Social Media Expedites Corporate Buyer’s Remorse
If you’ve ever made a large purchase, you know what it feels like to begin seeing flaws in your purchased “dream item” within the first few days or weeks of owning it. No matter how much time you spent evaluating the item, you never quite see all the flaws until you have spent time time with it. In a sense, social media serves as an amplifier which can exposes and exploit any weakness of a company sometimes before an owner even knows it exists and is prepared to deal with it. In the case of a social networking company named Friendster, the company started with some seemingly minor technological cracks and a lack of strong leadership, but the flood of customers added by such a viral market exacerbated the issues rapidly and left Friendster’s angel investors and venture capitalists with a serious case of buyer’s remorse.
Where There is No Vision, the People Perish*
Jonathan Abrams founded Friendster on the premise that he would create a “dating site that wasn’t about dating”. What he didn’t anticipate, was that in his efforts he was trying to map and coordinate much of the complexity of human relationships. Martin Giles, in his interview with The Economist, talks about the difficulties that online networks have experienced in making internet relationships seem more personable. In his talk The hidden influence of social networks, Nicholas Christakis describes why social networks are so effective and so difficult to explain. One of the models he used to demonstrate relationships is below**. As you can see, the mapping of relationships is no simple task. Abrams had an ingenious idea of attempting to maximize all of the complexities of the human relationship and not just the desire for anonymous romance. He had the right idea, but unfortunately his creativity bit off more than his leadership could handle.
Mikolaj Piskorski goes into detail on the history of Friendster in his case study for the Harvard Business School. In the developmental stages of Friendster the company noticed some technical problems that were causing delays and crashes in the software. Abrams had a hard time knowing how to respond. On page 4, he states that in 2004, Friendster was “not cohesive” and had a lot of difficulty reaching decisions. On the next page he again states that “few concrete decisions were made to address…[emergency engineering situations]…directly.” So early on in the company, chinks in the armor were starting to reveal themselves, all that was needed to complete the process was a little pressure. The company grew rapidly, and its software and engineers never caught up. The viral growth and expansion of social media overwhelmed the company and customers were unforgiving with delayed repairs and complications within the system. Because Abrams lacked the leadership to make the necessary decisions, the board began deferring to John Doerr who was a business man without a lot of technological sense and in at the end not much business sense either. It wasn’t until 3 years (an eternity in the technology world) and two CEOs later that the company performed any kind of consumer research. At this point however, Friendster was a second mover in the market with costly and complicated software. The lack of leadership continued as the board and new CEOs attempted abandoning ship with a sell strategy without improving their outdated product.
Who Got it Right?
In recent history we have seen CEOs such as Steve Jobs, Mark Zuckerberg, Larry Page and Bill Gates take the lead for their companies and dictate the direction of their company. While this is not the only contributing factor, very few people would not credit these CEOs with a significant contributions to the success of their companies. These guys not only had the ideas, but they had the understanding and leadership skills to execute the plan. Mark Zuckerberg was able to take the complex network of human relationships, and narrow down some essential structures that a majority of people would be interested in discussing. Now, Zuckerberg not only has individuals begun taking advantage of the interpersonal connections via social media, but corporations are utilizing his online media for the sharing of ideas.
Is It Worth the Opportunity Cost?
The question then remains, is this form of media which was founded to profit off individual’s social lives going to do anything but detriment to businesses? In his blog “Social Media – My initial thoughts”, Robert Kracke mentioned that businesses may be eager to “get the word out”, but that they might wind up releasing more information than for which they had originally bargained. While sensitive information always has some potential to be leaked, the majority concern of employers with social media is not as much the leaking of secrets as it is the outflow of employee time and work ethic. According to the article A World of Connections, Australia hosts the worlds “most avid online networkers.” Yet, a study performed by Ernst & Young on the Australian market revealed that Aussies only spent approximately of 4% of their work time (approximately 1.5 hrs/week) on Social Media. While ideally, managers would prefer that employees not waste any time, this is proportionally less than half the time wasted on unnecessary meetings (some of which may have been to reprimand the use of SM). On the contrary, relationships and ideas fostered in a sharing environment do create opportunities for synergy. Later in his talk, Nicholas Christakis points out that the form and organization of relationships matter (as demonstrated in the carbon diagram of diamonds and graphite below). The goal of businesses is now to utilize social media to maximize the forms of relationships that produce long-term sustainable profitability.
*KJV Bible, Proverbs 29:18