Chapter 2: Social Media: A Way of Life, a Way of Business

Businesses are learning to apply social media strategically for significant and meaningful outcomes: driving revenue and sales growth, improved customer relationships, superior and highly innovative new products, and higher levels of efficiency and productivity.¹

The stories in Chapter One and hundreds of others in society, business, and government—some of the most illustrative of which we explore in detail in this book—now herald the arrival of a fundamentally new form of individual power. Aided by new online technologies that enable enormous global influence at very little cost to individual actors, this new power drives collective self-determination and growing decentralization of institutions and businesses. This power shift from classical bastions of power—economic, political, cultural, and otherwise—in favor of loosely organized communities of individuals has been at least two decades in the making, since Tim Berners-Lee created the World Wide Web as we know it in August 1991.

The inflection point was during the rise of popular new global social networks starting in 2007 that made the shift readily apparent to casual observers: increasingly people were choosing simpler, more natural, and open forms of communication based on something now recognized as social media, a collective form of online participation that is not controlled by any person or organization. Social media made it extremely easy to connect with almost any other individual in the world: student, celebrity, politician, athlete, or just another businessperson. Anyone could quickly and easily communicate, share knowledge, or jointly accomplish just about any common activity. Ready access to social media combined with widespread adoption in most developed nations has now almost completely eliminated the barrier for individuals around the world to come together, rally around, and actualize the ideas that matter to them most.

The consequence of such global social networking and widespread adoption of other social media—as of 2012, an estimated 1 billion people use them (Figure 2.1)—is that we have entered an age of individual empowerment the likes of which has not been seen since the widespread introduction of the printed word.² A stream of highly accessible and virtually free technologies—this includes social media but also other novel methods of organizing like crowdsourcing—are transforming empowerment far beyond basic sentiment. They are putting vast, world-changing power into the hands of anyone that would use them.

Figure 2.1 The Rise of Social Media and Social Business

Sources: comScore, Hitwise, The Radicati Group, Forrester, APC, Intellicom, Nielsen Norman Group, Social Business Council, NetStrategy/JMC

To some, these trends and statements might sound like high-minded concepts that won't have much impact on the day-to-day activities of the organizations that comprise our economies and political systems. However, businesses and bureaucracies have been in the direct path of this social revolution as individuals around the world exert their newly found influence. Increasingly those in the developed—and now the developing—world are beginning to sense their ability to drive the changes that matter to them and that they would like to see realized in business, government, and other areas. In the vast virtual halls of the social world, consumers are engaging with each other, demanding respect, organizing, and making those who are traditionally used to one-way flows of control and power take notice and listen to them.

Like any other double-edged sword, empowerment can be employed to just about any end. The infamous Tottenham-sparked riots across London in 2011, for example, covered an entire spectrum of ways in which social media can be employed, for positive outcomes and otherwise. The rioters used social media to organize chaos on the ground as well as criminal activities. But social media also were used subsequently to identify perpetrators and coordinate the cleanup of the aftermath. Fortunately, the users of this new form of social power typically aren't sharing government secrets, overthrowing tyrants, or inciting riots. They are ordinary people who are rapidly understanding the nature of the growing power in their hands. More and more today, an organization's or government's perceived measure of authenticity, authority, fairness, trust, and good faith won't last long when the fundamental yardstick of influence is measured in real time by these very traits. Those without them will be ignored or, worse, will experience a profound loss of control over their customers, markets, and even their products and services. While this may seem alarmist wording at first reading, some of the case studies we present in this book make a strong case for the deeply disruptive yet simultaneously opportunity-rich nature of social business. Nevertheless, thus far, the transitions to social business have largely been nondisruptive.

Social business is one of the biggest shifts in the structure and process of our organizations in business history. It taps into entirely new sources of creative output (everyone on the network), relinquishes structure that reduces productive outputs, and inverts methods of traditional control and decision making in work processes (anyone can contribute as long as they create value) while focusing on useful outcomes.

As a result, there's a growing sense in some parts of the business community that traditional power and control will have a hard time continuing in their existing forms. Influential business thinker and strategist JP Rangaswami has been exhorting businesses for several years to begin “designing for loss of control” based on his experiences as chief information officer of British Telecom, one of the largest organizations in the world.³ Influence and power are inexorably flowing into everyone's hands now that all individuals have access to equally powerful tools for self-expression. Examples include user-generated media, where over sixty hours of video are uploaded to YouTube every minute, and open source software, designed by volunteers and now the leading source of software in the world. Every company now has to consider virtual competition with the entire world, not just a few large businesses, as competitors evolve faster and possess better tools, technologies, information, and methods of organization than ever before.

As we'll see throughout this book, the future of business is turning into a very different one from what it was in the twentieth century. Institutions unwilling to respond in kind with the new sensibilities and types of engagement the marketplace wants and increasingly expects will experience the consequences. For those that don't, customers and employees will soon come to distrust them, with consequences that vary but inevitably will be undesirable. Today customers who want to use a company's products can quickly consult with the collective experience of the world or broadcast their disapproval of the outcome globally for all to see. Prospective workers no longer have to take a company's assurance of what employment will be like; they can rapidly find out from people who already work there. But this new world is far from the exclusive benefit to consumers; businesses too can benefit. They can now pick and choose new partners in an open marketplace, where business reputations and prior performance are shared and visible for all to see.

To sum up the impact of all of these changes, new social models and enabling tools, combined with the means to employ them effectively, are remaking the landscape of business, society, culture, and government. This future can appear to be daunting, uncertain, and decidedly unfamiliar. But more and more, companies are studying what's happening, absorbing the lessons to be learned, and gaining competency in what's required to succeed in this new world. Even better, there are now numerous stories of large companies that have been successful in their journey to become genuine social businesses.

Success stories of early adopters and movers and shakers are emerging in this brave new period of social business. Fortunately, our collective understanding of the mechanisms is far enough along to understand the broad outlines of what social business entails. The principles of social business are surprisingly simple and straightforward. Virtually every significant outcome we cover in this book is based on three essential concepts. It's primarily due to their simplicity that social business is so powerful and effective at creating sustained results for those who employ the ideas in meaningful way. Wielding them successfully in an organization, however, requires a considerable change in the way we think about business and how it gets done.

The fundamental principles of social business can be distilled down to three basic ideas.

The processes of product development, marketing, sales, operations, customer support—in short, nearly all aspects of business—will ultimately be open, social, and participative. This applies to employees, business partners, customers, and the rest of the world and includes all possible uses. Although there must be some constraints and rules regarding who gets to participate and when, in general, the more open the participation, the more superior the result. When people and their friends use the explicit connections they have between each other, participation is most vibrant and useful.

Contributors have intrinsic worth based on their inherent ability to increase overall community value through participation. Building value requires that whenever possible, contributors automatically share content with the entire community in as close to real time as possible. The individual reputations of contributors matter as well, along with the resonance of their contribution with others engaged in similar work to create a virtuous participation cycle. Most shared value is created in simple social connection and incremental contributions such as conversations; however, contributions can be complex and sophisticated as well. Individual additions of shared value are tiny, but when they are aggregated into the output of millions of customers and interested stakeholders, value builds exponentially and accumulates into industry-leading outcomes. Formally, the process of automatically building shared value is called a network effect.

Social Business Tenet #3

While participation is self-organizing, the focus is on business outcomes.

Control in social business is ultimately embodied in those willing to participate or contribute. This can be through information, financial support, or access to expertise. It can be by anything of worth, though it's typically by the intrinsic value of the contribution alone. Although businesses can be uncomfortable with this fact at first, the control processes of social business are often not well defined. They can and will change dynamically based on the community that drives it. What separates this approach from that of consumer social media (as opposed to social business) is that while social media use the same processes and tools, the goals are solely those of the individuals. In social business, it's specifically about productive shared outcomes for all involved, as well as the business objectives the organization has for its participation. This tenet requires social media to be put to good business use, even though many other outcomes will result as well.

Sounds simple, right? Perhaps too simple and naive to produce serious business outcomes? At first glance, it seems to be a complete departure from the familiar hierarchical command-and-control processes of most businesses today. Consequently it's not uncommon for those encountering these social business ideas to demand immediate answers by business leaders to some tough questions: How can work productively get done with such open and seemingly uncontrolled processes? How does a business maintain direction, focus, control, and ownership of the results? What are the business models, and how does a social business generate revenue?

The ability to apply social business seems to work best in social media, though it's not required (social business ideas can work in many other contexts as well, such as e-mail, in-person work activities, or even executive leadership). In practice, the actors are identified very clearly—often through a user profile or other strong identification mechanism—and their activities are public and tied directly to this identity. This is a powerful accountability mechanism as well as a way to ensure proper credit and sourcing for contributions. Social networks, a popular form of social media, are grounded in identity and activity-tracking mechanisms that end up causing the three essential tenets to work simply and easily to produce surprisingly effective and robust business outcomes.

In the next chapter, we look more deeply at how to address these questions by providing examples of some organizations that have had success applying the three tenets. Because truth grounded in these fast-moving global charges is essential, we explore the stories of those who are directly on the front lines of social business. And we show some intriguing answers that we have discovered to these key issues.