Making Progress with Social Media

Marketing expert Deborah Overdeput suggests three main reasons why Social Media is important to business. She says it allows a company to build a community and engage in two way dialogue with customers, the media, partners and other key external stakeholders, and internally with employees.. It allows for collaboration through what Social Mediaistas call “crowdsourcing,” to enhance products, gain insights, and improve customer service. And, it enables a company to reach a broader market with fewer dollars.

Brian Solis recently posted data from a Visible Technologies and Sirius Decisions survey (from the eMarketer website) on the reasons US B2B companies use social media. The top reasons correlate with Deborah’s.

As Polis says, “perhaps one of the more understated benefits of social media in B2B is the ability to establish and foster expertise within a given industry or niche. Everything comes into focus by reverse engineering who you need to reach, at what level, where they go for answers and direction, who do they look to for insight, and who are they connected to and why.”

And, buttressing all this, a recent post discussed McKinsey’s global survey and how it showed steady, substantive increases in Social Media and Web 2.0 adoption rates and investment plans by business with a focus on Social Media.

But many people don’t yet see the value. They may be willing to “friend” you, but haven’t begun to see the business or commercial value. It’s alien or geeky:

You may agree that it’s geeky and take no interest at all. You may think that the acolytes of blogging and twittering and wikis are not only wasting their own time but yours in taking so much of the corporate agenda jabbering over tools that your kids use to arrange Mall Dates.

Working on Step 2

It’s a sure bet that some businesses are better suited to the use of Social Media than others. I believe that Social Media is relevant, to some degree, to all business and it’s a matter of fit whether it will drive or merely support your company’s delivery of messages and interaction with markets. What you don’t want to have happen is to be firmly in the doubting camp when the Social Marketing success is achieved transforming you instantly from a challenger to a Luddite.

One thing to watch for is small victories in the use of Social Media to cut through the layers of your business. Consultants like to talk about crossing or cutting across and through silos. Some call it “disintermediation.” They mean taking out intermediate steps, processes, systems and people no longer needed to get to an end point. It may be a long time, or it may be tomorrow, but a Social Media’s success at this is likely to occur in your business and you don’t want to be the last to know.

In a much simpler time (1980’s) I witnessed a sea-change from the first top-down use of e-mail inside DuPont. Before PC’s were ubiquitous the head of a small division within the Textile Fibers department embraced e-mail via CRT’s attached to minicomputers as a method to questions directly of people down the management chain. He quickly established direct flows of information with experts on plant floors or in engineering labs who were elated to talk directly to the boss about production issues and opportunities. He was able to ask his direct reports what they were going to do about things that they often did not yet know were going on. He drove the division to cut 9 management layers to 4 and to greatly speed up decision-to-action cycles. His division became leaner and faster and more successful, he was promoted to head the department, the entire department transformed and those who insisted on the traditional flow of reports from manager to manager to manager lost roles and influence.

In a recent McKinsey interview, Andrew McAfee of the Center for Digital Business at MIT’s Sloan School was asked how business will make progress in the use of Social Media. McAfee “[finds himself] agreeing more with the top-down crowd, though. We know how important it is for management to create culture and to signal what’s valued inside the organization.”

I agree. There must be activity on both ends but the sea change is imminent when someone, from a top-down perspective starts his or her “disintermediation” between themselves and market awareness and interest.

If you are a skeptic about your company’s use of Social Media don’t criticize the faddishness or the geekiness of the technology. Whether you’re the decision maker or a participant/observer in management do challenge the Social Media efforts to create a new flow of information, findings, hypothesis and decision making within the company. In the same manner, challenge the efforts to create interactions about markets and within markets, especially interactions external to the company and about needs and opportunities that you should address (versus, perhaps, the ones you are addressing).

Because Social Media flows inside and outside the company you may need to look less for a reduction layers (as in the 1980’s) and more one of creating a 360º perspective on strengths, weaknesses, opportunities and threats. As McAfee says, you can lay the tools out there but you must participate. In Social Media it is not enough for the company president or head of marketing to have a blog but her blog has to allow for comments and feedback. It must be a successful vehicle for company participation in conversations, internal or external, without going through 20^th Century layers of managers and processes.

Wither Web 2.0?

Recently McKinsey and company published some summary data from their third annual survey of over 1,700 companies on their use of Web 2.0 technologies. To see McKinsey's summary go to: http://www.mckinseyquarterly.com


Looking at their data there are a few things one can observe:


1. Adoption of Web 2.0 technologies is strong. For both internal and customer focused uses it is increasing but uses involving partners and other external parties has not changed:

Adoption rate by Community of Interest by Year
(source: McKinsey 2009 Web 2.0 Survey)

2. Increased adoption means that most firms are increasing or maintaining their investments in Web 2.0 technologies:

Future Investment Plans for Web 2.0
(source: McKinsey 2009 Web 2.0 Survey)

This section of the survey also indicates that the number of companies who were not sure of their investment direction had dropped significantly from 30% in 2007 to half that today. People are making up their minds that Web 2.0 matters to business.

3. There are a handful of Web 2.0 technologies that make up most of the use:

Web 2.0 Applied Purposes
(source: McKinsey 2009 Web 2.0 Survey)

Social Networking (e.g. Facebook-style technolgies) and blogs lead the list. Video sharing is big, especially with the otherwise tepid Partner/External category of uses. Peer-to-peer uses (e.g. Napster-like technologies) have fallen from being used by 34% of respondents in 2007 to only 10% today.

McKinsey has not published on the public site the business functions that these technologies have been put to. Other sources cite listening to and engaging with customers, in customers' own words, about their thoughts on products, services, values and brands through Facebook and similar services and through blogging and watching the feedback. Video sharing allow for rich communication and is used to help solidify understanding between firm and partners.

The big technology for Internal use is wiki's presumably replacing or extending the capabilities of internal web portals.


Marketing professionals are the most prone to use Web 2.0 at 73%. Leaving IT participation aside, the remaining functions, in descending order, are Sales, R&D, Service and Production/Operation at 51%, 49%, 41% and 34% respectively.



Working on Step 2:



It is apparent that what is collectively known as Web 2.0 technology will be important to business for some time to come. In many cases it will be transformational. In any meeting with marketing professionals it tends to come up and is rarely far from top-of-mind. The rest of us have to catch up and get aware.



One obstacle, the terminologies will be a bit murky for quite a while. If you read the commentary on the McKinsey site (see below for the link) the complaint is made that the names McKinsey has chosen for technologies are not "standard." Nothing is. In discussions with experts they will say "I'm not sure what is meant here by "rating" but..."



The bigger obstacle is that unless you use Web 2.0 in a more serious way than voting for the most attractive head of state (this week on Facebook) its difficult to effectively understand what Marketing is trying to accomplish, how you can help, and how you can extend the impact of their plans.



Sooner, rather than later, a competitor will develop an effective way to take the input from Web 2.0 interactions and directly, swiftly, and in an agile manner inform product development, delivery and service faster and better than others.


Here's a link to a recent post about the obstacle companies face in adopting social media: Five Reasons Corporations are failing at Social Media

Don't fail.

Distributing Sales Leads

I was reading a McKinsey white paper on managing IT costs in a downturn and was struck by an otherwise typical and innocent statement. In describing a case-study in a retail bank they wrote, “A team of business and IT staffers reviewed branch operations and quickly identified areas where focused action could produce substantial gains. The distribution of leads to the sales staff was automated, and more of them were directed to reps with the best performance in previous campaigns” (italics mine).

In a “normal market,” in a market that Nicholas Taleb might describe as being in Mediocristan, this makes eminent sense. If a group of 100 salespeople are equally given a fair share of leads in a campaign some will flourish, most will produce reasonably, some will fail. In the next campaign we’d all give a few more leads to the flourishers. Most sales management will have dismissed those who failed.

If we applied this logic to recent investment banking events then the sales staff to keep are those who successfully and willfully sold exotic mortgage backed securities and CDO’s. In mortgage banking it’s the brokers who sold Sub-prime and Alt-A products, the “liar” and adjustable loans who would be relied on to lift us out of our doldrums. These were the salespeople with highest revenues. They were also the salespeople who did the most harm to the company.

Working on Step 2:

It seems to me that instead of directing leads to the sales staff with the best performance in previous campaigns one should direct leads to sales staff best aligned with current and future campaigns who also demonstrate the professional ability to perform. Today an investment bank, or a mortgage brokerage, might keep the sales people who can sell AND balance short and long term risk, who can communicate value and transparency.

The company would want to understand the skill sets needed going forward, adjust the sales plan to reflect the behaviors preferred, and reward staff that meet today's needs first and foremost.