The evolution of business

[ I originally published this post on the Dachis Group blog in 2012. ]

The social business movement appears to be in full swing. Over the past weeks, I have read time and time again that 2012 will be the year of social business (Business Computing WorldSXSWWe are social). In terms of awareness, I totally agree; in terms of achieving our goals, perhaps that is too ambitious in such a short time period.

I believe that the notion of 2012 being the year of social business is rooted in a misunderstanding of what social business actually means. I do not intend to go down the slippery road of trying to create a definition.. Instead, some time ago I presented four concepts that highlighted the differences between traditional businesses using social media and social businesses. Judging by the comments it received it did a decent job at explaining what a social business is. Now, almost a year later though, I realise that it failed to show the evolutionary process required to move from a traditional business into a social business.


Picture credit goes to my colleague Giulio Martinelli

In my view, pure disconnected and social businesses represent the extremes of a continuum. To date they only exist in theory. In between you can plot any business on this planet. As the continuum suggests there is no such thing as ‘THE’ social business. It is not black and white but offers shades of grey. As time goes by we will see more organisations moving closer towards adopting characteristics of a social business and thus changing the way business is done in a connected world.

Traditional businesses with a traditional business mindset

In the past years organisations started to experiment with social tools inside and/or outside their firewall. Many of them created corporate presences on social networks adding these channels to their more traditional communication channels without changing their business attitude. Success? None! The failure was / is devastating and a true shock to the system. Nonetheless, most organisations can still be found in this category – traditional businesses with a traditional business mindset. No matter which channels and tools these organisations use, let them be social or not, these companies haven’t freed themselves from 20th century thinking yet.

Traditional businesses with a social business mindset

Forward-thinking and agile organisations have learned that in a connected world, business-as-usual is no more. They understand they need to listen to, engage and connect with the marketplace. That is why we now see HR departments connecting with potential talent on Facebook, Customer Service departments helping clients on Twitter or Business Development departments putting out thought-leadership pieces on the company blog. I call these organisations traditional businesses with a social business mindset. These are not social businesses.

I assume and would hope that this comes as surprise to many. Let there be no doubt: arriving at this level is for most organisations a huge challenge and already an amazing achievement. The way to here is long and thorny, but the rewards are plenty. However, compared to what could be these rewards might be rather small. The main problem is that at this level corporate functions still own the connections. This simply does not scale.

social_spectrum_4Picture credit goes to my colleague James Bray

Social Business

A social business is a truly connected business. It connects its employees with each other and them with the marketplace. Corporate functions are now part of the networks rather than owning and controlling the relationships. In my view, a social business creates intimacy at scale by democratising roles and responsibilities and encouraging employees to build their own brand (no, this is not a definition).

Intimacy at scale
How many connections can a HR department have with graduates, experienced hires or alumni? Do you think the HR department can ever have as many or more close relationships with their network than employees have with theirs? How well do social business efforts of a HR department scale compared to the company’s employees?

What can be said for the HR department is also true for other corporate functions like Marketing or Business Development and even R&D. Using your employees’ networks rather than relying on just your corporate functions will have a much greater impact on your business. This has fundamental impact on organisations’ social business strategy and programme!

Democratising role & responsibilities
To achieve intimacy at scale, corporate functions need to forego some of their control. (Did someone say ‘trust is cheaper than control’?) It is inevitable. We have already seen it in some pockets of organisations. For example, some companies have implemented new collaboration and communication tools. Users do not have to go through IT anymore to set up a group or community: they simply create a group and invite others. Open innovation approaches have been adopted by some companies saving the central R&D department considerable amounts of money. Some managers have adopted an open leadership style openly discussing decisions and gathering feedback from employees. Experience shows that this does not end in anarchy. IT, R&D, Management and so on provide the boundaries within employees and others can engage. However, corporate functions that have traditionally been outward-facing have shied away from the idea of democratising their role and responsibilities. In a social business, this will change.

Encouraging employees to build their own brand
This may be true only for certain industries such as professional services. In this industry especially, people are the most significant asset: the industry is about people, their knowledge and relationships. If you want your employees to participate in social media, do not make it about the company, make it about them. People are selfish. Help them understand how they can use social media to build their own brand under the company’s umbrella. If they have the means to build their own networks and enjoy working for you, they will help to show the human face of your company, will be willing to amplify corporate messages and even give it a relevant spin for their connections and networks. After all, your employees should be your greatest advocates. As companies evolve, we are beginning to see organisations not only encouraging their employees to engage on social networks, but expecting them to do so. (see Grant Thornton UK Social Media Policy Video [Disclaimer: Grant Thornton UK is a Dachis Group client. The video was created by Grant Thornton UK, not Dachis Group]).

When we look at the characteristics of a social business, we will need to answer new questions. Do companies need to incentivise or even reward employees for engaging in social channels? If every employee is expected to become a customer service agent, how do companies organise for this scenario? Do job descriptions for roles in a social business need to be altered? Can employees with large networks ask for a higher salary? Do employees indeed identify with their company and are they true brand advocates? These and many other questions will need to be answered, as organisations move to become true social businesses.

Starting to adopt a social business mindset and engaging with the marketplace is a first step in the right direction. However, it’s not the end of the journey! As businesses evolve, we will see true transformation supported by organisational design, change management and process reengineering expertise. If you are heading up a company or corporate function and are seeking to create (social) business strategies, ask yourself or your consultancy, whether they scale. If they don’t, you may be missing a trick.

© Picture Credit: Christoph Schmaltz

From traditional business to social business

When businesses ask for a social media strategy, what they are often really asking for is: Get me a presence on Facebook, Twitter and the like. The mantra of cultural and organisational change that is required in the social web seems to ring hollow. To be fair, it is not their fault. With a traditional business mindset it is hard to see why a presence on Twitter or Facebook is different from the corporate website. After all, these tools can seem to be just another communication channel.

When I talk to clients about the social web and its impact on businesses, I often use four key concepts. These concepts seem to help to explain the broader implications of social tools and why a mere presence on the social web will have a very limited business impact.

From Transaction to Interaction

Traditional Business - TransactionIn the good old days traditional businesses produced a product or service and the customer bought it. End of transaction. Over the years, they have distanced themselves from their customers. Traditional businesses live in their ivory tower from which they look down on their customers. They introduced call centres to shield themselves from customer complaints. Every so often, they introduce a new product and market it heavily using print and digital channels. Nowadays, they can also be found on Facebook and Twitter talking about their new product. They produce it, the customer buys it. End of transaction.

Social Business - InteractionA social business however, is all about interaction. It sees itself on an equal footing with their customers. Of course, it still wants their money. After all it is a business and not a charity. But a social business listens to what its customers have to say. It is eager to get feedback, both positive and negative. Negative feedback is acknowledged and addressed in an honest and transparent way. It sees it as an opportunity to co-create new products with the help of its customers. A social business operates in public and not from the heights of an ivory tower. A social business does not simply sell products, it sells customer experience.

A customer of Zappos once tweeted that she had ordered shoes for her birthday. A customer representative got in touch with her asking about her order number just to make sure that the shoes would arrive on time for her birthday. You think that is difficult? Not for a social business. It is where its customers are and listens to what they have to say. It is all about interaction and customer experience.

From B2B / B2C to P2P

Traditional Business - B2B:B2CA traditional business has successfully created a wall between its customers and itself. Only particular departments are allowed to interact with the outside world, for example Marketing, HR, Customer Service. The rest of the business is shielded away from any external distraction to ensure employees are productive. Humans work in a traditional business. They have a face, but they can only show the company’s face. Sorry, company policy. Nowadays, traditional businesses have developed their own recruiting platforms. They also have a presence on Facebook, where HR advertise for new vacancies and post recruiting tips. They are really proud of this achievement. The traditional business can connect with potential recruits on Facebook. But actually, when they join they will see that Facebook is blocked. Sorry, company policy.

Social Business - P2PA social business understands that people want to connect with people and not with businesses. If customers are looking for help, they want to talk to a real person, not a company. A social business acknowledges and is proud to employ many smart people not just in HR, Marketing or Customer Service. It employs them, because it trusts them. It wants the world to know about them and enables them to connect to the outside world. That is why social networks are open for everyone and people are still productive. A social business manages by objectives, not by presence.

Mary from the HR department posts new tips on Facebook, and not the HR department. A small but subtle difference. A highly talented engineering graduate asks on Facebook what life is like on an oil rig in the North Sea. Mary has never been on an oil rig, but she knows engineers who have. One engineer answers the question on Facebook, visible for everyone. It is John, not the company. People connect with people, not with companies.

From Gatekeeper to Platform Provider

Traditional Business - GatekeeperA traditional business clenches on to its old powers. It believes it still owns all the connections between customers and partners. If a partner would like to talk to another partner, he needs to go through the company. It manages in order to survive. According to a traditional business, shared knowledge is only worth half as much. Better to control the gates.

Social Business - Platform

A social businessunderstands that today’s technology enables anyone to connect with anyone, whether the business likes it or not. The gates are open. A social business knows if it simply keeps managing connections, it will survive, but if it facilitates connections it will thrive. Hence, it provides a platform for customers and / or partners. It is comfortable letting people discuss the business, its products or completely different matters. It facilitates and does not manage.

Dell, a computer manufacturer runs a Facebook Page about Social Media for Business. Yes, Dell is not in the business of providing social media services. But it uses the group as a platform to stay connected with existing customers and potential customers. Dell provides more value than it can capture (in the beginning). That way, Dell stays in people’s minds. Dell may not always be the best choice, but I bet, the next time a member of the FB page is asked for computer advice by a friend, he will also mention Dell.

From Hierarchy to Network

Traditional Business - HierarchyA traditional business has a rigid top-down communication structure. News from the top is passed down through the ranks of the organisation. The middle management is powerful as it acts as gatekeeper (see above). Open and transparent dialogue between the top and the bottom of the traditional business is difficult if not non-existent. Furthermore, technology provision in traditional businesses have manifested in department silos. Few employees know what other departments or teams are working on. Cross-departmental connections are made in the cafeteria, at the water-cooler or in the smoker’s corner.

Social Business - NetworkContrary to popular belief hierarchy still exists in a social businessbut it is heavily supported by an underlying network. Communication flows are bi-directional and cross-departmental. The middle management has lost its power as gatekeeper and is now functioning as platform provider. It provides a platform for the management and employees to communicate and connect. Employees can see what other teams and departments are working on. Increased visibility leads to better decision-making, improved customer service, superior products and ultimately higher sales. At the same time a social business also acknowledges that people connect with people not just because of work but also interests. Therefore, it encourages employees to form communities of interest or purely social groups. This creates stronger bonds between employees which leads to lower turn-over rates. If an employee does leave, they are more likely to stay in touch with colleagues, not the business. Remember, people connect with people, not with companies. (see P2P concept).

By now, many organisations have or are in the process of implementing a social business platform which enables employees to communicate with the senior management and also across teams and departments. Some of the most advanced and innovative organisations that have adopted this approach can be found in the Social Business Council.

No doubt, more concepts exists. However, I believe many of them are part of the ones I have outlined above, i.e. From Control to Trust (B2B/B2C to P2P; From Transaction to Interaction), From Management to Open Leadership (From B2B/B2C to P2P; From Gatekeeper to Platform), From Employee to Brand Ambassador (From B2B/B2C to P2P; From Transaction to Interaction).

If your social media strategy is all about setting up a social media presence, jump right in. It only takes a couple of minutes to set up accounts. There are gazillions of tips out there telling you how to increase your follower or “Like” counts. However, if your social media strategy is about business impact, you need to go back to basics. Understanding the key concepts and the broad impact of social tools on businesses, will help to deliver value. In the end, that is what business is all about, delivering value!

© Picture Credit: Christoph Schmaltz

Web X.0 and counting

[ I originally published this post on the Headshift blog in 2009. ]

This week I attended the Web 3.0 Conference in New York thanks to a ticket I won from Centernetworks.

Even though I work in fields that are named Web 2.0, Enterprise 2.0, Government 2.0 and what not, it is always good to know where development goes. Besides, at university I took classes in computer linguistic, natural language processing and retrieval, intelligent computer agents. While I was never capable of diving into the technical matters, I was always very excited by the opportunities that those technologies would bring us one day. Looking for example at Wolfram|Alpha we are starting to get a taste of what machines will be capable of doing in the future.

So, ignore the nomenclature of Web X.0 and imagine the Web as an ever evolving ecosystem, where players appear, change roles and vanish. In the mid and end 90s people were merely consumers of content that was thrown at them by media outlets and corporates. With the advent of social tools people changed roles and became content producers. Over the past seven years a massive amount of content has been created and is now dispersed around the Web. For example, people share reviews of books and movies on Facebook but that information is not available when they buy it at Amazon or Barnes & Nobles. People rate restaurants etc. on Yelp but that information is not at people’s fingertips when they accesse a restaurant’s website. Journalists produce content and have to manually link to resources on the Web. Thus, we have massive piles of data, but most of it is disconnected, tucked away in various services and applications that don’t talk to each other.

And so I think Thomas Tague, Calais Initiative Lead from Thomson Reuters, and keynote speaker at Web 3.0 sums it up quite nicely by saying that the next development will be ‘cleaning up the mess we made and harnessing the value we created with Web 2.0’. Of course, this era of social computing (aka Web 2.0)  will not cease to exist with the advent of new technologies, but it will be enhanced it in quite dramatic ways. Greg Boutin, founder of Growthroute Ventures, has written a great 3-part series of posts about new and exciting developments of the Web. He defines it as “the Web of Openness. A web that breaks the old siloes, links everyone everything everywhere, and makes the whole thing potentially smarter.”

Theory is great but what about practical examples? How can these technologies help to solve real-world business problems? Thomas Tague hit exactly on that point in his keynote. Technologists go nowhere if they don’t address business problems. Especially during these difficult economic times, businesses are forced to cut costs, increase revenue and competitiveness. He used the publishing industry as an example, which he sees as a zero-sum game and consequently businesses that adopt new (semantic) technologies can gain a decisive first-mover advantage. For example, the editorial workflow can be considerably reduced if the editor is automatically suggested links to bits & pieces mentioned in the text. Zemanta is a great example for providing that kind of technology. Another would be Apture, which allows editors to embed content from around the web and keep readers on their own website rather than sending them to Wikipedia, Flickr etc. Easily embedding 3rd party content will not only reduce time and cost but will also enhance the presented content and can therefore help to attract and keep audience. Another development is auatomatically enriching data with semantic metadata to improve findability and linking (e.g. Open Calais). Since the Web has become a platform we have come to understand that we need to make it dead simple to let other people use and interact with our content no matter where and when.

Other examples? In the beginning I mentioned that it is not possible to see reviews of a book that your network shared with you on Facebook at the point of purchase, e.g. Amazon. That’s not entirely true, because Adaptive Blue offers a browser plugin called ‘Glue’ which achieves exactly that. In this case every book is an object with a uniqe identifier and can therefore be querried from every corner of the Web. In the future you can imagine, that for example advertisers and brands can much better link the mentioning of a product by someone to the purchase of it by someone else leveraging the social graph. If you are in NYC on June 4, you should check out the next Semantic Web Meetup which looks at Semantic Advertising.

Another example: Recently, Google introduced Rich Snippets. It enhances the summary text of the results after a user performed a search. If the users searches for a specific restaurant Rich Snippets will show the restaurant on a map, reviews from other users etc.

Eventually the data that we have been creating around the web for the past years will come together and enhance our experience in ways we can’t even imagine yet. Mozilla calls it ‘the contextual web’ and I think it’s a great name. Objects and people will have more context and thus more value. There will be new possibilities, new business models and, yes, losers. I should dig out my old study notes, because the things that seemed to me science-fiction a couple of years ago, could become reality sooner rather than later.

A visit to the R&D department of the New York Times

[ I originally published this post on the Headshift blog in 2009. ]

Recently I was fortunate enough to visit the Research and Development department of the New York Times thanks to the kind invitation of the people of that I am working with here in NY.

For many people the Gray Lady stands for excellent journalism, as well as innovation when it comes to exploring the opportunities of the Digital World. The paper has won 98 Pulitzer Prizes, which is more than any other newspaper. Some of you may be familiar with projects like One in 8 Million or TimesPeople, or initiatives to open up NYT’s front page to outside content and the release of the Article Search API.

So it goes without saying that I was very excited and went to the meeting with high expectations. I wasn’t to be disappointed.

The first stop was at the gadget section. A group of the R&D department plays around with all shiny toys that recently came out or are still in development. Obviously, they had the Kindle, Sony’s e-reader, various netbooks, touchscreens and others. But they are also exploring the use of virtual laser keyboards, pocket sized projectors, iPod Video Glasses.

What have all these gadgets to do with a newspaper? Well, they do not have anything to do with the physical medium itself but with content. The people at the NYT know that the days of the print medium are counted and are looking for ways of distributing their content across any device and exploring new ad revenue streams. This became especially apparent at the next two stops – the interactive newspaper rack and the R&D Living Room.

The interactive newspaper rack is equipped with a monitor displaying the latest headlines, a touchscreen where you can choose sections you are interested in and which are then conveniently printed for you to go (on A4 format). The printed edition also includes QR codes to link people to sources online. Well, nothing really exciting you may think. However, include a card scanner and GPS functionality and all of the sudden you have a host of interesting options. The newspaper rack knows who you are and can simply print your favorite sections that you usually read on your way to work. At the same time those sections are forwarded to your mobile in case you want to access any multimedia content. Since the system knows where you are, you will also receive local news and for example advertisement from local stores. If you choose to go through the news on your mobile you can flag specific content that you would like to be read to you while you drive or for later consumption in the evening (for example video). This brings us nicely to the NYT Living Room.

After a long day you arrive home and sit in front of your home-entertainment system. The news items that you flagged on your mobile in the morning are already waiting for you. One of them includes a documentary about China. While you watch it, you can access additional information about things being said on the fly. In this case an airline or hotel chain could also give you information about their latest offers for China. Since you liked the documentary so much, you simply forward it to one of your friends – all without ever getting up from the sofa!

On your screen you also read about a new recipe by Mark Bittman, which another friend sent you earlier. It looks delicious and you want to try it out on the weekend. So, with one click you send the recipe to your mobile, which automatically creates a list of ingredients and gives you the latest offers from shops in your neighborhood. Maybe one day the system will first check your kitchen and fridge to see what ingredients you already have at home. But that’s still science fiction…

While people are still arguing about the future of newspapers, the New York Times is re-inventing itself. It is indisputable that making content accessible to anyone, anytime, anywhere through any device will be paramount. However, if this will really mean the survival of the brand New York Times or if it will eventually be merged into a larger media conglomerate is yet to be seen. What I do know is that they soon need to change their motto: All the News That’s Fit to Print.

Is the concept of blogging scalable?

[ I originally published this post on the Headshift blog in 2009. ]

This blog post was originally published by me on the Headshift blog in 2009.

It seems that there are only two topics people talk about these days . One is the economic turmoil and the other is the microblogging service Twitter. While there is unanimous consent that we are facing one of the worst economic situations after WWII, there is a heated debate going on about the usefulness of Twitter. Some simply love it while others can’t make sense of it viewing it as time-wasting and geeks’ new toy.

Despite the sarcasm of its numerous critics Twitter showed an impressive growth rate of 900% in the last year, and that’s only the usage of Double that traffic comes through the APIs, thus 3rd party applications. Some even suggested that Twitter could go mainstream soon, without actually defining what numbers needed to be reached to justify that statement.

Fact is, microblogging is not simply a super cool form of communication (a la SMS speak of teenagers but for 18+ (average Tweeter is 31!)). It fills a real need for almost realtime communication. If you want to know what people are paying attention to at the moment, you use the Twitter search instead of Google. Next time a plane touches down on the Hudson River make sure you are watching your Twitter stream instead of waiting for images to appear on CNN. So, microblogging will not go away. Twitter could potentially disappear, but at the moment that seems rather unlikely, especially since Pownce (talent) was recently aquired by Six Apart and Google couldn’t figure out how to make Jaiku work and in the end giving the code base to the community.

Let’s assume for a minute that Twitter will continue to grow at a phenomenal rate. You can only speculate on the number of current users, since the founders do not disclose the exact number. Jeremiah Owyang suggested something between 4 – 6 million users, up from 0.5 million in January 08. This would mean at the end of the year we could potentially see a whopping 45 million users on Twitter. (I will hold it like Winston Churchill and advise you that you shouldn’t trust any statistic that you didn’t forge yourself. So, please don’t quote me on this number!)

What I am trying to understand is if microblogging as it stands at the moment is actually scalable, not in terms of technology but behavior and usage. The biggest question mark I have is around the @ messages. Twitter was called superior to Email because you would only receive updates from people you choose to follow. Well, yes and no. This is certainly true for your overall friends update stream and Direct Messages. However, if you haven’t activated the setting ‘show me only @ messages from people I follow’, anyone can send you an @ message. There are people on Twitter that have thousands of followers and I assume they receive hundreds of @ messages. I have no clue how they cope with it, but I believe only few of us would put up with such flurry of messages. And how long will it take until someone creates a bot that listens to specific keywords and sends out @ messages to the people that used those keywords? Imagine you send out three tweets and receive nine spam @ messages. That may not seem severe but I think you get the idea. So, is the @ message functionality doomed once Twitter grows even more popular?

Furthermore, Twitter applications will need to become much smarter to be still practical once it does hit mainstream. For example, I am thinking of the dozens of RTs, which go unfiltered at the moment. Threaded replies (yes, I do have the Greasemonkey script installed, but I am mostly using Tweetdeck) would make life much easier, especially if someone responds to a tweet a day later and you have forgotten about the original tweet. If you have a conversation with two people it would be great to simply reply to the thread and it goes automatically to both recipients. Or would that open the door to spamming and we would see a CC functionality in disguise?

Abuse could become a significant issue for Twitter. We have seen that already happening, when Twitter accounts of high-profile people were hacked and sent out spam messages. Jeremiah Owyang fell vicitm to another spam spoof a couple of days ago, in which supposingly a bot created various Twitter accounts just changing one letter of his account and following thousands of people. Twitter is already plagued with spam followers, which is nothing serious but simply annoying. In the future another nuisance could be that spam twitter accounts are created en masse sending out messages to each other using specific keywords or hashtags. The more there are the more likely it is that the Twitter Search will be polluted with those messages.

Openness can be a blessing and a curse at the same time. I am very curious to see how our behavior and usage will evolve with the growing popularity of microblogging and how technology will cater for those sorts of changes. Maybe I am just overly concerned and microblogging does scale. That’s for you to decide. I would be very interested in hearing your thoughts.

Oh, and I am @christoph by the way.