20 Jun 2011  Lessons from the Classroom

Fame, Faith, and Social Activism: Business Lessons from Bono

Many executives struggle to balance work, family, and community, but for rock star Bono the effort is spread across the globe. In the HBS case "Bono and U2," professor Nancy F. Koehn discusses key business lessons to be learned from the famous band. Key concepts include:

  • Take stock of how you are using your funds, your authority, and your people.
  • A leader's mission and purpose isn't static; it evolves.
  • The mission of the CEO should be related to the organization's performance.
  • Who you are and what you stand for as an organization have great relevance to the people who buy your product.

 

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:

  1. 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 helped form the political advocacy organizations DATA (Debt, AIDS, Trade, Africa) and ONE, and the fundraising group (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."
  2. 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."
  3. 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."
  4. 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 the author

Kim Girard is a writer based in Brookline, Massachusetts.

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Comments

    • Anonymous

    Interesting analysis of a very big band.

     
     
     
    • Frank Fullard

    Bono is great - and I say that in all sincerity. He has structured his affairs to minimise the taxes he pays in Ireland, where he lives. Fair enough from a purely business perspective, and provided he leaves it at that. However, he still feels obliged to regularly pontificate on all things moral in the world, and the great need there is for universal social justice! This lofty approach this has brought him much praise on the world stage. Meanwhile Irish people, like myself, will remain lukewarm, at best, about him and his achievements until he pays his fair share of taxes in the country where he lives - just like the rest of us!

     
     
     
    • Anonymous

    When you finally get to interview Bono will you ask him about how he is able to balance his view that Government's should do more for poverty whilst doing his utmost to avoid paying taxes. Those same taxes that U2 avoid could in part be used to help eradicate poverty?

     
     
     
    • Vincent Fong
    • Project Manager, Nielsen

    A very timely dissertation, albeit, it's should just be CEOs but the greater corporate and government milieu that should sit up and take note.

    No longer can corporations including quasi government pay heed to just stakeholders, they now must re-balance the scale to ensure worker and employees are equally as important to the success of the enterprise. The future of a successful organisation, global, multinational or local will depend on:

    1. A clear modus-operadi that is focussed on being socially responsible and community conscious

    2. Acceptance that work for the larger community is a right and not a priviledge

    3. Workers need to be trained and supported to fulfil their roles within organisations and organisation need to put aside a trust of funds to ensure workers are adequately faciliated via training and continuing learning to do the job or jobs as these continue to change with time.

    4. Cost cutting is not limited to staff shedding nor should staff cutting be the first and only means to shave cost and increase bottom line profitability.

     
     
     
    • Barry Linetsky
    • Partner, The Strategic Planning Group

    It's fun to pretend a successful and creative celebrity is like the CEO of a large corporation. I'm not sure these four lessons have anything to do with Bono's success or have much application to real CEOs. Without a unique and differentiated entertainment product that brought him fame and fortune, an ambition and willingness to be in the spotlight, and the acceptance by his fans of what he was selling, his celebrity success could not have translated into political capital.

     
     
     
    • John Magill

    Its a very interesting dissertation, however, I don't see any mention of Paul McGuinness. Where would U2 be without their talented manager who has been with them from day one and has stood by them through thick and thin? I know they have had their differences in relation to using the internet to publicise their music, however, he has always been in the background running, managing and directing.

     
     
     
    • Richard

    Interesting analysis. Two quick comments: - This post (I haven't read the case yet) overlooks an essential factor for any creative enterprise, that is the intrinsic quality of the product. It might be completely obvious, but by and large, U2's records have been of consistently high quality. Their sales are an indicator of this, and I'm willing to bet that a sizeable portion of those sales are to audiences (including international) who are fairly ignorant about U2's (political) messages. Had they been mediocre, their fame and influence would have been far less, no matter how good the story.

    • A less sexy case to complement U2 might be Bon Jovi, who's frontman has supposedly said that he always considers himself to be the "CEO" of the group. Their ongoing popularity is interesting, despite their personally lower musical qualities (from my point of view)
     
     
     
    • Andy

    Ah, the commenters with the "tax evasion" arguments. Let's make it clear for everyone. U2 (NOT Bono) made a BUSINESS decision to move PART of their dealings to the Netherlands to avoid paying high taxes in Ireland. Shocking that an organization would want to maximize their profits! Things to remember: All 4 band members STILL live (own homes) in Ireland and, therefore, pay individual taxes themselves there. Not to mention Bono has contributed countless amounts of his own money to Irish charities (the Irish Hospice facilities that his late father used comes to mind), as well as the entire band contributing millions to ensure the arts are taught in schools there. Secondly, before this whole tax debacle started, the band (meaning the business of U2) was mostly done outside of Ireland anyway. McGuinness was quoted as saying over 90% of their dealings were done outside of the country anyway.

    U2 have generated more income for Ireland than probably anything in recent history. To crucify them (especially Bono) for being a hypocrite/liar/traitor simply because his band made a savvy business decision is ridiculous. Perhaps the government should take a look at their tax policies and they'd see that their recent legislation has turned many other bands/artists away as well, thus killing any future income that would otherwise be generated.

     
     
     
    • Steve Jones
    • author, www.brandlikearockstar.com

    Excellent piece, and great to see the discussion around the interesting link between rock n roll and business. In my upcoming book I write a chapter about U2, but from a slightly different angle. What I think was U2's most brilliant move as a band was to record their most experimental (and likely alienating) music under a different name. Many fans will remember their eclectic early 90s albums. But most don't realize they recorded another VERY eclectic album as "Passengers". It was never listed or promoted as U2. Very smart example of a brand recognizing its perceptual limits and avoiding the negative stigma of a bad album.

     
     
     
    • Anonymous

    I find it curious that the author, who equates Bono and U2 to a CEO, never mentions any of his true business ventures. I know of one venture in Dublin which is close to financial ruin. I wonder how many more there are?

     
     
     
    • Thomas Mrak
    • Musician with Entrepreneurial Tendencies, www.voltagecontrolmusic.com

    As an electronic musician learning about the business and marketing aspect of my work, I am noticing a lot of overlap between art and business.

    No longer is a dedicated fan-base and screaming fans merely the lifeblood of a music artist. The same is true of any organization; from the Fortune 500 to Main Street.

    Like a business, an artist must provide some sort of value to the wider community, and constantly refine their approach as well as their work. This may mean using new technologies to connect with fans, or developing products which go beyond selling albums.

    The social media revolution shows that people are connecting based more on what they are interested in, versus background, location, etc.

    It's no longer merely about profit. It's about art+technology+people.

    Like Bono, how will you continue to be a rock star?

    @richard Love what you had to say about quality, but quality does not always translate to large sales volume, and sometimes the reason certain people/brands stay or are relevant isn't always logical.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited

    Organisations aiming only at increasing shareholder value are prone to do so by hook or by crook.We have so many examples of otherwise apparently good companies with sound laid down instruction manuals who met their demise simply because of someone at the helm stepping to kill the hen which gave gold eggs having wrongly felt that short-term goals of making quick bucks was worthwhile. Not at all. Bono has given useful tips on business to students and these have to be grasped for success. The essence of being loyal to all stakeholders is reflected. Selling would be more exciting if there is absence of selfish motives.

     
     
     
    • Adrian Meli

    Great article and good line of thinking. I hadn't realized there was a case study done on U2 but makes total sense. Doing well by doing good...Bono and U2 are real class acts.

     
     
     
    • Anonymous

    To balance the account, I'd like to suggest reading "Dead Aid" by Dambisa Moyo. As an African woman and an expert on international finance, she makes a compelling case about the failures of the "Bono" approach to African poverty.

    Bono has certainly been very effective at agitating governments to tax their citizens to give to Africa. (while happily avoiding his own tax obligations). Ms. Moyo makes very interesting points about this contradiction as well as some surprising counter-intuitive truths about what passes for "aid" and the real harm it causes in many cases.

     
     
     
    • Dom

    Bono can start lecturing others when he stops being a tax-avoiding hypocrite. I guess God told him it was better not to fund hospitals and schools and better to live in luxury in a castle.

     
     
     
    • Syrene Reilly
    • '97 HBS grad and avid U2 fan, Boston, MA

    The 'business' success of U2 (and Bono as 'CEO') is a product of their artistic brilliance ->fan following ->financial success -> platform to promote social causes for which Bono (and to a lesser extent U2) is also passionate. Perhaps a cute business school 'virtual cycle of success diagram would be handy here.

    As to the taxes, I think on balance U2 has done much for Ireland and every city they visit - when on tour and not - during the 3 show days in 2009, the entire city of Dublin and out to the West Coast or Ireland was at capacity with travelers (like me) from afar. And I just recently returned from Baltimore, where they were the first band to fill that stadium and city with 80K fans (first concert in 4 years).

    They have done an enormous amount for suffering cities all over the globe. And much of this comes from the 'city that follows them around' - fans like me - I guess one could say they are more citizens of the Globe than of Dublin.

    As to their music, they are in my mind beyond Beatles status...no other band comes close in terms of creative genius, longevity (same 4 members for 30+ years), and contribution to economy and society.

     
     
     
    • Steve Sheinkopf
    • CEO, Yale Appliance

    We are stretching it here when discussing U2 as a business model.

     
     
     
    • Anonymous

    As others have pointed out, Professor Koehn does not touch on the highly controversial tax arrangements that Bono takes advantage of - which have potentially been to the detriment of the Irish economy and also the reason for some significant demonstrations and violence at U2's more recent gig. http://news.sky.com/skynews/Home/Showbiz-News/Glastonbury-U2-Violence-Breaks-Out-At-Protest-Over-Irish-Rockers-Tax-Status/Article/201106416017864?f=rss

     
     
     
    • David McNabb

    "tax evasion" is terrible because we have seen that more tax collecting is directly proportional to reducing poverty. And who is Bono to spend his money on Africa rather than give it to the government? We need more "freelance wealth re-distribution" or stealing as the great P.J. O'Rourke wrote in Rolling Stone

     
     
     
    • Anonymous

    I think this has been taken out of its meaning. This article proposes a very important model regarding to business success. Remember that this bands are still in play and they are seen as example for young people today. I really think this article brings out very important aspects of business administration. Congrats