Rob Swystun, Pristine Advisers
Lots of people use social media and it is highly influential. I will skip the usual litany of numbers about how many people use X and how it has X% influence on Y because I don’t want to copy and paste them and you don’t want to read them. If you don’t know by now that social media is huge and it holds a lot of sway, you should probably be thinking more about retirement than running a company.
What you’re here for is the advice and the free beer. (Full disclosure; there is no free beer.) But there is advice …
1. Align corporate strategy with where value is found today.
In what is touted as the “social age,” (that’s today) value means having a robust and well-connected network, both inside and outside the company.
Example: Unisys Corporation, an American global information technology company based in Blue Bell, Pennsylvania, created 10 social circles that any of its 20,000 global employees could join to try and help the company solve technical challenges and answer questions by sharing their knowledge and expertise. Eventually, 16,000 of the company’s employees joined up, vastly improving the company’s productivity and collaboration among employees.
2. Leverage the collective wisdom of employees and your organization’s crowds.
The next big idea might come from anywhere. HR directors and managers should be making a conscious effort to mine ideas not only from employees in their areas, but from customers, clients, fans and even critics. Social media, both internal and external, is a great way to cultivate what could be groundbreaking ideas for products and services.
Example: Both Starbucks and Dell have specific websites set up where people can submit their ideas for new products and services. And in the case of Starbucks, you can also discuss and vote on the ideas proposed. Apple and Google both encourage users of their products to create apps that bring in billions of dollars in revenue and market value.
3. Shift the focus of processes from “inside-out” to “outside-in.”
While companies still need to have efficient internal processes to function well, today’s landscape dictates that companies have to work on their external processes, to draw customers in. Gone are the days when consumers had relatively little choice about where they spent their money. Now, they can buy from anyone, anywhere, meaning companies need to put more effort on those external processes that bring customers to you.
Example: Nike observed the continually increasing size and scope of social media and reinvented its marketing processes to flow outside-in by creating Nike Digital Sport so they could utilize the capabilities and insights of their fans and followers. They developed products that their users could keep with them and use almost constantly, keeping the company at the forefront of consumers’ minds. This has helped transform Nike into a more social oriented company, increased its revenue and helped cut television advertising costs.
4. Add value and minimize risks by actively integrating today’s social, mobile, cloud, and big-data technologies into everything your company does.
Boards should always be encouraging management to explore new ways that technology can be used to improve processes and cut costs. Are there ways technology is being used that your company could take advantage of?
Example: In January, AmEx cut 5,400 staff and reallocated capital to online technologies, noting that more than half of its corporate customers book trips using online e-commerce sites rather than calling AmEx agents, meaning AmEx required fewer customer service people.
5. Diversify boards so that you have at least one member who is competent and comfortable with today’s social media technology.
It’s always a good thing to have a diverse board to make sure that a bevy of opinions and perspectives are represented. But, according to research by executive search consulting firm Spencer Stuart, many boards still lack members with modern technology and strategy skills. In a world where everyone — including customers, employees, partners and investors — has a voice, there is an increasing demand for accountability, transparency and open approaches involving all stakeholders. Knowing the ins and outs of social media and how it affects your business is imperative and shouldn’t be left up to your summer interns. It should be something that at least one board member understands and has expertise in.
Example: Starbucks chairman Harold Schultz announced on Dec. 14, 2011 that Clara Shih, CEO of Hearsay Social, was elected to the Starbucks board of directors. His reason? To make sure that his board contained an expert in social and mobile technologies.
6. Invest in today’s “intangible” and unmeasured sources of value, such as social network membership and intelligence.
Fewer than 25 years ago, physical and financial assets constituted about 80% of corporate market value, but, according to research by financial services company Ocean Tomo, that amount is less than 20% today. Leaders need to rethink their capital allocation strategies to fit a modern market.
Example: Business consulting companies like Infosys are creating new measurements and reporting systems that are meant to fully capture the value of organizations’ capital allocations to intangible assets.
7. Leverage real-time data from social technologies and mobile networks to offer a more complete view on what is coming next.
Today’s boards and CFOs require social intelligence about future desires and needs of stakeholders. Financial reporting alone no longer cuts it. The modern market demands network alignment and capital reallocation to new sources of value and technology, as well as new business model strategies.
Example: IBM Global Business Services conducted a survey of 1,000 consumers worldwide and 350 corporate executives and found some eye opening information on the disconnect between what consumers actually want from their interaction with companies on social media and what executives think consumers want. From the executive summary of the survey; “Sixty-five percent of businesses view social media as a new source for revenue but, at the same time, many believe receiving discounts or coupons and purchasing products or services are among the least likely reasons a customer would seek them out on social sites. Ironically, though, consumers say getting tangible value is the top reason they interact with a company.” (Emphasis added by me.)
New board members should be recruited and new business models should be fashioned based on modern technology realities. Social enterprises are faster, better, and more competitive than their traditional counterparts, and are here not only to stay, but to take over.