The Tribalization of Business Study and other outside research indicate that some of the key impediments to organizations moving toward Hyper-Sociality are rooted in management thinking that is dramatically out of sync with the expectations and traits of the humans who are a firm’s customers and employees. Indeed, the Tribalization of Business Study shows that current management practices are failing to adequately develop, interact with, and support the tribes that are important to their businesses. Organizations’ efforts to interact with their tribes are frequently characterized by underinvestment, poor management, and flawed implementation. Other commentators have noted a striking general lack of innovation in management over the past years.1
Although we believe that many formerly viable management practices, strategies, and tactics may well be past their prime, we want to clarify here that the need in a Hyper-Social marketplace is not for less management; in fact, there is likely to be a need for more management. We perceive a sentiment among some that in a Hyper-Social world, more and more organizational functions will be assumed by the tribe, and that over time, the organization will shrink to a small nucleus. We are not convinced that this is the case, however, and we believe that even if companies do shrink in size, their need for expert management will either remain at current levels or increase.
Let’s take a look at classical business management thinking first. In contemporary business, much of what constitutes “management” is the process of maintaining the status quo while growing by an annually reevaluated amount above that point. A critical aspect of this function is allocating limited resources (marketing spending, human capital, expenditures, and so on) in furtherance of executing on short- and long-term tactics designed to take advantage of (or cause) certain anticipated outcomes. A couple of key assumptions here are that many resources are scarce, and that the future can be predicted with some sort of certainty.
Going forward, however, we believe that some of these assumptions need to be reevaluated. In an increasingly digital world, scarcity needs to be reconsidered, as many of the constraints that we formerly faced have been erased by Moore’s Law, the Internet, and technological advances. Also, in a Hyper-Social company or marketplace, what was formerly scarce needs to be reevaluated (for example, marketing spending is no longer a scarce resource—your ability to get your tribe’s attention and its desire to retell your messages is now the scarce, sought-after commodity). Similarly, in an increasingly complex marketplace in which new entrants, new products, and new information are being created faster than ever, how will the ability to predict future events change?
Also implicit in all this is the assumption that people on the “inside” of a company control how that company interacts with (and influences) the external environment and, through careful control and action, can maneuver the company toward success. Consider for a moment the principle of market share as it is classically understood and viewed: It is a share of market that results from the actions or inactions and choices of the company and its competitors. By changing price, advertising, or product, or through the missteps of a competitor, a company can act in a way that is reasonably expected to affect consumers, and therefore the company’s share of their wallets, in a relatively short time frame.
Given the Hyper-Social shift, however, it’s clear that while management may be able to do a lot of things as part of its job, “controlling” what it formerly sought to control is increasingly unlikely. For instance, no matter how large a company’s marketing budget is, or how talented its marketing professionals may be, it is difficult today to control a righteously unsatisfied customer who starts a “YourCompanyStinks.com” Web site or blogs about your company’s shortfalls. Likewise, as we’ve stated already, the data indicate that customers are becoming less influenced by and receptive to advertising and marketing. Instead, significant numbers of people are purchasing products based on the online reviews of strangers.2 Given these facts, which levers should management now pull to reach the same level of influence that it formerly enjoyed?
Similarly, no matter how much corporate resources are directed at product development, the mathematical reality is that there’s a far greater chance that the next great product idea will come from outside, not inside, the company. And now, because of globalization, there are many more companies from many more regions developing their own competitive products.
And given the dynamics of communities, we see that the levers that we thought were effective may no longer be. For instance, even if you have robust fan communities discussing your products and creating disdain for competitors’ products, research indicates that these same fans can become very vocal and persuasive traitors if they discover that the competition has introduced desired features that their (formerly) preferred company hasn’t.3
Management should spend less time trying to exert control by pulling conventional levers, and put more resources toward sensing, understanding, acting upon, and then immediately assessing feedback based upon the new voices and Hyper-Social abilities that your customers, your members, your business partners, and your employees have. The importance of the feedback element here cannot be overemphasized; human interaction is a constant action/feedback/action process. And this needs to be operationalized in the organization. As Porter Gale, CMO of Virgin Airlines, told us:
We kind of close the loop with the employees too. So, we give them feedback. We let them know that we’re getting e-mails from guests and that this behavior is, you know, very positive.
We also talk to people about even basic things about keeping the planes clean and how that creates a better experience and how people’s actions on the frontline are going to affect the longevity of the company.
So, our employees are very well informed and they recognize their part in the process.4
Managers should strive to understand the subtleties of the new communities, explore the nature of those “lurkers” who hang around but don’t actively comment or register, determine why tribes of people are investing their valuable attention in the firm’s product, and understand how companies can delight a customer before the competition learns what they know about the humans who engage with their company. Similarly, managers need to consider how each stakeholder group has grown or changed as a result of Hyper-Sociality. Stakeholders have grown and changed, and they have a new level of control and expectations. Customers, for instance, know how your products performed for others, they know how much others paid for your products, they know who your fittest competitors are, and they are inclined to share their opinions with your existing and potential customers. How will you manage that to your benefit?
If an organization’s “org chart” is dictated by its strategy, then how will shifting toward becoming more Hyper-Social affect the way the company is organized?
As we noted earlier, the typical business spends much of its time allocating scarce resources (human, production, information, and others) to develop goods and services that it then pushes out to meet projected demand. The firm collects information, spends appreciable amounts of time parsing that quickly aging information, and then passes that information across structural features (divisions, silos, and reporting structures) that developed largely because of historical forces. Moreover, generally speaking, unless there have been deep changes in its markets or recent high-level management turnover, a company’s organizational structure probably bears a striking resemblance to its structure of five or ten years ago. And experience shows that in the majority of cases, the specific arrangement of the organization chart was driven primarily by the interests of past corporate executives or past business strategies, not the interests of emerging strategies, present employees, current business partners, or potential Hyper-Social customers. Organization design is often company-centric, not human-centric.
Accordingly, we expect to see widespread reformation of organization charts as companies become increasingly Hyper-Social, realign corporate functions around tribes and new knowledge flows, and start interacting with customers more effectively. Responsiveness to both customers’ very visible feedback and competitors’ accelerating moves will become increasingly important, as will decision makers’ awareness of what is being said about the company and its wares. Will traditional hierarchical organizations, with multiple levels of management between the tribes and the corporate decision makers, enjoy any sort of advantage in a Hyper-Social future? It seems unlikely. Similarly, will decisions to create geographic or specific product divisions be critical in the future, as technologically enabled means of coupling with customers and partners in various regions lessen the need for dedicated geography-based divisions, and the definitions of products may change overnight in response to changing preferences?
Ominously, we have seen the early cases in which people in middle management roles have scuttled new social software and systems that encourage greater interaction and communication up and across the organization chart. Acting as a conduit between the executives and the rank and file has long been the province of middle management, and many people in this middle band may well be challenged by Hyper-Sociality between those colleagues who are above and below them.
As Hyper-Social companies find themselves increasingly sharing information with partners, collaborating with customers on product development, and reaching outside of their enterprise to find expertise within tribes or other companies, we believe that the porosity of corporate boundaries will increase. For instance, it will become more difficult to define where corporate marketing ends and the tribe’s marketing begins. Similarly, the boundary between customer support provided by the company and that provided by volunteers or other customers will blur as people share common help documents and share expertise with one another. This may lead to management’s reexamining exactly what it is that the company should be selling and what business it is really in (or should be in). As the communities better define what it is that they want and what they would rather do themselves, it is foreseeable that companies will unbundle irrelevant functions and abilities, and seek to acquire others where they can either enjoy a competitive advantage or differentiate themselves.
Our research indicates that by taking immediate steps, companies can deploy new ways of managerial thinking that will accelerate their shift toward more Hyper-Social organizations.
One such step is realizing that the Hyper-Social future will require greater partnering between organizations, and then implementing this practice. There are several reasons for this increase in partnering, driven largely by the reality that your target tribes are probably already members of existing tribes, and that rather than trying to win their attention away, you should partner with the existing sponsors of those tribes and bring the humans better value through this partnering. The Tribalization of Business Study shows that although a majority of managers considered partnering when setting up their online communities, only a minority actually included it. This tendency is a clear indication that there’s a feeling that this can all be done in-house. This possibility is bolstered by the fact that the majority of the firms studied also declined to hire outside experts for creating content and declined to use external ambassadors.
Another key step that managers can take to accelerate the Hyper-Social shift in their organizations is to better allocate corporate resources against their tribes. One common misallocation that we see frequently in our interaction with these companies is the over-weighting of investment in social media tools and technology infrastructure, and the underweighing of organizational investment in the human resources who will interact with the tribes and who will move tribe-generated knowledge throughout the organization. It is curious how so many companies, as they attempt to exploit social media, view the technology as the key input, and the people who will manage the new information flows and the new interactions with customers as being of secondary or tertiary importance. Indeed, the majority of companies polled in the Tribalization of Business Study report that one or fewer full-time employees are responsible for managing their corporate communities! This stark underinvestment in the human talent involved in managing corporate communities is especially troubling when respondents cite community “facilitation and moderation” as being among the top four most effective community features.
An additional area in which management will need to think and act differently is in its attempt to “monetize” social media and tribes as if they were discrete product lines. In our research, we see this discussion distract and undermine Hyper-Social shift activities repeatedly. The debate goes something like this: “We will begin using social media at our company when we have determined how to monetize it. We don’t want to start a customer community or use Twitter until we’ve figured out the proper economic model. Right now, no one is making money with social media, and we don’t intend to jump in just because everyone else is. This is not a wise use of our funds.”
We urge executives to stop thinking about social media and its use as a Hyper-Socializing toolkit in such a way. Just as the telephone and e-mail were not technologies that most companies ever went on to monetize in the conventional sense, this is also the case with Web 2.0 tools and social media. The desired outcome of adopting and using these elements is the increased participation of customers, business partners, and employees in the organization’s key activities, not charging the customers for them.
We also see this approach to the Hyper-Social shift as being productive: asking, “What are the big, thorny problems that your company needs to solve? Do they include creating better products? Differentiating itself from the competition in a decisive and sustainable way? Attracting the best talent and keeping it for life? Creating an organization that learns more effectively than its competition? ” As we will discuss in the coming chapters, becoming Hyper-Social works well on problems like these, and enables the socializing of key business functions.
If your business model is failing, you will need to develop a range of options that will provide you with strategic flexibility and a path to success. Can Hyper-Socializing the ideation process improve this situation? Venture capitalists understand that only a small fraction of ideas will end up being successful. Why, then, do management teams try to rely on a small group of leaders and consultants to generate enough ideas to give birth to that one idea that will actually help? By opening up key value-creation processes and making them Hyper-Social, organizations tend to generate more and better ideas, and to improve their ability to learn.
Although this is difficult for product-centric companies to acknowledge, carefully cloaked business processes can be much more important to a company’s success than products. Several commentators have noted that visible portions of business models and processes will eventually be copied. Those companies that can create subtle linkages between visible processes can create sustainable advantages because the linkages can’t be copied. Inventing an innovative process may someday eclipse product development or making large capital investments in these same companies’ agendas. By leveraging Human 1.0 tendencies to cooperate, share, and collaborate, management should invest more effort in innovating these imperceptible business processes and improving linkages between processes. These management-driven innovations, properly done, will be difficult for competitors to emulate, and will provide more value to the human customers and employees. Unfortunately, most managers today have excelled by delivering on the old strategies with ever-increasing efficiency.5 Managers in the Hyper-Social future will need to innovate new managerial models tailored for a Hyper-Social marketplace.
As we discuss in later chapters, business processes such as product development, customer care, marketing, and talent management are all interlocked in Hyper-Social organizations from the customer perspective. Indeed, you cannot divorce any one from the others and expect optimal outcomes. Now the customer can see the public interplay of these departments—if products are having problems, users will learn that from their tribes. No marketing campaign will be able to change that communication. Talent inside the company will be speaking with the customer, perhaps in a much more credible way than corporate communications is. It will take significant management to make this work well, and to ensure consistent information across all of these functions.
Another question that we urge managers to ask themselves is, “Where are the biggest gaps between your goals and what you actually hit?” Improperly managed and perceived, these misses can be some of the most damaging to a company. If it was a legitimate goal, you wanted to hit it, and you didn’t, that’s a loss. Worse yet, you have disappointed people—customers, employees, and investors. Direct Hyper-Sociality at those problems, and you are likely to generate new insights and tactics for your next attempt. The power to mobilize people, both inside and outside the organization, and to tap into capabilities, knowledge, and energy that you formerly missed may well turn the tide on your next attempt. Hyper-Socialize the business processes that you know are connected to reaching these goals, and experience shows that you’ll stand a much better chance of success. Companies as varied as those in online retailing, video rentals, and computer networking have all taken this step to their advantage.
Management should also consider the possible changes in the role of the corporation in business that Hyper-Sociality will lead to. Corporations arose in large part because the costs of coordinating internal corporate resources were lower than those of trying to coordinate external third parties. Executives should ask themselves whether this structure may change now that social media permits the coordination of marketing, support, and development activities with outside parties. Corporations may be compelled to shrink their internal functions because there will be fewer functions that need to be or should be “internal.” Which functions will remain within the corporation? We agree with other researchers that a corporation’s advantage in the future will depend less on the resources that the company owns and more on its capability and insights in finding and mobilizing the resources of others to add more value for customers.6 Some of these new benefits that the corporation may deliver more effectively than individuals include shared services and economies around activities like regulatory approvals and raw materials sourcing.
Given the dynamics of how investors prefer to invest (there are certain economies that investors typically prefer, i.e., investing a large sum in one entity, rather than conducting due diligence on 20 companies and investing 1/20 of that same sum in each of those companies), corporations may be more alluring investment vehicles than individuals. This could be a long-term competitive advantage of the corporation over communities or loose affiliations in terms of raising financing, and one that management should consider exploiting in a Hyper-Social future.
It is likely that there will be a fundamental and widespread reassessment by management of the relative power and quality of the relationship between the company and its employees. Right now, many companies in many industries are dealing with the fallout from technology-driven customer choice. For instance, now that there is a surfeit of entertainment content, and much of it can be found for free, media companies are being forced to become more responsive to customer demands, as customers finally have the choice of going somewhere else for entertainment. A number of analogous technological and economic forces are giving employees greater freedom to leave unfulfilling jobs or places that fail to meet their Human 1.0 needs. As demographic trends create greater shortages of qualified employees, the need to appeal to the Human 1.0 features of their employees will become painfully evident to many companies. Those organizations that fail to make the Hyper-Social shift will be out-competed at the most basic and important level—they will not be able to attract the best employees.
Classic core attributes of companies—buildings, factories, distribution channels, and access to the mass media—are becoming less important in the rising knowledge economy. Here, the critical factors of production are intelligence, creativity, the ability to communicate and collaborate effectively, and the ability to solve problems. The most Hyper-Social companies, those that put humans at the center of their operations and guiding principles, will appeal to these creative, thinking beings and match their interests and passions.
Thanks to social media and richer insights into how companies really work, competitors will be able to poach talent from other companies more easily. Formerly, it was difficult to determine exactly which staff engineer was turning out the best designs—recruiters would first look at the person who was leading the group and assume that he was the star. Today, each staff engineer probably has a Facebook page on which she tells and shows what she does and what she is good at, and a recruiter can find her instantly.
We consider this aspect of managerial change, the rising power of the employee, to be one of the easiest to forecast, but the one that management will probably struggle with the most. Why? Well, because in many cases it upends the status quo, where the people who make the most do so because of seniority or perceived value. Because of the transparency that social media brings, and the scrutiny that the community can bring to bear on who is really contributing what to the bottom line, the status quo might well be reconfigured. That would indeed be a wrenching change for many managers.
Alfred Chandler, in the seminal book The Visible Hand: The Managerial Revolution in American Business, observes, “Once a managerial hierarchy had been formed, and successfully carried out its function of administrative coordination, the hierarchy itself became a source of permanence, power and continued growth.”7
It is also likely that management will have to realize that volunteers will figure prominently in the future of business. We’ve all heard the weary complaint of executives that “It’s hard to compete with free,” but too many people ignore the corollary to that rule: “It’s wonderful to have volunteers working for your business for free.” In fact, that’s what we have seen proven by open-source software development, the formation and rise of Wikipedia, and online retailers’ customer review sections. To realize the full potential of the volunteer effect, executives need to understand that this volunteerism can be both overt and coincidental.
Think, for instance, about the collaborative filtering that online retailers employ when they suggest that, since many other previous buyers bought a secondary battery when they bought a digital camera, you might want to buy the same battery along with the camera you are purchasing. Here, the prior customers’ decision to purchase a secondary battery serves as advice of sorts, or at least a prompting, to subsequent buyers that they might want that second battery while their primary one is recharging. And as some commentators point out, in many cases you can actually position yourself to take advantage of this inherent human volunteerism.8
Amazon allowed negative reviews of products, a decision that most retail conventional wisdom would have opposed. Instead, Amazon sought to tap into the passion that consumers had for products and for shopping, and began developing a knowledge platform that would attract users.9 Amazon has built a veritable Wikipedia of product reviews that rely on a user-generated model that is likely to steamroll any competitor who tries to fight back with professionally created reviews.
Similarly, we often encounter managers who shrink from Hyper-Sociality because “we won’t be able to control our brand if we do that.” Again, controlling the brand is an artifact of the past. Communication with the customer used to be a study in control—the company allowed out only those communications and interactions about its brand that passed muster. Now there is no opacity or control over what the customer knows or says about your brand, or how many millions of people he says it to. Today, authenticity and being able to adequately reward your customers for their attention are the scarce attributes that managers must be concerned about possessing.
As we mentioned at the opening of this chapter, all of these examples point toward the increased relevance of gifted management, don’t they?
The Hyper-Social shift promises to radically affect long-standing management thinking. Often managers underappreciate the impact that Hyper-Socialization will have on their organizations, and the following questions can be used to demonstrate just how significant the shifts in managers’ thinking may have to be: Are current notions of corporate control over brand and corporate communications reasonable in a world in which marketing budgets are eclipsed by the scale and reach of the Internet and the blogosphere? Is your organization optimally arranged for the flows of information that will spring up as customers and future customers interact with more touch points within the organization in real time? Do legacy views of your organizational boundaries help or hinder increased collaboration and codevelopment with customers and others outside of the organization? What sort of employees do you need to attract and develop now that customers and external partners expect more frequent, unscripted, and authentic communication across multiple communication channels?