Social Business for the CEO

How do you talk with CEOs about social media? Speak the language of social business.  A new book by Dion Hinchcliffe and Peter Kim, Social Business by Design: Transformative Social Business Strategies for the Connected Company, will teach you how.

Social Business by Design shows how social media can have far-reaching impacts beyond its commonly known applications for marketing and customer service. The book makes a bold assertion that companies can transform all aspects of their business through social media, including HR, Operations, and R&D. For instance, Kim and Hinchcliffe, both Dachis Group executives, discuss how organizations have successfully used social for product co-creation through a network of crowd-sourcing partners.

“Until quite recently, social media were viewed either as a consumer activity, with marketing as the most useful activity for a business to be engaged in, or something workers used inside the company to collaborate, and occasionally for product innovation or customer care,” they write. “However, social media have now infiltrated every aspect of business operations, and perspectives have expanded to consider four major and interrelated activities: customers, the marketplace, workers, and trading partners.”

It’s no wonder that Social Business by Design advocates for the development of multiple community managers – and not an overworked marketer to manage your Facebook account, but seasoned executives who understand the nuances of knowledge management (for internal community management) and relationship building (for public facing community management).

To get a better sense of why Kim and Hincliffe wrote Social Business by Design and to delve into the ideas behind the book, I asked Peter Kim to discuss the book in the interview published here. Check out what he has to say – and then get ready to embrace social business.

What inspired you and Dion Hinchcliffe to write this book? 

Dion and I have been thinking about the concepts in the book for years. He comes from a technology background, I have a marketing background, and we’re both business strategists. The world has seen the rise of all things “social” over the past decade and brands are just now going on the record to report measurable outcomes as a result of participation. Now that external social media and internal collaboration technology have matured, we felt that it was time to crystallize our thinking and experience to the world in a framework of ten fundamental principles of social business for beginners and experts alike.

Social Business by Design urges companies to act as social businesses. What is a social business? What are your one or two favorite examples right now?

This is an important question, David. Many attempts to define social business are recursive and/or focus on an activity, not an entity. An effective definition needs to describe what something is, then what it does. We believe that a social business harnesses fundamental tendencies in human behavior via emerging technology to improve strategic and tactical outcomes. From that starting point, you can then consider implications on business activities like consumer engagement, employee collaboration, and supply chain management. A great example of a social business in action is IBM; among the multitude of proof points they offer, their developerWorks community saves $100 million annually in support cost deflection.

What’s the difference between acting as a social business and adding social media features to your company’s activities such as sales and marketing?

Social media are tools that offer new approaches to sales and marketing. In isolation, use of social media doesn’t constitute social business – for example, anyone can add a Facebook page or Twitter account to a campaign. Acting as a social business requires a change in the way companies operate, including designing programs so that anyone can participate and integrating social tools and techniques deeply into the flow of work. Process and culture change are key.

Who should own the challenge of transforming your business into a social business? How do you get started with that transformation?

The days of the “rockstar CMO” are long gone along with the era of the “social media superstar.”

Getting started requires a strong internal change agent who can build support across functions with a deep reserve of political capital. Budget never hurts either.

Can any business be a social business? Are there any that are not suited to functioning as social business?

Yes, absolutely any business can be a social business. But not everyone wants to embark on the process of transformation. Change is difficult and inertia is powerful. However, brands in some industries have little choice; high tech and media/entertainment have been early to embrace social business and early adopters like IBM, Dell, and News Corporation are creating competitive advantage for themselves. B2C, B2B, regulated or not: if you have customers, you need to know about social business.

Since it’s an election year, I have to ask: could you name one or two national politicians who are especially adept acting as social businesses, and why?

I’m more purple than red or blue, so I don’t pay much attention to politics. However, the business world can watch and learn from examples like Twitter’s promoted political tweets, operationalization of change.gov input, and collaboration enabled by NationalField.

Apple does not seem to be a very social company, and yet Apple seems to be thriving. What would you tell Tim Cook about the importance of being a social business?

Apple may not be actively engaging in social media conversations, but they’ve certainly felt the impacts of aggregated consumer voices.

Almost a decade ago there was the “dirty secret” regarding iPod batteries and more recently iPhone 4 antenna-gate. In those cases, the company responded with actions rather than words, but it was clearly listening. And while Apple’s App Stores are open in some ways and closed in others, the bigger takeaway is a focus on value creation for publishers as well as platform. Social business requires a fine balance between company and consumer needs – and like good strategy, successful approaches vary according to situation.

Your book cites examples of companies performing real-time marketing, such as the Old Spice Guy.  How do you define real-time marketing? How important is it for a social business to act as a real-time business?

Real-time marketing at a fundamental level requires consumer engagement to a reasonable extent within a reasonable time frame. I use the subjective term “reasonable” because every business needs to define what works for its own goals. Zappos may support customer service reps fielding an eight-hour support call, but Fidelity Investments can’t afford to run their business in that manner. Social businesses understand the benefits of engagement within the boundaries of their operating objectives.

Your book describes the example of how Mountain Equipment Co-op’s administrator of social business activities, Joey Dubuc, has helped MEC act as a social business. What kind of people does a company need to have onboard in order to make the transition to being a social business? What kind of person should I hire?

All of us are fundamentally social beings and different types of people are required to drive social business success. Early on, catalysts help create energy and momentum for exploring new opportunities. Builders and architects are needed to convert vision into reality and help integrate new tools, processes, and mindsets into the organization. Community managers are critical to getting new initiatives off the ground and sustaining participation. Many of these skills already reside in today’s workforce; for most companies, it’s a matter of recognizing these talents and activating them appropriately.

You discuss how companies can act as social businesses via gamification, or the use of game mechanics to solve real-life problems. Who is doing a great job of using gamification, and why?

One of the examples we discuss in the book is Foldit and how they’ve used games to solve very difficult science questions.

In the corporate world, thankfully we don’t often have to deal in matters of life and death. Some good examples come from the world of collaboration platforms, like IBM Connections, Lithium, and Spigit. U.K. telecom provider giffgaff offers discussion boards as customer service instead of operating call centers. Users create avatars and handles and answer posts to achieve titles and collect points and kudos. The cost savings are substantial and giffgaff maintains a very high Net Promoter Score.

Several times in the book, you discuss the rise of open source development, or software produced by peer communities. Why is the concept of open source development important to a social business, and what can non-technology people learn from open source development?

I think open source is important for marketers to learn from because its approaches to collaboration and co-creation are almost antithetical to the way most brands think about customer relationships today. It’s important for marketers to remember that open source drives towards business outcomes, not anarchy; Linux remains an operating system and Firefox a browser. The role of curation is key and marketers can create results more efficiently with a peer community than possible in isolation or hoping for a campaign to go “viral.”

One of my favorite chapters is Chapter 7, where you discuss how companies can embrace social product development through shared creation, or opening up the creative process beyond your company’s boundaries. Why is shared creation good for your business? What’s the difference between shared creation and crowd-sourcing?

New product introductions carry an extremely high failure rate, and shared creation can lead to products that more closely meet customer needs, resulting in more successful products that are more resilient to disruption and changes in the marketplace. Social product development focuses on a specific step in a company’s R&D effort; crowdsourcing focuses on less intellectual work and consists of literally any form of participation required to accomplish a business objective.

The community manager emerges as a hero for social businesses. You cite the importance of having an external facing community manager for marketing and sales and an internal facing community manager for internal social networking functions like employee knowledge collaboration. Could you cite an example of especially effective external and internal community managers?

Scott Monty at Ford is a great example of a best practice external-facing community manager.

He’s effective at bridging old and new media approaches, defusing crises, and helping generate attention and momentum in communities as diverse as auto enthusiasts, green bloggers, mommy bloggers, and social media gurus.

Ekaterina Walter at Intel is a great example of a best practice internal community manager, even though her title doesn’t specifically reflect that.

She has played a key role in building Intel’s social capabilities via its Social Media Center of Excellence and helping mobilize a 100,000 employee organization – not an easy task.

However, both of them actually operate behind and outside of their corporate firewalls – that’s what being an effective social business manager is all about.

What needs to happen for community managers to get more respect and reward?

Community managers are unsung heroes and the good ones already get respect and rewards from those who they value most – community participants. As more organizations realize that operationalizing social business requires much more than media spend, these people will become more valued with their vibrant communities as proof of their capability. It will take time for organizations to evolve into this understanding.

The book cites the importance of the social business unit, which facilitates social media adoption. Could you explain how a social business unit should operate? Should every company have one, and what is the role of the community manager in a social business unit?

At maturity, a Social Business Unit or Center of Excellence coordinates efforts that are owned and operated by business units and functions. We have seen SBU’s in operation across industries at companies including Coca-Cola, Target, and US Cellular. It’s an organizational construct that can help companies get started with collaboration and planning. Not every company needs one, but they help organizations move down the path towards social business more quickly. Community managers are the front-line agents of the Social Business Unit.

I’ll bet you’re already thinking about how your next edition of the book will read. Any predictions for what concepts you might tackle next time around when you discuss the design of social businesses?

The next iteration will most certainly cover the rise of big data and how companies have used analytics and insights to drive meaningful returns. We’re early now in understanding how to collect the data and use the tools, but not too far off from hearing about a new wave of business successes.

Another area I see emerging is globalization/localization. Social business initiatives are occurring with uneven distribution when you look around the world. For example, internal “Enterprise 2.0” technologies are huge in Germany, while China has sites like Jiepang and Douban that look like U.S. companies but offer interesting local twists.

And finally, I believe we’ll continue to hear about quantified business results. Vendors and service providers need these to stay in business and social business professionals need proof to stay employed. The truth is out there and waiting to be measured.

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