How Social Media Remains an Enigma to Big Business
The Stanford Graduate School of Business recently published a fascinating study of 180 C-level executives* revealing their perceptions of social media versus social media implementation in their organizations. What they conclude is that there is a large knowledge gap between the potential for social media and how executives understand it.
Since this is a self-reported study, some of the information is imprecise. But there are some poignant insights in the responses and in the remedies that are worth paying attention to.
*more than 50% of respondents work for a company with >$500 million annual revenue, more than 10% >$10 billion annual revenue.
What executives do know about social media
Not surprisingly, the most common social media experience that C-suiters have is with LinkedIn (the majority are male as well). This obviously colors their viewpoint of social media as a bit less useful and dynamic than it is. Many also have some experience with Facebook, but their familiarity with less prevalent social media platforms is low. About half of respondents said that they participate in social media on a daily basis, although they don’t appear to be creating a whole lot of content as a part of their participation.
The two primary reasons that their businesses use social media “to communicate and interact with customers” and “to advertise or sell to customers.” This possibly intimates an unrealistic expectation of the effectiveness of social media to convert.
More than anything else, this seems to show that executives have delegated social media to their marketers and don’t have a complete understanding of how it is being integrated into their marketing strategy. The authors make the point (discussed below) that KPIs need to be in place for executives to have visibility of social media initiatives. Lack of meaningful metrics isn’t unique to social media however, as AdAge pointed out earlier this year.
What executives should know about social media
In addition to showcasing executive blindspots, the authors offer some suggestions of how business leaders can understand and integrate social media better into their organizations. The most actionable of their recommendations is social listening, which as social strategies go is pretty defensive. To support this the authors use the bizarre example of pharmaceutical company Eli Lilly to validate social listening. In 2009, Lilly was fined over $1 billion dollars by the government for distributing materials encouraging doctors to use an anti-psychotic drug “off-label” for dementia. I’m not sure that social listening could have righted that wrong. That example notwithstanding, the recent example of Nestle shows the benefit for large companies to at the very minimum have an understanding of social conversations about them.
Here is the complement of recommendations from the Stanford report:
- Assess your current capabilities
- Determine how social media fits with your strategy and business model
- Map your company’s KPIs and risk factors to information available through social media
- Implement a “listening” system to capture social media data and transform it into metrics
- Develop formal policies and guidelines for employees, executives, and directors
- Consider the legal and behavioral ramifications
Rebecca Lieb and Jeremiah Owyang of Altimeter released a report a few months back entitled “The Converged Media Imperative” which looks at social media from a more holistic perspective. Rather than considering social media a la carte, they explore paid, owned and earned media, looking at where and how those types of media converge. Compared to the Stanford recommendations, this seems like a much more complete way to understand how social media fits into a marketing plan. It’s important to understand what would justify channeling dollars from traditional media to an earned media channel, rather than how a standalone social channel could benefit an organization.
A recent article in the Wall Street Journal entitled, “Your employee is an online celebrity, now what do you do” may also show how these recommendations could be misguided. Much like the Stanford recommendations, this article takes a very disciplinary view of employee social behavior suggesting that employers place limits on time that employees are able to network. Both completely miss the point that at least 40% of workers use social networking sites from work – with Gen Y and Z anticipated to be much higher. Given the familiarity of most employees with social media, I think it’s rather foolish to try and limit how and when they can participate on social channels. In a recent podcast, Mark Horstman and Mike Auzenne of Manager Tools suggested the much more pragmatic option to hold people accountable to their work commitments instead of focusing on their social media usage.
In other words, I don’t think any company seriously considering an increase in social resource allocation should follow such a generic recipe to assess and plan it.
Most Admired Companies
One of the great questions in this study was whose social presence was most admired. I think this is worthwhile in that it is quite accurate. These executives may not understand social media in its totality (who does?), but they do a heck of a good job benchmarking themselves against businesses who are innovative and successful in the social space.
Burberry Group plc
Cisco Systems, Inc.
The Clorox Company
The Coca-Cola Company
Dominos Pizza, Inc.
Ford Motor Company
Starbucks Coffee Company
Target Brands, Inc.
The biggest takeaway is that social media is by and large a decentralized function in large companies. Most executives probably have a good sense of the power of social media even if they aren’t personally familiar with the tools involved. And any company’s aptitude with social media channels is probably not best measured by its executives.
What do you think? Is this study representative of how most executives understand social media? Is it incumbent for marketers to develop social media KPIs for their C-level executives? Do Stanford’s recommendations make sense for most businesses? Is there any relevance in this study for smaller businesses?