Social search causing creative destruction

ByJensGregersen:Iampassionateaboutturningideasintoprofitableconsumerandexperienceorientated businessesbeingnewmarketentries,ornewproductsinexistingmarkets. StayconnectedLinkedIn

WiththeintroductionofsocialsearchbyBingandGoogleonMayandAugust2011astructuralanddisruptive changetookplaceonline,whichwillhaveadirectimpactontheprofitstrategiesofmostbusinesses.Thisarticle describesthelogicandpremisesofthesocialmediaeconomy,howitalterscustomerbehaviour,andfinallythe impactonbusinesses. Thefundamentalpremisesofsocialmediaare,first,thatitscontentisusergenerated,andsecond,thatpeople usethesetosociallyinteractwiththeirfriends,family,andincreasinglywithorganisations.Asmoreandmore interactiontakeplaceviasocialmediathesewillincreasinglydefineandshapetheusersreputation.Hence,in thesocialeconomyusers,orcustomers,willincreasinglybuildandaccumulatesocialcapitalthroughactions andexpressionofopinionsonline.

CustomerBehaviourPriorTotheSocialEconomy
Untilrecentlycompaniesoperatedwitharealityof80%ofdissatisfiedcustomerstellingabouthisorherexperi enceto10people(20%wouldtell20people),andthatahappycustomerwouldtelljustthreepeople.Thishas allchangedwiththereachofsocialmedia.Thebadnewsforcompaniesisthatinthesocialeconomyunhappy customerswilltelltheworld,notjust10people!Thegoodnewsisthatahappycustomerwillalsoletthewhole worldknow. Anotherthingthathaschangedwithsocialmediaisthatinanefforttoaccumulatesocialcapitalfarmorecus tomerswillfindthetimeandenergytoexpresstheiropinionsthisisespeciallytroublesomefornoncustomer centriccompaniesasuntiltheriseofthesocialeconomy90%ofdissatisfiedcustomersdidnotcomplaint,they simplystoppedbuying.Thus,theprimarychallengefacingbusinessestodayistomakesurethatcustomersget anexperiencebeyondtheirexpectationsthroughparticipationandconnection(recommendedarticle:Experi enceEconomy:ParisHiltonRetailShopCaseStudybyJensGregersen). CaseStudy:DellHell ShortlyafterJeffJarvishadpurchasedacomputerfromDellhecontactedthecompanyscustomerservice departmentasitsufferedfrommalfunctioninghardware.AfterbasicallybeingignoredbyDellonseveralocca sionshecreatedablogcalledDellHelltosharehisfrustration.Withinacoupleofweekshundredsofother unhappyDellcustomersaddedtheirstoriestothebloghighlightingfundamentalserviceproblemsatDell. WithinweeksthecompanyssharepriceandreputationplummetedandthefounderMichaelDellhadtore turntothecompanyafterthreeyearsabsence.ThefollowingyearDellannounceda150millionUSDinvest mentintothecompanyscustomerservicedepartment.

TheDellHellcasehappenedbackin2005whenFacebookonlyhadacoupleofmillionsusersandTwitterdid notevenexist.Today(August2011)Facebookhasmorethan750millionusers,andTwitterusersaresendinga dailyaverageof140milliontweetsandthesenumbersaregrowingbytheday!Inotherwords,hadtheDell Hellincidenthappenedtodaytheeffectandspeedwouldhavebeenmanifold.

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TheoreticalInsight:SocialCapital In1986Bourdieuarticulatedsocialcapitaltoconsistoftwocomponents;groupmember shipandsocialnetworks,andsymboliccharacterwhichonlyexistintheeyesoftheoth ersinotherwords,symboliccharacterisapersonsreputation.Bourdieuexplainedfur ther,Thelevelofapersonssocialcapitaldependsonthesizeofthenetworkofconnec tionsthatcaneffectivelybemobilized..

DisruptiveBusinessChanges
ManyofthebiggestcompaniessuchasCarlsberg,Johnson&Johnson,andCocaColaincreasinglyunderstand andhandlethenewrealityofcustomersinthesocialmediaeconomy,butunfortunatelythisisnotanunder standingsharedbythemajorityofcompanieswhoconsidersocialmediaasyetaplatformfortraditionalmar keting,hencetheseareoperatingblindlyandwithincreasedrisktotheirprofits.Duringjustthreemonthsof 2011(MaytoAugust)thepowerofsocialmediawassubjecttoasignificantchange,achangewhichundoubt edlywillcausedisruptiontothebusinessworldasweknowitachangewhichfewbusinessmanagersproba blyunderstandthefullscaleofandareunpreparedfor. InMay2011FacebookandBing(Microsoftssearchengine)announcedapartnershipinvolvingFacebooks Likebutton,whichmakesitfasterandeasierforusersofBingssearchenginetoseewhattheirsocialnetwork connectionslikeandaresharing.ThisinitiativewasquicklyfollowedupbyGoogleinAugust2011withthebeta testofGoogle+andGoogleSocialSearchwhichnowincludeblogs,recommendations,picturesetc.inGoogles searchresults.Youmightaskwhythiswillcausedisruptivechangestothebusinessworldwell,considerthe following: ResearchconductedbyMicrosoftsBingTeamhasrevealedthat[]80%ofpeoplewilldelaymakingadecision untiltheycangetafriendsstampofapproval.Theteamalsoconcludedthat90%ofpeoplelistentorecom mendationsoffriendsandfamily,90%!Addtothisthatcustomersdonotlimittheirsourceofrecommenda tionstofriendsandfamily;forexample,whenlookingtomakeahotelreservationcustomersreadandconsider recommendationsandviewpointsfromcompletestrangersinthedecisionprocess. That90%ofpeoplelistentorecommendationsoffriendsandfamilyareconditionsbusinesseshaveoperated underseeminglyalwaysbutthesechangewhenaddingBing,Googleandsocialmediatotheequation.People measuretheirsocialstatus,theybuildandmaintainrelations,andtheyaccumulatesocialcapitalviaonlineso cialmediaandtheinternetistheirmainsourceofinformation.Hence,withBingsandGooglesinclusionof recommendationsandviewpointsofpeoplesconnectionsattheverytopofthesearchresultsthefutureofnon customercentricorganisationslooksexceptionallygrimandhandonheart,themajorityofbusinessesarenot customercentric.Thus,inaworldprominentlydominatedbysocialmedia,businessesareholdmoreliable,and crisismanagementisconsideredafailureandalastresorthappeningprimarilytobusinesseswithoutaseparate socialmediastrategyandcustomerfocus.

SocialCapitalandthePremisesofSocialMedia
Inorderforbusinessestonavigateconfidentlyinthesocialmediaeconomytheymustunderstandthepower andlogicofsocialnetworking.Thecoreconceptofsocialmediaeconomyissocialcapital,whichincreasinglyis beingusedasametricforapersons(orcompanys)levelofinfluence,andisbasedonrelationships,connec tionsandreputation.ThetermsocialcapitalwasfirstarticulatedbyHanifan(1916)andlaterbecamewide spreadknowthroughtheworksofsociologistslikeBourdieu(1972)andPutnam(1995). Littlehaschangedovertheyearsintermsofdefiningsocialcapital,whichremainsacombinationofapersons contactsurface(hisorhersnumberofconnections)andreputationbutnotexclusivelyastheDellHellcase revealed.TheDellHellcasedidnotreachtheproportionsitdidbecauseofJeffJarvisscontactsurfacenorbe causeofhimbeingfamous;hesimplypublishedhisthoughts,thoughtsthatendedupvoicingageneraland

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widespreadproblem.Inotherwords,intermsofcustomerservicecompaniesshouldbecarefulnottoevaluateand adjusttheirresponsebasedontheconceptionofacustomerslevelofsocialcapital.Theonlytimecompaniesmight wanttoconsiderlevelofsocialcapitaliswhenchoosingambassadorspeoplewhocancreateapositivebuzz (startconversations). Inthesocialeconomypeoplessocialcapi CaseStudy:47CharactersWorth1,5millionUSD talisbasedonactiveparticipationinrele InJuly2009ParisHiltonsentoutthefollowingtweet:Timeforalil vantonlinecommunitiesandpublishing napbeforeweland.Socomfy.:)alongwithapictureofherinflight bed.AccordingtoAdnanDawood,anexpertincelebrityendorsement, inotherwords,throughactionsandthe thevaluefortheEmiratesAirlinewas1,5millionUSD! expressionofopinions.Thusduringthe comingyearspeoplewillincreasinglyfeel theneedtohavetheirvoiceheardtoaccu Twoyearslater,August2011,ParisHiltonhas22timesmorefollowers onTwitter,atotalof4,5millionpeoplejustimaginethevalueand mulatesocialcapital,andBingand effectofhertweetstoday.Measuredagainsttheprinciplesofsocial Googlessearchengineshavealready capitalParisHiltoniswithoutdoubtahighworthpersonaandheropin startedgivingthesevoicesaprominent ionsandactionshaveanimmenseimpactonbusinesses. positionamongtheirsearchresults.

MoreSimpleInaComplicatedWay
Asdescribedintheintroductiontothisarticle,beforetheemergenceofthesocialeconomythebehaviourofdissat isfiedcustomerswasmorenuanced,forexample80%wouldtell10people;90%wouldnotcomplain,theywould simplystopbuying,andsatisfiedcustomerswouldtelljustthreepeopleeach.Inthesocialeconomythingsareactu allyfarmoresimple,asjustaboutallcustomerswillsharetheirexperienceswiththeirnetwork(asofAugust2011 Facebookusershaveanaverageof130friends)andindirectlytherestoftheworldviamajorsearchengineslike BingandGoogle!Butthesimplicityendshereasincludingsocialmediainbusinessesprofitstrategiesbynomeansis easy,tosucceedthemajorityofcompanieswillhavetomakechangestotheirselfunderstandingtheirculture.In thesocialeconomyonlycustomercentricorganisationswillthrive,oftherestsomewillbetoleratedbutnotac ceptedbytheircustomers. About:JensGregersen

MonitorSocialMediaActivity

Thisarticlehasdemonstratedtheconsequencesoftheso cialeconomyintheinterrelationbetweenbusinessesand theircustomers,andhowthiswillbedisruptedfurtherin theyearstocome.Itisbeyondthescopeofthisarticleto coverindetailwhatisrequiredforbusinessestosucceedin thesocialeconomybesidesfromthementionofthelikely needforstructuralandculturalchangesacrossmanyor ganisations,butonepracticaladvicecanbegiven. Withforexample750millionFacebookusers(August2011) thereachandexistenceofsocialmediaisnotnewsperse buteventhoughfewbusinesseshavesocialmediamonitor ingtoolsinplacelikeBuzzMetrics,Radian6etc.,theyare blindlynavigatingthesocialmediauniverse.Smallandme diumsizedbusinesseswithlimitedbudgetsshouldatthe veryleastuseGooglesAlertfunctiontostayupdatedon thesocialmediasceneduringtheworkofcreatingacus tomercentricandexperienceorientatedorganisation.Rec ommendedarticle:ExperienceEconomy:ParisHiltonRetail ShopCaseStudy.

ConnectviaLinkedIn Iampassionateaboutturning ideasintoprofitableconsumer andexperienceorientated businessesbeingnewmarket entries,ornewproductsin existingmarkets. Mytrackrecordincludese.g.theintroductionofParis Hiltoncelebritybrandedproductsinto2,500+shopsin 40+countriesworldwide;andtheconversionofa businessideaintotheleadingB2Cecommercein Denmark,Saxo.comwhichconsequentlyledto33% lowerretailpricesonbooksnationwide. Inaworldclusteredwithproductsandservicesoflittle differenceIdeveloplongtermcompetitiveadvantages basedonconsumerorientedstrategiesanapproach whichIhaveimplementedindiverseculturalmarkets acrossEurope,theMiddleEastandAsia. Iamanexperiencedsalesandmarketingentrepreneur withcomprehensiveconsumerorientatedstrategic planningandimplementationskills.

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