Monday, August 25, 2008

Preparing the Enterprise for Social Media Disruption

Yesterday on Experience: The Blog, we revisited the mid- to late-90s--a period remembered for the introduction and adoption of the Internet--to forecast how consumers and new tools may evolve over the next several years.

As the Internet did in the late 90s, Social Media is about to change the world in ways we can anticipate but not predict with clarity. We are entering a period of significant change when creativity, new technologies, and investment will cause a burst of innovative tools and concepts; some of these will succeed but many will evolve, merge, or simply fail. These new Social Media concepts will change consumers' relationships with and expectations of products and brands.

So, what does this mean to you and your organization? How will Social Media change your enterprise? Organizational change models combined with knowledge of how business adapted to the Internet can furnish us a sort of crystal ball in which to foresee the future:

Security Phase

The Security Phase is where organizations start prior to recognizing and accepting change. Patterns are well established; employees understand their roles; and the organization has confidence of its place in the world.

Prior to 1995, businesses were comfortable with the status quo. Larger businesses and market leaders were the most comfortable, but even smaller competitors seeking to shake up their markets were snug in their knowledge of the ways, relationships, and strategies of business.

Into this environment the Internet was introduced. The business world did not immediately gravitate toward the Internet nor did it recognize the profound change the Internet represented. Instead, those in business reacted the way people secure with their worlds do: they ignored it, denied it, and were wary of (or downright hostile to) those who were vocal about the shifts that were coming.

The Internet was derided as a "flash in the pan." Senior business execs expounded on how their consumers weren't online and never would be. Detractors took refuge in the seemingly logical argument that people were unlikely to rush out to purchase a pricey computer and pay for expensive monthly access just to "surf the Web."

The Security Phase was when nimble speculators began to grab trademarked domain names. Slow moving corporations were forced to file complaints or negotiate with so-called cybersquatters in order to regain control of their brand and corporate names. This was but one of many factors that forced organizations out of their Security phase.

Another factor that scared many enterprises out of their comfort zone was when competitors began to succeed, if not in terms of actual online sales, at least in terms of PR, stock performance, and reputation. A point was reached when even the most stubborn of executives and systems had to face the fact their company needed to embrace the Internet.

What this means for the future: With respect to Social Media, business is coming to the end of the Security Phase. The avoidance and denial of Web 2.0 has not been as severe as the reaction to the Internet in the mid 90s, but that doesn't mean companies have been quick to embrace Social Media. A visit to brand and corporate sites shows that the majority of organizations continue to live in a Web 1.0 world. For every My Starbucks Idea or Scott Common Sense Community you'll find dozens of sites where "contact us" is the most collaborative feature on the site.

As happened with the cybersquatters 12 years ago, the thing that may shake many companies out of their complacency is when their brands begin to get co-opted within third-party Social Media sites. For example, while still very small, a site that is worth watching is GetSatisfaction, where consumers are gathering to complain, share information, and collaborate on product and service issues, with or without the participation of the brands. Another example is the recent brandjacking of Exxon Mobil by a Twitter user (and possible Exxon Mobile employee).

Occurrences like these will pressure organizations to recognize that Social Media is more than product ratings, blogger relationships, and other tactics they control. Its greater implication is in the way Social Media gives a voice to consumers and thus shifts a degree of power and control away from brands.

Every organization must eventually leave the Security phase. Those that delay their engagement in social networks and other Social Media sites run the risk their absence will harm brand perception, create opportunities for competitors, and leave a vacuum into which employees or others may step to speak on your behalf.

Anxiety Phase

Once people become aware that their assumptions are incorrect and that change is necessary, they become anxious. Organizations responded to Internet anxiety in different ways back in the late 90s.

One reaction to the Internet Anxiety phase was to treat the Internet as a tactic. For example, organizations posted their customer service phone numbers on their sites and ignored that the Internet was profoundly changing consumer expectations with respect to communication channels, speed of response, access to information, and most importantly the ability to immediately manage one's own needs . Many organizations believed that established customer service processes would continue to be sufficient in the age of the Internet, but they quickly came to realize that more profound changes would be required--ones that demanded new tools, new skills, new investments, new processes, and new structures to meet consumers' increased expectations.

Another way organizations dealt with Internet Anxiety was to assume that new online tools and concepts would be controlled by brand owners and implemented in whatever timeframe was preferred by the business. It didn't take long for these organizations to learn they did not have the luxury of either control or time; swift actions were required to deal with the seemingly instantaneous changes in the competitive landscape, consumers' shifting expectations and loyalty, investors' new views about business valuation, and the actions of distribution partners.

Not all organizations reacted to the Anxiety phase with denial and arrogance; some people and organizations were energized, embracing the changes in profound ways. Jeff Bezos saw the future (or at least enough of the future) to launch a new kind of book company that exploited the rapid changes in business and technology. It wasn't long before Amazon, started in a garage in 1994, was grabbing huge chunks of business from larger, older companies that were still struggling to get past their Anxiety phase. Today, Bezos' wealth is estimated at $8.2 billion; the combined market caps of Borders Group and Barnes & Noble is less than $2 billion.

What this means for the future: The coming years will create winners and losers out of established companies as Social Media changes the business landscape. How your organization embraces these changes will either move it into a better competitive position with greater brand loyalty and profitability or will allow competitors to chip away at your organization's market share, reputation, and margins.

There will be a natural inclination to assume that Social Media is merely a set of tactics that can be used to whatever extent and speed the organization wishes. This a dangerous trap because Social Media is, in fact, full of tactics: Offering service through Twitter is a tactic; creating a branded Facebook profile is a tactic; launching a blog is a tactic.

But while it is necessary for organizations to survey and choose their tactics, reducing Social Media to a menu of tactics is missing the forest for the trees. Just like the Internet did a decade ago, Social Media isn't just a series of new technologies and tools but is a disruptive change in the model that will require deep and broad changes within organization.

Another way organizations will deal with Social Media Anxiety in the next few years will be to assume that the organization controls the Social Media relationship between the brand and the consumer. This mentality will lead to a great deal of focus about what brands should do within their own Web sites, and much time and energy will go into considering product ratings, forums, comments, moderation, registration, functionality, the permissibility of criticisms, and response responsibilities.

While organizations debate and plan, Social Media will be growing by leaps and bounds away from brands' walled gardens, and soon enterprises will be struggling to keep up. Already, YouTube videos are forcing reactive crisis management; consumers are engaging in their own forums to seek assistance, offer tips, and share gripes; employees are trading ratings of their CEOs and information about salary levels; companies are losing control over brand management to fans and detractors using Social Media megaphones; and some employees are taking PR and customer service into their own hands. The Social Media train is leaving the station with or without your organization on board.

Organizations that will best succeed over the next several years will
get past their anxiety and quickly come to understand that Social Media will change everything--procedures, processes, ethics, structure, employment, internal and external relationships, control, collaboration, service, product, consumer choices, the media landscape, marketing, and brand management.

Tomorrow on Experience: The Blog we'll finish our three-part series on how Social Media will change the enterprise in the coming years. Having considered the first two phases of organizational change management--Security and Anxiety--we'll explore the last two phases--Discovery and Adoption. Businesses that can navigate the tricky journey out of Security and through Anxiety are halfway to recreating themselves as social organizations that build trust, consideration, usage, and loyalty with the newly empowered consumer.


Richard Jennings said...

I predict the next three websites which will be aquired are: (a professional networking site) ( a job matching site taking share) (a popular technology blog)

Two of them have a social media component. So if you plan on starting a site, try to add a social component.

Augie Ray said...

Thanks Richard. I wonder if Twitter might not be a target. It has no obvious way to monetize, particularly with most of its traffic coming by way of the API (which means reduced page views on which to place ads.) I think purchasing Twitter might provide Yahoo, Google, or MSN with some integration possibilities and perhaps the ability to aggregate data for improved ad serving.

Interesting thoughts on takeover targets. Clearly, there will be quite a bit of shakeout and convergence in the coming years!