Golden Strategies in a Digital Business World
Today, there are NO communication strategies that can afford to not take into consideration social networks. Who thinks otherwise is a bit like someone in the 1920s saying “the telephone will not be needed for all businesses“. The only thing I can think of that might not have a SN aspect to its business strategy is the simplest laborer and even this person, if equipped with a mobile phone, could increase his turnover by 50% through SN marketing of the simplest kind. Bellow there are the most important of my conclusions regarding social networks and innovative communication.
The impact the digital solutions can have on a business
The effect that digital solutions have is on our lives-yours, mine, the kids at school, the hospital. So it is more about accepting this revolution that is now more than 20 years old than about separating an isolated notion of its impact on business. Business exists because of life and if life is transformed, those businesses that fail to follow life, disappear. To maximize the positive purely economic side of the changes for a business means to innovate with the solutions, not just attempt to plug and play. In general, I have a concept called the digital nervous system-a business that gets this concept, well, gets rich pretty fast compared to competitors.
Two stories: Polaroid (who didn’t get it) and Apple (who did get it). Polaroid had a very sophisticated patent protection on its instant print cameras. This gave them a category monopoly for almost 50 years. But they were so wedded to the old model that they did not see digital photography coming. They disappeared within 4 years. Kodak, the film makers, just barely saved themselves by leveraging their brand. Apple didn’t know what it had-Jobs (and incidentally he enlisted an innovation consultant from OUTSIDE Apple) imagined the iPod and the music business that would change forever because of digital life. They positioned themselves in the middle of the digital crossroads. They have easily 20 years of above normal profits ahead of them now, even if the response cycle from innovative competitors is ever shorter today.
Things to consider for an online strategy
The first thing to do is to understand one’s PROCESS of relationships with the customer and the community networks. Online is the best medium for establishing, maintaining and growing that understanding of the business’s partners. Partners are the entire ecosystem-the users, suppliers, sellers, producers and deliverers on any business’ value offer. What people forget is that online is a conversation between business and its stakeholders that is “always on“. You don’t close the shop at 4h30 PM and go home.
I remember a fine bed linens shop a friend worked with in France-they brought their company online late, only 3 years ago. They started by creating a sophisticated catalogue, but failed to look at how they would handle large orders from overseas. They were thinking well, most people in this area do 20% of their volume online today in France, so we’ll think small. A week after they opened, someone in Texas ordered almost a 6 month quantity of the best they had—their stock arrangements could not handle it. They had to make special conditions but their turnover increased 40% in 6 months, saving the family business.
Some people say “well there are businesses that have no online model“. You cannot cut someone’s hair online for example. But you could offer them styles and scheduling online and thereby increase your throughput and your margins. You can offer them hair products, promotions etc. too so of course you need to do this.
This does not mean every business needs a website in twelve languages. You need primarily to find those aspects of your business where the combination of your processes and the online (let’s call it seamless network and mobile communications) are best managed or delivered through these networks.
How can we choose from 100 ideas the winning one?
Investment should always be made on the basis of matching value and the potential growth of relationship with the business’s community. Investment must follow a programmed set of objectives for one of the five pillars (in my personal networked strategy approach) these are CONTENT (all business today is content); TEAM and LEADERSHIP, RESOURCE DYNAMIC / PRICE DYNAMIC, VOICE, and STRATEGY (which is in fact simply applying resources in a disproportional way to one of three things: Market Knowledge, Market Access or Rarity).
In this system you look at how one or another of the leverage points will lift the business in the networked space and create payback and relationships in the community. In one case, I took a company delivering a product in canisters (it could be beer, propane, fire extinguishers) and increased their regional turnover 150% in two years, simply by using the online environment and the iPhone to manage customer preferences and logistics (and they already had 20% market share when we started!). The margins increased by 35%.
Which is the role online can play for a business
It’s about survival, not about a role. This is akin to asking what does a CEO do for a business? It really depends on how the strategy is worked up, the resource applied and the leverage effect possible in that business category. Obviously for the travel industry—it has been revolutionary (and it’s not over). For the music industry (where I did some work) it has transformed the players and has killed the major studios who could not get away from their agency model to the mass choice model and the crowd-sourced model.
The golden rules of social networks marketing
From the point of view of innovation in marketing,
I see five key things to remember:
1. It’s about the customer, stupid (sorry for this funny ending, but we so often want to use the technology to make OUR job easier). You know, like when you must go through 8 levels of phone server questions to buy 10 Euros worth of credits for your phone. For someone like me, the three minutes I spend doing this are worth 60 Euros…
2. It’s always on and never sleeps. If you are linked into the social network as a business, then somewhere, at every second of your HQ’s day, something is being said about you. And this can result in nice surprises, but also in the other kind.
3. Whatever you say or allow to be said in your relationship with the SN (what I call your VOICE) is there forever. There will come a time when services that erase your VOICE will earn a lot of money from “cleaning up“… but this will be complicated. It therefore is necessary today to be vigilant and use Semantic crawlers to stay ahead. A lesson BP learned only too well in the Gulf Oil Spill crisis last year. Their mismanagement of the social networks probably cost them USD 2Billion in addition to the direct damages.
4. Organise a Voice, not a brand. Brands are static, they are monolithic, they do not evolve quickly enough. The Voice is something that can be heard above the noise. It comes from a brand, but it is more supple… brands are the music, but the voice sings the solo. It has to be distinct, have character, know its part, sing in tune… you get the idea. This has to be developed.
5. Use the SN to gain relationships that make sense, don’t try to use it to sell like an advertising channel. You will sell, but because the SN listens to your voice, wants to be implicated in your business offer. One of the biggest sales and value creators in the SN and broader networks is the feedback on quality and future needs that comes from listening carefully to your community of users. It’s like having a focus group of 3 billion people anytime you wish. And you can today also use that relationship to do open innovation where the customers make the products directly for you.
Joshua Bower-Saul is Managing Partner at EX2 Expansion Consulting. A graduate of Harvard and INSEAD, he has 20 years experience in innovative project and new market development, regional development and SME and start-up investments. Joshua assists board members in applying creativity and innovation methods to marketing, R&D and international growth. He also reads as a guest lecturer at INSEAD on entrepreneurial growth strategies drawing from his nine start-up experiences. He will be present in Romania on June 1st , to present a conference on “The Changed Marketing World: Innovations in Marketing and the Digital Nervous System“, invited by the French Chamber of Commerce and Industry in Romania.