You Recover From Losing; Disruption Transforms You Forever

The Thunderbird Global Series On Disruption

Scotland Women vs Ireland Women Rugby match 2015 (Scotland went down 3–73)

Don’t confuse losing with disruption.

Scotland Women couldn’t handle the attentions of the Irish side.”

The press criticism was brutal: Scotland missed passes, were indecisive, and made every error in the book until they swung the door open as “Ireland took a stranglehold on the game.” Then, a gentle post-mortem: “after promising progress this year, Scotland must now analyze and work on the areas which let them down.”

Now, look at the Scottish ball carrier’s face again. She may not have won, she may have lost, but she’ll be back trying harder next time. That is what losing looks like. It’s honorable in its own way.

Why was United Airlines disrupted?

Scotland Women’s 73–3 trounce can be compared to another stunning loss, that of United Airlines and the eviction of Dr. Dao, a painful episode in the carrier’s history. But there is more to learn from this story than just another SNL skit. Unlike the Scottish women, the airline can’t merely chalk it up to “let’s try harder next time.” The company didn’t lose, it was disrupted, and that means they have to transform.

The facts are compelling. United messed up badly, muddied its customer servicer reputation for a decade, and lost hundreds of millions in shareholder value. A very bad day.

Then, a similar incident happened to another airline the following day, and there were daily reports of other incidents no less toxic in the past. So why was United’s story front page news? Why did it go viral this time?

The reasons are both simple and complex. On the macro level, due to social media, viral videos, and raging anti-business fever, this is the beginning of rampant disruption that is occurring on a global scale. The other lesson is what the Scottish women are trying to tell us: Disruption is what happens when you refuse to learn from your losses.

Disruption is almost always self-inflicted.

Would you call it “disruption” when a passenger bound for home is comfortably seated on a flight and evicted as it is about to take off? Hog tied and beaten? The CEO refers to the passenger as ‘belligerent.” The crucial moments conveniently caught on video?

How does the flight attendant even approach the subject, “you sir, please don’t bother fastening your seatbelt. Oh, and this will make you feel better, you were chosen at random.”

Most of what you read about United’s fiasco simply puts knocks the airline and its CEO, Oscar Munoz, for bad decision making and the ensuing fracas as he walked back his comments. If you’re trying to understand the insidious effect of disruption on a business, there’s a better story and one that requires us to look inside the airline and the world around us. The story the media missed.

The media and most of us always ascribe stupidity when we see stories like, “Man falls from cliff,” and we say, how dumb to stand so close to the edge. But smart analysts and problem solvers ought to ask themselves, is there more to the story? The people who run United manage fly 5,000 flights and over half a million passengers each day of the year. Are they really that dumb?

The question to ask: why do smart people do things so odd that risk their jobs and even the company? What were they thinking and why? Then the real question: will those of us reading about it do the same some day?

Disruption comes in several flavors, all of them bitter.

We’ve defined disruption as different from losing. Losing means you did your best and the chips didn’t fall your way. Disruption means someone else plays the game so much better you’re out of the action. For life.

They also know how to handicap the odds. That’s what happened to United’s Oscar Munoz.

Business executives used to worry about tough competitors. Now they face a Pandora’s Box of disruptors, including activists, extortionists, video Snapchatters, and flame throwers focused on turning anything and anyone into a victim to gain followers, donations, or blackmail. If there is a video, that gives it just the credibility it needs to go viral.

If it bleeds, it ledes.

The problem with public journalism and its favorite tool, iPhone video, the time it takes to get the camera rolling provides viewers with consequences, not causes. Whatever caused the ruckus is over. All you get is the reaction.

When someone crosses a street distractedly taking a selfie and slams into an oncoming bicyclist, social media doesn’t see an irresponsible pedestrian, it sees a fairy tale. A video with a person on the ground bleeding and screaming in pain is what goes viral, while standing nearby is a guy in spandex shorts and a bent bicycle wheel. That headline writes itself.

The only question that matters to Facebook and YouTube, who is the victim and who is the ogre? Not sure?

Meet the new extortionists.

Dr. Dao sued United and settled the case quietly (rumor pegs it at $100 million). In round numbers, the episode cost United a half a billion dollars in legal costs and lost shareholder value. Ouch! At least we can say, they got what was coming to them.

But a company does not need to make an egregious mistake as United to be pressured into an agonizing apology. Whether the company deserves it is not relevant. What is important, can someone be made to look like a victim by the media — or can the company afford to litigate in front of an anti-business jury.

Walmart protesters in New York City (where the company does not have operations)

Walmart pays all of its employees above minimum wage and has no employees in New York City.

Yet labor union bosses organize protests against them in New York City for minimum wage practices. Why? Because Walmart is a media magnet because of their size, wealth of the Waltons, the founding family, and New York is a good location for media coverage, and so the company has become a convenient target for “the new extortionists.”

You don’t have to be an SNL script writer to figure out this plot. Business is the bad guy.

If you’re a young MBA this may seem way off your radar. All you want is a job. But when you move into the C-suite in 20 years, the extortionists will follow you around like a bad disease. You will worry more about them as disruptors, then your competitors who can only cause you to lose. Your business is the host on which they will prey, you are how they make money and how they make a living.

Which do you think United worries more about now, videos or whether Delta is lowering fares?

The rogues attacking business include anti-business media and digital click-baiters like Buzzfeed, virtue signaling humanitarians, environmental activists who use any tactics to destroy business, plaintiff attorneys who pay politicians (our version of the medieval sale of indulgences) and politicians who return the favor by voting laws that enrich them, and since the 1989 Whistleblower Protection Act, your own employees. All of them have something to gain at your expense. Your business has become a career and they aren’t letting go of a meal ticket.

The question a CEO needs to ask, “did those forces come after you or as in the case of United, did you send an invitation? Can you fight disruption? Or must you transform, starting with yourself, your team and your company?

Here are nine steps to keep the disruptors away:

  1. Admit you have a problem as Alcoholics Anonymous suggests. You still might lose occasionally, but you will never be disrupted.
  2. Pre-test like a mad scientist. Your own people are the best research. Did United ask flight attendants how they felt when they evicted passengers? Because that would have told them this is a bad idea.
  3. Let the world know you are in FIRE mode: fixing, investigating, resolving, and engaging. Don’t issue apologies prematurely. That’s what weak PR types will have you do. Or fearful lawyers will tell you go dark. Both lead to disastrous public relations.
  4. Think of social media as a magic act. No one cares whether it’s true, just entertaining or inflammatory, or both. If you provide the dish, you are going to get the treatment. The short answer to that is you need a content strategy that loads up the Google search engine with nicer things said about you.
  5. Promote contrarians in your organization (out of the box we used to call it) as they are a weapon against disruption. Firs thing they tell you, change the narrative: what about offering flights to hospitals, sanctuaries, and resettlement locations for refugees.
  6. Change incentive structures radically. If your people think they will be fired — and not rewarded — if they disobey policy as in allowing Dr. Dao to remain on the flight, they’ll resort to the rule book.
  7. Fix what Six Sigma calls fatal errors and don’t waste time on minor defects. In other words, attend to what really matters. Why didn’t United teach flight attendants to move on when confronted and say, “it sounds like you’re not able to cooperate with us, so we’ll make an offer to another passenger.” (I realize the offer was limited to $800. Go back to rule #4)
  8. Do some housecleaning. If you’re the CEO, decide if are you the problem and resign, and if not, it could mean firing the people whose job it is to watch the front lines. Start at the top. Disruption will take their jobs away anyway.
  9. Like a good airline pilot, be absolutely clear with your people about the dark clouds ahead, the burdens you bear, your willingness to take them with you to the top. Promise them a rainbow when it’s over, but they must know the road ahead is bumpy.
  10. Much of what goes wrong can be traced back to the unintended consequence of regulation which your people are following robotically (in the case of United, the FAA penalizes crew wait times). Better to train employees to risk a regulatory penalty than punish an innocent customer.
  11. How you prepare for disruption decides whether your company survives. You would rather lose than be disrupted, because if so, you’ll be among the winners no matter how the chips fall.