June 20, 2011
By kim Girard
To Nancy F. Koehn, the history of the Irish rock band U2 has it all as a business case study: teamwork, leadership, creative destruction, branding, and strategy.
Koehn’s case “Bono and U2″, co-written with Katherine Miller and Rachel K. Wilcox, reconstructs the story of U2′s meteoric rise in the 1980s, the band members’ journey to sustain and enhance their identity in the next two decades, and the ongoing commitment to balancing their music careers, fame, personal lives, and—in the case of three of the musicians, their Christian faith. At the same time, Koehn charts the lead singer Bono’s escalating, high-profile campaign against Third World debt, poverty, war and disease.
“Any CEO who thinks his or her job is about maximizing shareholder value is living in the past.”
Koehn, a Harvard Business School historian who has studied social entrepreneurs and leadership in the work of celebrities including Bill Gates, Warren Buffet, and Oprah Winfrey, was drawn to Bono’s commitment to conscious capitalism and to the question of what made Bono, well, Bono.
“It so clicked for me,” she says. “I hadn’t listened to U2 in 10 years. I started peeling back the layers of the U2 onion. As I did, I realized that no one had ever told this story as a business story.”
In the bigger picture, U2′s journey reflects our own moment here in the early 21st century, Koehn says, pointing to a growing spiritual hunger among young people, the backlash against Wall Street greed, and the revolutions in the Middle East. “U2′s appeal has always been about our common humanity and the yearning we all experience to follow a higher path. People are looking for the light, and U2′s music has spoken to that search since the band started recording more than two decades ago.”
For CEOs who struggle with building a company that reflects their personal values, U2 also provides a model.
“Any CEO who thinks his or her job is primarily about maximizing shareholder value is living in the past,” Koehn says. “The game of what kind of capitalism will define this century has changed very quickly and dramatically. “‘Creative capitalism,’ ‘conscious capitalism,’ ‘stakeholder capitalism,’ call it what you will,” Koehn adds. “The larger social footprint and role of business are here to stay.”
The project, inspired by a friend, began with Koehn, a classical music zealot, spending a year listening and studying the lyrics of most U2 songs. “It was like a huge baptism,” she says, referring to the Christian ethos of some of the music, alongside the political and social messages of songs like “Sunday Bloody Sunday” (violence in Northern Ireland), “Bullet the Blue Sky” (political violence in Latin America), and “MLK” (about Martin Luther King Jr.).
Savvy from the start
U2′s business savvy in the earliest days serves as a lesson for any MBA student. In an industry notorious for its focus on short-term hits and for taking control of an artist’s work and profits, the band members and their long-time manager Paul McGuiness always looked to build an enterprise that would have a long life.
“Bono doesn’t get to meet with Bill Clinton and shake hands with the pope if he’s not a rock-and-roll star.”
As important, they recognized the importance of creating as much autonomy—strategic as well as artistic—as they could. Toward this end, they obtained the rights to their own copyrights back from Island Records; they oversaw the vast majority of decisions about touring, record production, graphics, and packaging themselves; they focused on touring and a direct relationship with their audience (versus relying on radio station distribution and the roller coaster of trying to generate “Top 40″ hits); and they acquired a 10 percent ownership stake in Island Records worth $30 million when the record company was acquired by PolyGram in 1989.
U2 was also innovative, understanding from the get go that technological change and the creative destruction it unleashed would have a big impact on the business of making and distributing music. In 1981, for example, U2 made a video for the song “Gloria,” which was one of the first videos to slide into constant MTV rotation. Some two decades later, in 2004, Bono connected with Apple for an early release on iTunes of the single “Vertigo,” and the video was featured in an Apple ad campaign. “We turned advertising into a rock video,” Bono said at the time. That’s not selling out, he said. “It’s exciting.”
Bono on business
The business takeaways from U2′s story, according to Koehn, are universal and ring true whether she’s teaching the case to advertising execs or second-year students in the MBA program. They include:
- Take smart (and onging) stock of how you are using your people, your authority, and your resources. Bono became interested in Africa in the mid 1980s when he and his wife, Ali Hewson, worked at an Ethiopian feeding station. He used his growing celebrity status to forge a crucial longtime relationships with Eunice Kennedy Shriver (U2 recorded a song for her Special Olympics cause), and then Bobby Shriver, who connected him to the Kennedys and other influential politicians. Bono and Bobby Shriver formed the fundraising campaigns DATA (Debt, AIDS, Trade, Africa), ONE, and (RED) to fight disease, poverty, and hunger in Africa. He also used his fame and understanding of Christianity to convince North Carolina Senator Jesse Helms to change his position on government funding for AIDS. As Koehn points out, Bono chose to use his authority as a rock star for social ends, recognizing that his own status has been critical to his ability to make a difference: “Bono doesn’t get to meet with Bill Clinton and shake hands with the Pope John Paul II if he’s not a rock-and-roll roll star.”
- A leader’s mission is not static; it evolves. Bono continuously sets new goals around several related global challenges. For example, he started advocating for famine relief in Africa in the mid-1980s, and then in the early 1990s began raising awareness of the conflict in Sarajevo, playing live footage of the war during U2′s Zooropa tour. After working to get eight industrialized nations in 1999 to agree to $100 million in African debt relief, he continued with a campaign to cancel debt owed by Third World nations to the World Bank and the International Monetary Fund. Then he began lobbying the administration of George W. Bush for additional funding to fight AIDS (in 2003, the US government pledged $15 billion toward the disease). Like Bono, Koehn says, leaders “must take a hard look at (their missions) on an ongoing basis.”
- The mission of the CEO should align with the organization’s performance. The band’s mission is to make fulfilling music that comes from the four members’ heads, hearts, and souls, and that connects to many audiences. Koehn says the band would not have been as successful if its members had not remained true to themselves and this larger purpose. For example, at various moments, Bono’s commitment to the band was questioned by his colleagues because of all of the time he devoted to political causes. In Koehn’s case study, manager Paul McGuinness says Bono “takes far too much on but it is hard to criticize him because his political achievements are very real.” Ultimately, the other members believed in what he was doing. “There was a sense that (the political activism) could demystify and devalue U2,” Bono has commented. “It wasn’t very glamorous work…It should have damaged us…but it didn’t.”
- Who you are and what you stand for as an organization have great relevance to the people who buy your product. Many of U2′s supporters embrace the band because the causes the four members work to address—from social injustice to hunger—are issues the fans themselves are concerned about. By participating in Live Aid, Band Aid, and the Amnesty International Conspiracy of Hope tour, U2 also refuses to sell out creatively, which keeps fans loyal. “People don’t just buy (the single) “Walk On” or (album) No Line on the Horizon,” Koehn says, “they are buying the backstory to that music, just like grocery shoppers buying organic milk or fair trade coffee.” This lesson applies across all businesses. “We think this is only true for artists and entertainers, but it’s true for making tennis shoes and semiconductors, and for how you create limited partners at an investment bank,” she says. “The backstory of organizations is now part of the value proposition for consumers. The lads from Dublin understood that early on and they still understand it.”
Koehn says the U2 case remains a work in progress and she believes she will someday interview Bono for her work—just as Oprah showed up at her classroom to answer student questions during a case discussion about the talk show icon.. “Stay tuned,” Koehn says. “I am meant to meet this restless, devoted, and inspiring leader.”
About Faculty in this Article:
Nancy F. Koehn is the James E. Robison Professor of Business Administration at Harvard Business School.