Is social networking the most important business development

Social networking is probably the most significant business development of 2010.

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.

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.

Many top leaders are 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.

More and more companies are also realizing that social media can be a powerful crisis management tool:

• During the Icelandic volcano eruption both KLM, SAS and Lufthansa did a great job providing information about the actual development. While KLM embraced it, Air France ignored it. KLM’s President and CEO Peter Hartman even apologized due to the unprecedented ash crisis in Europe
• The Domino Pizza incident where two of its kitchen staffs deliberately contaminated the pizzas and posted the video in YouTube created a huge drama in the media, including the social media. The CEO apologized via YouTube
• Lexus Group President and General Manager Mike Templin recorded a personal message on YouTube for their customers, in response to Consumer Reports’ review of the rollover risk of the GX 460 SUV

The biggest threat presented by social networks is that the power has shifted to the customer who can, if dissatisfied with the business, impact the business and brand very publically. Alone this year there have been some major attacks:

• Intel was attacked by activists opposed to minerals mining in the Congo inundated Intel’s Facebook page. They wanted Intel to pledge its support for a congressional bill that would restrict the import of “conflict minerals” that contribute to fighting in the war-torn country
• Human rights group Amnesty International launched a social media campaign on Facebook, Twitter, MySpace and through bloggers, designed to raise money for a full page ad buy attacking oil company Shell in a UK national newspaper
• Nestlé, was attacked by Greenpeace for using palm oil from companies that where trashing Indonesian rainforests, threatening the livelihoods of local people and pushing orang-utans towards extinction. Greenpeace prepared a frontal assault with prepared assets such as off-brand logos, detrimental videos, and called for their Twitter followers to attack Nestle’s Facebook page
• Greenpeace, initiated a “Rebrand the BP Logo” contest. Greenpeace asked its supporters to “ . . . create a logo for BP which shows that the company is not ‘beyond petroleum’ – they’re up to their necks in tar sands and deepwater drilling.”
• A Facebook group called “Boycott BP,” it’s urging a worldwide boycott of all BP brands and services, has drawn more than 836.000 fans
• “Closed. Moving beyond petroleum” – In a attack against BP, Greenpeace shut down every BP petrol station in London

In fact, brands who take on board the criticisms they hear on Facebook, Twitter or through social media monitoring, and then try to improve on them, will be the ones who continue to grow and prosper. Every single piece of information that is picked up online, be it good or bad, is a valuable learning. A good example of a brand that has the ability to embrace criticism as well as praise is Domino’s pizza. Instead of cowering in shame or responding angrily to negative online reviews and comments about their products, Dominos pizza met the criticism head on - “Oh yes we did – The Pizza Turnaround“. They made a documentary describing the extent of their problems and the efforts they were making to improve their products and services.

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About the author

Torben Rick Experienced senior executive, both at a strategic and operational level, with strong track record in developing, driving and managing business improvement and development and change management. International experience from management positions in Denmark, Germany and Switzerland View full profile

About the author

	Torben Rick
Experienced senior executive, both at a strategic and operational level, with strong track record in developing, driving and managing business improvement and development and change management. International experience from management positions in Denmark, Germany and Switzerland View full profile