Monday, September 28, 2009

The Social Web's impact on Management Theory

An increasing number of people are talking about how social technologies -- social media, social networks, collaboration, reviews, crowd sourcing, etc -- are impacting our understanding of how organizations should be structured and how employees should be recruited, managed, and rewarded. On Wednesday of last week I presented an initial paper in London on this subject, based on my work with companies over the past decade or so: Open Management (opens PDF on Scribd website).

The last 10 years? Yes, in May of 2000 I joined Borland as its Chief Strategy Officer and had the pleasure of working with Doc Searls (one of the four authors of the Cluetrain Manifesto) who was working as a consultant to the company. Borland had decided to develop an open source development tools product, (Kylix for those of you who might wonder) and Doc had been retained to help the company understand the Linux "community" whatever that was!

As a technology firm working with software developers Borland already had a long history of using online forums to connect with customers. But I think it is fair to say that the experience of bringing a Linux product to market significantly increased our awareness of a new dynamic between companies and their markets. This has led me on a decade long exploration of social media, social networks, and a variety of other tools which I broadly group together under the name "social technologies." Social, not because it they are about fun but because they are about people doing things with other people. In other words, social as in sociology.

And organizations, especially corporations, are one of the most interesting places to study human social behavior. For generations now we have relied upon hierarchical structures to facilitate the coordination required for large numbers of people to act together. Now technology is offering an alternative to hierarchy, one which is proving to offer significant competitive advantages to early adopters, open source being one clear example.

In taking "open" as my label for this movement I seek to focus on the difference emerging from our twentieth century business constructs. All business is "social" -- but the 21st century will see an increasing number of open business models -- open management, open communications, open source, open support, open product development, open research... It is a great time to rethink assumptions and consider alternatives to everything we know in business!

Airline choice from SFO to LHR?

So you are a United Mileage Plus member -- maybe a premier exec or even a 1K flyer. You are trying to decide, who would be best for my next trip from San Francisco to London? United of course!? I'd like to explain how I came to the conclusion that Virgin Atlantic was a better choice, and I don't care how many miles you have on United Airlines (oh, OK maybe you are "global services" in which case... I don't know).

First - something about my survey methodology. I have been doing a project in London for the past 6 months that has required me to be in London twice a month (that is 12 trips, for those of you keeping track). I have been flying on United Airlines for a very long time. My Mileage Plus account was opened in 1990 and I currently have well over 1 million miles flown over those almost 20 years. This year alone, mostly from all those trips to London, I have flown well over 150,000 miles with the airline.

Like most frequent flyers I rely on miles to make my travel more pleasant. Once in awhile I spend those 10 hours in "economy" (or coach, or chose your euphemism - I like cattle class). But once you have flown a couple of times you start to have the option of "upgrading" -- space available. And as you climb in status your chances of being upgraded improve. So as a million mile, 1K traveller on United my chances should be pretty good. And I am happy to say that United has upgraded me on most of my flights over the past 6 months (thank you).

But a number of service issues with United Airlines recently made me ask, is there a better airline to fly to London on? And so I begin to investigate my alternatives. I just flew for the first time on Virgin Atlantic - more about the actual experience in a moment. But the real surprise was the economics!

Here are the numbers -- am pulling an arbitrary travel date in the future, more than one month ahead. Fly to London from San Francisco on Sunday November 15th and returning on Sunday November 22nd (that crucial Saturday stay over).

$3,006.20 is the lowest economy fare United is offering which will allow for an upgrade to business class using miles

$1,517.00 is the lowest PREMIUM ECONOMY seat that Virgin Atlantic is offering

Now what, you might ask, is the difference between Business on United and Premium Economy on Virgin? That was my question as well, so I decided to go ahead and book a Premium Economy seat and see for myself.


(1) The Virgin seats are closer together meaning offering less leg room and not reclining as much. But they are still quite comfortable and I was able to sleep for 6 hours of the flight.

(2) Virgin's 747 has 8 seats across in premium economy instead of United's 777 configuration with 7 business seats across meaning that the seats are a bit narrower - not a problem unless you are larger than average.

(3) Virgin's food service was good but one could argue that United's is better. My experience ordering a special meal was better on Virgin -- on United the flight attendants actually apologize for the special meals being disgusting.

(4) Virgin's flight attendants were great -- United has a mixed bag of some terrific people and a few rotten eggs. Even the other flight attendants on United know who those terrible ones are but say that United can't get rid of them because of the union

Result: Even if you were guaranteed an upgrade by United (which they definitely do not guarantee) you would have a comparable experience between premium economy on Virgin and a business seat on United -- for half the price!

And if there was a chance of being stuck in United Economy, there is no question -- fly Virgin Atlantic.

To me, all of this simply points to United Airlines being completely broken as a company. I am sure this same analysis could be done for many of their other routes. This will be a continuing spiral down into failure for UAL until they are able to entirely reinvent their company.

First suggestion:

Create a facility through which your passengers can log a complaint about a particular flight attendant. Negotiate with the union for some procedure by which after a certain number of complaints and warnings that you can terminate that flight attendant for cause.

United Mileage Plus members are ready to make more suggestions and pitch in but first you have to be willing to change. Can we all get behind a movement to fix United?

In the meantime I am going to keep flying Virgin Atlantic.