It's the Trough of Disillusionment and So Much More

We're in for an interesting ride. The social software market is going through a bumpy patch. The 'trough of disillusionment' is the third phase of Gartner's Hype Cycle and I think we are in its valley in the social software market.  For those that aren't familiar with the model, it's below:

Why are we here? Well everyone got pretty excited about social tools ability to spread information and the adoption rate by individuals has been phenomenal. If you need a refresher on adoption rates, re-view What is Social Media (not for polite company but gets the point across). So all you have to do is listen to the conversation and jump in, right?  That works quite well as an individual or even a small company.... but it doesn't take much size before an organization gets wrapped up in their own operations and drama, used to the way things are, and pretty rigid when it comes to change.  And what I think many people have not gotten is the magnitude of the change we need in organizations to take advantage of the new information environment - this is not just about a software category - it's about the fundamental nature of information exchange and relationships. It comes luring us with a 140-character text box - what could be simpler? But it amounts to complex information arbitrage - something I wrote about back at the beginning of 2008.

Business structures have been set up and optimized for an environment where information was very unevenly distributed. They used that inequity to maintain their margins, keep their employees, distribute profits, etc. Most large organization can't change very quickly and are largely operating as if that environment still existed. The problem? Information barriers are crumbling quickly outside organizations and savvy customers can easily know more about their vendors than the vendor employees do - with a little research. Customers can easily find other customers to confirm experiences. Customers who use a product day-to-day often know more about it than their vendor account manager who doesn't actually use the product. The days of glossing over a problem or using a 'smoke and mirrors' approach are dying.

What is a large organization to do? Setting up a Twitter account should be the last of their worries. Not only do customers have better information, the cost of sales has dropped and companies still have a huge sales and marketing organization that can't just be lopped off. They've got customers demanding answers to which they may not know or have a great answer. Because of the prior information inequality, relationships were not the highest priority thing to attend to. Even recently, I've seen a lot of senior customer advocates being cut from marketing departments because they don't have direct ROI and in tough times, they are the first to go. But relationships are becoming the core competitive differentiator. If I as the customer can get somewhat equal products for the same price (and increasingly that is likely because the customer has access to information by which to negotiate), I am going to do business with the company I trust and like - not the one that professes to be perfect but seems highly disingenuous. Middle management is used to being the conduit for information and the hard truth is we just won't need as many layers of management as we used to. For the managers we do need, we need a very different style of leaderships - one that facilitates rather than directs, that promotes others, and that ensures cross-functional alignment and consistency. 

Structure drives behavior and today's organizational structures are not set up for today's information environment. Companies need to manage their communities of constituents like consenting, opt-in adults. Winning that trust from people is hard when starting from zero but many companies have created antagonistic relationships with customers and so have even more work to do. So they start down the path - by creating a blog or setting up a Twitter account... and it looks like a lot of effort without the direct reward in the scale or timeframe of more traditional initiatives. And it can look like that for a pretty long time, because customers' validly developed skepticism is a hard thing to turn. And that's where we are generally. Companies are looking at all of these social initiatives and re-assessing. Some community managers are being let go. Other companies don't even realize they need a community manager. Some are slogging through and doing the hard work of change management.

The rest of 2009 and 2010 will separate the pack - those organizations that see the changing information environment and realize that it links directly with how they engage customers, partners, and employees will start seeing results after months or years of investment. Others will leave social initiatives on the side and ignore the changing dynamic at their financial peril. The power has shifted. The organization needs to be shaken up. We are just at the beginning of where this shift gets really interesting. Who's along for the ride?

Note: just saw a note on Twitter about how the head of BMW's US Marketing group moved all of his people into new roles... great example of how the break some long held habits and 'think differently'

Comments

[Account Deleted]

Rachel, that is bloody fantastic and so, so right!!! The power has indeed shifted.

[Rachel Happe]

Thanks Sue - I'm glad this rings true for you.

[Beth Dunn]

Great post, Rachel, and as you can tell by what I posted on my blog today, I'm thinking much along the same lines -- and still thinking about your post from last year about opt-in & project-based work. I think it's all part of the same issue -- the new pathways for information call for (require?) new organizational structures and new ways of thinking about the management function.

This *isn't* just another piece of software, to be truly effective in today's social world requires a much bigger shakedown than that -- and that's why things are about to get very interesting, as some organizations figure out how to make their adaptation skills their competitive advantage, and others do not.

[working girl]

Yeah, there's a bit more to it than setting up a Twitter account. . .

[Rachel Happe]

Hi Beth -

Thanks for stopping by and the comment - social software incents people to reach out and connect authentically but organizational structures do not... and I really think structures/policy drive behavior. It's going to be a messy process for companies to figure out how to adapt. Very difficult to put the genie back in the bottle. They've held the cap on for so long...

[Retheauditors]

Hi Rachel,

I'm seeing extremely uneven awareness and adoption of social media by corporates. Having been a Twitter user, for example, for almost two years now, I've refined my use and also loosened it, based on the tool and my changing needs and so have others. But I still see newbies, big and small, and I still see very large organizations in my world continue to be totally oblivious to it.

The test for me will come later this week when I speak again, a year later, to a potential blog sponsor. It's a large, publicly traded staffing company, one that knows me and my content well. But a year ago they told me that CFOs, CIOs, Chief Audit Executives don't read blogs. Regardless of what the Technorati survey says (everyone reads blogs now) it will be interesting to see if the fact that they asked me for a meeting means that they are now at least curious if not actually admitting that there is a more cost effective, impactful and targeted way to reach their audience and develop their own voice than traditional print advertising and expensive conferences and trade shows.

"Structure drives behavior and today's organizational structures are not set up for today's information environment."

That statement is especially true in the age of big business belt-tightening and cost cutting. With every initiative measured by cost savings as the ROI holy grail, it will be difficult to find and sustain the corporate sponsors needed to realize the potential of these tools in large organizations. I'm seeing smaller accounting firms adopt more quickly than the Big 4 audit firms because it's all they have to choose from and the "idea to execution" path is much shorter.

It's going to get really interesting now, I agree.

[Adam Cohen]

Francine is right - it's going to get really interesting now. Every client I talk to is at a different point on the learning curve. I talk to banking clients who say, "we've wanted to do something in social media for two years but our CMO just started paying attention" to companies already making revenue through Facebook and Twitter alone, looking for ways to step it up a notch. This is SEO 8 years ago - lots of companies (and individuals) trying to sell services on how to do it and few tried and true methodologies. I wonder if Social Media will eventually get to be that much more established in measurement, methods and expertise (white hat/black hat too).

Another point - There is still so much room for maturity in this and all tangential markets. For example, social media monitoring continues to go through innovation and consolidation. Community vendors are adapting. Ecosystems like Laura Fitton's http://oneforty.com are appearing. Think one day these will be the maturity equivalent of Web Analytics, ERP software and (yes, it's way ahead) Apple's app store? I do... Great post Rachel, though provoking as always.

[twitter.com/JoeCascio]

I'm very glad to hear you point out that many companies have created adversarial, antagonistic relations with their customers. I wonder how far any of them are willing to go to reform that inward-looking culture of denial. I call it "Dementia Presidentia", the syndrome that affects so many executives used to thinking that just because they give the orders, the world is really the way they say it is in their memos.

[Rachel Happe]

Hi Joe -

Thanks for stopping by and the comment. I actually don't think companies have intentionally created adversarial relationships with customers/employees/public. It's just been an externality of efficiency that couldn't be measured so they ignored the issue. Either way though, social media is changing the balance in a way that can't be ignored.

[Guy Martin]

Excellent analysis Rachel!

I think the only thing that will really start to get the attention of companies is falling sales, and/or the rising sales of their competitors who have not ignored this trend.

This is not unlike the boom/bust cycles of employment. In today's tougher economy, many companies promulgate the 'you should be lucky we are willing to employ you' mantra, but, when the pendulum swings (and it always does), they forget that most employees have VERY long memories, and those employers with the reputation of great places to work will get the quality candidates in the end.

Though companies should take a longer term approach, stockholders and boards of directors seem to always hold a short-term interests position. The only thing that seems to sway that is a drastic shift in profits.