Blogging was where we began, and how we built our company so we have preserved this archive to show how our thinking developed over a decade of developing the use of social technology inside organisations

From traditional business to social business

by Christoph Schmaltz

When businesses ask for a social media strategy, what they are often really asking for is: Get me a presence on Facebook, Twitter and the like. The mantra of cultural and organisational change that is required in the social web seems to ring hollow. To be fair, it is not their fault. With a traditional business mindset it is hard to see why a presence on Twitter or Facebook is different from the corporate website. After all, these tools can seem to be just another communication channel.

When I talk to clients about the social web and its impact on businesses, I often use four key concepts. These concepts seem to help to explain the broader implications of social tools and why a mere presence on the social web will have a very limited business impact.

 

From Transaction to Interaction

In the good old days traditional businesses produced a product or service and the customer bought it. End of transaction. Over the years, they have distanced themselves from their customers. Traditional businesses live in their ivory tower from which they look down on their customers. They introduced call centres to shield themselves from customer complaints. Every so often, they introduce a new product and market it heavily using print and digital channels. Nowadays, they can also be found on Facebook and Twitter talking about their new product. They produce it, the customer buys it. End of transaction.

A social business however, is all about interaction. It sees itself on an equal footing with their customers. Of course, it still wants their money. After all it is a business and not a charity. But a social business listens to what its customers have to say. It is eager to get feedback, both positive and negative. Negative feedback is acknowledged and addressed in an honest and transparent way. It sees it as an opportunity to co-create new products with the help of its customers. A social business operates in public and not from the heights of an ivory tower. A social business does not simply sell products, it sells customer experience.

Example
A customer of Zappos once tweeted that she had ordered shoes for her birthday. A customer representative got in touch with her asking about her order number just to make sure that the shoes would arrive on time for her birthday. You think that is difficult? Not for a social business. It is where its customers are and listens to what they have to say. It is all about interaction and customer experience.

 

From B2B / B2C to P2P

A traditional business has successfully created a wall between its customers and itself. Only particular departments are allowed to interact with the outside world, for example Marketing, HR, Customer Service. The rest of the business is shielded away from any external distraction to ensure employees are productive. Humans work in a traditional business. They have a face, but they can only show the company’s face. Sorry, company policy. Nowadays, traditional businesses have developed their own recruiting platforms. They also have a presence on Facebook, where HR advertise for new vacancies and post recruiting tips. They are really proud of this achievement. The traditional business can connect with potential recruits on Facebook. But actually, when they join they will see that Facebook is blocked. Sorry, company policy.

A social business understands that people want to connect with people and not with businesses. If customers are looking for help, they want to talk to a real person, not a company. A social business acknowledges and is proud to employ many smart people not just in HR, Marketing or Customer Service. It employs them, because it trusts them. It wants the world to know about them and enables them to connect to the outside world. That is why social networks are open for everyone and people are still productive. A social business manages by objectives, not by presence.

Example
Mary from the HR department posts new tips on Facebook, and not the HR department. A small but subtle difference. A highly talented engineering graduate asks on Facebook what life is like on an oil rig in the North Sea. Mary has never been on an oil rig, but she knows engineers who have. One engineer answers the question on Facebook, visible for everyone. It is John, not the company. People connect with people, not with companies.

 

From Gatekeeper to Platform Provider

A traditional business clenches on to its old powers. It believes it still owns all the connections between customers and partners. If a partner would like to talk to another partner, he needs to go through the company. It manages in order to survive. According to a traditional business, shared knowledge is only worth half as much. Better to control the gates.

 

A social business understands that today’s technology enables anyone to connect with anyone, whether the business likes it or not. The gates are open. A social business knows if it simply keeps managing connections, it will survive, but if it facilitates connections it will thrive. Hence, it provides a platform for customers and / or partners. It is comfortable letting people discuss the business, its products or completely different matters. It facilitates and does not manage.

Example
Dell, a computer manufacturer runs a Facebook Page about Social Media for Business. Yes, Dell is not in the business of providing social media services. But it uses the group as a platform to stay connected with existing customers and potential customers. Dell provides more value than it can capture (in the beginning). That way, Dell stays in people’s minds. Dell may not always be the best choice, but I bet, the next time a member of the FB page is asked for computer advice by a friend, he will also mention Dell.

 

From Hierarchy to Network

A traditional business has a rigid top-down communication structure. News from the top is passed down through the ranks of the organisation. The middle management is powerful as it acts as gatekeeper (see above). Open and transparent dialogue between the top and the bottom of the traditional business is difficult if not non-existent. Furthermore, technology provision in traditional businesses have manifested in department silos. Few employees know what other departments or teams are working on. Cross-departmental connections are made in the cafeteria, at the water-cooler or in the smoker’s corner.

Contrary to popular belief hierarchy still exists in a social business but it is heavily supported by an underlying network. Communication flows are bi-directional and cross-departmental. The middle management has lost its power as gatekeeper and is now functioning as platform provider. It provides a platform for the management and employees to communicate and connect. Employees can see what other teams and departments are working on. Increased visibility leads to better decision-making, improved customer service, superior products and ultimately higher sales. At the same time a social business also acknowledges that people connect with people not just because of work but also interests. Therefore, it encourages employees to form communities of interest or purely social groups. This creates stronger bonds between employees which leads to lower turn-over rates. If an employee does leave, they are more likely to stay in touch with colleagues, not the business. Remember, people connect with people, not with companies. (see P2P concept).

Example
By now, many organisations have or are in the process of implementing a social business platform which enables employees to communicate with the senior management and also across teams and departments. Some of the most advanced and innovative organisations that have adopted this approach can be found in the Social Business Council.

 

No doubt, more concepts exists. However, I believe many of them are part of the ones I have outlined above, i.e. From Control to Trust (B2B/B2C to P2P; From Transaction to Interaction), From Management to Open Leadership (From B2B/B2C to P2P; From Gatekeeper to Platform), From Employee to Brand Ambassador (From B2B/B2C to P2P; From Transaction to Interaction).

If your social media strategy is all about setting up a social media presence, jump right in. It only takes a couple of minutes to set up accounts. There are gazillions of tips out there telling you how to increase your follower or “Like” counts. However, if your social media strategy is about business impact, you need to go back to basics. Understanding the key concepts and the broad impact of social tools on businesses, will help to deliver value. In the end, that is what business is all about, delivering value!

Diagrams courtesy of my colleague James.

23 Responses to From traditional business to social business

  1. By Susan Scrupski on July 28, 2011 at 4:04 pm

    I am rushing this blog with a virtual hug! Love, love, love this post Christoph. Maybe my favorite all year so far. <3 xoxo

  2. By Liz Sumner on July 28, 2011 at 4:13 pm

    Great distinctions and examples. Thank you.

  3. Pingback: From traditional business to social business « Dachis Group Collaboratory

  4. By Rob Caldera on July 28, 2011 at 9:29 pm

    Great post! One of the best explanations of social business that I’ve read. Simple and clear with a big impact. Kudos!

  5. Pingback: From traditional business to social business | DigitalStrategist.biz

  6. By Cormac Heron on July 29, 2011 at 11:09 am

    Gute post Christoph! Nice and clear and germanic in the best meaning of the word. Love the drawings also!

  7. By Conrad Chua on July 29, 2011 at 12:37 pm

    Great post. These ideas have been swimming around in my head this past year as I have moved my business unit towards embracing and embedding social media values, but you’ve just put everything together so clearly. Love those pix.

  8. By Joe Raimondo on July 29, 2011 at 12:58 pm

    I really appreciate the effort the effort to tame all the various interwoven concepts that comprise social business. At the same time, we’re hamstrung by the medium–drawing dotted lines in the networked organization to evoke its inherent multi-dimensional nature doesn’t do justice to the fact that the networked organization is an emergent phenomenon, and by its nature can’t be fixed.

  9. By Jasjeet Gill on July 29, 2011 at 5:53 pm

    Found the information was on the point. So many businesses are behind when it comes to social media. The feeling is that with each day they are moving further and further back. Thank you for the information that you wrote about. I hope that I can also apply it to my efforts.

  10. By Susan Gautsch on July 29, 2011 at 8:43 pm

    Nice work. Very useful not only for our own internal move to social business, but also for our MBA students working to advance their industries and workplaces. thanks.

  11. By Jim Worth on July 31, 2011 at 12:32 pm

    Great writeup. It captures the essence of the culture change required when implementing social tools within an enterprise. I wonder if you could take this and turn it into a self assessment tool for a business. They could get a score 0-10 on their social business readiness by answering a series of questions based on the examples described in this post.

    Again, great job of capturing what we have all been trying to say.

    • By Christoph Schmaltz on July 31, 2011 at 1:57 pm

      Jim, thank you for your thoughts! As a matter of fact we do have a social business readiness framework at Headshift which we use in client engagements. It is different to the social business maturity models that have been introduced by Forrester, Altimeter Group and others. These tend to include factual questions like ‘Does your organisation have a social media policy’, ‘How are social media activities coordinated within the organisation’, ‘Do you have a social media education programme’.

      Our framework starts earlier and goes a layer below. It looks at leadership style, communication culture and flows, internal perception of employees and management as well as other aspects. The questions depend on the company and audience. We also do comparative analysis between employees and management. Sometimes, the views and opinions voiced by the different audiences are strikingly different from each other. For example, while the management may think that people would be comfortable raising concerns openly, employees may say exactly the opposite.

      This exercise often surfaces some critical issues that will need to be addressed as part of a social business programme to ensure it becomes a business success. Unfortunately, some organisations are oblivious to these underlying issues and see technology (e.g. social tools) as the solution for improving customer services, increasing sales or attracting new talent etc. They will have limited success unless they understand the concepts and have put the prerequisites in place to support them.

      Thanks again for the comment and great to see that our thinking is aligned.

  12. By Christoph Schmaltz on July 31, 2011 at 1:58 pm

    Thank you everyone for the positive feedback. I am very glad to see that the post has helped clarifying and supporting similar thoughts of yours.

  13. By Pim van Wetten on August 2, 2011 at 1:01 pm

    Great post! Great structure, great examples, well written..

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  15. By Hamish Forsyth (oneleap.to) on August 11, 2011 at 10:02 am

    Christoph, thanks for this excellent blog (and thanks Conrad for RT via @CambridgeMBA). Strongly agree with your P2P and Hierachy points.

    Your P2P point resonates strongly with what we do at oneleap.to: as an online business networking platform, we allow anyone to get a message (often a pitch) directly through to a company’s senior individuals – not its avatar.* Of course without hierachy or restriction, there has to be some filter, so a user sending a message, pays deposit, refundable by the recipient if it’s a good message. If it’s a timewasting message, the deposit goes to charitry.

    *This might involve also mean embracing Randi Zuckerberg’s point that we should oblige social network users to use their real names: http://www.guardian.co.uk/technology/2011/aug/06/randi-zuckerberg-facebook-social-networking

    • By Christoph Schmaltz on August 12, 2011 at 5:09 pm

      Hey Hamish,

      Thanks for the comment. I met Robyn at a Sandbox meetup where she presented oneleap.to.

      Anonymity on the Net has always been a hot topic. Just recently Germany’s interior minister called an end to the anonymity of bloggers after the tragic events in Norway. I believe there are always ways to circumvent any of these attempts and they are therefore futile in the end. Moreover, it would punish the majority of good and well-behaved net-citizens just because a small minority is abusing the privileges of staying anonymous on the Web.

      Due to the nature of social networks (it is all about people) there is a natural tendency to use one’s real identity. I see limited value of using a fake identity when building one’s network in Facebook if you have good intentions. It should therefore be left to users how much anonymity and privacy they want to enjoy. That’s not only the case on the Internet but also in everyday life. For example, I know people that despise loyalty cards, because they don’t want that companies know anything about their shopping behaviour.

      My colleague Peter Kim recently wrote about the trade-off between privacy and recognition. Makes for an interesting read and a long debate 🙂

      In communities this is a different matter. Topics and content are more important than people. Thus, you see more fake identities in communities than networks.

  16. By Vanda Gould on August 21, 2011 at 10:11 pm

    Thats a pretty nice presentation, social business this days are keep boosting as days go by.

  17. By Georgio on August 23, 2011 at 7:12 am

    Very thought provoking article. “if your social media strategy is about business impact, you need to go back to basics … delivering value!”

    This remarkably simple message is certainly true in a time when there is so much hype about social media everywhere. Social is more than just opening a Twitter account and involves working with HR, Product Development and more. I am wondering if it is harder for traditional B2B companies to shift to social B2B companies?

  18. By Kevin Cody on September 7, 2011 at 3:50 pm

    Great writing – really shows how much change is required organisationally, culturally as well as technically before companies can be considered “social businesses”

  19. By Stuart G Hall on September 9, 2011 at 7:58 am

    Nice post Christoph, particularly like the sound of the social business readiness framework at Headshift. Following on from what you’ve said from my experience the ‘elephant on the table’ is often the underlying sense of dependency which undermines company culture, which holds back use of social media in a way which would genuinely transform the business.

    I’ve touched on that theme briefly in a recent blog post , inspired by reading Google’s ZMOT document recently on social shopping strategies in the age of the smartphone, but moving on to social business issues in general: ‘Please don’t let engineers take charge of the product’.

  20. Pingback: @stuartgh - Please don’t let engineers take charge of the product

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