UNITED We Stand

Social Media has changed the face of Leadership. Pay attention now, or risk destruction later.

David Dao and Oscar Munoz

The demands of leading a high-profile organisation has changed and there’s no going back.

The treatment of David Dao, the now infamous United Airlines passenger this week was appalling. Just as bad, has been the organisation’s response, in particular the CEO, Oscar Munoz. You cannot immediately measure the impact of Munoz’s response on the United brand, or the bottom line — but it is obviously not going to be good. (Edited Wednesday 12th April: Actually you can — read on!).

Munoz’s Letter of response

Munoz’s letter does not take responsibility for his company’s actions; nor does it consider the weight and the shocking nature of what actually occurred. If he didn’t realise the power of digital and social media last week, he will this morning.

It is obvious that Munoz’s response has been delivered with this mindset: ‘I must return the biggest dividend possible to my shareholders.’ End of story. No impact on people, community, society, culture — just cold, hard cash. If you’re being cynical, you might suggest he is simply trying to avoid a lawsuit for the actions in the video below:

Shocking, isn’t it. Perhaps Munoz would have been better off, holding his hands up, apologising and saying that this type of behaviour is completely unacceptable towards a customer who has already paid for his flight. But then, he’d have to deal with the root cause of this problem, which is the culture of the company, centred around (you guessed it) — the bottom line.

Out of the flames, there is something to learn for leaders of any organisation. The demands on your role, your responsibilities, your impact on culture and how much you value the new digital landscape has changed. Drastically.

Traditional View

McKinsey, the global consulting firm recently conducted research on 600 CEO’s to find out what makes them exceptional. There are some interesting lessons here, but also things to consider and challenge. The research was conducted on “roughly 600 chief executives at S&P 500 companies between 2004 and 2014” in order to establish any links or trends that created the most successful CEOs.

Like many others, i was reading to find out what they found, and it turns out that if you are a new CEO from outside the organisation, you have a greater chance of ‘success’ that if you are internally appointed (so if you want to be a CEO, you should probably start applying elsewhere); and if you begin a strategic review within the first two years of your appointment you also have a greater chance of ‘success.’ — For outsiders, this is probably easier to do, due to no involvement in internal politics, and for insiders it seems that it would be beneficial to get external facilitators or consultants in to help (like McKinsey i’m guessing?)— But I digress.

My first question of the study was, ‘what is McKinsey considering a success?’

Here is their answer:

“Our focus was on the top 5 percent of the CEOs in our sample as a whole whose companies’ returns to shareholders had increased by more than 500 percent over their tenure.”

Clearly, there is only one set of criteria for being a ‘successful’ CEO — the bottom line. Something that Oscar Munoz clearly prescribes to.

Oscar Munoz — CEO of United Airlines

An Alternate View

As we have seen this week, the landscape of business and organisations has changed significantly since 2008 when the worldwide economic crash occurred, and particularly since 13 years ago, when McKinsey started studying ‘exceptional leaders’ in 2004. I am not just saying this as a ‘millennial’ who is deeply interested in leadership and strategy — I am saying this by looking at the facts over the last 7 days.

The dramatic rise of digital and social media has changed the business landscape forever, as customers now expect an urgency and transparency when dealing with organisations.

If you have a problem with a product, or a service the best and quickest way to get an answer for it, is by using social media. If you happen to have a million followers, that’s an opportunity for a million different people (and their social networks) to see your product or service letting someone down. The ability to deal with this quickly, efficiently and in the correct tone is essential to a brand, and ultimately to the bottom line. See an example below from Jet Blue — the American airline.

Not only this, but consumers are demanding organisations to be more ethical and considerate in their business processes. Just observe how much negative press United Airlines is getting this week on YouTube or on any notable press outlet. Whilst this is obviously an extreme, and an appalling example of how one company has treated a paying customer — the outrage and the ‘wildfire’ that has spread will damage the brand far beyond the immediate bottom line. If a company reveals itself to be unethical, and exploiting of labour, it is setting itself up as a target for negative press, negative social media coverage and ultimately poor performance.

Edited: to illustrate the immediate impact — see two images below pulled from Twitter this morning, which shows United’s stocks decreasing by 1.1% or $255 million in a week.
twitter.com

Therefore, operating with strong ethical values and with transparency; and having a wider social, cultural and community impact are no longer on the list of ‘nice to do’ for a company — they are essential. And no matter how ‘exceptional’ a leader may be in delivering a strong bottom line it is a huge risk in the modern age to ignore the leaders ability to run an ethical and considerate organisation.

Stephen

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