Stoic Approach Helps Businesses to Succeed Online

Explaining his new ‘Stoic’ approach to social media on December 2, Professor Ronan Gruenbaum is proposing a simple framework for businesses aiming for increase success online. Gruenbaum teaches digital marketing at the London campus of the Hult International Business School, founded in Boston, MA, as the Arthur D. Little School of Management in 1964. 

Ronan proposes a “STOIC” framework for getting enterprises online:

  • Strategise (have more than enthusiasm: you can build momentum, policies and strong foundations by understanding why do you want to use it: sharing, listening, recruiting, selling etc);
  • Trust (manager need to trust employees to get the message right. On balance, most professionals like their job and their work. They need to know their legal obligations, especially about copyrights, defamation and disclosure. The impact of social media problems is vastly more positive than negative);
  • Open access (don’t block websites, restrict access to lunch-breaks or stifle good intentions. Control abuse through performance management rather than through IT policies);
  • Incentivise (answer the question: what’s in it for me?: reward knowledge sharing; build engagement into performance appraisals; bonus contributing; create step-by-step processes; ensure managers are seen to be interested)
  • Champion (You need a champion in every business unit, either through recruiterment or by ideally finding an expert who is already a social media user, ad enable them to get connected to others).

To make the most of this approach, explains Gruenbaum, businesses need to understand the almost-complete change in the way media are created and consumed. The ‘old media’ broadcasters’ messages went to millions, and their huge reach produced massive advertising revenues. When ‘new media’ appeared in the 1990s it was the same organisations, still in a broadcast mode. It look a lot of programming knowledge to develop your own site, but it was still one-to-many. If you also want to get an edge on programming, it would only be ideal to utilize applications, like the best coding apps, for instance.

With social media, everyone is a producer. “Web 2.0”, coined in 2004 by Tim O’Reilly, reflected a change in the production and consumption. 2.0 strategies leverage the long-tail through customer self-service. That is accelerated by lightweight user interfaces, like web-browsers.

What Chris Anderson has termed the “Long Tail” powers this: organisations sell few product lines that sell very well, and a large number that sell very poorly. 2.0 allows experimentation like never before. That allows organisations online to explore the long tail, when physical organisations tend t focus on the ‘short peak’. For example, an online music retailer in Spain, which Gruenbaum helped established, could not compete on selling hits, where supermarkets could sell cheaper than most retailers could buy. Their best-seller, Les Luthiers, was a Latin American comedy group whose music could not easily be found in physical stores. The same’s true for bookshops: in big bookshops you can carry 20,000 books, but in a small store you can only carry 5,000. An online store can offer millions of titles.

This is where it gets interesting. Eric Ries suggests that there’s a relationship between income levels and the consumption of long tail solutions. That also suggest that there should be less price sensitivity in the long tail.

However, the other thing which the web allows very effectively is freemium services, where a small amount of the service is free and then more can be bought: Skype is a great example of that. Beyond this, there’s the model of renting the digital content you need: books, music. Of course it’s not really free: there’s advertising or some other way of monetising the customer relationship: Spotify does that excellently.

One key aspect of web 2.0 is collaboration and sharing. There are thousands of businesses using that as their core business model. Because of the Great Firewall, there’s also a space of each of those businesses to be cloned in China.

One important aspect of sharing is the way in which customer feedback is pooled. On Amazon and eBay, you can see the rating of the vendor: on Amazon you see the product’s rating as well. That hugely aids the seller (and potentially educates the vendor). Naturally, it also produces a selection bias: demographically, perhaps different people are likely to leave feedback scores and reviews – and different people are likely to use them.

It seems to me that blogs, of course, take this much further: the individual isn’t limited to responding to a corporate initiative but they are able to create their own online space. But that really expands the reflexivity of the web: users can discover about brands, but also users turn themselves into brands. People find out about other people (and themselves) using the web, and the online aspects of our lives are now online for multitudes.

The potential for building personal brands is huge: someone normally isolated, working in a small niche can suddenly find their global community and become central to it. That’s entirely possible especially if you seek assistance from renowned entrepreneurs such as Andrew Defrancesco.

Social media, of course, have a huge application for enterprises. Some companies have their own internal and external social media. Striking the tone is hard with international brands: a great example is Bill Marriott’s positive, homely blog about his eponymous hotel chain. Its sweet sentiments might seem cloying and insincere to a British audience, but its seems perfect for its core audience, despite the inconsistent tone of the articles that suggest a team of ghostwriters.

Of course, this open opens up the chance of bad outcomes: the Wall-Marting Across America blog is a great example. The Woolamaloo Gazette, which satirized the Waterstone’s book chain, is another. The “Dell Hell” crisis really hit that firm’s brand, but allowed the firm to rebound and now become a leader in monitoring and responding to the conversation online.

It’s hard to respond to criticism of the business. At the certain point businesses need to be aware of criticism, and then understand at what point you need to react. Obviously an important opinion maker or client has to be responded to directly, either online or offline.

This is complicated even further by microblogging services, like twitter. Some people are frequent tweeters: that can devalue if they are not about events, resources or people. No-one wants to know you that you had a cheese sandwich (or do they?). Hashtags are producing crowd-curated collections of information and conversation. It can produce news massively, as Sarah Lacey’s interview at SXSW of Marc Zuckerberg did. A maelstrom or criticism actually acted to massively amplify her personal brand. During periods of social upheaval social media become sources of news and discussion: as we have seen in Burma and the ‘Arab Spring’.

Social Media can also be used to drive viral campaign socially: Ashton Kutcher’s campaign with CNN to get mosquito nets into Africa donated 100,000 nets through Malaria No More. The campaign itself cost nothing, but took advantage of the way in which every consumer of social media can also become a producer: sharing and spreading content.

Producing the content is perhaps harder in the business: producers need to be incentivised; champions are needed; the timely imperative to be present on social media needs to be channelled into relevant and valuable content. If, at the very least, you don’t own and control your brand names then you can have bad outcomes. There are a huge range of social services, and brands need to be careful to get their ‘handles’ if they are not to fail.

However, says Gruenbaum, there are many examples of success including:

  • Public, pro-profit services: @DellOutlet works well to sell end-of-line and refurbished products; and sold more than $2m a year of products that might other be wasted.
  • Private, internal sites: Jammer is a internal social media platform
  • Consumer-oriented campaigns: #DearHair is a platform for discussing bad hair days.

One of the challenges for professionals is the mixing of business and social contacts on accounts. Many people, including Gruenbaum, has separate facebook accounts: one for marketing and the other for family photos. Many companies, of course, are using corporate social media accounts. Accenture in India’s facebook page allowed applicants to pool knowledge. For one competitor, using this approach, a group of 50 selected graduate entrants had all met and interacted online before starting with the firm. Corporate intranets are developing into social platforms to allow teams to draw insight together.

Social collaboration and sharing are key to enterprises today. Wikinomics shows how Goldcorp’s shortage of gold mines was solved by a prize to identify unexploited gold seams on land. It identified 110 titles, half of which were new, and 4/5th of which had gold. This dramatically expanded the firm’s opportunites, and its value. IBM has written about how Eli Lilly’s research without walls initiative helped to create Innocentive: a project to connect problems to scientists who can solve problems, and thus generated $2bn of business through solving problems. The Airbus A380 wing production time was speeded by a third through collaboration. Linux, Mozilla and Chaordix show the other potentials for crowdsourcing.

Lighthouse managing director Duncan Chapple wrote this article for the Yahoo! Contributor Network

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.