19 Feb

United Breaks Guitars

Guitar

Back in 2008, singer/songwriter Dave Carroll was flying to Nebraska with his fellow band members.  As he was getting out of the plane, on a stop over in Chicago, he heard a passenger say “they’re throwing guitars out there!” Dave and his band members looked in shock as they realised that their guitars were being thrown out of luggage compartment. Indeed, his $3500 guitar was broken. Carroll filed a complaint with United Airlines, Airline, but he was informed that he was ineligible for compensation because he had failed to make the claim within its 24 hour time frame.

So Carroll, as a singer/songwriter, decided that writing a song was the only thing he could do. So he wrote a song about the incident called “United breaks guitars”. He put it up on YouTube and unfortunately for United Airlines it went viral. As of writing this it has 15,583,732 views.

After 150,000 views, United contacted Dave Carroll and offered to pay him to take the video down. He had changed his mind, however. It wasn’t about the money anymore. In fact, he suggested they donate the money to a charity.

United also discovered that “United Breaks Guitars” wasn’t just a single song. It was part of a trilogy. Furthermore, soon Carroll was doing interviews, there were parody videos and now there is even a book! This wasn’t just embarrassing publicity for United Airlines, the BBC reported that United’s stock price dropped by 10% within three to four weeks of the release of the video – a decrease in valuation of $180 million!

This story clearly shows the powerful impact that social media can have. It is also an illustration of the importance of good stakeholder relationships. Just one bad relationship with a customer cost United Airlines millions of dollars. While most bad stakeholder relationships don’t cost a company millions of dollars, their importance and the risk if they go wrong, is undeniable. Yet despite the potential for most companies do not measure or manage their stakeholder relationships.

In a recent interview with Global Reporting initiative, Mervyn King, Chairman of the International Integrated Reporting Council, argues:

“Companies need to be informed about the needs, interests and expectations of their stakeholders throughout the year and when they’re strategizing, otherwise the oversight that they have over management and its strategic proposals is not an informed oversight. At every board meeting there should be an agenda item that wasn’t there before: ‘Stakeholder Relationships.’”

According to King therefore, the boards of many companies are carrying out uninformed oversight. Therefore, for proper accountability and informed oversight, companies must be informed properly about their stakeholder relationships.

Some might see this simply as another unhelpful addition to all that companies have to do. However, proper management of stakeholder relationships can be a huge force for value creation. For companies that begin a dialogue with their stakeholders can develop a strategy that is much more informed. Furthermore, through such a dialogue, and through relationship measurement, companies can increase the levels of trust in their relationships with their stakeholders. This trust brings confidence, sustainability and innovation. So while companies will want to manage the risk in their stakeholder relationships to prevent any negative outcomes, investing in these relationships, measuring them and beginning a dialogue can drive a company forward and increase its value.

Photo: Guitar (by Shane Adams on Flickr)

15 Jul

More than money: understanding poverty relationally

relational poverty

Poverty is a pervasive and global problem, but it exists in different forms and has many different effects. Something approaching a billion people are hungry worldwide. One in six people have inadequate access to water and a quarter live without electricity. Global inequality is increasing. The richest one percent of people in the world own nearly half of the world’s wealth, and the figure is expected to grow in the coming years.

In higher income countries like the UK, we tend not to experience poverty in the same way as many of those in low-income countries, but it is still a feature of life for many. Charity foodbanks supplied people with emergency food for three days on over a million different occasions in 2014-15, with around 500,000 unique users.

The definition of poverty
Like so many other things, we are used to seeing poverty in terms of its material dimensions. Generally speaking, we understand it as a financial issue: poverty simply involves not having enough money. This may be the most obvious symptom, but poverty is a much broader issue.

Three of the most commonly-used definitions used in the UK today are Absolute Poverty, Relative Poverty and Social Exclusion.

• Absolute poverty is defined as the lack of sufficient resources to meet physical needs for health.
• Relative poverty defines income or resources in relation to the national average. It is concerned with the absence of the material needs to participate fully in daily life.
• Social exclusion is a fairly new term, broadly similar to relative poverty but including both the causes and effects of poverty. It includes many different factors that can drive and result from poverty: unemployment, substandard housing, education, low income, addiction, crime, health and family breakdown.

Relational capital
Social exclusion starts to get to the heart of the matter, but doesn’t go far enough. We would argue that, more than being about money – which is important but really only the symptom of a deeper issue – poverty is ultimately about relationships. Very often this involves global relationships and injustices, or the structural and institutional relationships that create and perpetuate poverty (including government corruption and inefficiency; punitive interest and debt repayment; labour practices, and so on).

In wealthier countries, it is still those people who are most marginalised and who live on the edges of society, who also tend to be poorest financially. This week we heard the news that children brought up in the care system are heavily overrepresented in the prison population. ‘Fewer than 1% of children and young people are in the care of local authorities, but a third of boys and 61% of girls in custody either are in care or have been.’ A comment from one young offender was particularly telling: ‘If I’d had the support around me when I was younger, I would have stayed as smart and sweet and innocent – but it was the fact that I’ve built myself up with so much anger. I’m not used to anyone supporting me.’ Those with a criminal record will be discounted from around half of all job opportunities and just a third of those leaving prison go on into education, training or paid work.

Those with fuller and broader networks of relationships are often able to cope with a setback such as a divorce, redundancy, debt, eviction and so on, that might trap those who do not have the same relational capital in a cycle of poverty. This is neatly illustrated by Mark Granovetter’s 1973 well-known paper, The Strength of Weak Ties. Granovetter’s research demonstrates that opportunities (in this case, for employment) come most often not from our closest circle of relationships, but from the ‘weak ties’ in our social networks – the friend-of-a-friend, acquaintances and contacts who bridge different and otherwise disconnected social groups and therefore offer access to new and useful information. Despite the language of ‘weak’ ties, these bridges are a key element of relational capital, and those without this richness of relational network are at a serious disadvantage.

Guy Brandon works as a researcher for the Jubilee Centre.

31 Mar

Translating the best…to the rest

pizza

I was at Jamie’s Italian recently in Liverpool. The menu had all the trademarks of the man’s appreciation of simple quality. The décor combined a sense of kitchen with a marketplace. The staff, albeit without a hint of Essex, had a familiar enthusiasm about the food they were serving (apparently they are trained to know about each recipe). It worked – a tried and tested approach with a distinctly local character, crammed full of customers.

But it doesn’t always work. The chain’s flagship Istanbul branch reportedly filed for bankruptcy earlier this year.

A restaurant offers a combination of concept, venue, recipe, ingredients, a chef’s skill, service and customers. The mix of these elements is often dynamic and subtle. Knowing how a great restaurant is working today does not tell you how it got to be great, let alone how to replicate it elsewhere. Which is why successfully rolling out a complex package to a wider constituency is challenging.

The NHS England Vanguard programme of New Models of Care has set out its stall to explore scaleable and replicable solutions. It is planned that the first wave of sites will pave the way for a group of early followers within a matter of months and years. Simon Stevens described the choice of Vanguard sites being made on the basis that they were already ‘performing strongly and have good relationships’. Selecting sites with strong relationships makes sense, as the success of an organisation depends on how well it connects internally and externally. The biggest challenges lie post-vanguard: how to translate what works for established partnerships (that also have access to a coordinated support programme and a share of £200m) into success for the rest.

Prominent amongst these challenges is how to replicate relational capital. Relational capital already exists within the Vanguard sites. Like an established restaurant, these sites have the wherewithal to adapt to improve customer service. How those sites got their strong relationships and how to help others build strong relationships is a different question.

Taking another example, it is striking how the relationships (some of them longstanding) behind devo Manc were so crucial in getting the agreement for devolved health and social care budgets for the city region. Where capital is less developed, as amongst some of the hoped for early followers, the parties to the relationships will need help to develop the capital they need. Unlike financial capital, relational capital cannot simply be transferred from headquarters. Adopting only the model or method or even providing the finances will not be the whole package for the post-vanguard sites, as numerous examples of public sector ‘pilot-itis’ testify.

The Vanguard has a real opportunity to address this. If NHS England generates a detailed understanding of the relational capital fuelling the first wave of sites, it can support the next wave to develop good relationships more quickly. Many areas struggle to broker trust and common purpose amongst stakeholders, finding themselves battling organisational self-preservation and chequered histories of engagement. However, relational capital can now be quantified and explained in ways that can be adopted by another system relatively quickly. Introducing a common language and understanding of inter-organisational relationship will practically help areas ‘make it real here, regardless of where we are starting from’. With this sort of outcome, the New Models of Care programme will truly be transformative.

This article was originally published by Renuma, one of our member organisations, and is republished here with their permission.