Old Apr 20, 17, 9:51 am
  #6360  
spin88
 
Join Date: Feb 2008
Programs: 6 year GS, now MM Jeff-ugee, *wood LTPlt, VX Gold, SkyPeso PLT
Posts: 6,278
Originally Posted by mdkowals View Post
From a risk management perspective, using an equation is fine for this analysis but you have to factor in all foreseeable avenues of risk. For this exercise "IDB passenger refuses to IDB" doesn't seem like an unreasonable risk to plan for and factor into the math. It's also not unforeseeable that police removing someone from an airplane has a near 100% chance of making national news on just about every day but election day, whereas police removing someone from a gate area has a pretty low chance of making it (more background distractions, only a handful of people hearing the conversation between the passenger and gate agents, etc...).
....
The math mistake United made in its IDB/VDB formula was assigning a $0 value to negative media exposure (or forgetting to factor it in at all).
This error of not looking at external costs and more generally brand damage was the hallmark of Smisik's (third rate) team's reign. They would run a spreadsheet and not think about the secondary impacts. For example, they saved $$$ on "freshbrew" coffee, easy to see what they saved, but harder to quantify the brand damage. It showed in UA's horrible (and still horrible) NPS scores but that did not figure into the analysis.

There is lots of this "running United like a business" thinking to be unwound if UA is going to restore its reputation.
spin88 is offline