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Archive for July, 2009

By the traffic on YouTube many of you have already seen this video, but for those who haven’t feel free to join the other 1.5 million customers who have watched the video on “United Breaks Guitars.”

You can view the video below.

My Take: United’s shareholder value has dropped approximately 50 million dollars, since this video was published on Monday!

Now I know what some of you may be thinking. Dave Carroll was not the sole contributing force to the perfomance of United’s stock this week. You are probably right, but let’s say Dave was only 25% responsible for the performance of United’s stock this week. This would mean that Dave Carroll personally cost United and it shareholders 12.5 million dollars!

Dave Carroll is obviously benefiting from this video as he has a music company that is getting tremendous exposure.  If I was an executive at RCA or Sony records, I would be on the phone trying to get this guy signed ASAP, as he is very talented. 

We live in times that are very new. Organizations must accept that this is the new marketing model. It’s not a print ad! Dave Carroll has influenced 1.5 million customers this week with this video. Think about that for a moment. How much money did Dave Carroll cost United? Organizations must start putting the customer experience first and foremost or be prepared to face severe consequences with every customer they serve. In the case of United Airlines, approximatey 75 million customers fly United annually. Any one of these 75 million customers could potentially cause devastating consequences to shareholder value. Obviously, today’s time of customers being more engaged with social media can present significant rewards but the consequences can be disatrous.

I have no reason to believe that Dave Carroll has any sinister motivations, but what if Dave Carroll was the son of the marketing manager for American? Or, what if Dave Carroll was looking to make a quick profit? If he had a lot of money to invest, and short sold United on Monday, he could have made a small fortune.

How much money do you think United would have paid Dave Carroll if he tried to extort money from them? If United was confident that this video would be viewed by 1.5 million customers and potentially cost them 50 million in shareholder value in 5 days, my bet would be a great deal.

I think the success of this video demonstrates the clear and present threat that social media presents to organizations. I think it would be naive to believe that these sinister scenarios are inplausible. In fact, I would expect this type of corporate sabotage to be on the rise as organizations are increasingly aware of the pain that one customer can inflict through all of the vehicles available on the internet.

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Jack Welch

I have admired Jack Welch for the success that he has brought GE. Welch was the chairman and CEO of GE from 1981 to 2001, and has amassed a net worth of $720 million. Incidentally, GE has adopted Net Promoter which Jeff Immelt (Jack’s successor) praised in an earlier posting.

Jack Welch knew that his employees were a valuable resource for new and creative ideas, and he wanted to create an environment that pushed towards “a relentless, endless companywide search for a better way to do everything we do.” Welch developed the Work-Out program to reduce bureaucracy within organizations and give every employee, from managers to factory workers, an opportunity to influence and improve GE’s day-to-day operations.

The goal of the Work-Out program was to “clean up” GE. This outside-the-box brainstorming session was an innovative way for the organization to make workers more productive and processes simpler. Work-Out was designed to reduce, and ultimately eliminate, all of the wasted time and energy that organizations like GE typically expend.

In Welch’s words, Work-Out is meant to help people stop “wrestling with the boundaries, the absurdities that grow in large organizations. We’re all familiar with those absurdities:  too many approvals, duplication, pomposity, waste.”

Click here to hear Welch describes why Work-Out was so successful. Welch found that employees wanted to discuss professional issues like their position, compensation and growth but they wouldn’t discuss it with their boss.

So Welch created Work-Out so that the independent facilitators are not the bosses of the employees involved in the Work-Out. With Work-Out Welch could “draw out their real opinions that they wouldn’t say in front of their boss. The boss then comes into the room and the staff members then have the courage to say what needs to be said so that the company improves processes to make the company more successful.

My Take: I think Work-Out is an outside-the-box leadership approach to organizations. It’s necessary for organizations to be able to step back and look at the big picture and reexamine the way that they run their business.

Many golf businesses are facing today’s challenges without a plan. Their direction is based on old strategies and tactics that were established at a time when the golf industry was a very different industry – before we added 4,000 new golf courses, and at a time when golfers were more loyal to the game and the place they where played it.

By having an independent facilitator who is an expert on the company’s business organize a Work-Out, organizations will tap into a massive resource of imagination and energy from its talented employees. This Work-Out will allow the organization to identify critical inefficiencies in their business and develop a current plan from their employees.

To view the full episode where Welch helps Hertz work out their new Connect brand, click here.

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