In 1979, Michael Porter, the renowned Harvard Business School Faculty, may have been right about corporate strategy. But back then, Mark Zuckerberg, the founder of Facebook, wasn’t born, Google didn’t exist, and Steve Job’s hadn’t even invented the Apple iPhone. Consequently, although many of today’s oldest companies continue to use Mr. Porters Five Forces of Competition to guide their corporate strategy – I am sorry to tell them that traditional strategy is dead. Long Live Social Strategy!
Today, as opposed to 30 years ago, we live in an era where competition for profits no longer comes from other competitors – nor are products and services created inside companies and thrust upon consumers using big advertising campaigns. Best Buy, Kodak, Susan G. Koman Foundation, Netflix, Bank of America, and Encyclopedia Britannica — as well as 12 fallen nations of the Arab Spring – have all learned this lesson the hard way. In the social age, with 1 billion people connected and collaborating using social software and another 4 billion people using mobile phones to change who, how and where they do business – the old concepts of traditional strategy is quickly losing steam.
To put this all in context, let’s look at a few examples:
- In the Industrial Age, organizations got bigger in order to be more profitable; In the Social Age, companies (and nations) can also be powerful – but they have to do it the Apple way – by co-creating with others (and that includes sharing profits with their crowds).
- In the Industrial Age, business strategies and processes grew out of the notion of that bigness was about making lots of things to make lots of money by finding lots of buyers to purchase their goods and services; in the Social Age, it is about the size of social networks (people with common interests, passions and connections – e.g. friends and fans), which co-create company’s marketing campaigns, leads and new products and services.
in the Social Age, its all about being open – and having transparent and shared relationships, profits and ultimately mutual accountability.
- In the Industrial Age, power was derived from doing everything by the company – and holding on dearly (and closely and in private) for control – to insure, what they hoped would be endless power and limited risks.
- In the Industrial Age, it was primarily about the institution (company and country) as the center and source of value. In the social age (including web 1.0 and 2.0 plus mobile and smart devices), the center of value is social networks and individuals that belong to them.
- In the Industrial Age – the 1% won – and the 99% lost because leadership, control and profits was controlled from top down. In the Social age, the 99% have the tools and size – members of the social network – to regain control as well as sources of value from the bottom up – and they are beginning to do just that.
Too many organizations continue to think their status as an “800-pound gorilla” gives them an edge and protects them against the power and speed of social and mobile networks – but they are wrong. They underestimate today’s social realities and by so doing create unmitigated risks for their enterprise. They see the Social Age as simply a passing fad – only applicable to such business functions as marketing and customer support. Their view is a simple (and dangerous) one: ‘Like us on Facebook’ or ‘Tweet us your customer problem’. This narrow view – propagated by CEO’s that don’t use social media (only 30% do) and corporate boards (80% of which don’t understand social technologies) – is caused for concern.
First – separate two words – social and media. Social can be and is more than marketing or communications. Social affects every dimension of your business model: the way an organization creates, delivers, and captures value. It also shifts risks from individuals to organizations. Second – leave your old business strategy behind and create a new social one. Third: Remember Michael Porter came up with his view of strategy 30 years ago – before Facebook, Apple, and Google.
Finally: Know that Traditional Strategy is Dead. Long live Social Strategy!