Are we in the Social Era or witnessing the emergence of Social Capitalism?


Nilofer Merchant on the Rise of the Social Era

Nilofer Merchant, strategist and author of “11 Rules for Creating Value in the Social Era,” explains the big paradigm shift that’s changing the way we do business.

What is “social”? (An Entymology of Sorts)

“With all of these definitions around, you might wonder why I even added to the terminology when I wrote a book, and coined the term #socialera. Social Era then captures two distinct power shifts:

1. Organizational

Connected individuals can now do what once only large centralized organizations could. This fundamentally alters the structural core and role of “the firm,” and of working people. As more and more freelancers and solopreneurs enter the market, work is increasingly freed from jobs (to the tune of 43M in the US and climbing to 70M by 2020). The shift is from “value chain” to “value flows.” (An earlier post of mine on this idea can be read here.)

2. Individual

Anyone can be a game changer by using the power of their ideas. They need not first be vetted or chosen to be powerful. These largely unheard voices are essential for solving new problems, as well as for finding new solutions to old problems. Without celebrating what anyone – quite possibly everyone can offer, people are simply cogs in a machine – dispensable and undervalued. By celebrating each person and the value they can create, economic power is unlocked. And it’s not that everyone will, but that anyone can. (See earlier talks and posts on this idea).

Sometimes it helps to see distinctions side by side


Here’s my recommendation…. Unless you’re talking about marketing specifically, don’t use the term “Social Media.” If you are discussing ways social tools can be applied to all parts of a value chain, Social Business is probably the term you are looking for. And, if you describing a reconstitution of work and institutions, then use Social Era”.

Source : extract from Nilofer Merchant Blog Post 20-FEB

Rules For the Social Era – HBR Blog 14-FEB

“Here, let me start with three major shifts that I see:

Lean, not big.

Most organizations operating today started when companies needed more operating capital. Being big was in itself a mark of success. And in fact, being big created a natural barrier to entry for competitors. The “big” mindset continues to form an organizational framework for many institutions. Take banking as a visible example. Bank of America recently considered a $5 fee for customers to get their own money via their debit card because they have to find a way to fund all those retail storefronts. But if they were launching today, banks would likely ask themselves how to accomplish the transactions (deposits, withdrawals, financial management) of banking without the physical commitment of banks. They might try what ING is doing with its café model. They might even reimagine what it is to lend money. Instead of competing with new startups like Lending Club or ProFounder, they might be the ones reinventing the space.

Conversations, not chains.

Many organizations still operate by Porter’s Value Chain model, where Z follows Y, which follows X. These linear models optimized efficient delivery of a known thing. But this doesn’t help us when faster, fluid responses are what we need. Fifteen years ago, The Cluetrain Manifesto taught us that markets are conversations and that was a great starting point. But “conversations” can actually go deeper if you allow them to become central to how you work, rather than leave them on the perimeter of the work. How many companies have figured out how to shift from supply chain management to integrating customer feedback directly into their product design, distribution, and delivery? Because that’s the point.

Mass markets were a convenient fiction created by mass media. Television and major magazines could only reach only very vague demographic segments like “women of child-bearing age” and “college students,” so a lot of organizations still think of that as “targeting” their offer. But real markets are much more precise.

Finding out where any particular customers hang out and talking with them directly is central to accurately understanding demand and building it into the business model. Case in point: Gap missed many of its performance numbers in 2011 by believing that their only interaction with their customers happened at the cash register.

Sharing, not telling.

When companies think of social media, they hope to get consumers to “like” them or “fan” them, as if that increased connection is meaningful. Again, that captures the marketing aspect but misses the strategic point. The social object that unites people isn’t a company or a product; the social object that most unites people is a shared value or purpose. When consumers “love” Apple, they are saying they love great design and the shared idea that “thinking differently” is valuable. By “loving” Firefox, the web community is saying that they believe an open web browser is valuable to the world. By loving TEDx, a volunteer army of people are saying they believe that smart ideas that get people to think more about their world is a cause worth putting energy into”.

Nilofer Merchant – Author of Social Era (TedX Houston)


Gartner Says Capitalism Going Social Will Require Organizations

to Build Two-Way Relationships with the “99 Percent”

“While capitalism won’t collapse, there are fundamental changes under way as it morphs to a new form that is more in tune with the technology and attitudes of the 21st century,” said Nigel Rayner, research vice president at Gartner. “The coming capitalist era is that of the Facebook generation, in which the values and behaviors that pervade the Internet and social media will also be adopted by innovative and disruptive businesses. With half the world’s population under the age of 25, this may happen sooner than many think.”

Gartner has identified a number of major shifts that will occur as capitalism goes social:

  • Businesses will move away from the hierarchical command-and-control model to a more democratic and meritocratic model. Employees will be judged (and granted decision rights) on the basis of their impact on and value to the community, rather than on job title, age or social background.
  • Businesses will adopt a more open approach to decision making, allowing anyone in the organization, and also people outside the organization, to have input into the decision-making process. Goals and objectives will be set by socializing strategic aims with employees, shareholders and communities of interest.
  • Social and mobile technologies will be used to build and manage two-way relationships between businesses and all their communities of interest. This use of technology will go way beyond the one-way, outward-looking, limited use of social media today. It really will bring the 99 percent inside the walls of the enterprise to become part of the organization.

“These changes won’t impact all industries and businesses in the same way. Some will use them to create incremental business opportunities, but others may find their business model directly threatened, because they are seen by the 99 percent as the worst cases of exploitative business practices,” said Mr. Rayner. “However, some innovative organizations will use capitalism going social to create new business models and disrupt their industries.”

Gartner calls these businesses “social capitalists.” Not every enterprise can follow a social capitalist model, but those that can will be the most admired companies in the next 10 years. Business and IT leaders must understand the impact of these changes on their industries and organizations, and ensure that their business and IT plans have the appropriate focus on social media technologies. They should also identify whether management practices need to change to make the best use of these investments.

A key aspect of capitalism going social will be the use of social and mobile technologies by business to change the way it interacts with the 99 percent, bringing them inside the four walls of the enterprise to become part of the organization’s processes, rather than keeping it at arm’s length.

Social technologies are also central to improving employee engagement and rebuilding employee trust, but only if they are deployed with the intention of enhancing open communication and employee participation in decision making. This approach is based on the premise that engaged, motivated and empowered employees will deliver better customer service and value.

“Capitalism going social is a reflection of the wider societal changes that are happening in the 21st century. These changes cannot be ignored, although their impact will vary by industry and organization. IT and business leaders must identify how soon their industries and companies will be affected by these changes,” said Mr. Rayner. “Ideally they should seek out a senior executive in the organization that faces the greatest threat from capitalism going social who will be a strong ally. Once this person is on board, they should use the IT department to trial social technologies, and use the results of these experiments to advocate wider adoption across the organization.”

Source : Gartner’s Maverick Research Special Report Sparks New, Unconventional Insights 03-DEC

WDGLL specs

Nilofer Merchant states that to create value in the Social Era “organizations don’t operate like the powerful “800-pound gorillas” of yesteryear—but instead act more like a herd of 800 gazelles, moving together across a savannah, outrunning the competition”.

“people started giving her monikers like “The Jane Bond of Innovation” because of her ability to guide companies through impossible odds”.

The Gartner “Maverick” Research findings state that capitalism going social is about flatter more open structures with genuine two-way dialogue.  Although these are not breakthrough findings they do represent a positive step forward from normally conservative Gartner.

At the start of last year Haydn Shaughnessy wrote an excellent article for Forbes entitled the Emergence of Social Capitalists. here is a quote:

“The way we set about creating wealth is undergoing a significant transition. Many leaders may not get it. Some might not know how to catch up. But it is happening.

It lacks a resonant label and I don’t see social business having powerful resonance over time, not like the word capitalism”.

Whether we tag the rethinking and reimagining of Business as the new Social Era or capitalism going social is not the strategic exam question it is about how structures are evolving to imitate nature and symbiotic relationships.

Today it is not possible to envisage what half of the worlds population which is under 25 will build with options like crowd funding and micro financing to give 3rd World businesses a jump start.

In closing I love this clip where Nilofer holds a closed fist and open palm to explain the Power of Open Ideas.


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