Examining ‘United Breaks Guitars’ – Lessons Learned the Hard Way

by David Armistead

[Note – The ‘old economy’ is the world economy, now shrinking and transforming, that produced the global consumer society.  The ‘new economy’ is the world economy emerging now that is producing a global sustainable society. The old economy created wealth by resource consumption, leading to resource overuse and depletion. The new economy produces wealth by resource amplification – doing more with less by continually substituting knowledge for energy, material, labor, finance and time. This new strategy is leading to wealth creation that lives always lighter on the Earth.]

Continuing our ride on the Clue Train down the rail to the global sustainable society…

Last week major media finally broke a story, following lively blogspace coverage, about Dave Carroll’s fun youtube song release, “United Breaks Guitars.” (Song: http://bit.ly/z2GU5; full story: http://bit.ly/mch2A)

The short version of the story is that Dave Carroll, another one of those great Canadian singer songwriters (in Austin, we love singer songwriters) wrote and produced a YouTube music video for $150 that told the tale of how United Airlines broke his guitar in luggage handling as he flew out of Chicago to a gig, and how a 9 month saga ensued in which he sought compensation, ending with United just saying ‘no.’ At the end, Dave told the United rep handling his claim that he intended to make a music video telling the whole sad tale if they refused to take responsibility for the damage. They declined. He made the video. And he posted it to youtube.

As of this morning (07/21/09, 5:40am) the video has been viewed 3.5 million times in about ten weeks.

Unsurprisingly, various follow up news stories indicate United has had a major change in attitude around all this since the YouTube video went ballistic. And the incident has apparently also resulted in a lot of well-deserved attention for Dave and his music (which I like). There have apparently been offers by equipment makers to give Dave new stuff, and offers by other air carriers to give him free rides, etc.

BUT HERE IS THE BIG POINT –

After 9 months of engaging United’s ‘customer service’ process with no result, for a cost of $150 Dave Carroll, a lone voice, self-published to the open web a message that immediately cut completely through all of United’s many layered, inaccessible, murky, confusing, difficult, complex, well funded, ‘customer service’ process – and established direct connection for Dave to the tip top layer of real control over the whole airline, with United’s top executives and board tracking the relationship minute by minute. Dave got, and has retained, very senior, very top level attention at United – for $150.

Consider Dave Carroll’s own words on this point: “…it occurred to me that I had been fighting a losing battle all this time and that fighting over this at all was a waste of time. The system is designed to frustrate customers into giving up their claims, and United is very good at it. However I realized that as a songwriter I wasn’t without options. In my final reply… I told her that I would be writing three songs about United Airlines and my experience in the whole matter. I would then make videos for these songs and share them on YouTube…. My goal: to get one million hits in one year.” (http://bit.ly/mch2A)

In the old economy, which is opaque and favors finance capital over everything else, it paid to push the costs for damaging passengers’ luggage back onto the customer. This is a profit-enhancing strategy called ‘cost externalization.’ It’s an old economy strategy that only works in a world of top-down hierarchical relationships.  In the new network world, where everyone has equal access at almost no cost to the ears of everyone interested to listen, the ‘cost externalization’ strategy is gradually falling apart. And in this case it failed badly.

Perhaps because he is a communicator and artist, Dave Carroll understood what the United senior executives did not.  Transparency can be forced onto any organization now for almost nothing. And there was nothing United could do to hold the consequences of Dave Carroll’s music videos back.

United failed to keep pace with reality, and continued playing the old economy strategy of cost externalization wrapped in opacity and layers of hierarchy, even though the value of that approach has now turned into a nest of liabilities. Consequently, in a moment when airline revenues have declined 20%+ each month for the last six months, United executives, by failing to adapt to the changing reality, have cost their firm massive amounts of critical social capital, in the consumer market and the equity market, at exactly at the wrong competitive moment for such a mistake. So for the United the change is not coming.

Executives – listen up.  In a world in which 3.5 million views can be gained through YouTube by anyone in a few days at a cost of $150 – you must embrace some serious change.  Adapt now. Don’t be United. The lesson does not have to come the hard way.

In case the point is not getting across, let me remind you of the Virgin Air social media disaster that happened earlier this year. It could have been anybody. It happened to be the most social media hip of all airlines, but they still tried to play by the old economy rules. Virgin had established an external blog for air passenger, i.e. customer, comments. Eighteen Virgin employees, stymied by an old economy-style internal run around processes to ‘handle’ employee complaints and suggestions, jumped out to the open and public passenger blog site and posted comments about Virgin’s engine maintenance and rat infestations on planes. Virgin responded, in old economy fashion, by firing all eighteen.

A blogspace fire storm followed, with significant loss of opacity, increase of transparency, to Virgin’s internal affairs. Virgin capitulated and rehired the employees, with apologies, and opened up an internal employee blog for uncensored and protected communications from employees about internal conditions. Since then Virgin has been racing headlong into the new economy and the new strategies.

We are already deeply into a real sea change, a transformation of the way we organize and coordinate and relate. It affects all our social capital, all our stakeholder relationships. This sea change is technologically based and cost driven, and it is being profoundly accelerated by the emergence of the new social media technologies which are deeply socially enabling. Adoption of these transforming technologies is not optional. Your competitors are doing it right now, along with your customers and employees and investors and lenders and suppliers. And this sea change affects every level of every organization, every moment of the day.

Don’t be United.

Embrace the change and use it to help your organization. Get on with developing a comprehensive, integrated social media strategy for your whole organization now.

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2 Responses to Examining ‘United Breaks Guitars’ – Lessons Learned the Hard Way

  1. Wickedly well done, Dave.

  2. David Lee says:

    I also thought how the United could turn this around as their favor. Something to think about…

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