Wednesday, September 10, 2014

The Business Case Study in Atlanta (or Bruce Levenson is a Big Scaredy Pants)

Racism is alive and well (and disgusting).  Yes, we all should be able to see that.  That isn't news. Is Bruce Levenson a racist?  Is there a lesson there?

The better lesson may be that Bruce Levenson let fear (albeit racially-based) and ignorance drive his business decisions. He and the NBA lost millions of dollars in Atlanta and drove a potentially valuable brand, the Atlanta Hawks, into the ground. It appears he is most guilty of being an ignorant, horrible business man. How did he do that?

Very simply, he failed in some extremely basic ways.  He forgot some fundamental principles of Business 101.

If his first question was "How do I bring in more fans?" then he started strongly.  However,  he quickly lost his way.  Even if his second question was "Why do white fans fear black fans?" he might not have been incorrect.  It's just irrelevant.  A great businessman understands this:  

1.  Current customers are easier to keep than new customers are to find.

Levenson stupidly thought that he needed to build a virtually non-existent white fan base rather than build a growing, diverse fan base that was capable of building momentum and sustainability. He needed to ensure that his customers kept coming back again and again.  If he saw black fans, he should have brought them back time and time again.  Instead, he wanted to lose current customers and gain non-customers.  No business school teaches that.      

2.  Do your research.  Don't rely on faulty assumptions, anecdotal evidence or hearsay.  

Levenson didn't do his homework.  He made assumptions, He fostered stereotypes.  Whites are rich, black are poor.  More white fans are better than more black fans.  Blacks in large numbers are scary and most whites are scared.  Black cheerleaders, hip-hop music, and black people kissing on the Jumbotron are threatening.    

Atlanta is the home of a large, hugely affluent black population. Atlanta blacks have money and do spend it. Levenson just ignored that fact.

3.  Look at successful business models and replicate them.

The Atlanta Falcons of the NFL are right next door.  They sell out their home games. They have a strong black fan base.  They have a inclusionary approach to attracting fans.  They have a diverse fan base. Black and white fans from a variety of backgrounds come to the games and they are rabid, loyal, excited fans.  Their fan base has come together.  Their fans don't scare each other away.              
4. Don't alienate your loyal customers.

Despite the racially-tinged Michael Vick dog fighting debacle, the Atlanta Falcons have survived, recovered and prospered by leveraging their strengths as a brand and as an attractive product. The Falcons knew what they had and gave their fans an experience to embrace. All you have to do is walk around the Georgia Dome before a Falcons game and see the tailgating and merchandising to see their success model at play.  

5.  Money is not black, white, yellow, or brown. Money is green.

It may benefit the NBA to actively get rid of stupid, ignorant, fearful owners who ignore sound business practices.  Racism may not go away, but it can be effectively neutralized and neutered. Not a bad outcome, I must say.