Winning by Sharing

Social business: Can you really handle it?

In 2012, 81% of top Asian companies have a branded social media presence compared to just 10% in 2010.  McKinsey reports this year that China has the world's largest community of social networkers, with 95% of web users in large cities maintaining a social media profile of some kind.  One of the primary drivers of enterprise social media platforms in the West is the need for companies to be better organised internally to communicate with their customers who spend most of their online time in social networks. “The biggest challenge CEOs face today is getting their enterprises closer to their customers” (CEO, MoxieSoft)   The demand for enterprise social media platforms comes mostly from HR, Operations and Property functions and with the increasing use of social media in Asia many CIO’s will be unprepared to understand, debate and advise on its deployment with their peers on the board.  This talk describes why social software is at its most transformative inside the organisation, how this specifically relates to IT, what CIOs should be doing to support the business, and how to influence its widespread adoption within the organisation.

 

Social business: Can you handle it?

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General Motors spends $40m a year on Facebook presence

Just as Facebook goes public and raises $16 billion General Motors announces that Facebook Ads don't pay off.   GM is spending a staggering $40m per year on its Facebook presence and although only a mere $10m is spent on ads it's reached the conclusion that they simply don't work.  Shock, horror.  Did anyone at GM read ComScore's 2009 report called Natural Born Clickers?  It concludes after a year of research;

Barely anyone clicks on banner ads anymore.  The number of people online who click display ads has dropped 50% in less than two years, and only 8% of internet users account for 85% of all clicks.

In 2006 academics reached this conclusion as far back as 2006 but Techcrunch picked it this up in 2009 here.  Their research is based on the analysis of large datasets from Youtube, Flickr and others and concluded that the current model is unlikely to survive, principally due to lack of trust. 

Trust is the killer app.

 

Social inside; The Big Picture

Image via CrunchBase

I've long argued that if companies want to interact with social networks, they must themselves become social networks.  

That's the whole point of 'social business'. When a company wants to roll out a customer facing social media initiative the first question I ask is how are you collaborating inside?  How are you being like your customer?  I get too many replies of 'what's that got to do with it?'. Everything - it's the whole game.  The very clever people at Dachis Group have articulated this in a single picture here:

 

Get it now?  Social software is actually most transformative inside the company.  

“The biggest challenge CEOs face today is getting their enterprises closer to their customers,” Tom Kelly, Moxie Soft

Rich poor gap is cause of UK riots

In 2003 some four years before the credit crunch a good friend of mine, Frank Dunn, a polymath and hedge fund expert told me he’d been researching the causes of financial collapse by examining detailed records from stretching from the first Wall Street crash (the Great Depression) to the Dutch tulip disaster and beyond.  It turns out the key cause of financial meltdown is when there is too high a concentration of wealth in too few hands.  When this happens, calamity, chaos and collapse aren’t too far away; mathematically, they are a sure thing.

In America, the top 1% of the population own 40% of the wealth.  To put this in perspective, that’s the same level of inequality seen in countries ruled by dictators and oligarchs or roughly the equivalent wealth inequality seen in Iran and Russia. 

Associated Press recently reported on the release of a report by the International Monetary Fund (IMF) stating:

“A recent report by the International Monetary Fund destroys the myth that the current economic crisis—the worst in almost a century—was caused by fancy financial instruments, government intervention in the housing market or Main Street greed.  It concludes, rather, that the global brush with economic depression was the result of the colossal gap in incomes between rich and working Americans.

The sadly obscure paper argues that a dramatic concentration in wealth at the top—at levels not seen anywhere else in the industrialized world—created a fundamental imbalance that brought the entire system down on itself. The document shows that the origins of America’s last financial implosion, in 1929, were almost identical to those of 2008. In both cases, income inequality was the culprit. And even in the collapse’s wake, the chasm between the top 10 per cent and the remaining 90 per cent appears to be widening further.”

Not long after the most recent financial crash, the so called Credit Crunch, I noted in 2009 here;

During routine scanning of the London job boards throughout 2009, specifically Jobserve I've noticed a number of positions advertised by investment banks for a wide variety of skill sets to build applications for the very financial instruments that caused the meltdown of the global financial system in the past eighteen months. 

With the global financial markets in turmoil again and the prospect of more bail outs for European countries, most notably Italy maybe another credit crunch is the boil that has to burst?

But the masters of the universe, Tea Party activists and the ruling elite should beware.  As noted by Joseph Stiglitz:  “The top 1% may have the best houses, educations, and lifestyles, but their fate is bound up with how the other 99% per cent live.” 

I won’t be at all surprised if we see Middle East style uprisings in the West over the next few years as more and more people start to awaken and realise the economic crimes against humanity that have brought about this ‘colossal inequality’ .  Indeed this is the only thing the 1% fear.

 

 

PowerPoint and Chocolate Biscuits

The Economist article Dicing with Debt and the Future writes:

"As the whole world knows, America’s government is in danger of defaulting after August 2nd unless Congress raises the federal debt ceiling so that it can keep borrowing enough to pay its bills"

The process of reaching an agreement reminds me of this cartoon from my book created for the chapter PowerPoint and Chocolate Biscuits.

We describe the endless back to back meetings, teleconferences, and INSEAD training schedules of executives and middle managers that make up unproductive interactions as “people who do PowerPoint and chocolate biscuits”.  Back in 2005, the Boston Consulting Group the effort of creating PowerPoint presentations had become so crushing that it was outsourcing 20,000 hours of this effort offshore to India every year.

 

Enterprise social media. Does it really make a difference?

Image by ixtlan via Flickr

The horrific events of September 11^th and their aftermath, including war, restricted mobility, big government, and fear.  The banking crisis, crippled economies, the shift of economic power to the East, pandemic flu, climate change, peak oil, the war on terror, the emergence of social networks the size of continents, a black US president. When will things get back to normal? They are. This is the new normal.

Business and government aren’t structured or designed to cope with this rate of change and it’s apparent even to ‘the man in the street’ they’ve struggled to understand, react and adapt to a seemingly endless stream of social, economic and political crises, many of which don’t even arise in their own countries.  

In business, entire industry sectors have seen much of their value destroyed by upstarts using cheap, open source technology, offshore software development and financial support from visionary venture capitalist firms.  Some parts of the media industry in particular have experienced massive destruction in value, most significantly by the omnipresence of file sharing networks.  TV, print and broadcast based advertising in general are in decline and the next generation of consumers simply aren’t interested in it, almost exclusively preferring peer recommendation.  Even the porn industry has been eclipsed by social networks and social media sites, now the most visited web sites on the planet. 

Mass action and mass participation enabled by internet mediated social software has forced political u-turns, embarrassing corporate climb downs, regime change, and put presidents into office.  The biggest story of the 21^st century is the realisation that a 2000 year old model of centralised, command and control organisation is unable to adapt to an ‘outside world’ that is increasingly network centric and decentralised.  It isn’t fit for purpose. It’s that simple.

Productive professionals make big enterprises competitive, yet these employees increasingly find their work obstructed. Creating and exchanging tacit knowledge through interaction with their professional peers internally and externally is ‘what they do’. Yet most of them squander endless hours searching for the knowledge and access to people they need, even when it resides in their own companies.

Mckinsey reported in 2005, “Each upsurge in the number of professionals who work in a company leads to an almost exponential—not linear—increase in the number of potential collaborators and unproductive interactions. Many leading companies now employ 10,000 or more professionals, who have some 50 million potential bilateral relationships. The same holds true for knowledge: searching for it means trying to find the person in whose head it resides, because most companies lack working "knowledge markets."

 One measure of the difficulty of this quest is the volume of global corporate e-mail, up from about 1.8 billion a day in 1998 to more than 17 billion a day in 2004. As finding people and knowledge becomes more difficult, social cohesion and trust among professional colleagues declines, further reducing productivity”.

This essay makes the case for the role of a Super Connector in large organisations whose sole responsibility is to create the same levels of connectivity, collaboration and productivity achieved by open source movements, conversational software and social media platforms.  It recognises the need for evolution rather than revolution and most importantly describes the end game, the end state; and the implications for leadership, employees, revenue, stakeholder return and market valuation.

An approach to creating a social media business case

Dancing with the customer. Image by ixtlan via Flickr

Whilst working at Carphone Warehouse and Best Buy I made a contribution to Forrester's excellent report on the ROI of Customer Services Using Online Communities.  One of the major obstacles that big companies still face is how to justify spending on social media in a language and format that financial planners and budget holders understand particularly in terms of benefits, which really means revenue and/or cost reduction.  This report includes some realistic figures that demonstrate how a strong financial argument can be made for using Twitter for some types of customer service.  In this case, the business case is based on reducing the cost to serve information to customers who would otherwise call the contact centre - typically the difference is $5 (call centre) versus (50 cents) Twitter for a successful transmission of information that enables the customer to self-service (for example configure email on a smartphone).   The spreadsheet accompanying the report uses these key paramaters to build the business benefits case;

Direct call deflection
Indirect call deflection

Basically if you can offload x% of traffic from the call centre how much is this worth in terms of fewer agents?

Other factors include...

Increase in agent productivity
Reduction in agent assisted email
Increase in relevant Web site content and search engine optmization (SEO) rankings
Customer retention and customer lifetime value

I use a handy spreadsheet as a starting point to guide people through calculating the business case. The biggest challenge is translating intangible benefits into revenue or cost reduction numbers.  Feel free to download and improve.

Download Sn biz benefits v2

 

Grandparents urged to strike in Spain

The Guardian writes that grandparents are being urged by unions to strike in Spain because they can effectively bring the country to a halt by refusing to look after grandchildren while their parents are at work. 

"For a country where half of all grandparents look after their grandchildren every day – one in eight for more than nine hours a day – the strike call threatens to disrupt the working lives of a significant proportion of the population and expose the extent to which this unpaid work is propping up the economy."

The Stiglitz Commission, appointed by France president Sarkozy, estimates that at least 35 percent could be added to national wealth to account for all "domestic" services.

A massive secret GDP exists that is not accounted for anywhere.  We need new platforms that enable this kind of work to be accounted for with little or no cash.  It's not beyond the realms of possibility that in the future, there'll be economies based on giving everything away.

As an aside, Joseph Stiglizt said that whoever designed the Obama administration's bank rescue plan is "either in the pocket of the banks or they’re incompetent"

 

BP opens up. Not.

Image by ixtlan via Flickr

Way back in 2004 my first post here on Typepad was entitled Big Oil Companies Open up.  It's about Shell reaching out to stakeholders and the launch of it's 'conversation' platform called Tell Shell. 

It starts with;

It’s not often that a company publishes accusations of murder on its website, especially when the accusations are directed against the company. 

At that time it was a functional online forum although heavily moderated.  Now this is what you get;

Thank you for taking the time to send us your comments. Your message will be sent to our Customer Service Centre. A Shell representative will contact you soon.

It obviously didn't work out and was very quickly replaced with a citizen's alternative tellshell.org which documents how pointless and futile it is to attempt open, transparent conversations with oil companies.  

BP's recent oil spill disaster reminded me of the Jean Francois Noubel's statement about the survival of companies;

The future of a company is less about the nature of its issues, and more about its capacity to invent social structures able to solve them.  In other words, an ability to create and nurture networks.

Someone, somewhere on this planet has a solution to BP's oil spill disaster.  But because BP like every other large multinational is organised in command and control structures, it stands no chance of harnessing the wisdom crowds.  What do companies need to survive?

This form of organisation is unsustainable, and we all know it.  BP, where are your super connectors?

The bank of Facebook

Image by ixtlan via Flickr

Thomas Power, Chairman of Ecademy, has produced this intriguing video predicting the evolution of Facebook into a bank.  His rationale is based on the idea that "the winner of the game is the one with all the names", which he's been saying since 2001. Ridiculous then, but a bit obvious now.

In the same way that Steven Spielberg can't get his films into movie theatres without the cooperation of distributors, however powerful and influential he is in the industry, Thomas argues that if you have a distribution channel the size of Facebook then you can pretty much dictate what goods and services get to these people.