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A businessman’s guide to social media

A businessman’s guide to social media

Stephanie N. Mehta

@FortuneMagazine

JUNE 13, 2014, 5:13 PM EDT

A Harvard Business School associate professor breaks it down for the non-hoodie-wearing crowd.

When Mikolaj Jan Piskorski was an assistant professor at the Stanford Graduate School of Business, he met a couple of entrepreneurs who were poised launch an online networking company. Piskorski initially dismissed their idea, on the theory that the offline world already provides executives and employees with plenty of opportunities for interaction. But he changed his mind on his commute home and asked the fledgling entrepreneurs if he could hear more. The founders, Konstantin Guericke and Reid Hoffman, would go on to unveil LinkedIn. Piskorski, meanwhile, has developed a body of research around social platforms. Now an associate professor at Harvard Business School, Piskorski spoke withFortune about his new book, A Social Strategy: How We Profit from Social Media, which aims to help business leaders figure out how best to use this new medium for fun and (mostly) profit.  Edited excepts follow:

Why did you write the book?

What I heard repeatedly from my executive education students is: “This seems to be a very different medium here, we are getting these really poor results [from corporate social media efforts].  Either nobody listens to us, or when we get engagement we can’t convert into sales.” This was almost a cry for help that made me go into the field again, and this time look at various companies that use social to benefit themselves strategically.  It became quickly apparent that there were two ways of engaging with social, the broadcasting way, and the truly social way where a company is trying to step in and bring together people who can’t get together in the offline world, and really facilitate relationships between them. I found the latter approach really works better than the first.

The reason why I wrote this book was to say: This really is a different medium, this isn’t a medium where people are coming together to be broadcast to, this is a medium where people come to interact with each other. A company cannot insert itsself to be a “friend” because people know companies cannot be friends with people.  Companies need to focus on facilitating relationships between individuals who otherwise wouldn’t be able to connect. There is then a quid pro quo where the company facilitates relationships, and in return the people who got helped will do something for the company.  This requires a fundamental shift in how companies perceive that they’re doing. The first shift is the companies need to step away from broadcasting which is very difficult to do because companies have been in the business of broadcasting for a very long time, and No. 2 is to  change the way they think about what product they’re providing; most companies don’t think their role is to facilitate relationships among people.

What are some simple things companies can do to better utilize social for a tool?

You will be surprised by answer. I think the most important thing is to step back and think about the strategic goals you are trying to achieve. I cannot tell you how many times I’ve spoken to companies who say say to me, “we need a Twitter strategy”  or,  “we need a Facebook strategy.”  My response is you need a strategy to sell more, or more expensively, or to lower your costs. You need to think about what your goals are and work from the goals to the kind of platforms you might want to use. In some cases you might want to use Facebook or Twitter. In some cases you might want to do your own platform. The canonical example here is the Cisco platform. Cisco sells routers and switches and they have a lot of competitors who are trying to steal each others customers all the time. This is a business-to-business sale, not a business-to-consumer product. Cisco stepped back and said, “How can we use social to help us build competitive advantage and barriers to entry?” That led them to develop this unique platform that has more than 3 million engineers who interact with each other and talk to each other. And they love the service because it helps them troubleshoot the problems they had on running their networks. When competitors came and tried to steal their business, the engineers actually didn’t want to switch. They figured out what problem they were trying to fix, rather than, “how can I increase my likes on Facebook”?

Why do you think companies such as eHarmony and OK Cupid let you in?

The way we do research at Harvard Business School is we always start with field work, and we say if you mind if we just come and talk with you, and after a while we say can we write a case study and in the process of writing a case study you end up developing relationships. And you say, “I would like to include some of the data in the case study because the students need to understand what’s going on and have a more informed discussion based on the data.” And I’ll also run some analysis, and in many cases I’ll get back to the company and say, “Guys did you know you have this problem on the website?”  Then you become useful to the company, and the company gains trust that you can be helpful.

What are the biggest surprises that about consumers interacting with brands?

In the book I talk about this program called Link, Like Love, which American Express introduced. It basically sharing electronic coupons with your friends. So you get an offer from American Express that says you if you spend $50 at Whole Foods you get $10 credited on your Amex card. And then they gave the option for people to actually share with their friends on Facebook. And I remember conversations with people saying, “oh, people will not do that.” They said it was like Zynga where people were asked to share cows, and they just didn’t do it. They said, “This is never going to work.” The reality was it worked very, very nicely, and the what’s surprising here is we think that social and commerce cannot go hand in hand ,we think getting people to do something for companies is quite difficult but it is actually quite easy, so long as you’re not using people for your commercial goals. So people are willing to do quite a lot for companies, advertising their products, share with their friends, but it has to be: What’s in it for me socially? I want to come across as a good friend, I want to be someone who does something good for his friends, not someone who is spamming his friends.

 

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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