Why CEOs Should Watch the Royal Wedding
Posted on Harvard Business Review: April 25, 2011 11:02 AM
The wedding of Prince William and Catherine Middleton might seem entirely frothy and unworthy of the time of busy executives. It seems an inconsequential event—no new international alliances are formed, no policies will change within their home nation, and the young couple doesn't seem all that interesting.
But the April 29 nuptials are one more example of the coming of the experience economy, in which people pay for the chance to participate at particular times (Farmville, anyone?), and expenditures on goods and services come in bundles tied to particular events.
So tune in to the royal wedding, and watch for a few strategic insights.
1. The soft stuff can attract even bigger audiences and higher revenues than the hard stuff.
Romance and ritual matter to people and add meaning to their lives. The British wedding might have a larger global television audience than the World Cup championship or the U.S. Super Bowl—better a kiss than a concussion, I say, Even though the U.K. marriage rate is falling, there is vicarious enjoyment in romance writ large. To put it cynically, sentiment sells.
Royal weddings come along infrequently, but weddings have become year-round big business. In the U.S., costofweddings.com estimates that the average couple spends $24,000 per wedding, probably an underestimate once one adds up a year's worth of planning for apparel, beauty treatments (including weight loss), officiants and music, venues and catering, and numerous other services. This doesn't include the cost of the gifts others lavish on the newlyweds.
The joy factor—hope and unity—is a better business theme to emphasize than the fear factor.
2. Brilliant brand management is multi-media and cause-related.
Within the confines of good taste, we hope, the Brits are marketing the heck out of the wedding. It's more attention-grabbing than former Prime Minister Tony Blair's Cool Britannia campaign, and the royal stars don't even have to be cool themselves. The whole world can experience the event and learn British history through multiple channels. There is a Royal Wedding website, a Clarence House royal wedding Twitter feed, and a live multi-media blog put together by St. James Palace. Anyone can watch the Archbishop of Canterbury talk about the significance of marriage.
The happy couple has endorsed a charitable gift fund to benefit children, military families, and environmental causes in the U.K., Australia, New Zealand, and Canada. Donations can be made in six currencies by phone, check, or text message.
3. Events are double-edged swords. They focus attention not only on the message but on the cost of getting out the message, which can undercut the message.
Royal wedding excitement has been accompanied by calls to abolish the monarchy as a drain on a cash-strapped nation. A 2010 study showed that the public cost of supporting the monarchy was more than $55 million in 2009. The critics might be written off as party-poopers, but you can bet the watchdogs are adding up the costs—just as they do for corporate campaigns and political events.
There are estimates that the royal wedding will be the most expensive security event in U.K. history at the equivalent in pounds of about $30 million. For the wedding, I've seen estimates of $80 million in revenues to hotels in London and retailers selling souvenirs such as dishes, pillows, and playing cards. Some British economists estimate a potential loss of national output because wedding festivities span two holiday weekends, encouraging people to take up to 11 days out of work, adding up to 1/4% of U.K. GDP or around $50 billion.
The royal wedding can also be watched as a cautionary tale. One former New York CEO for whom I was a consultant ran a tight ship and was fond of saying that "Business is the last monarchy." Not exactly. Real monarchs, in the Western world and increasingly elsewhere, must align their goals with those of the public, get the approval of elected governments, and exhibit the common touch. CEOs must beware. Lavish expenditures helped bring down Dennis Kozlowski, former TYCO CEO. And who can forget the public outcry over Blackstone's Stephen Schwartzman, who threw himself a multi-million dollar 60th birthday party, decorated with his portrait (the one that usually hangs in his living room). Those are actions that princes of finance should leave to the real princes.
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