many business models need to die. Boo hoo. Fucking die. Αν είναι να μην πεθάνω ένδοξα καλύτερα να μην πεθάνω καθόλου. Α.Λ.Civilizations have clashed in an unexpected way this year, as ordinary people using Facebook and Twitter knocked down dictators in Tunisia, Egypt and Libya—and are threatening absolute rule in Syria. A so-called Arab spring brought waves of liberation to a long-oppressed region. Something similar is happening in more democratic countries. In Spain throngs of young people, known as “the indignant ones,” occupied public plazas nationwide, protesting unemployment and exclusionary politics. In Israel ordinary citizens from both right and left united in massive demonstrations against high housing prices. And in India one man’s campaign against corruption went viral, bringing thousands to the streets in support.
This social might is now moving toward your company. We have entered the age of empowered individuals, who use potent new technologies and harness social media to organize themselves. A few have joined cause with WikiLeaks and its terrifying stepchildren, upending the once secure corridors of the U.S. State Department and Pentagon. But most are ordinary people with new tools to force you to listen to what they care about and to demand respect. Both your customers and your employees have started marching in this burgeoning social media multitude, and you’d better get out of their way—or learn to embrace them.
The institutions of modern developed societies, whether governments or companies, are not prepared for this new social power. People are changing faster than companies. “I don’t think it’s crazy to ask if your CEO is the next Mubarak,” says Gary Hamel, one of business’ most eminent theoreticians of management. “The elites—or managers in companies—no longer control the conversation. This is how insurrections start.” Says Marc Benioff, CEO of Salesforce.com: “This isn’t just about Arab spring. This is about corporate spring.”
In this new world of business, companies and leaders will have to show authenticity, fairness, transparency and good faith. If they don’t, customers and employees may come to distrust them, to potentially disastrous effect. Customers who don’t like a product can quickly broadcast their disapproval. Prospective employees don’t have to take your word for what life is like at your company—they can find out from people who already work there. And long time loyal employees now have more options to launch their own, more fleet-footed start ups, which could become your fiercest competitors in the future. “Companies that have been around more than five years are having a hard time because this is so different from what they know” is the jarring observation of Doreen Lorenzo, president of design and consulting firm Frog.
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But overall these changes suggest a bright future for business and society globally. The world is becoming more democratic and reflective of the will of ordinary people. And pragmatically, social power can help keep your company vital. Newly armed customer and employee activists can become the source of creativity, innovation and new ideas to take your company forward. A growing number of executives and companies are converts to this point of view.
It calls for humility of a sort most business leaders aren’t used to. “Trust is built by sharing vulnerability,” says John Hagel, a long time author and consultant who co-chairs Deloitte’s Center for the Edge. “The more you expose and share your problems, the more successful you become. It’s not about the top executive dictating what needs to be done and when, it’s about providing individuals with the power to connect.”
Benioff recounts his own epiphany about humility and transparency at Salesforce, which sells online software for salespeople. “In 2005 we had reliability problems with one of our servers. We weren’t talking about it, and customers were upset. It turned into a p.r. problem. And my marketing leader Bruce Francis came in and said, ‘Marc,you need to expose everything. You need to have a website that is directly connected to the computers. If they are running, the website should be green, and when they’re not it should be red.’ I had to open up.” Such a system has been in place ever since. “Social success is really based on trust,” Benioff opines. “If you don’t have transparency you will be eliminated by the system around you.” He is now writing a book arguing that every company must become what he calls a “social enterprise.”
The headlines abound with examples of the precariously shifting dynamic. Companies that show greed or insensitivity to workers or customers quickly find themselves on the defensive. Hershey looked Scrooge-like and clueless in August when 400 college students hired through a State Department-sponsored foreign-exchange program revolted, walking off their jobs. They didn’t like their stressful work in a candy-packing factory, sometimes on all-night shifts. These kids from China, Nigeria, Turkey and Ukraine are facile digital communicators and used YouTube, Facebook and other tools to bring attention to their plight.
Adidas recently found itself under attack in New Zealand when fans of the hugely popular national rugby team were outraged to learn that Adidas team jerseys were being sold for significantly more there than elsewhere in the world. Fans went online to research comparative product prices in New Zealand and the U.S. and then to organize fellow fans in protest. Soon national news programs were focusing on the protest and Adidas’ flat-footed response. People started returning Adidas clothing to stores in disgust, and employees felt so threatened they removed logos from company vehicles, reported the New York Times.
Executives can’t hide from the outrage. In the Netherlands earlier this year a social media campaign against bankers’ bonuses focused on Amsterdam-based ING. People began threatening en masse to withdraw deposits. CEO Jan Hommen voluntarily waived his upcoming $1.8 million bonus and ordered all company directors to do the same. British Prime Minister David Cameron recently proposed shutting down social media during riots like those that brought chaos to the U.K. recently. But Google Chairman Eric Schmidt replied to that idea in an interview in the Guardian with advice that applies equally to CEOs: “It is a mistake to look into the mirror and try to break the mirror. Whatever the problem was [that caused the riots] the Internet is a reflection of that problem. If you have a problem, use the Internet to understand what the problem is.”
If there’s a primary culprit for this changed landscape, it’s Facebook. The social network’s astonishing success in less than eight years has brought it more than 750 million active users in every country on earth, made it the world’s busiest website—and the most popular tool for fomenting insurrection around the world. Why? Because Facebook gives all its users a personal broadcast platform. In the past only a select few had such power—Walter Cronkite, for example, or those at the BBC. People on Facebook, by contrast, usually just broadcast to friends, which seems only modestly impactful, at first. However, a peculiar new dynamic—call it a viral consensus—may develop. Say you post a status update, photo or video that expresses a view that your friends agree with or respond to; that message can spread like influenza. Friends click “like,” or comment on the update, saying, for example, “Yeah, I think Mubarak has got to go, too!” or “I’m throwing out all my Adidas stuff!” That rebroadcasts it to their friends. The “meme,” or idea, can go viral and spread almost instantly to vast numbers, if it happens to strike a chord with the zeitgeist.
LinkedIn is another central tool for empowerment all executives ought to ponder—and not only because they already maintain a profile there (along with more than 115 million others). At its heart LinkedIn is a way to maintain a permanent public work résumé. Many of your company’s most valued employees now have CVs out on the street full time—searchable by millions, including your competitor’s recruiters. Do you want to take a chance mistreating or ignoring such people?
Plenty of other social software tools are now in the hands of ordinary people as well. They live on mobile phones that are really powerful computers—broadcast terminals able to spew opinion or information at will, as well as receive it. YouTube, for example, provides endless hours of light entertainment—or can be used by anyone anytime to broadcast video. In 2009 one appeared showing a Domino’s Pizza worker putting cheese in his nose while making a sandwich, among other abominations. Its stock dropped 10% in short order. One employee’s bad judgment damaged an entire company’s reputation. Twitter is a potent broadcast tool for anyone with a following; FourSquare, a way to coordinate in the physical world; GroupMe, just sold to Skype, enables you to send a single text or make one telephone call to a group of up to 25. All these services are basically free.
New incarnations of social power emerge almost daily from legions of entrepreneurs worldwide who see how rapidly success can come in a densely networked world. That ease of company creation is yet another example of individual empowerment. GroupMe’s two founders—ages 24 and 29—sold their company in August for around $50 million just one year after it debuted.
Bo Fishback created his tool of social power with stunning speed. He’s CEO of Zaarly, a location-based market place for buyers and sellers of both products and services; buyers post what they want, and people looking to earn money make offers to provide it. The company was born in February, when Fishback—a perpetual entrepreneur—attended “Startup Weekend” in Los Angeles. He pitched his idea Friday, had a working prototype by Sunday and says that Tuesday he closed $1 million in financing. (He already knew veteran investors, granted.) Two weeks later Zaarly launched in beta at South By Southwest Interactive in Austin, Tex. and did $10,000 worth of transactions. The service debuted in late May in several cities and by late August $3.4 million in transactions had been requested and 50,000 people had registered.
Fishback’s whole life as a Net-centric businessman presumes social power. “Empowered individuals are what drives Zaarly on both sides of our marketplace,” he says. “On the buyer side it transcends typical marketplace dynamics where you can only buy what someone else is already selling. On the fulfiller[or seller] side this demand-driven market gives people a new way to work for themselves.”