The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

To sign-up to receive the CSR Newsletters regularly during the fall and spring academic semesters, e-mail author David Chandler at david.chandler@ucdenver.edu


Friday, August 28, 2009

Strategic CSR - United Airlines

You may have heard about or seen the YouTube video over the summer by the musician whose guitar was broken on a United Airlines flight in March, 2008:

http://www.youtube.com/watch?v=5YGc4zOqozo

The article in the first url below outlines the background to the event:

“Canadian singer Dave Carroll is now on the map, courtesy of United Airlines (UAUA). In March 2008 he was changing planes in Chicago on the way to a gig when he saw baggage handlers tossing instruments. Finding his $3,500 Taylor acoustic guitar damaged, Carroll tried for more than a year to get United to pay for the $1,200 repair.”

When United continued to deny any responsibility (largely based on a technicality—the firm claimed he had failed to file a complaint within 24 hours; a claim Carroll denies in his video), Carroll responded by writing the song and posting it on YouTube, where, as the article in the second url below reports, it quickly became a hit:

“According to the Times of London, "...within four days of the song going online, the gathering thunderclouds of bad PR caused United Airlines' stock price to suffer a mid-flight stall, and it plunged by 10%, costing shareholders $180 million. Which, incidentally, would have bought Carroll more than 51,000 replacement guitars."”

At present, this video has had over 5,250,000 views on YouTube and there are multiple postings:

“Can United's 180 million dollar loss be chalked up entirely to a song on YouTube? Probably not. Did the song have a very real and very negative effect on United's brand equity? Absolutely.”

A strategic approach to CSR involves firms putting systems in place to meet the needs of as broad a number of stakeholders as possible. The goal is to avoid the backlash often associated with a short term focus on minimizing costs, which, as United demonstrates, can turn out to be more expensive in the long run.

To see the benefits of doing things differently, see this response video posted by a musician who has been flying Southwest for many years and, as he says, “Southwest Never Broke My Guitar.” The song is not as good, but I think the value of having a loyal consumer base, rather than one that is suspicious, quickly becomes apparent:

http://www.youtube.com/watch?v=u1SMcaVekVE

Have a good weekend.
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/


Broken-Guitar Hero

Christopher Palmeri
Businessweek
August 3, 2009, p17.
http://www.businessweek.com/magazine/content/09_31/c4141btw643725.htm

Broken Guitar Has United Playing the Blues to the Tune of $180 Million

July 30, 2009
By: Ravi Sawhney
Fast Company Magazine
http://www.fastcompany.com/blog/ravi-sawhney/design-reach/youtube-serves-180-million-heartbreak