May 3, 2010
Even though there's plenty of evidence showing the positive impact many companies are getting from leveraging a social media strategy, there are still companies rigidly refusing to develop a social media strategy. This reminds me of the early days of the Internet: there were those companies looking to embrace the Internet and develop a new kind of "e-business," and the rest, steadfastly refusing to believe the Internet would transform their business. Even as Amazon defined a new online shopping channel in retail it was amazing to see how many large retailers were slow to establish an online presence.
Back in 2000 I wrote a report urging online retailers to embrace “community” as one of three core elements of their customer strategy. Companies such as REI, which already had an online community in 2000, have learned from their experience and are surging ahead into new social media.
The parallels are plain to see. If the late 90s saw the dawn of the Internet-enabled e-business, today we are witnessing the dawn of the social-media enabled business – perhaps we could call this S-business. Today companies are redefining their business model based around social media, social communities and empowered customers. Companies like Best Buy and Starbucks are already empowering consumers to help shape their experience, while actively engaging employees in supporting customers through social media.
Yet for all the hype about social media, we've barely scratched the surface of the potential for social media to truly transform business.
Many companies are still simply looking to bolt a social media campaign onto their existing business models, hiring social media experts to add a social component in much the same way retailers bolted a website to their business years ago. It's taken ten years for retailers to understand that a website isn't simply an electronic catalog. Now retailers are beginning to understand they need an end-to-end strategy where the online/mobile experience is completely integrated to the in-store experience. We're still a long way off from fully integrating social technologies. The question we need to be asking is:
- How can we completely redesign company strategy and execution using social applications to create a social-enabled business; one in which all processes are transformed by social applications to deliver huge benefits to customers and greater returns to shareholders?
Over the past fifteen years companies have reengineered their business processes to leverage the power of the Internet in ways we couldn't dream of when we started down the Internet road in the early 90s. Back then, the world of business was full of naysayers suggesting the Internet phenomenon had no place in business; that it was overhyped. Where are these people today? Like the Internet, social media also has transformational power, but it is still difficult to see the true potential. As companies continue to push the boundaries we will see new business models emerge that would have been impossible before social computing. Social computing is changing the nature of the relationships between investors, customers, suppliers, employees, politicians and government administrations. Social technology is an enabler of people in ways we are only just beginning to understand. First-mover advantage will go to the companies willing to embrace social computing and rethink their business model.
Once we begin rethinking business processes around a social-enabled model, we open up new ways to tackle old problems. Many of our existing business processes are engineered to deliver optimum business performance. Unfortunately they were also designed in a world before social collaboration, mobile web access, portable apps, wifi and ubiquitous consumer technology. In today's organizational design, the Internet is central to delivering productivity and profitability. In tomorrow's organizational design, social empowerment will be central to delivering profitability.
Early adopters have the potential to become the leading S-businesses of tomorrow. Companies need to be actively reviewing how social media can transform their business model and starting to re-architect processes today. Sure there are security risks and legal concerns. These won't go away. There will also be a few disasters of a kind we haven't seen before. But those figuring it out today will have a significant competitive advantage over those that choose to wait out the passing of what they perceive to be a fad.
As Einstein said, "The significant challenges we face cannot be resolved at the same level of thinking we were at when we created them" (one of my favorite quotes). I believe he may have been talking about social media – how prescient of him!
Do you have an opinion? Let me know @NigelFenwick or post your comment below – and thank you!
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