon Valley tech unicorns. Their texts are often entertaining, but they've got nothing to do with the world I live in. And I suspect it's the same for you today, too. Now, we are going to write that book and today's episode is probably going to have a chapter all of its own, because today's show is a masterclass in value innovation, also known as Blue Ocean Strategy. Now, if you're listening to this while you're doing something else that needs attention, like using power tools, I suggest you hit stop and listen to Abba instead of this podcast, because this is an episode that is really going to claim your attention. Today. We're joined by JetBlue's general manager for Europe, Maja Gedosev, and she is going to take us through JetBlue's incredible and inspiring story of growth, innovation, disruption and purpose.

00:59
Dom Hawes
Maja gives you a true window into the soul and ethos of the company and its ideals. She's extremely detailed about the decisions JetBlue makes, and if you're as curious, as hungry for insight as me, oh, my God, you're in for a real treat. Now, while researching this show, I noted that JetBlue had managed to achieve both price leadership and clear differentiation. According to traditional texts on strategy, that's kind of not possible. It's binary. You either choose price leadership or you choose differentiation. But you can't have both. Except, as it turns out, you can. And others have achieved it, too. Think citizen M hotels, Tesla, yellowtail wine, Nintendo, Wi HubSpot, caterpillar salesforce and many more. Now these companies have all executed what INSEAD professors Chan Kim and Renee Mauborgne dubbed a Blue Ocean strategy. And they did it whether they meant to or not. JetBlue has also created a clear market space that it owns its own Blue Ocean, if you like.

02:01
Dom Hawes
Now, if you haven't come across Blue Ocean Strategy before, I'm going to link some references in the show notes. Kim and Mauborgne’s work may give you ideas, too, which, after all, is what this show is all about. And today we're going to ask Maja to frame her story around the four P's of marketing, product, price, promotion and place. And we're going to break that into two parts because there's so much to cover. But first, let me tell you a little bit about JetBlue, the business. It was founded in 2000 with a mission to bring back humanity to air travel, and you're going to hear a lot about that today. JetBlue is New York's hometown airline, carrying 44 million passengers, which, by the way, is as many as British Airways, with over 900 daily flights serving around 100 destinations in the USA, Caribbean, South America and now the continent of Europe.

02:49
Dom Hawes
JetBlue has made its name for affordable fares and high quality customer service. And it's that ability to innovate on both value and service that I wanted to explore with Maja so Maja, welcome to the Unicorny project I mentioned in the introduction that it looks like JetBlue has executed the most extraordinary blue ocean strategy is that a phrase or something that you recognize? I mean, how do you talk about this innovation at JetBlue?

03:20
Maja Gedosev
It's really interesting. First of all, I've been with JetBlue now this is my fourth year and honestly I have to look back to where we began in 2000 and the airline already then was set up to disrupt the market. We wanted to bring something new, fresh, innovative. We wanted to bring humanity back to travel because by 2000 everything in travel was about quick processing. So it was missing the personal touch, it was missing the emotion, the experience. It was all about the seat, who is in the seat sales and so on. We came into the market and we wanted to disrupt by doing something very different. We introduced mint product. We were the first airline to introduce completely free WiFi that actually works. And also we are now crossing the pond. So this is really a big deal for us with a product that's very different and still we didn't compromise on the value of that product for the price that we charge.

04:20
Dom Hawes
And there we have value innovation defined perfectly. It's price or value leadership without having to compromise on quality. Until relatively recently that went against business strategy orthodoxy.

04:34
Maja Gedosev
That's correct.

04:35
Dom Hawes
When you communicate your approach internally to your own team, how does the way that you're organized like your organizational design and your internal communication mechanics, how does that work? Is that different than in other companies too? Do the internal culture reflect what you're trying to do outside?

04:49
Maja Gedosev
I mean, we're 23 years old now and over time, our values have not changed and we all have learned to live those values. And one of the values actually is fun values. So we make sure that we always have fun in whatever we do. But of course, safety, caring, passion these are the things that define JetBlue. And it's funny, we're talking just now about acquisition of another airline in the US. Called Spirit. And we're in the process of sort of thinking about how are we going to end up after this acquisition is complete and how our culture will change. Because there are certain things that Spirit will bring along their culture, their ways of doing things that will benefit our new company, that will emerge. But we still want to make sure that we preserve those things that made us so successful.

05:40
Dom Hawes
Ethos now I get it.

05:41
Maja Gedosev
No matter what you do, you're a crew member of JetBlue. And crew members of JetBlue tend to stick a long time. We still have among our most inspirational leaders founders that started back in 2000 or actually even before the planes were there in 1999. Some joined. We didn't have the planes yet at that point. So it's that culture that kind of keeps us going.

06:06
Dom Hawes
Brilliant. Okay, well, look, I think that gives us a context for what we're about to talk, and we're going to dive very deep, I hope, into the business. What struck me when we held our pre production meeting for today was how deep the desire is to disrupt. And I think the words already been said five or six times. It's right in your DNA and you seem to want to rewrite all the rules for everything. And I hope that's going to come out. So I want to dig deeper into the concept of value innovation. And I think given this is a marketing show, we're going to use the four P's as a framework. So let's get stuck in and talk about product. And I want to start with the big bits. Okay, so you've created a unique and differentiated product. It really stands out in the airline industry.

06:44
Dom Hawes
Even your airplanes are different.

06:46
Maja Gedosev
Correct. So when we said were going to fly transatlantic, we said, okay, we want to set up a product that's going to be new, fresh, different, and it's going to be definitely more competitive and we will be able to basically compete with the big legacy carriers on transatlantic market. Entering transatlantic market is like entering Alliance Den. It's been for a long time, sort of monopolized by big carriers that have been operating these routes for decades at very high prices. So what we did, we invested a lot of time, I believe four to five years, that our product team invested in sort of understanding, first of all, the customer and transatlantic market. And then we took all that information and data and went back to the drawing board and started thinking about what are the little things that will be different on board our flights? So, first of all, we don't have the wide body aircraft.

07:43
Maja Gedosev
We have a narrow body aircraft with a single aisle. And that makes a huge difference because the whole service element becomes more personal and the feeling on board becomes more unique.

07:54
Dom Hawes
Like you're in a private jet.

07:55
Maja Gedosev
Oh, totally. It's a private jet feeling. It's a private jet feeling. You board and deboard these flights very quickly. And the idea is that the crew members on board have actually time to dedicate and devote themselves fully to the customer experience. And it's not just for the business class, which we call Mint experience. It's also for the economy class product, which we call the Core Experience. So already there we changed the names of these cabins because we didn't want them to be called business and economy, because actually they're more than economy and they're very different than just for a business customer. They actually address the needs of high end, leisure customer as well, or any other customer that wants to fly on these flights. In the front of the cabin, we said we had mint experience. So we have about 24 seats. All seats have both aisle and window access.

08:49
Maja Gedosev
They have basically a sliding door so that you can close and cocoon yourself into your own private room. On board. There is also like a loungey kind of feeling. So there are very warm colours, wood, et cetera. We played with light in the cabin as well. So what we did, were the first airline to innovate with Airbus. This airspace cabin that we have now, also on the narrow body aircraft, usually you would see that or find it on wide body aircraft, but were the first airline to have it on narrow body aircraft. What does that mean? You have these mood lights, you have this spacious kind of feeling of the cabin that actually gives you the notion of flying on a wide body aircraft, almost. And you have these mood lights that change throughout the flight depending on the type of service we're offering at that moment or time of the day.

09:39
Maja Gedosev
So that customers can either enjoy the live flatbed or just sit down and have a cocktail or watch a movie. So it's that kind of thing. So that was one thing that we did.

09:49
Dom Hawes
Just want to get back to the narrow bodied aircraft, because developing an airframe takes years and years. Airbus was your partner in this. How responsive were they to developing something new? Like totally new?

10:00
Maja Gedosev
I think they were also keen to put something in place that is going to really work. And to be honest, I think following our order of these aircraft, there were many other airlines that followed. A 321, a long range Airbus aircraft is very much the aircraft of the current times. I mean, we live in the world of where sustainability is number one. The environmental impact is critical for corporates, but also for individuals. The millennials are coming along, the young generations that are looking for the aircraft that's going to actually care for the environment. And this type of aircraft is actually answering all those questions.

10:39
Dom Hawes
So I get that they're working with you and you've basically co created a different type of space. The level of detail you described is extraordinary, but I guess you did your fieldwork for four years, so you know what the market wants. And I think for me, that's a defining characteristic of any kind of blue ocean strategy. You really know the customer well, and that's how you're able to carve out a completely different space, I think 100%.

11:03
Maja Gedosev
I mean, we also thought about what happens when you're sitting in that seat. It's like, how long are your arms? What can you reach? Do you need to really kneel down to get to your power outlet? Or can you just have a wireless charger next to your left arm? For example? In our case, can we place some space on the side where you can put your bottles of water or you can put your laptop how do we make a tray for the laptop accessible? But that you can also during the flight, just push it away and get your meal served.

11:39
Dom Hawes
So let's come to that. Now we're going inside the cabin a bit deeper because service is an important part of product. And you took, again, a very different approach through partnership with family run, minority run, female run businesses that really I mean, it makes the experience, I think, very different and appeals to customers, I think, who have an ESG agenda or like the fact that you sort of support small businesses and diverse businesses. Isn't there an amusing story with one of the partners about how you met them?

12:11
Maja Gedosev
Yes. So we're actually very much an airline that resembles our own customer base. And the way we wanted to innovate is we wanted to give an opportunity to diverse and different businesses to small businesses, to unusual businesses to actually be able to serve bigger markets. I'm very proud of this one story. Our CEO was traveling and there was a lady sitting right next to him and she offered him a couple of cookies. He tried those, he's like, wow, these cookies are really fantastic. Where'd you get them from? Whose cookies are these and which brand? And she's like, well, these are mine. I produce them for a community, a small community where I live in. And then he goes, well, how about you produce these for 44 million customer base of JetBlue?

13:02
Dom Hawes
You can hear Maja's passion for product in all she says here. And, you know, in the edit process, were a bit worried. It sounds a little salesy, but if you're looking to differentiate your product, there's so much to learn from an almost fanatical level of detail that JetBlue takes to its customer experience. They've literally reinvented everything to do with the experience. And, you know, Maja hasn't finished detailing them yet either. From co creating a new airline experience from the airframe to the lighting in the cabin to really thinking through the ergonomics of the cabin space to taking a value led approach to supplier selection and building New York's eateries and design ethos into the heart of the brand. That's kind of more than creating distinctiveness, it's genuine differentiation. I think there are lessons we can all learn here about truly putting ourselves in our customers shoes and taking a much more critical look at our products and services.

13:55
Dom Hawes
Like, if we all had the same attention to detail and explored literally every touch point to the same degree that JetBlue and Maja do well, we too might be building ourselves a blue ocean. I don't know about you, but as I was writing this part of the overdub script, I promised to be inspired by Maja to think about our own product experience more. I know we can do more and I hope her passion for product is having the same effect on you. Now. I love the story about the CEO and the cookie cook. Maja does too. She's really proud of it. But the food story, it doesn't stop there.

14:30
Maja Gedosev
That is a great story because it just tells, you know, we would want to work with anyone. We want to give an opportunity, we want to give voice, we want to give a platform to those that really are eager and want to also work with us.

14:46
Dom Hawes
That's really appealing from a customer point of view as well, because that kind of gray rubber chicken that, you know, the chicken or beef option, oh, yeah, no, doesn't exist. That's just done with. And I love the fact that the service is kind of branded as well. It feels very different. But you must have a great procurement department as well, because I think it must be every procurement department's nightmare. The CEO meets, someone goes, we're going.

15:06
Maja Gedosev
To have that at all sort of positions in our company. We're all open minded to these things. We work with, of course, big suppliers and big partners, but we also love to have these small businesses. We have another example, just to mention that one. We serve now plantain chips on board our flights as well, and that is sourced from the Caribbean partner. And this is something that really also stands out. We're bringing those regions where we fly to also to the vast customer base that we have in the North American market and even the transatlantic market now. So these plantain chips are coming from the Caribbean, but they're reaching our London customer.

15:47
Dom Hawes
And you don't even need to worry about food miles because you're flying anyway, right?

15:50
Maja Gedosev
That's right.

15:51
Dom Hawes
Great. So that's at the smaller end, although it's not small for them anymore because they've gone from being not quite mom and pop businesses, but now they're serving 44 million people. But the service is different entertainment. You've taken a very different approach too.

16:05
Maja Gedosev
Definitely. So in terms of entertainment, we felt that we want to give our customers the ability to stay connected throughout their flight. We realized that being away from your technology or from your business for a significant time could cause some kind of anxiety as well. And to be honest, were the first airline to introduce completely free WiFi across all our cabins and the entire network. And actually that WiFi works. You can even stream your favourite movies and anything else that you like, but stay connected to your business and get off a flight with kind of free mind, relaxed, knowing that you've done what you needed to do and you can get on with your day. It's really important these days. I mean, at least for me, from my perspective, being a customer, that's one thing I would want to expect. But it's not just that.

16:57
Maja Gedosev
We also have live TV, okay? You can never miss a Premier League game with us. We will stream your favourite shows and you'll see news always coming up and so on. So, yeah, this is another upside of that. And of course the influent entertainment, the standard one where we introduce some really latest movies, people can basically bring their own entertainment.

17:19
Dom Hawes
Yeah. So Netflix, Amazon, whatever they use, they like, yes. Wow. Okay. So the key thing about, as I said, about value innovation is price leadership, but also a highly differentiated product. And normally differentiation costs more. But you've managed, I guess, by focusing on the things people care about and not doing the things they don't care about. Are there any sacrifices that you think you've made? Things that other people do that you don't feel the need to do?

17:43
Maja Gedosev
I'd say that perhaps I can see one thing from one and the other perspective in terms of being phenomenal for the customer, but has been a challenge to introduce ourselves. So in our economy cabin, which is the core experience, we again use technology to bring complete innovation to the way we serve food on board. And I love that. I think this is the biggest upside on any carrier right now. The fact that we fly the narrow body aircraft allows us to do something very different, and that is to allow the customer, through the technology, to pick and select how they want to build their own meal. And the crew then gets this order on a tablet and is able to put together a specific meal for you. And they will walk by and they will say, hey, Dom, you ordered this kale salad or sweet potatoes, or you had like cauliflower rice with chicken or meatballs that are very popular, or mac and cheese.

18:45
Maja Gedosev
So we definitely don't have any more chicken or beef. This is completely out for us. And what is in is actually giving the customer the ability to feel like they're in a fantastic restaurant with healthy food options.

19:01
Dom Hawes
And if they're choosing, I guess you're reducing waste massively.

19:06
Maja Gedosev
That is right. It's been like almost two years now that we operate these flights. We understand now what customers love to have the key base meal they want to stick with. We know exactly what are the sides they like, and this is what we cater for on board our flights. It's really a great and different way, and it's also giving an economy class customer an ability to feel a bit different and that their choice is valued and they can actually create their experience themselves.

19:37
Dom Hawes
And there's so much behavioural economics in that because people always value things that they make themselves more than, yeah, 100% super smart. Okay, so look, we've done the big product, we've done the service on the inside. A core part of product is also, of course, in the travel industry, destinations. In the early days, you were point to under targeted destinations right out of the budget airline playbook. But now you've gone international. London, Paris, Amsterdam.

20:03
Maja Gedosev
That's right.

20:04
Dom Hawes
Where next?

20:05
Maja Gedosev
Maybe south of Europe somewhere spain or Italy.

20:08
Dom Hawes
Am I getting warmer?

20:09
Maja Gedosev
Could be. You're getting warmer.

20:10
Dom Hawes
Okay.

20:11
Maja Gedosev
We went to find destinations that are available to our customer, to a huge customer base in New York and Boston, 365 days a year. And this is, for us, the key thing, actually, that we introduce not just the fantastic product and the low fare that we stand for, but we also give opportunity to our customers to actually continue to fly us on these transatlantic routes instead of other airlines. So our biggest unserved markets up until recently were London, were Amsterdam and Paris. And then after that, I believe that south of Europe has become extremely attractive. Lisbon is probably one of the top destinations for the US customers, and the same goes for Spain, Madrid, or Know.

20:57
Dom Hawes
Those are kind of like interesting markets. Lovely. Okay. But breaking into new markets is really hard, particularly in aviation, as you say, because those slots are very strongly guarded. And you decided to commit to the UK during COVID when the rest of the industry was shuttered, or certainly Timid, but the numbers must be enormous, committing to a new route. Tell me the story of how you landed Heathrow.

21:21
Maja Gedosev
Very interesting story, and I love that story. I think it just shows how bold and brave were. As you imagine, during the Pandemic, aviation industry was hard hit by the entire events, and the corridor was closed and transatlantic, especially between the US. And the UK. Many airlines grounded their planes, et cetera, and we felt like we should continue to look for opportunities and play offense a little bit. In fact, everyone then followed suit, so it looked like a little bit of a soccer match. Everybody was running around trying to score with the ball, find the opportunity to win. And I think that we as a team, we said, all right, the key will be to enter Heathrow, which is usually impossible to do. That is the most expensive real estate in aviation. When it comes to the airport slots, we said, okay, let's have a look, let's see what happens.

22:16
Maja Gedosev
Some of the slots were available, and we managed to get them on an ad hoc basis. Okay, what does that mean? That means that you get it for a certain period of time. Usually it's a yata summer or winter season, and once that season expires, you are then waiting to hear whether you're getting it for the next season, and so on. And we said, okay, we definitely want to get in, and we will show that we are committed, that we are invested, and that we are here to stay. And we will use that period to actually show our key stakeholders, meaning the airport, of course, as number one, but also the authorities, and basically played the proper partner win game. And this is what we did. And we ended up having slots at Heathrow today we operate three flights at Heathrow.

23:06
Dom Hawes
Okay, Fab, I think that's product well done. Let's move on to price. JetBlue very clearly positioned as a lower cost alternative to legacy carriers. And I've mentioned already that lower cost plus differentiation or plus high quality is the blue ocean. How are you able to maintain the position? Because I'm imagining that you've got a pack of other people coming after you, trying to innovate in the same sort of ways. Being a leader is hard. Maintaining that leadership position is hard.

23:35
Maja Gedosev
First of all, it is very important to understand that our philosophy overall throughout our entire network is to bring that value and the low fare. We are not always the lowest fare, but we want to make sure that the customer, when they do pay the ticket, that they feel that they got the most out of it. And this is our philosophy. Now, were looking at these transatlantic markets for quite a long time and we observed that prices on transatlantic markets would go up to maybe for a business class seat on a six hour flight or a five and a half hour flight would go up to 1015 thousand pounds on a return flight, which is completely unacceptable in the world we live in right now. I mean, everybody is looking to get the most for the buck, but they're also looking to potentially save as much as they can, especially in the corporate world.

24:33
Maja Gedosev
So we said, okay, we can change that. We don't have to have these margins. There are margins that are involved here. So we said, fine, we will create a product and an experience and we will charge accordingly. And what we entered the UK market with was actually 70% lower fares in our business class cabin, mint cabin, than what the competition offered. The same goes in our economy cabin where we offered fantastic product and experience elements, but for about 20% to 30% lower fares.

25:08
Dom Hawes
So it's value leadership, not price leadership, that matters to you.

25:10
Maja Gedosev
Correct.

25:11
Dom Hawes
But it's nice if you have a more attractive price.

25:14
Maja Gedosev
What happens in the aviation world? It's the same like with hotels, et cetera, where you manage the inventory. So in our case, we have 134 seats on board our flights and at a certain point in time, when the flight starts becoming full, the price will start getting higher.

25:32
Dom Hawes
In terms of lessons that our listeners can take away from this, I love the concept of value leadership. And because you've thought so deeply about the product and where there's value in the product, you can be confident that you're offering better value, if not always a better price. Okay, I've got my head around that. How do partners help you with your value leadership principles?

25:50
Maja Gedosev
Probably we are good at selecting the right partners at the right value as well. I won't say that we're looking to create the product cheap. We're creating a quality product, but it's the partners that usually you won't find already being in the industry recognized or used by other competitors.

26:08
Dom Hawes
No gate gourmet here.

26:10
Maja Gedosev
Well, we have, by the way, on the food side, we did pick a really great partner. It's Doe and Co. And their chefs are trained by the restaurant chef that we use the recipes from. But I'll tell you the following. For our seat, for example, we used a bad mattress producer, which is a proper bad mattress producer, and they actually installed their bed mattresses on our seats. So you have actually a bed in the sky, a proper bed in the sky, and probably that company will not be the one that will be used by other partners. And we have the ability to feature them to talk about the quality of their product. It gives us that value, but maybe not at high cost.

26:51
Dom Hawes
My only knowledge of mattresses is how expensive they are. So I can't imagine that an actual mattress seat might give you any price advantage over a seat, but I'll take your word for it that does. One of the very frustrating things as a passenger with airlines and all the big carriers are doing it these days is they bait you with a low fare and then they pile on extras. What's your policy? Is the whole industry like that?

27:11
Maja Gedosev
Now, we have this kind of concept of a fare that includes the base core product that we call core product. And then you have the ancillaries. So in aviation, that is how we function. The ultra low cost or the low cost carriers will actually break the product down into pieces and you will see that with them and they will sell seat this bag there refunds or changes this and that. In our case, we have a full inclusive fare that gives you the full experience on board. So basically, you will be able to get the bag included. You'll get your seat, you will get your meal, you will get your free Wi Fi, which is a huge add on. We also, although a small airplane, like we mentioned earlier, a narrow body aircraft, we stand for the airline that provides the biggest legroom space and economy as well on transatlantic.

28:04
Maja Gedosev
How do we do it? Well, we want to do that for our customers. And then on top of that, we offer free snacks and free soft drinks throughout the flight as well to all customers. So that is the basis for us. And then we have the ability then to build on that in case customer says, well, I'd like to add another bag. Sure, you can buy that. Or I'd like to upsell to an even more space, which is a seat which has more legroom. You can upsell there.

28:32
Dom Hawes
Okay.

28:32
Maja Gedosev
Or in our mint cabin, we have at the very front two studios that you can actually get and they're also an upsell. Those studios can actually host two people. For lunch meeting or cocktail sharing or just movie watching.

28:48
Dom Hawes
So differentiating in how you price the product, too. But ultimately, at the heart of this is a low cost business model, so you're innovating through partnerships.

28:56
Maja Gedosev
So, Dom, I just want to correct this. It's not a low cost, it's a low fair value carrier, because low cost, usually people have this perception when you say low cost, the point is, are your costs that you put into creating the product low?

29:11
Dom Hawes
Or is your and I meant the last I meant are the costs you're putting in?

29:15
Maja Gedosev
Yes, you're right.

29:16
Dom Hawes
To offer value leadership, you have to keep a very keen eye on what you're spending exactly. As well as what you're charging. Of course.

29:22
Maja Gedosev
Exactly. We make sure that our costs are efficiently managed, we make sure that what we put in has high value and that low cost. There are businesses out there that we partner with that have the same philosophy as we do. So we want to find, like, mind partners that are maybe breaking into another industry, that are thinking, wow, actually I'm making beds now, but tomorrow I could be making seats in the sky. Why don't we just do that?

29:48
Dom Hawes
Let's do it. Wow. I think that's price done. By the way, if you're listening to this and you have any questions that you want us to address, you can record a voicemail for us by going to Unicorny Co UK. And on the tab on the right hand side of the screen, you can click on that and leave a voice message. Now, if you do that, I will heat seek Maja and when she's not too busy, I will get those questions answered for you. And if your questions are really good, I might even read them out on air at one of our future episodes and see if she'll come back and answer them. But for now, today, that is it. In part two, we're going to move on to promotion and place and believe me, the content is just as good. Now, if you've enjoyed this episode, there are loads more in our back catalogue and we're going to be publishing weekly now, as you know, so there's loads more to come.

30:37
Dom Hawes
It takes us around ten to 12 hours to make every 30 minutes episode, so we do really hope you like the show. Be sure to follow us on your favourite Pod platform and please connect to us on LinkedIn too. You can find my details on the show notes and connect me there. And by the way, if you pop your email address in the box at Unicorny Co UK, we will let you know the minute a new show goes live. One last thing, really appreciate it if you would recommend the show to your colleagues, friends and network. Thanks for listening and we will see you next time for more amazing insights.