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Organizational Theory and Social Media

By

Chester Elijah Branch

Introduction

Social media has an ability to create multi-million dollar products. True enough, Justin

Bieber has received his amount of criticism; but putting that aside, we have to admit that the

sheer power of social media has made him a huge success. In 2007 his mother posted a youtube

video of him singing. By 2008 Usher signed a recording deal with Justin. And in 2009, Bieber

performed in front of the President of the United Sates. In 2011 Bieber Inc. was estimated to be

worth around 100 million dollars. This is all a direct result of using social media to create a

community of ‘beliebers.’ An analysis of organizational design will highlight the need for

businesses to focus on using social media for building virtual communities that will affect the

real world.

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Netflix and B of A

The conventional method for most business organizations is to build a product. They

often create a product or service by talking with the senior leadership team. Then, and only then,

do they use social media as a ‘one-way conversation’ where they mass market their product or

service. Piskorski says this is analogous to a bunch of people sitting at a dinner table having a

good time and then someone pulls up a chair to say ‘hey all! Can I sell you something?” 1

We have recently seen a backlash to these kinds of maneuvers. Take a look at Netflix and

Bank of America (B of A). Netflix and Bank of America made some decisions. B of A decided to

add a five dollar fee for the use of their debit card. Netflix decided to raise the cost of customer’s

who had both video-streaming and DVD delivery in their Netflix package. After making these

developments to their service/product, they used social media to have a one-way conversation

about the policy changes.

When hearing about the hike in fees and changing of policies, thousands of people took

to social media communities on Twitter, Facebook, and the Blogosphere. Most people voiced

their outrage and gathered together petitions. Both Netflix and Bank of America responded to this

huge outcry by resending their policies. They feared the potential loss of customers.

This is what Toffler would call ‘prosumerism.’ Toffler uses an example from the auto-

industry. Say you bought a car and suddenly you discover you have a problem with the

carburetor, or some other part of it. You take it back to the dealer and ask them to fix it but they

ignore you. In the days of Henry Ford’s Model T a customer would walk away helpless. But

now you can go online and say: I just bought a year 2011-12 gizmo, has anyone else had

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problems with this? Before you know it, you could have up to 700 people with complaints and a

potential product liability case.2

It appears that someone either hacked Bank of America’s Google Plus page or someone

created a fake Google Plus page for Bank of America. The reason why it appears to have been a

fake is because their page statuses were insulting to poor people in the world and they were also

flaunting the fact that B of A received TARP bailout money in 2007-08.3 To extend Piskorski’s

analogy, this would be the equivalent of what happens when the annoying sales-person leaves

the table after his sales pitch. The people who were initially socializing begin to mock the sales

person for a while and then they go back to having a good time.

Piskorski suggests that instead of simply transferring digital strategies into a social

environment, companies should start using social strategies. Instead of coming to the table and

saying ‘can I sell you something?’ come to the table and ask something like ‘may I help you all

develop better relationships?’ Now the organization starts off with a higher ambition and a

higher purpose. This structure will greatly affect their behavior and their organization’s

competitive advantage.

1 Misiek Piskorski, “Social Strategies that Work.” www.hbr.org 11 November, 2011, http://hbr.org/2011/11/social-strategies-that-work/ar/1

2 Alvin Toffler, interview by James Daly, “An Interview with Alvin Toffler.”Business 2.0, (September 2000).

3 Julia La Roche, “Bank Of America Just Had the Ultimate Social Media Fail.” www.businessinsider.com 15 November, 2011, http://articles.businessinsider.com/2011-11-15/wall_street/30400487_1_google-bank-tarp

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Amazon Kindle Fire

Sinek calls this pattern going from the inside out.4 He argues that we need to start with

‘why’ (belief and purpose) and then move outward to the ‘what’ (results and profit).

Beer, author of Higher Ambition, makes a similar case. He shows how, by holding to a higher

sense of purpose, companies can move past short-term investors and towards those long-term

investors that will stay with you from beginning to the end.5

4 Simon Sinek, Start with Why (New York: Portfolio, 2009), See Chapter 2 ‘The Golden Circle’

5 Michael Beer, Higher Ambition (Boston: Harvard Business Review Press, 2011)166-167, compare with Bulke, CEO of Nestle, on page 98.

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This echoes Galbraith’s sentiments about organizational structure being “the means for

creating a community of collective effort that yields more than the sum of each individual’s

efforts and results; the organization’s structures, processes, and practices channel and shape

people’s behavior and energy.”6 Bezos, CEO of Amazon, represents a non-traditional

organizational structure that chases long-term purpose instead of short-term pay checks. They do

not worry about what short-term Wall Street traders think.

The Wall Street traders usually underestimate Amazon’s profits. 7 This is because Bezos

will often sacrifice short-term profits for long-term investments. They also hire aggressively for

the future at a time where most companies are cutting costs and laying people off. All of these

patterns within their structure have proven to generate a positive effect on employee behavior.

The effect has also been positive in creating a competitive advantage for their organization.

Their latest product, Kindle Fire, is the result of creating that initial ‘community of

collective effort’ that Galbraith mentions in his book. Amazon has built this collective

community through the use of social media. Bradley calls this the new wave of organizational

design. 8 Toffler makes similar comments, while pointing to several examples:

6 Jay R. Galbraith; Diane Downey; Amy Kates, Designing Dynamic Organizations (New York: Amacom, 2002), preface.

7 Henry Blodget, “Why We Owe Amazon a Huge Thank You.” www.businessinsider.com 26 October, 2011, http://www.businessinsider.com/thank-you-amazon-2011-10?utm_source=dlvr.it&utm_medium=twitter

8 Anthony Bradley; Mark McDonald, The Social Organization (Boston: Harvard Business Review Press, 2011).

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“Amazon.com has created a bookstore without [physically] creating a store. Ebay

has developed an auction bureau in which the customers do the auctioneering.

Google and Yahoo process 600 million queries a day, altering what libraries do

and transforming the publishing industry.” 9

Amazon’s Kindle Fire is not intentionally competing with IPad2. Bezos’s goal is not to

‘beat out’ Apple with a bigger and better gadget. Kindle Fire is merely a media service created to

expand Amazon’s social media cloud/community. Their focus is always on building a

community, not a product. They have successfully done what Galbraith describes as

collaboration and empowerment through several platforms.10 While Amazon is one of the clearest

examples, there are several others.

Fold It

There is a collective community movement in the social media gaming world known as

gamification.11 McGonigal takes this a bit further stressing that because ‘reality is broken’ we

will need to partner with local communities and virtual gaming communities, within social

media, in order to rebuild our economy. 12 For centuries, gaming communities have been

9 Alvin Toffler and Heidi Toffler, Revolutionary Wealth (New York: Doubleday, 2006), 236.

10 Jay R. Galbraith, Designing the Global Corporation (San Francisco: Jossey-Bass, 2000), 208-212.

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working as an escape from present day problems while simultaneously preparing the next

generation to create viable solutions for the future. Herodotus the historian said that games,

particularly dice games, were invented in the kingdom of Lydia during a time of famine around

2,500 years ago.13

This gaming went on for 18 years as a way to deal with the famine, and then the king

divided the entire kingdom in half. The winners left Lydia, in search of a new place where their

civilization could thrive. 14 Evidence has shown that the Etruscans, who dominated the Roman

Empire, share the same DNA as the ancient Lydians. The gaming community, built by these

Lydians, brought about success for their future generations in the Roman Empire.15

Mark Jung-Beeman, a cognitive neuroscientist at Northwestern University, started

mapping the brain to find out what causes people to have insight. He started this research in 1993

by basing it on Schooler’s verbal overshadowing concept. In 2004 and 2006 Jung-Beeman and

Kounios found quantifiable evidence that gaming communities do indeed help our minds to

change strategies and start creatively looking for solutions.16

11 Gabe Zichermann; Christopher Cunningham, Gamification by Design (Sebatopol: O’ Reilly Media, 2011).

12 Jane McGonigal, Reality is Broken (New York: Penguin Press, 2011).

13 Herodotus; William Beloe, Herodotus V. 1 (London: L. Hansard & Sons, 1812), 31.

14 Robert Drews, “Herodotus 1.94.” Historia (1992): 14-39.

15 Nicholas Wade, “DNA Boosts Herodotus’ Account” New York Times (April 2007).

16 Jonah Lehrer, “The Eureka Hunt.” New Yorker (July 2008): 42.

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Schooler says these kinds of gaming ‘distractions’ are helpful. “Schooler believes that

letting the mind wander is essential. ‘Just look at the history of science,’ he said. ‘The big ideas

seem to always come when people [appear to be] sidetracked, when they’re doing something that

has nothing to do with their research.’” 17 Foldit is a social media gaming program that looks like

a 21st century version of Tetris but they are really folding proteins and working on solutions that

can cure actual diseases. 18 Gamer intuition, through the use of social media, is proving to

successfully compete with supercomputers.19

Flickr and Instagram

Flickr was a feature that became its own product. This organization began as a social

gamming community known as Neverending. They worked with a gaming start up called

Ludicorp. The game was never published but this community, headed by Fake and Butterfield,

discovered an untapped yet desired market space of simplified online photo sharing. In 2005,

Yahoo purchased this unique community of photo sharing that is now known as Flickr.

Instagram is one of the newest social media communities; most of the other social media

communities exploded on the scene somewhere between 2004 and 2006. Founder Kevin

Systrom’s goal was to combine Foursquare and Mafia Wars into a mobile HTML5 app. They

wanted to make a social media game and, much like flickr, became a photo-sharing community.

While flickr was mainly for PC, instagram was designed specifically as an app for smart phones.

17 Ibid.

18 Jane McGonigal, Reality is Broken (New York: Penguin Press, 2011), See: Gamer’s Mass Participation.

19 Seth Cooper; Zoran Popovic; Foldit Players, “Predicting Protien Structures with a Multiplayer Online Game.” Nature (August 2010) 466: 756-760.

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These are also two examples of combining the Nadler/Tushman method of organizational design

with the Blue Ocean Strategy of creating a new community and market space. The same can be

said for Twitter and their hashtags.

Twitter and Hashtag

Nadler & Tushman mention that the last source of competitive advantage lies in the

organizational design.20 By seeing organizational patterns, one can prevent competitive

disadvantage and leverage a competitive advantage in said organization’s favor.21 Kim and

Mauborgne’s ‘blue ocean strategy’ shows how innovation oftentimes supersedes the so-called

competitive advantage.22 Focusing on Nadler’s organizational matrix coincides with Kim’s ‘blue

ocean strategy.’ The advent of social media allows businesses to create both a new community

and a new market space. The diagram below illustrates this in more detail:

20 David A Nadler; Michael L Tushman, Competing by Design (New York: Oxford University Press, 1997), See chapter 12, ‘Lesson in Design.’

21 Robert W. Keidel, Seeing Organizational Patterns (San Francisco: Berrett-Koehler, 1995), See page 16 under ‘Three ways to fail.’

22 W Chan Kim; Renee Mauborgne, Blue Ocean Strategy (Boston: Harvard Business School Press, 2005).

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23

As you can see from the chart above, by creating an uncontested market, or new community, a

business can almost make the issue of competition irrelevant. Instead of attempting to exploit an

existing demand, building new communities allows businesses to create and capture new

demand.

Evan Williams, one of the co-founders of Twitter, admits that he never thought Twitter

would be anything more than status updates for friends and family. But the community of Twitter

customers began creating new software that allowed this tool to become an even stronger force

than most news outlets. One of the significant software developments came from a little third-

party company in Virginia called Summize. They built a Twitter search engine. It was built on the

premise that if you have millions of people around the world talking about what they’re doing,

you have an incredible resource to find out among any topic or event in real time.24  

23 W Chan Kim; Renee Mauborgne, Blue Ocean Strategy (Boston: Harvard Business School Press, 2005).

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For example there was a gas shortage in Atlanta. Some users figured out that they would

use twitter when they found gas, where it was, and how much it cost, and then appended the

keyword or hashtag ‘#atlgas’ so that other people could search for that and find gas themselves.

It is happening more and more. This ranges from raising money for homeless to digging wells in

Africa. The Egyptian revolution was sustained by Twitter and hashtags.25 Occupy Wall Street

has been sustained through twitter hashtags. The Lybian revolution was also sustained through

the hashtag. Clay Shirky, author of Here Comes Everybody, believes that social media tools have

allowed us to bare witness to the largest increase of expressive capability in human history. He

says this is because all media has become digitized and the internet can now carry all forms of

media side-by-side.

This revolutionizes the human access to information and news. It also revolutionizes the

average human’s ability to communicate to others all over the world.26 People all over the world

can now organize without physically building organizations. Anyone, through a hashtag, can

create a virtual community that connects to people all over the world. This also allows businesses

to create and capture new demands.

Some other social media examples where companies create communities that build product

based on new demands are the following: Yelp, You Tube, Woot.com, Flickr.com, and Wikipedia.

27

Yelp

24 Lon Safko, The Social Media Bible (Hoboken: Wiley, 2010), 269.

25 Caroline McCarthy, “Egypt, Twitter and the Rise of the Watchdog Crowd.” www.news.cnet.com 11 February, 2011, http://news.cnet.com/8301-13577_3-20031600-36.html

26 Milton Chen, Education Nation (San Francisco: Jossey-Bass, 2010) 215.

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Jeremy Stoppelman and Russel Simmons decided to create a community that would share

recommendations for good doctors and good movie rentals from millions of people. The

company started in 2004 as an automated system using email as their primary method of sending

requests to friends. One of their early investors was Max-Levchin, the co-founder of PayPal. The

community they were building did not respond very well to their product. After all, there were

several established sites where you could find this information and comment on other people’s

reviews; the biggest two would be IMDB.com and Rotten Tomatoes.

Some of the users in Yelp’s social media community began creating another product and

thankfully the business organization decided to listen. Their users began reviewing other

business organizations. The founders then decided to change direction and capitalize on this idea

of reviewing local businesses. They now see over 50 million users a month and have over 17

million reviews online. In November 2011 Yelp announced their plans of going public.

You Tube

In 2005 this social media community began as a dating site called ‘Tune In Hook Up.’

The community did not respond well to sharing videos with the hopes of finding a date. They did

enjoy the concept of sharing videos; mostly funny videos or cute videos. People later were

sharing illegal and pirated movies. This spawned many other legitimate TV and Movie sharing

websites: Hulu.com, Netflix, and Apple TV. You Tube now has a separate feature on their site

where you can even watch HD quality films and television shows. They were acquired by

27 Nicholas Thomas, “11 Start Ups That Found Success by Changing Direction.” www.mashable.com 8 Jul, 2011, http://mashable.com/2011/07/08/startups-change-direction/#view_as_one_page-gallery_box1819

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Google for around 1.65 billion in stock. Google TV has plans of creating highly interactive

methods for watching films and movies in the future.

Wikipedia

Communicating a vision to make the world a better place through knowledge is what

brought a social media community together to build the product/project known as Wikipedia.

This online project has been considered by Piskorski as one of the most successful social media

experiments. It has created a popular community known as a free knowledge resource portal. It

has the distinction of being end-user centered. The product is edited shared and created by its

users. It is qualitatively different than one-way media forms like newspapers or magazines. 28

Most universities discourage using this open source site as a primary source and co-founder

Jimmy Wales agrees saying “encyclopedias of any type are not usually appropriate as primary

sources.”29

Several articles in the early 2000s came out that challenged the agility of encyclopedia

Britannica, when compared to the social media community of Wikipedia.30 In 2010 Wikipedia

was credited with holding a 97% share of the online encyclopedia market. This caused Microsoft

to shut down their online encyclopedia ‘Encarta.’31 This also prompted to Britannica to go free,

online, and to collaborate with bloggers in 2008. Thanks to a powerful social media community,

28 George Brown, Social Media (Brisbane: Emereo, 2008), 123.

29 Burt Helm, “Wikipedia: ‘A Work in Progress.’” www. businessweek.com 14 December, 2005, http://www.businessweek.com/technology/content/dec2005/tc20051214_441708.htm

30 Jim Giles, “Internet Encyclopedias Go Head to Head,” Nature, (December 2005): 900-01.

31 Gabriel Bodard; Simon Mahony, Digital Research in the Study of Classical Antiquity (Farnham: Ashgate, 2010), 39.

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led by Jim Whales and the Wikipedia organization, Britannica was forced to begin building a

similar social media community of knowledge sharing called Britannica Webshare.32

Conclusion

An analysis of organizational design has shown several benefits for organizations that

focus on using social media to build virtual communities that will affect the real world. This

analysis has also revealed an inherent organizational value in starting with a higher sense of

purpose and building community first. Social media makes the process all the more accessible.

Wikipedia’s higher purpose is to create ‘a world in which every single person is given free

access to the sum of all human knowledge.’ Twitter’s purpose is ‘to connect people everywhere

with what is most meaningful to them.’ In order to successfully navigate an organization in an

age of social media, each business should ask themselves ‘what is my organization’s higher

purpose and how can this help build better communities and relationships?’

About the author: Chester Elijah Branch is working on a doctorate in organizational strategies. He is a consultant that applies Blue Ocean, long tail, and crowd sourcing strategies to transmedia marketing and transmedia storytelling. His company, Parables Today, uses crowd sourced narrative signifiers to enhance and expand potential transmedia film and television projects.

32 Andrew Lih, The Wikipedia Revolution (New York: Hyperion, 2009), See ‘Britannica Goes Free and Collaborative.’

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Endnotes