Social Networking Has Changed Business

Bill George

Here is an excerpt from an article written by Bill George for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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Social networking is the most significant business development of 2010, topping the resurgence of the U.S. automobile industry. During the year, social networking morphed from a personal communications tool for young people into a new vehicle that business leaders are using to transform communications with their employees and customers, as it shifts from one-way transmission of information to two-way interaction. That’s one reason Time magazine just named Facebook founder Mark Zuckerberg Person of the Year.

A year ago, many people poked fun at Facebook as a place where kids shared their latest party news. Today more than 600 million users worldwide are active on the site. The most rapidly growing demographic is people over forty. More than 300 million people spend at least one hour a day on Facebook. Approximately two hundred million people are active on Twitter in spite of — or because of — its 140-character limitation. Another 100 million use LinkedIn. None of these social networks even existed at the beginning of the decade.

Leaders like IBM’s Sam Palmisano, PepsiCo’s Indra Nooyi, Apple’s Steve Jobs, Microsoft’s Steve Ballmer, Carlson’s Marilyn Nelson, and Harvard Business School Dean Nitin Nohria

are all active social network users. Why? Because these social networks are a unique way of broadly communicating real-time messages to the audiences they want to reach. They can write a message anywhere, anytime, and share it with interested parties without any public relations meddling, speech writers, airplane travel, canned videos, or voicemail messages. Now their words are much more authentic and can be remarkably empowering.

Social networking is also flattening organizations by distributing access to information. Everyone is equal on the social network. No hierarchies need get involved.

The biggest threat presented by social networks is to middle managers, who may become obsolete when they are no longer needed to convey messages up and down the organization. The key to success in the social networking era is to empower the people who do the actual work — designing products, manufacturing them, creating marketing innovations, or selling services — to step up and lead without a hierarchy.

Consumer marketing companies are lining up to use these networks to reach their tailored demographics with highly personalized messages. Already they are revolutionizing marketing by shifting dollars from purchased media advertisements to building their own outlets and content. Kraft Foods, for example, is now one of the largest publishers of food-related materials. IBM is launching thought leadership communities. PepsiCo uses social networks to reach millions of social entrepreneurs in lieu of advertising at the Super Bowl. From a leadership perspective, social networking is making authentic leadership a reality and a necessity for 21st century leaders. You can’t hide on your social network when you’re revealing who you are and what you really believe. Transparency is essential here.

Even more important, this new phenomenon is enabling business leaders to regain the trust and credibility they have lost over the last 10 years. That’s why social networking is the most important business development of the year.

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Bill George is Professor of Management Practice at Harvard Business School and author of Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value, True North: Discover Your Authentic Leadership
with Peter Sims, and Seven Lessons for Leading in a Crisis.

Designing for Propensity

John Seely Brown and John Hagel III

Here is an excerpt from an article written by John Hagel III and John Seely Brown for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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Compare a standard company org chart with a network analysis of the day-to-day relationships and interactions in the same company.

The contrast is striking. On the one hand, clearly delineated boxes with a few set relationships driven by formal authority; on the other, a bewildering array of rapidly evolving connections. The two representations are so different that one might question whether they in fact are focused on the same organization. Such is the chasm separating two mindsets.

Mindset matters, and we each need to make explicit, and challenge, our most basic assumptions about what is required for personal and business success. Business today requires a mindset that is fundamentally different from the dominant existing mindset, and we have, so far, considered two specific dimensions: short-term versus long-term and fixed versus growth. A third dimension is control versus propensity.

This aspect of mindset addresses how to get results and reduce risk.

In a control mindset, the assumption is that we need to own resources and tightly direct them in order to achieve objectives with the minimum amount of risk.

A propensity mindset focuses on the intrinsic development paths that characterize all resources and the dynamic relationships across resources that are continually shaping those paths. From this perspective, the best way to reduce risk is to understand these paths and find ways to leverage them.

The concept of propensity is richly developed by Francois Jullien, a French sinologist, in his book, The Propensity of Things.

Jullien explores the Chinese concept of shi, a term whose multiple, related, meanings often confound Westerners but is central to the way Chinese view the world. Although it may be described as position or potential, Jullien translates shi as “propensity” — “a tendency that stems from a situation” and “which, once set off, cannot be arrested.” In this understanding of shi, the only countervailing force is a natural tendency towards balance; when a propensity plays out to an extreme, it tends to self-correct and reverse course. Thus, we are still contained within some range.

Shi initially emerged in the realm of strategy and politics but evolved to have a much broader philosophical meaning. In the widely quoted The Art of War, the legendary warrior, Sun Tzu, draws heavily on the concept of propensity: a battle may be won even before the fighting begins if you understand and act upon the propensities of the opponent and the battlefield. By understanding and leveraging these forces, you can avoid direct confrontation and achieve your objectives with minimum effort.

This idea of propensity reinforces the differences between Eastern and Western views of the world so powerfully described in Richard Nesbitt’s The Geography of Thought .

In thinking about mindset, propensity has two key components:

• A dynamic verses static view of the world: everything is in a state of becoming.

• A focus on relationships versus objects: the process of becoming is shaped by context and relationships to others.

This mindset focuses our attention on the dynamics that continually shape the tendencies and potential of the people and resources around us. One cannot understand their propensity by examining them in isolation. Everything exists not just in bilateral relationships, but in complex webs of relationships among people, objects and the broader environment.

Propensity is not abstract; it is shaped by a specific context. For example, years ago Stewart Brand wrote a marvelous book called How Buildings Learn. His point was that buildings are constantly evolving in response to the needs of owners and inhabitants, not to mention weather patterns. The same structure may evolve along very different paths depending on the specific location, owners and inhabitants.

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John Hagel III and John Seely Brown are co-chairmen of the Deloitte LLP Center for the Edge, and have written several books focused on technology and innovation. Their most recent is The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion, published by Basic Books (2010).

We Eat What We’ve Always Eaten – Subtle Change vs. Massive Innovation; Maybe it Depends on the Industry

We are what we eat, so they say.  And, here’s the really interesting/surprising/not-so-surprising news.  We eat what we have been eating, over the very long haul.  Here are a number of excerpts regarding the 25^th anniversary of the study of what we eat, from Sylvia Rector (Detroit Free Press): Trendy though we think we are, pop, burgers and fries still No. 1.

As founder and director of the NPD Group’s annual Eating Patterns in America study, Harry Balzer probably knows more about what we eat than anyone else in the country.
So when Chicago-based NPD announced that this was the study’s 25th anniversary, I called Balzer to find out what he considered the biggest changes in our eating habits in the past quarter century.
“In the long run,” he says, “the top three foods we ordered in 1978, when I first started — were (in order) carbonated soft drinks, french fries and hamburgers.
“And yesterday, the top three foods we ordered at restaurants were carbonated soft drinks, hamburgers and french fries. … We’ve changed so much!” he joked.

What we eat: Pop, Burgers, and Fries

So, where is the change?  Primarily, it is found not in the “what,” but in the “where.”  We get our “staples” from different places. Again, from the article:

We still order all those burgers and fries, but new players keep arriving to sell them. The fastest-growing restaurant chain in America, Balzer says, is Five Guys Burgers and Fries, which didn’t open its first store until 1986.
As he puts it, “It’s not whether you’ll eat pizza or not eat pizza, but about what brand of pizza you’ll eat.”
We’re so predictable, he adds, “I already know that in 2020, the things we’ll order most in restaurants will be soft drinks, hamburgers and fries,” even though he can’t say now where we’ll buy them.

The column concludes with this, which is reminiscent of findings in Switch:  How To Change Things When Change is Hard, by Chip Heath and Dan Heath:

The force of habit is indeed strong — something to remember if you, like me, are planning to change the way you eat in the new year.

The Post Office Was Out of Stamps – Can you Believe It?!

Sold Out!

This one is simply beyond me.  My friend Larry James went to the Post Office to buy stamps – and they.were.out.of.stamps!  Twice! (read about it here).

Peter Drucker famously counseled all businesses to answer these three questions:

What is your business?
Who is your customer?
What does your customer consider value?

When a business fails at its core business (Larry wrote about this), then you’ve got real trouble for that business.

This one is simply beyond me.