Neville Hobson, arguably Britain’s leading social media blogger, has replied to my charge that social media do not change the rules of business. He says: This is no fad, this is a revolution. Let’s take a closer look at his arguments.
Addressing Neville’s argument
I don’t think it’s a revolution, and even if it was it wouldn’t be all good or all bad. But before I say what I think it is really about, let’s begin by looking at how Neville Hobson defines what he’s addressing.
“…this isn’t really about arguing over tools and channels. It’s about fundamental shifts in behaviours that I believe are having a powerful effect on many organizations and how they conduct their business.”
“For instance, take a look at companies like General Motors and their experiences with blogs and other social media around the world; and Dell Computers’ IdeaStorm as well as the $3 million revenue Dell earned via Twitter. These are legitimate examples that illustrate how those firms’ embrace of new forms of communicating, connecting and engaging with their customers have directly influenced the way they conduct their business.”
I fear his examples illustrate the weakness of his point. General Motors is a bankrupt government-owned modern-day failure. While GM’s flirtation with selling new cars on under-performing eBay opens a new channel, GM has been keen to downplay its significance, arguing it does little to sidestep dealers. Moreover, if you follow the link Neville provides, you read:
“Driving Conversations is a blog for GM leadership in Europe—mostly led by Carl-Peter Forster—to discuss products, issues and corporate performance from a personal perspective. “
But that’s a misleading claim from GM at best; dishonest at worst. Here, the “personal perspective” is a clever way to express the corporate perspective, or Forster would soon be out of a job. Consider this example: Whole Foods CEO John Mackay created a storm when he voiced an opinion critical of Barack Obama’s health-care policy that ran contrary to his company’s brand and reputational image.
As for Dell using Twitter to sell, a $3 million revenue stream in a company turning over $41 billion per year is hardly a sign of an emerging commercial or social revolution: it represents 0.0073% of its business.
Dell, by the way, has had to ditch using the internet as an exclusive direct channel and adopt – the once derided – multi channel distribution, sales and marketing model favoured by the likes of HP. As the FT said last year as Dell started selling its kit at Wal-Mart:
“The company has been struggling to right itself for more than two years after its belated response to fierce competition and changes in customer buying habits [in Dell’s case away from the internet] led sales and profits to slip.”
Meanwhile, Twitter might have many millions of users, but it has no business model or revenue of note. It is in fact not a business at all.
Toward the end of his explanation of “social media’s fundamental shifts in behaviours”, Neville calls up some evidence from others;
“Here’s a pretty good way to illustrate what’s happening now and what shifts in behaviours herald for many organizations and their old-world business rulebooks in the very near future, in Socialnomics: How Social Media has changed the way we live and do business, and posted on YouTube last month.”produced by to promote his book
Addressing Erik Qualman’s argument
The video kicks off by welcoming us to the revolution. It then describes how the adoption of the internet and later social media platforms outpaced any communication channels that went before such as telephones, radio and TV.
That’s all true (except the revolution bit). But so what? Let me now rebut a few of the video’s major claims that follow.
Claim: Word of mouth is the new black. Evidence: 25% of search results for the world’s largest brands are linked to user-generated content. 34% of bloggers post opinions about products and brands. It asks, do you like what they are saying about your brand? For instance, 75% of consumers trust peer recommendations, only 14% trust advertising.
Rebuttal: This is the big one. This is the one that companies do grasp and rightly seek help to manage. However we should take the denigration of advertising with a pinch of salt, just as we should any denigration of PR; both remain critical to corporate success. Moreover, there’s nothing new about word of mouth, it has been around since we learned to talk. It just that it has gone from being grounded to being virtual. Apple – no fan of social media in marketing and corporate practice – shows how an interactive relationship with its customers based on a fan base still works today, just as it always did so long as companies deliver on their promises.
Claim: Successful companies in social media behave more like Dale Carnegie than David Ogilvy. Successful companies in social media act more like party planners, aggregators, and content providers than traditional advertisers.
Rebuttal: Dale Carnegie and David Ogilvy sales techniques remain the major push-pull double act in town. Brands still need to be marketed driven, promoted, built and managed. Apple, for instance, has not been blinded by its own innovative technology or by the concepts of planners, aggregators and facilitators to ditch old-fashioned command and control management and marketing techniques.
Today, the spontaneity of the crowd is as “manipulable” as ever. Indeed, with the advent of social media, brands have more reasons than ever not to stand by and leave their fate in the hands of others. But on the other hand, brands have always had little control over their markets, customers and society’s chatter (remember New Coke?). Marketing remains as risky as ever.
Claim: If Facebook was a country it would be the world’s fourth largest
Rebuttal: If Facebook was country it would be bankrupt and facing a revolution, not leading one. The New York Times speculated last week about whether Facebook was “doomed to someday become an online ghost town, run by zombie users who never update their pages and packs of marketers picking at the corpses of social circles they once hoped to exploit?”
Claim: We no longer search for news; the news finds us
Rebuttal: The news still gets filtered and produced by gatekeepers and then its distribution finds us or or we find it. News production is still a profession, a business, the product of which we’ve been getting for free on the internet and soon will have (rightly) to pay for. Put another way, Rupert Murdoch is about to call the bluff of those who believe dead tree press is dead by making people online pay to read his output.
User generated content cannot – repeat not – compete with professional news production, even if it can complement, supplement, spread, sometimes source news and most definitely interact with its originators via online networking.
Addressing one or two other views
However, Tom Murphy, a leading PR working for Microsoft in the USA, sees things differently:
To argue that social media will not have any effect on the way we do business is like arguing that we should have four different bathrooms for four different levels of workers each with a different quality of toilet paper. And make sure that we eat in four different canteens because that’s the way we’ve done business for the last four hundred years. (I was in a factory just like that in Coventry in 1981. It was a wonder it still existed at all. I am pretty sure it didn’t last very much longer.) Business like society will change because of social media.
Murphy makes a valid observation about culture’s impact on the world of work. But my argument is that while innovations from the spinning jenny to modern-day computer systems continually change the business landscape, business basics remain pretty fixed in terms of its essence, as the likes of Boo.com discovered during Web 1.0.
Meanwhile, social media management guru Shel Holtz recognizes that despite utopian dreams of social media champions of flat, open models, the real work of real businesses requires structures. But he says that I don’t appreciate the full scope of what social media can do to improve how businesses function. For instance:
‘The ability for people in the oil and gas unit to have relevant and useful conversations with the people in marketing, for all of them to talk directly to the customer, and for the customer to have a voice in the organization alters the way businesses make decisions. It makes them nimble.”
Yet telephones, email and normal social interaction have long made it possible for everybody in an organisation to relate directly to customers. What’s stopped them doing so was commonsense. The last thing a salesperson needs is a PR or backroom technical person interfering with his or her pitch. That’s a recipe for chaos.
My own view
Social media is all very interesting but it may not change business and politics as much as people think. It may not change organisations as much as the internet did in the first place. The internet changed things by altering (a) information storage and (b) communications (within companies and between them, and between companies and the outside worlds they deal with). Obviously the net made customers both easier and harder to deal with. Roughly speaking, it made it easier to be nice to your friends and easier for your enemies to be nasty to you.
The internet also, of course, helped customers (voters) share information about you, and that was probably good all round provided you were up for the criticism.
Social media intensifies some of these trends. But it increases the likelihood of febrile and misinformed reactions. Febrile, because viral; misinformed because gossipy. Viral because peer-to-peer; gossipy because conversational. The trouble is, of course, that while social media doesn’t have to be lazy, stupid or ignorant it doesn’t encourage the diligent, intelligent or well-argued.
The issue for business (and politics) is how to join this conversation without becoming prey to its worst features, and how to respond to the viral world’s occasional attacks. So, social media is neither good nor bad, useful or problematic.
Social media is just there and everyone has to wrestle with it as best they may. Even when it seems to be working for you, you have to remember that you may be lured into bad or trivial behaviour by its charms. So you may dumb down your messages and then find you’re accused of dumbing down – and you hoped you were being alert to the zeitgeist.
Now it’s over to Neville who, in the tradition of polite debate, gets the right to close this session because I opened it.