Just in case you thought 'size is everything' in social networks here are some links to research that suggest having the most followers does NOT necessarily make you influential. Quality of people seems to count for more.
A cosmetic surgeon based in Cardiff encountered many victims of knife crime as part of his work. During consultations with his patients he soon became aware that he a goldmine of information on the precise locations of the violence, the times of the days when stabbings occurred, the locations, the type of weapons used and the assailants. He started sharing this information with the police and his local authority. The data was made anonymous so that patient confidentiality could be maintained.
The information enabled the police to target hotspots and put more manpower on the right streets at the right time of day. The results were dramatic. Knife crime was cut by over 40% and Cardiff moved from a mid-table mediocrity in tackling violence to the safest city in its Home Office family of 15 similar cities.
The Liberal Democrat home affairs spokesman raised a question in Parliament on how many other local authorities had implemented similar schemes. The response was 'not known, since no-one was collecting this information centrally'. A subsequent FOI request to every acute hospital trust revealed that out of 150 hospital trusts with emergency departments, only 20% were working with their local police force in providing Cardiff-style data.
The Cardiff model, which began in 2002, is still relatively unknown to other local authorities and hospital trusts, though it has been published in the Emergency Medical Journal and The Surgeon
Shameless self-promotion. LinkedIn hit the 100 million member mark in March 2011 and CEO Reid Hoffman sent a personal email to the first 100,000 joiners suggesting that this group laid the foundations for its exponential growth several tears later, the super connectors who heavily influence the success or failure of the network. I was joiner number 5,471.
Those early days in social media were a lot of fun but an interesting mathematician called G.H. Hardy once said: “When the map-makers arrive, you know the real explorers have already moved on”.
The horrific events of September 11th 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 21st 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.
This is a question that has pretty much kept me up at night for over ten years. In that time I've come to the conclusion that it's the right question, asked the wrong way. The question we're all asking is actually; How do you measure the value of intangible assets?
Sit with CFOs and ask this question (instead of the ROI of social media) and you'll get a decent conversation out of them, because they've been looking for the (right) answer for centuries.
To drive this point home consider the value of a public company when it's being sold. A significant component of its value is based on what accountants call Good Will. For example (from Wikipedia), 'a software company may have net assets (consisting primarily of miscellaneous equipment, and assuming no debt) valued at $1 million, but the company's overall value (including brand, customers, intellectual capital) is valued at $10 million'.
The point here is that calculating Good Will is entirely arbitrary. Yes there are some accounting rules but the number agreed upon has no rigour to it in a mathematical sense and yet huge companies are acquired by other companies where the value of Good Will (or intangible assets) can be as high as 60%-70% of the purchase price. Remember Time Warner/AOL, PWC/IBM, Compaq/HP? The list is endless. Share prices also have a good will element.
Most studies show that over 60% of mergers and acquisitions don't return value to shareholders mostly because of the inaccurate calculation of good will. As an aside, the post mortem carried out by the US government following the Enron/Worldcom 'issue' and the dot com crash that brought about the Sarbanes-Oxley Act (that was supposed to prevent the latest 'credit crunch') fund managers around the world committed to allocating 1%-3% of their revenues on research into calculating the value of intangible assets. There has been some progress but I won't go into it here.
Ok, so enough theory. At a more practical level I use a handy guide as a starting point to construct a business case for investing in social media. There are both tangible and intangible benefits. Intangibles are recorded under a column of Brand Awareness, Reputation and Customer Loyalty. Tangibles are recorded under a column label of Direct Revenue & Lower Operational Expense. Rows are labelled;
Customer/Member profile Advocacy/pass through revenue Group Discounts Affiliation Member-Member commerce Offline events (for talent acquisition, for example) Competitive research Product development & feedback Peer-to-peer self-help Membership
You can download it here; I've found that most of the benefits are intangible (hence my diatribe above) but I'd be interested in how others would 'tick the boxes'.
My experience of working with senior managers and the boards of companies when justifying investment is that the most compelling benefits are in two main areas;
1. Demand Sensing. If a statistically significant number of customers say (or behave in a way) that tells me what existing product/service they want to buy and when they will buy it then I can plan/prepare. Think of how immensely effective this has been for Tesco's Club Card loyalty scheme, propelling it to the UK's number one grocer - and keeping it there. Three years ago a global brand approached me and said they were about to invest billions in a new product. They'd already done all their home work but as a quick additional check they wanted to ask a million people from a particular demographic if they would buy this product. They needed the results in 48 hours. They were prepared to pay up to $1 for every valid response. That's how important and valuable demand sensing is.
2. Product & Service Development. Companies understand the value of risk mitigation. If a million customers say they want a product or service then when it's brought to market, it kind of reduces the risk of getting it wrong. Unilever has been using online (closed) communities, under the radar for product development for at least 8 years and claim they've taken a third of their costs out of global R&D (Cluetrain: You want me to pay? I want you to pay attention!). That's a very, very big number. Witness the explosion of the use by Pharma companies of innocentive.com
The last project I worked on in social media was for Britain's eighth oldest company (founded in the 1600's) that no one has ever heard of. We ran a video competition. We devised it in a way that forced a high level of quality from participants. We got 53 submissions. Five of these were of sufficient quality to air on TV (as commercials) with no editing - they really were that good. The brand saved millions on commissioning commercials from traditional ad agencies. The business case was constructed on this premise from the outset.
In my humble opinion, the ground breaking research conducted by Yochai Benkler on the why Open Source (because that's what we're really talking about) is *a lot* more efficient than 'the firm' is easily the most insightful body of work to reference when building an ROI case for social media. His subsequent book called The Wealth of Networks is dry, academic and a struggle to get through but pretty much all the answers to this question are there.
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
website, especially when the accusations are directed against the
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.
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?
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.