How to Manage Your Company’s Social Media Efforts Using a Portfolio Approach
What can Venture Capital Firms and conglomerates like General Electric teach corporations about Social Media strategy? By using a portfolio approach, they can increase their overall performance through diversification, focus, and transfer of best practices.
Managing Social Media Risk Doesn’t Mean Moving Slowly
A slow approach to Social Media seems logical. “Let’s try Social Media out by creating a blog post or two, let’s tweet something cool about our brand, let’s put our advertisements on YouTube.”
But moving slowly is not likely to help your company reach its objectives because most firms in your industry have already done something similar. While you can increase your chance of avoiding a Social Media disaster, you aren’t likely to make much progress.
Why Businesses Use a Portfolio Approach
Portfolios have been used by mutual funds, venture capital firms, and conglomerates for many years for the following reasons
- Diversification
- Focus
- Knowledge Transfer
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Diversification – Increase chance of average positive return through multiple small bets
- A diversified portfolio has a balance of initiatives. Some will win, some will lose. On average, the gains from the winners will out perform the costs from the losers
- Mutual Funds and Venture Capital firms increase overall return by offsetting losses from poor parts with gains from great parts
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Focus on Objectives - Increase overall company success by focusing on specific business objectives
- Too many companies launch a social media initiative that tries to boil the ocean and do everything at once, but Social Media is too new for leaders to fully understand where it bests satisfies business objectives
- Conglomerates like General Electric use a portfolio approach to focus on specific objectives
- Consumer Products (Lightbulbs or Appliances) help to improve brand image and provide reliable cash flow
- Infrastructure helps GE gain a foothold in emerging global markets like the Middle East, China, India and Brazil
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Transfer of Best Practices – Improve component success by spreading what worked and learning from failure
- A portfolio with separate tactics and focused strategies can provide detailed market-tested lessons to other portfolio components
- Conglomerates like GE are legendary for spreading managerial knowledge to other businesses
- Six Sigma was applied first in the manufacturing businesses and then successfully deployed across the entire organization
- Venture Capital firms learn from the dogs of their portfolio and then apply the market lessons to other businessess across the portfolio
Internal Benefits of a Portfolio Approach
- Try more things – The greatest thing about a portfolio approach, besides the clarity it provides to management, is that it provides the Social Media function with more opportunities in the market
What are some drawbacks to a portfolio approach? In my next post, I’ll talk about governance strucutres to manage your Social Media efforts. In the meantime, let me know what you think the disadvantages are to using a portfolio approach versus a large mass initiative.
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benphoster
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mike walsh
