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Social – good for business?

MARCH 2013

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EXECUTIVE SUMMARY Four in every five Internet users are on social networks – that’s something like 1.43 billion

users connecting via wikis, blogs, Facebook, Twitter, Tumblr or any number of other existing

or emerging shared spaces.

While the purpose of each social site may be different, the reason people use these sites

is arguably the same: people want to participate, to be a part of something bigger or to just

gain assurance of their place in the world.

We play different roles in social too. It’s often noted that less than 10% of people on

the Internet are creating or changing content. The rest are watching. Yet whether as

a contributor, driver or voyeur, all Internet users are participating at some level.

Our participation in online social networks is often for the benefit of our offline world.

That dress we saw our friend’s friend wear on Facebook becomes the style we want

to wear. Your mate encourages you to sign up on a blog so you can agree to his/her

choice of eatery for when you next meet.

It’s part of human nature; people want

to participate, and that’s true at work

just as it is in other parts of our lives

Ross Chestney, head of

communications services

at BT

“

”

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For most of us, social networks are still something of a personal affair, something we use at

work but not necessarily for work, or at least not in an official manner. We flick between our

inboxes and our social networks. We interrupt sometimes more menial tasks with something

lighter, like scrolling through Facebook.

Many businesses find this interruption a threat to productivity and take the seemingly

extreme measure of blocking social networks in the work environment. They assume

employees will be more efficient if they are restricted to a more formal set of work tools,

such as emails, meetings and PowerPoint presentations.

An [enlightened] minority of businesses, however, believe the opposite. They have

augmented their traditional tool chest with social networking tools and practices.

Rather than seeing social networking as something to be controlled, they embrace

the participatory nature of social networks, the collective action it spurs and the

transparency that it demands.

They create and encourage new connections between employees, suppliers, partners

and consumers and are gaining efficiencies of a different kind. Rather than efficiency being

measured by silo outputs, a social business gains efficiency by sharing tasks across the

business. Ideas are sought from a broader range of stakeholders, with improvements being

made to a range of less obvious measures such as turnaround times, speed to market, and

customer responsiveness.

The culture of a social business is happily suffering from hierarchical anemia. Processes

exist to be challenged and the lines between employee, management, suppliers, partners

and customers are increasingly blurred. These social businesses endorse cross-pollination

and as a result the ecosystem begins to operate more organically.

Like every popular mode of communication, social networks have had an impact on how

we view or understand the world we’re involved in. The immediacy of social and its content,

however, allows that view to be more agile; that understanding, more fluid; the solutions we

put in place, more flexible.

Social businesses are arguably the next generation of business; a new model of operating,

and interacting. They are businesses where success is based on the participation of all,

rather than the outputs of a few.

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The term “social business” is not new but it is the use of this term combined with the idea

of a business model that is.

A social business model is one that lives, breathes and accepts social networking

tools and practices as the cornerstones of communication, knowledge sharing and

interaction. A social business has arguably accepted that collaboration is better than

closed doors; that the opinion, insight and drive of every employee, customer or partner

are valuable. More than that, it provides assurance and creates virtuous feedback loops,

recognizing the value of all contributions made.

SOCIAL BUSINESSTime to participate?

A social business is an organization that has

put in place the strategies, technologies and

processes to systematically engage

all the individuals of its ecosystem

(employees, customers,

partners, suppliers) to

maximize cocreated

value.

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http://darmano.typepad.com/.a/6a00d8341bfa9853ef0168eb2e0b4c970c-pi

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The idea of a community-based business model, where everyone in the company

ecosystem cocreate happily may sound a bit utopian and even proponents agree that

theory and reality take time to come together.

Fad or not, few can deny that social networks have changed the way people and brands

interact. Social media has enabled every brand to become a publisher and to start an online

community. Social media is real time. It breaks down the walls between those “inside” the

business and invites those “outside” the business, in. Consumers can interact with a brand

in ways not seen before. A brand that interacts and is responsive and transparent can

quickly become a hero — and just as quickly become a villain if consumers feel disengaged.

Yet for many brands the free flow of participation and engagement hasn’t happened and

instead, the results in social have been poorer than anticipated.

BUSINESS FAD OR SMART REALITY?

Only 9% expect to fully integrate

social technologies across

the business.

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There are many possible reasons for poor results in social, however, it is hard to deny the

impact of conservatism, overzealous moderation and lack of feedback as reasons why an

online community fails.

If we think about the way people interact in the real world, we see that communities are

usually born of a shared interest. Communities need leaders to inspire and guide them but

actual participation is often moderated by instinct and a moral compass. Equally, each

community member knows that there will be an exchange of value and will participate within

the rules on this assurance.

Clever brands know this about communities, which is why there is an abundance of

cocreated campaigns. Whether like LEGO Factory, where cocreation is about harnessing

passionate loyalists to imagine new block shapes, or Doritos, who sourced advertising

content from creative consumers, the customer-made trend is not new.

A social business model operates in much the same way as cocreated campaigns,

but bigger. The model recognizes how people interact outside of the work environment

and understands that if participation is encouraged, the pool of ideas a company can draw

from will expand. The more people on the web, the more combinations of possible ideas.

Yet despite the plethora of proof points and the accepted appetite for cocreation and open

social networking, few businesses seem to have adopted a social business model.

If consumers have authority to cocreate products or advertising simply because they use

said products, surely those who work in the business, and within the wider business

ecosystem, have equal, if not more authority, to cocreate too.

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Those that have adopted a social enterprise model are undoubtedly ahead of the curve.

IBM has been a leader in social business for years, adopting several different models

to satisfy the needs of all stakeholders, from internal employees now preferring social

platforms over email, to external tech consultants utilizing such platforms for learning

and training purposes.

As an undisputed leader, IBM using its 2012 Social Business Study to better understand

why the lag in adoption of social business models. The critical finding was a lack of

knowledge. A critical gap is apparent between executives’ knowledge of social media

and its uses for the company.

Ahead of the curve

A 2012 study by AIIM indicated that while

“two-thirds of businesses are now using

social technology for marketing and

related functions” only 9% expect

to fully integrate social

technologies across

the business.

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The desire to increase social technology investment is high (46% of companies), but the

surety about the impact of increasing the reach of social across the business is much

less ambitious.

Connecting with customers on social networks outside company walls is well understood

but bringing that technology within company walls is still the purview of those at the leading

edge of the adoption curve.

http://zdnet.com/blog/hinchcliffe

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Under the construct of a traditional business, the propagation and development of ideas

can be difficult. Consider that for every four projects that enter development, only one makes

it to market or that at launch, at least 1 in 3 products fail despite high development costs,

deep research and planning.

New projects are often conceived from lengthy market research and bought to life by the

work of a few. The research can become outdated as the development process ensues,

and as time is taken to engage individual stakeholders and groups.

Rather than gating ideas as “necessary to compete,” or “testing well in research,” a social

business uses the amplificatory nature of social to generate a larger pool of ideas. It uses

this larger number of ideas and a more ready pool of contributors to test, develop, retest and

refine the ideas in real time.

“KNOWLEDGEMENT” VS. MANAGEMENT.

At launch, at least 1 in 3 products

fail despite high development costs,

deep research and planning.

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These options are still funneled, even moderated, by the business but it is the open-

source approach to problem solving (or open innovation) that allows a social business

to be adaptive, responsive and even, at times, leading edge, in their market.

Like with all social media led activity, the more attuned you are to what’s being said,

the more successfully you can find the germ of a great idea. Moving from managing

the data to knowing what the data is telling you is key for a social business model

to succeed.

There are two types of data a social business needs to look out for. Big data — aptly

named and referring to identifying patterns amongst the plethora of small data points

flowing in on a daily basis. And individualized data – not only acknowledging individuals

but understanding how individuals operate within the group that is formed. As with any

community, some individuals will speak louder and more often than others.

Big data is the navigator: helping to find new routes, provide direction, and steer the

business towards the right opportunities. It requires a shift from churning out finished

activity to sifting through enormous data points, processing these, and plotting actions

to be seeded, discussed and formulated.

Individualized data is about appreciating the value of contributors.

Value could be expressed as knowing how to tap into the value of members of the

ecosystem. Within businesses, there is often a mountain of knowledge, ideas and

information — amplified by the increasingly transient nature of careers.

Critical business knowledge can be hidden in minds and archived filing systems or lost

in printed papers and notebooks. And those gems are known about by a few.

Using social tools, this insight and knowledge can be teased out more readily.

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The value an individual brings to a social business could also be seen as their ability to rally,

contribute, and create action.

Either way, individualized data if monitored ensures contributors are recognized. A study by

Insites Consulting in 2012 claims that “eight out of 10 consumers want to help in cocreating

projects of companies they like. The only thing they ask in return: give us feedback on what

you do with our input.”

That idea of feedback is also what governs social communities. But more on that later.

Having more ideas, greater access to knowledge, and a more traceable timeline of that

information is undoubtedly compelling. Trickier is step changing a business enough to

be able to take advantage of the benefits offered by a social business model.

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http://visual.ly/what-big-data

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More ideas, cocreation, cross-pollination and data management add creativity to a

business. But that is only one part of implementing a social business model. The right tools,

processes and attitudes are needed to truly build a social business model; to take ideas

to market and add agility to the equation.

British Telecom has implemented a social business model. They saw a shift in protocols,

attitudes and culture as adept digital natives, a group of young people used to conversing

via social networks began entering the workforce. They used chat and networks more

readily for discovery than did their older counterparts, and challenged hierarchical

expectations and boundaries.

“They function differently; they are informal and will fire stuff off quickly to anyone, they are

not scared of picking up the phone and speaking to the most senior manager. This breaks

down the traditional business barriers, a culture where people hid comfortably in their silos.”

But more than that, British Telecom saw the benefits — not expressed in traditional bottom

line business metrics — but in the participation and engagement levels of employees.

So they added tools: blogs to test ideas and communicate lessons gained at conferences

or external meetings; Sharepoint as a project workspace to enable additional project team

collaboration; digital channels to communicate news, announcement or encouraging

podcasts of user generated material; and of course social networking tools to connect

people through skills and interests.

Breaking down silos between teams and encouraging cross-pollination of ideas requires

businesses to smash existing expectations of hierarchy. A graduate may just as likely hold

the key to a complex business problem as a tenured manager may.

BECOMING A MODEL OF SOCIAL BUSINESS

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And it is the openness of a social business model that can be the most difficult for

businesses to adapt to. Industries have been built around corporate communications, brand

reputation, and top-down, need-to-know management styles. Trusting everyone within

the business ecosystem can be difficult when transparency is increased. Even proponents

agree that there is an increased risk of indiscretions.

But the social business needs to balance this with the understanding and belief that few

employees actually want to damage the reputation of the brand or business they work for.

Most businesses today have already deployed guidelines and/or training in social media,

and the most successful social business models used encourage responsible practices

and communicate their belief in their employees over deploying stifling control tactics that

limit interactions or quash creativity.

Equally, the system can be self-policing. Many psychologists have studied the

Prisoner’s Dilemma and know that the what-if scenarios plotted by this dilemma can

be counterbalanced by assurance: that is, knowing the cost-benefit of each scenario.

It proposes that humans are less likely to be simply altruistic in their decisions to signal

a cheat or thief, their decision, and more likely instead to weigh up the need for collective

action if one or two in the group threaten the security of the others. In simple terms,

the feedback loop will be self-policing so long as you provide assurance that you

are listening.

Toyota is another company employing social business practices across its ecosystem.

Breaking down traditional supplier barriers, Toyota began to train suppliers in how to

best organize their business to satisfy the industry. This training and openness wasn’t for

altruistic purposes. Toyota knew they were benefiting their competitors also. But, they knew

they would have the same benefits as their competitors with the added advantage of a

highly engaged supplier network.

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Unfortunately, traditional ROI measures aren’t applicable when assessing the benefits

of implementing a social business model. Those operating a social business model

seem simply to cite the value to the business as self-evident.

Self-evident, however, is a difficult sell in any culture-changing, technology-dependent

business case!

Better then is to talk in terms of comparisons. When shifting from offline to online, email

businesses measured the move in terms of productivity — or the efficiency of workers.

But the definition of productivity has changed since the advent of email. Remote work

spaces and an always-on mobilized work-force are efficient.

Rather, social businesses look at the efficiency of the entire ecosystem, using measures such

as improved speed to market of NPD, response times, customer sentiment, and employee and

supplier engagement. Putting a line in the sand as to how much a social business model will

improve these attributes is arguably linked to how open and agile the social business model is.

SIMPLE METRICS

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Whether we’re interacting within a social circle, adding our creative voice to a collective one,

or simply scanning, absorbing and commentating offline, for most, social has amplified our

ability to imagine more than what we see everyday.

Before, we may have accepted what we had heard on the news, but now we can challenge

the reported media and investigate new opinions. Before, we may have accepted the town

gossip, now we can hear more from the horse’s mouth. Before, we may have struggled to

solve a conundrum with a few trusted colleagues, but now we can open source solutions.

Participation in social isn’t altruistic; it is arguably driven by self-interest and it is this that

makes social such a powerful tool not only in our private lives but also in business.

The challenges posed by social media have confounded many businesses. Social media

is real time. It does close the gap between businesses and consumers, increasingly placing

much of the control of the relationship in the consumer’s hand.

A social business model conceivably dilutes this control even further. But a new control

arises. Shifting from churning to channeling, from management to “knowledge-ment.”

It does sound utopian. But also very efficient.

TIME TO PARTICIPATE?

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Most businesses today recognize there are benefits to be reaped from a CSR program,

but often the issue is less about desire and more about mobilizing your community to act.

American Express tackled mobilization through social, creating a multidimensional

charitable program that works only if the AMEX community gets involved. Aptly named

“The Members Project,” the narrative is simple: change is possible if we take it one step

at a time.

Using Facebook as the hub, AMEX presented fans with multiple opportunities to make

a difference, whether by donating, voting for a charity to receive funds, volunteering or

simply telling friends via a social share.

To amplify the project, AMEX partnered with Glee, adding an element of celebrity, and,

at the same time, introduced multiple channels through which they propagated their cause

and intent. From TV to cinema, every reference drove fans back to social channels using

interactivity and tangible member rewards to encourage action.

Social good came from social networks.

Through co-creation, participation and

reward, encouraging a broader community

to help shape AMEX’s CSR program, this

model has resulted in millions being donated

to fan-selected charities, chosen from a base

of over 750,000 fans.

CASE STUDY: AMEX MEMBERS’ PROJECT USING SOCIAL MODELS TO DRIVE SOCIAL GOOD

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• Institute of Electrical and Electronic Engineers 1978, . C. R. Licklider and Albert Vezza

• http://socrates.berkeley.edu/~scotch/innovation/inventing_email.pdf

• http://www.ted.com/talks/howard_rheingold_on_collaboration.html

• “Can Social media show you the money’ David Taylor, Market Leader, Q1, 2013

• “Social business: a way to reinvent marketing”, Mahesh Enjeti, Market Leader, Q1, 2013

• http://www.socialbusinessforum.com/what-is-social-business/

• British Telecom Case Study http://richarddennison.files.wordpress.com/

2008/09/ci-digital-generation-bt.pdf

• http://searchenginewatch.com/article/2167518/Worldwide-Social-Media-Usage-

Trends-in-2012

• “Social Business Design” Dachis Group: Jeffrey Dachis et al. 2009

• Rick Smolan: Can Big Data Change Who You Are?

• http://www.youtube.com/watch?v=8CrwICToUqw&list=PLE50FC91A844EEC33&index=6

• 4 Great Ways to Leverage User Generated Content, Sept 2012

• http://www.postadvertising.com/2012/09/4-great-ways-to-leverage-user-generated-content/

• Co-Creating Brands and Campaigns via Customer Communities, 27 Nov 2012

• http://www.slideshare.net/TomDeRuyck/cocreating-brands-campaigns-

via-customer-communities

• When Co-Creation becomes the beating heart of marketing, Companies Win, 29 Nov 2012

• http://www.fastcompany.com/3003448/when-co-creation-becomes-beating-heart-marketing-

companies-win

• http://en.wikipedia.org/wiki/Social_business

• http://midsizeinsider.com/en-us/article/struggling-with-social-media-study-find

• http://www.gsb.stanford.edu/cldr/research/surveys/social.html

• http://hbr.org/web/slideshows/social-media-what-most-companies-dont-know/3-slide

References

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About the Authors

Maggie ChristieDirector of Integration, Proximity Auckland.

With over 25 years in both client and agency sides, Maggie has recently

joined Colenso BBDO to help continue the evolution of the Colenso BBDO

and the AIM Proximity model.

Her experience spans Europe, North America and New Zealand, and across

multiple industries – financial services (Lloyds Insurance, UDC Finance,

Bank of New Zealand, ANZ), telecommunications (Telecom and Vodafone),

Utilities (Contact Energy), Loyalty Programs (Loyalty New Zealand

– Fly Buys) and many other industries (Yellow, SkyCity, etc.).

Maggie is a passionate direct marketer who was integral in the startup of

AIM Direct Wellington (later AIM Proximity) and, more recently, RAPP Tribal.

She understands the importance of insights to drive results and ultimately

provide effective business solutions whatever the channel.

Phone +64 9 361 0100

Mobile +64 27 205 1710

Email maggie.christie@proximity.co.nz

Michegro Chisholm

Michegro is a Senior Planner and Strategist at Proximity Auckland in

New Zealand. She is an experienced direct practitioner with a strong

background in both agency and client sides of the business. Michegro

is part of the wider Proximity Auckland team; the number-one direct

agency in the world for 2013.