Social media is changing the world because it changes the way people communicate. Social media makes it easy to collaborate, exchange information and ideas, and develop online relationships. However, the power of social media goes much deeper. It can be used to improve business transparency, build trust in important business relationships and give employees the power to innovate and excel. All of the advantages of social media are founded in one feature – communication.
Business transparency has taken on new meaning since the collapse of the global financial markets during the Great Recession. There have been a large number of corporate scandals including risky investments in derivatives, pyramid schemes and falsified financial statements. Consumers now want to know more about how companies operate, make decisions, manage employee relations, and incorporate social responsibility in strategies. People no longer choose businesses strictly based on product and price. Consumers want to know that a company is easily accessible when they have questions or problems. Once again, social media is playing a central role by enabling employee collaboration and employee-customer interaction on an ongoing basis.
Brave New World of Corporate Dialogue
Social media includes any technology tool that enables networking. Usually people first think of the popular sites like Facebook, LinkedIn and Twitter, but social media also includes blogs, collaborative infrastructures and uniquely designed corporate global outsourcing platforms. One of the many advantages of social media is that the improved collaborative communication can be used by any sized business too. In fact, it can give a small business greater market exposure, thus improving its ability to compete. For example, the business can maintain a Facebook page that potential customers can access to read about the company’s products or services and the company’s community involvement. Social media visitors can also read comments about the company posted by other customers, while the company can refine its products and services based on the comments.
Promoting customer engagement is one of the most powerful advantages of leveraging social media. A company can make information public and then encourage the public to analyze and comment. The public includes current and potential customers, suppliers, shareholders, community members, investors and anyone else interested in the company. Called “corporate dialogue,” the business can build or restore trust by making information available and giving stakeholders the opportunity to provide input.
There are a number of ways to use social media. Promoting employee collaboration can drive innovation and quality performance. Using wikis, employees are able to collaborate with coworkers across organizational boundaries leading to collective intelligence. Wikispaces (or wikis) is a free web hosting service (sometimes called a wiki farm) based in San Francisco, CA, that began in March 2005. Another form of collaboration is industry forums where employees can debate concepts or discuss specific problems. Companies that engage in these collaborative communities discover that organizational performance and effectiveness is enhanced.
Clearly, collaboration can be both internal and external to the business. Businesses can now do mass distribution of information to external stakeholders or develop internal corporate communications systems that flatten the typical hierarchy and control systems through collaboration and information distribution.
Though there are many advantages to social media, one of the most relevant in light of the recession is increased transparency. Businesses can distribute content rapidly and frequently through company websites. The links to the websites can then be copied and shared by readers in their social media sites. The transparency is achieved through frequent updating of information by the corporation. Beyond products and services, information can include fee structures, corporate policies, staff profiles, the analysis of the impact of government regulatory changes, and any other information that’s important to the success of the business.
Corporate dialogue requires two-way communication, though. Simply posting static information on websites is not dialogue. To leverage social media to increase transparency and build trust, stakeholders need to be able to share points of view, recommendations and even criticisms. In many cases, businesses are turning to blogs to conduct online conversations with the marketplace. Blogging is highly effective because it gives people a voice about the company while also giving the company a chance to respond. In the past there was been concern about unjust comments being posted online and the company not having any opportunity to respond. Maintaining a corporate blog enables the business to maintain a level of control while adding dynamic networking.
Ethics, Compliance and Transparency
Jonathan Schwartz was the CEO of Sun Microsystems prior to its acquisition by the company Oracle. He was a leader using social media, particularly blogs, and encouraged his company and others to think in terms of mass collaboration. His comments at the time have become even more relevant in the post-recession period. “We’re going to be driving unparalleled transparency into everything we do precisely because it’s the most efficient mechanism to accelerate change…Transparency enables everything to go faster, invites accountability, and drives dialogue between Sun Microsystems and the communities we serve.”
Social media flattens the hierarchy because it enables people within the organization to work in cross functional teams and to have input. At Sun Microsystems, Schwartz used blogging to communicate with external stakeholders and employees. The same type of communication can be developed on most social media forms including Facebook and LinkedIn.
Used to communicate with employees, social media introduced a new way for staff to interact and organize leading to new management dynamics. Employees can now self-organize into teams based on need, exchange ideas and solve problems. This promotes creative thinking, while also changing the traditional control systems businesses have used in the past. In other words, top down control is largely eliminated as employees take more control of their work. They can form online teams, get input from global industry members and generate collaborative solutions to problems.
One of the concerns management expresses about social media is that its use by employees can make it more difficult to maintain accountability to regulators and shareholders. The ability to easily share information that may be proprietary in nature can be seen as a disadvantage more than an advantage. That is why it’s incumbent on companies using social media to establish ground rules via policies and procedures, to hold employees accountable for their actions, and to independently monitor social media tools.
The Next Generation
In an interesting turn of events, Jonathan Schwartz just might be launching the next wave of social media strategies. In February 2012, he began a new internet site that is focused on caretaking for elderly persons. The subscription site allows family and workers in the health care industry to post information about patients, caretaking methods and other related content. There is no advertising and the site is not meant to compete with other health care sites. A glimpse into the future is a site that is user controlled and competitive. This site gives advance warning that social media is still developing and companies need to participate now in order to take advantage of the next major influences if they expect to stay competitive.
Social media will only continue to advance. The next trends are pointing to integrating social media into everyday activities. For example, customers can swipe a card that immediately posts information to their social media site. A company could issue integrative cards or other media enabling customers to post information about purchases and location on their social media sites, and then reward customers with points. Another trend is the emergence of the micro economy that gives innovators and creators a platform for new ideas and leads to compensation.
The true power of social media is the fact it enables all people to communicate. It allows people to cross organizational functional areas, geographic borders and arbitrary boundaries. It can accelerate technological progress, take advantage of the creative minds of employees and increase company value. Those companies that don’t get on board with social media will soon find that the most creative people are going around them in the marketplace. Social media is an engagement tool that every business, no matter how large or how small, can use to their advantage.