Creating Value Beyond the Firm's Boundaries: Networks, Social Media, and Virtual Worlds

The Third Industrial Revolution?Creating value beyond the firm’s

boundaries

Dr. Robin Teigland, akaKarinda Rhode in SL

Associate ProfessorStockholm School of Economics

www.knowledgenetworking.orgwww.slideshare.net/eteigland

Photo: Lundholm, Metro

April 2010ww.sse.edu

"...when the rate of change outside an organization is greater than the rate of change inside, the end is near...."

Jack Welch…

Did You Know? Shift Happenshttp://www.youtube.com/watch?

v=jpEnFwiqdx8&feature=fvst

What does this mean for organizations?

http://www.personalizemedia.com/garys-social-media-count/

Growth

Time

Information and knowledge

Human absorptive capacity

Human capacity cannot keep up…

Cohen & Levinthal 1989

”No one knows everything, everyone knows something,

all knowledge resides in humanity.”

networks

Adapted from Lévy 1997

6 degrees of separation Everybody is connected to everybody else by no more than six degrees of separation.

“Small World Phenomenon” by sociologist Stanley Milgram, 1967

Leveraging external resources to find solutions and solve unsolved problems

A shift from being problem solvers to solution finders

The wisdom of the crowd

ClosedExpensiveComplexAccurate

OpenInexpensive

SimpleClose enough

Hinton 2007

Accurate

History tends to repeat itself….Innovation, financial crisis, industrial revolution,

…

Steam engine

Internal combustion

engine

Microelectronics

Late 18th C Late 19th C Late 20th C

Schön 2008

Third industrial revolution?

A new workforce is appearing…

Prensky 2001, Beck and Wade 2004, Mahaley 2008

“Digital Immigrants”“Digital Natives”

Company loyaltyWork ≠ Personal

Learning=Behind the desk

Professional loyaltyWork = Personal

Learning=Fun and games

The older generation of leaders

As of June 2009, of the Fortune 100 CEOS….2 CEOs have Twitter accounts but no activity13 CEOs on LinkedIn but only 3 have >10

connections 19 CEOs on Facebook but <15 friends75 CEOs on Wikipedia but nearly 33% of these

have limited or outdated information0% have a blog

http://www.slideshare.net/shazza/fortune-100-ceos-and-social-media?type=presentation

Facebook: Only for people I have met in real life. Mainly friends but also colleagues and managers

Google Reader/Buzz: All blogs that I read as well as alerts on specific words. A lot of sharing among friends

LinkedIn: My resume online, one of the first links you see in Google

My Blog: Interaction with other bloggers, allow me to write down my own thoughts, makes me pay more attention. A good way of showing who I am

Twitter: I learn new things everyday, people share links to interesting posts, articles etc. Good place to network and get to know people in your field

Enckel 2010

Enckel 2010

Building skills in virtual environments

My CV• Leading a virtual team of 30

individuals from across the globe• Creating and successfully executing strategies under

pressure• Managing cross-cultural conflict

without face-to-face communication

The last generation to “attend” college?

http://features.csmonitor.com/innovation/2009/10/15/the-future-of-college-may-be-virtual/

Increasing pressure on “traditional” organizations

Formal organization/ Hierarchy

Social organization /Heterarchy

Teigland 2003

My company has blocked my computer from

accessing most of the social media sites. But I feel so cut off from my network. So, now I just

connect through my phone.

But management cannot mandate social relationships

Teigland & Hustad 2009

Empower and trust employees

Policies written by IBM employees based on IBM’s

Business Conduct Guidelines

Apply internally and externally

Available on ibm.com“blogging guidelines”

Adapted from Poole 2008

BA

While A and B have the same number of contacts,….

…they have very different access to resources,

BA

….thus impacting performance

BA

Poor creativity and

innovative performance

Highcreativity and

innovative performance

Teigland 2003

Using the social web to leverage external networks

Adapted from FredCavazza.net

My definition of social media

Internet-based technologies that ..- enable communication &

collaboration… - through user-generated

content….- from one-to-one to

many-to-many people…- across all boundaries

Teigland 2010

Companies span the full range of use but….

Organizational use

Employee use

No use

Ban use

One-way “broadcasting”

Allow use

Encourage use

Two-wayconversations

..the majority are

here

Teigland 2010

Organizations primarily use social media for branding…..

  Blogs YouTube Facebook Twitter LinkedIn

Branding 30% 28% 23% 12%  

Customer relations 24%        

Innovation 28%        

Networking     25%   25%

Marketing   28%      

Employee communications 23%        

Learning & training   27%      

Business intelligence 26%        

Future employees     15%    

B2C companies are more active than B2B

Teigland 2010

Positive return on social media for INC 500

companies

Barnes & Mattsson 2009

No

Yes88%

12%

If you use social media, has it been successful (hits, comments, leads, sales)?

$6.5 million as o

f Dec 2009

Where are the sources of sustainable competitive advantage?

#1Innovation

Networks of relationships

Brand & Reputation

FIRM

Kay 1993

Where are the sources of sustainable competitive advantage?

#1Innovation

Networks of relationships

Brand & Reputation

FIRM

From Brand owners to Brand advocates

“Organizations no longer own their

brand…rather they should see their

brand as a relay race baton that people should pick up and pass on to others.”

Berlin, CEO Silver, 2009

Creating value through external conversations

ExploitationImproving

existing value creation activities

ExplorationDeveloping new value creation activities

Adapted from March 1991

BART strengthens public transit and communities through interactive games using Foursquare

http://www.youtube.com/watch?v=Ryne05wiQ_chttp://www.bart.gov/news/articles/2009/news20091022.aspx

What came first – the community or the company?

http://www.youtube.com/watch?v=9VKRbmnqXR4

eZ230+

Partners

30,000+Communitymembers

5,000+Customers in 130 countries

Ez Ecosystem

• #1 open source content management software

• Customers include UN, Vogue, Hitachi, 3M, MIT

• 75 employees in 9 countries (US, Europe & Asia)

The backbone of eZ Systems is supporting networks through social media - throughout the value chain

Innovation in the eZ ecosystem

Here comes the Immersive Internet

O’Driscoll 2009

Around 150 virtual worlds

600 mln users

What are Virtual Worlds?

• Persistent, computer-simulated, immersive environments

• Shared space/co-presence with possibility for socialization and community

• In some cases, ability to manipulate/create content• In some cases, virtual economy and currencyhttp://www.youtube.com/watch?v=wMOqI3hH9Gs

“Clearly if social activity migrates to synthetic worlds, economic activity will go

there as well.” Castranova

http://www.youtube.com/watch?v=-ahqjBeknT0

• USD 3 bln in virtual goods sales in 2009, to grow to USD 12 bln in

2012• Swedish government granted bank license to virtual world Mind Bank

in 2009• USD 330,000 for virtual

space station in 2010• Growing number of

entrepreneurs & millionaires

Gartner’s hype cycle

Virtual World

s today?

What financial crisis?

Increasing members Increasing turnover Increasing companies

Wonderland

Virtual world revenues

USD 3bln in 2009

US spending on virtual goods passes USD 1 bln in 2009

USD 330,000for space

resort

Facilitating the virtual workforce through virtual worlds

• Completely private virtual business worlds offering tools to conduct business and collaborate

• Fortune 500: IBM, Intel, Johnson & Johnson, Motorola, Novartis, Sun Microsystems, Unilever

Improving training and education

Improving virtual teaming and cross-cultural skillsDesigned by Duke CE and SSE inworld

Task: To build a bridge in your virtual team

http://www.youtube.com/watch?v=N8XPmp0qGyg

Finding and recruiting talent globally

• Amazon.com job fair

• Benelux job fair• Accenture island

• IBM island• Entrepreneurs

• Microemployees• Pro-Ams

New possibilities for marketing

Project led by Florida State UniversityNew brands designed and showcased during

annual Miss Calypso on Planet CalypsoResults reveal that VWs enable engaging

brand experiences that go far beyond 2D webpages

Hooker et al. 2009

Redgrave – A virtual boutique in Second Life

• Numerous stores selling all kinds of wares and services in-world

• International customer base• Easy payment scheme: Microtransactions

• Global work force: Microemployees

Will the playing field for SMEs be leveled?

Giovacchini et al. 2009

Innovation workshops bring

together users from across the globe

The University of Texas goes inworld

53

https://blogs.secondlife.com/community/learninginworld/blog/2009/09/15/the-first-statewide-rollout-of-a-virtual-world-learning-environment-the-university-of-texas-system-in-second-life

Which professions and industrieswill not be revolutionized?

From the mobility of goods to the mobility of financial capital to …

...the “mobility” of labor?

Interested in learning more about Virtual Worlds?

So, what does all this mean?

Organizations have to ….develop their employees’ network leadership

skills to build their networks globally - both inside and

out

leverage social media− to win the war for talent

− to innovate for continuous competitive advantage

− to build their reputation and brand

− to build their networks across numerous boundaries

cultivate an open, knowledge sharing culture

Leadership moving forward……

If you love knowledge, set it free…

HierarchyLinear, static, process-

based organization

HeterarchyDynamic, integrated

collaboration networks

Teigland 2010

DNAug 20, 1996

Thanks and see you in world!

Karinda Rhode

aka Robin Teiglandrobin.teigland@hhs.se

www.knowledgenetworking.org

www.slideshare.net/eteigland

Photo: Lindholm, Metro