Is Social Media A Management Breakthrough or a Fad?
BusinessWeek’s March 23-30, 2009 issue focuses on Smart Ideas for Tough Times which describes how managers are taking innovative approaches to weather the downturn. The most interesting part of the series covers 11 breakthrough management ideas that are now the basics of any business school education.
This 4 part series will examine these breakthroughs alongside social media to see if we are witnessing a world-changing idea, or just another management fad. First, here is the recap from BusinessWeek:
Some of the most powerful and lasting management methods were launched during tough times, when companies needed new ways to manage costs and grow. Here is a look back at some of the biggest ideas over the past 100 years.
1910 – The Assembly Line – Explanation
1920 – Market Segmentation – Explanation
1931 – Brand Management – Explanation
1943 – Skunk Works – Explanation
1950s – Lean Manufacturing – Explanation
1967 – Scenario Planning – Explanation
1973 – 360 Review – Explanation
1987 – Six Sigma – Explanation
1989 – Outsourcing – Explanation
#1 – The Assembly Line
The Breakthrough: Ford dramatically lowered labor costs through standardized parts. This made an expensive technology cheaper and therefore increased mass market demand.
The Question: Can Social Media make expensive technologies more affordable for the Mass Market?
- Answer: Probably Not – Social Media makes communication faster and more relevant through online social networks. This makes knowledge workers more productive than in the past. However, big industries that rely on knowledge workers (pharmaceuticals, software, finance) can profit more from using this information to increase features, and therefore price.
- Additionally, while collaboration is now less expensive, globalization and other technological improvements have already made streamlined labor costs a barrier to entry in most industries rather than a competitive advantage.
# 2 – Market Segmentation
The Breakthrough: GM divided customers into groups based on their unique needs and focused their products on meeting those needs. This decreased competition and cannibalization between their brands.
The Question: Can Social Media allow companies to better identify and meet distinct consumer needs?
- Answer: Absolutely Yes – Tremendous amounts of data are being created by users of social networks and organized by marketing-savvy companies. A company’s biggest challenge is how to make sense out of all thea data that is out there.
- Eventually, managers will have the tools to micro-segment their consumers and offer highly specialized products that do not contain features that would compete with other products they offer.
# 3 – Brand Management
The Breakthrough: Organize brands into “mini-businesses” that must differentiate themselves from both internal and external competitors to survive.
The Question: Can Social Media allow organizations to more effectively align their resources to maximize total profit?
- Answer: Sometimes – Social Media can extend the communication and collaboration ushered in by the first generation of internet technologies. Larger organizations with many brands competing for internal resources will benefit from improved information flow, but this will be a one-time, medium-size improvement rather than a radical redesign.
- However, the majority of the benefits from improved internal communication have been realized through the adoption of first generation internet technologies.
