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What Exactly is ‘Social Business’ and What is its Future?

A few days ago (October 24th), you may have read about the news of Salesforce showing signs of trouble with two of its most high profile acquisitions.

I think we can all agree that no acquisition comes without its challenges, and it’s safe to say that no matter how strong the offerings in Radian6 and Buddy Media might come across as a bundled service product, integrating whole businesses and their respective technologies into a “your size fits here” package is tough. But I don’t think that’s really the core issue, nor will it be moving forward.

Since the 70s, companies like IBM have been bundling their services to provide a host of software stacks and enterprise collaboration services — it’s how IBM ultimately got out of the hardware business. Microsoft starting doing this in the 80s. Cisco has been doing it for as long as anyone can remember. Sun Microsystems was also doing it leading up to its acquisition by Oracle in 2010. This is hardly a new model. What is new is this thing called “social business”.

By definition, social business is a term created by Nobel Peace Prize laureate, Professor Muhammad Yunus, to describe a “a non-loss, non-dividend company designed to address a social objective within the highly regulated marketplace of today.” A variant of this is the social business model, which is a term loosely “applied to businesses that have adopted social networking tools and practices for internal and external functions across their organizations.”

Let’s face it: in enterprise circles, social business is a major marketing phenomenon. Led by the imperial Marc Benioff, it is a mindshift doctrine replete with all the accoutrements of a seemingly sexy, emerging trade — “cloud computing” this, “parallel processing” that, “community management” this, “open enterprise” that. And while I do believe there is merit in all of these foundational elements, the doctrine lacks the very thing that Salesforce’s predecessors have all lacked, despite strong earnings and at times, rising stock prices: human insight.

Translation: bundled services mean little if people don’t really know what to do with them.

As we’ve discussed in numerous posts on this blog, technology acceleration can only take us so far, and has only taken us so far. Let’s go back to one of our most important lessons in recent history, Sun Microsystems. After the post-crash bubble of 2003-2005, Sun pivoted to a grid computing model that basically gave customers enhanced computing capability at $1 per CPU, and was its first true SaaS (software as a service) product. Long story short, the service provided Sun a temporary revenue spike until the stock plummeted in 2007-2008 and the company experienced its biggest losses and layoffs to date.

The lesson learned? Distributed computing networks don’t necessarily scale. Why? Because no matter how much chip speed you can provide a client, if you can’t empower the people inside the organization who are actually using data and other forms of distributed information, you can’t upsell, you can’t stack, and you can’t scale. Granted, this was mostly an I.T. play, but it had all the characteristics of what we now consider to be the social enterprise.

So back to Salesforce.

I actually think Salesforce was smart to acquire Radian6 and Buddy Media — the idea of leveraging infrastructure, and a solid client base, is a good one. However, I think Salesforce is also missing the bigger picture.

It seems to me that the three biggest concerns we have in this Internet economy that directly affect social business are privacy, “piracy” and community, and they are the three biggest factors in acquiring and retaining customers. Privacy is that thing we all struggle with in terms of managing, distributing and protecting personal information. “Piracy” is a phenomenon with multiple definitions and disinformation streams, and along with privacy, is no less (mis)informing policy generation in Washington; in short, it implies that what we distribute has serious liabilities. Community is that thing we all claim to have a handle on, but is becoming increasingly more complex, as well as elusive, as we try to shoehorn our (e)commerce models into the mix. Facebook’s “fCommerce” is a classic example of this struggle.

Let’s look at the community element for a moment, because it would seem that with Radian6 and Buddy Media, Salesforce might have a pretty good leg up on the market. Here’s the issue: regulation. For one, there still aren’t any clear-cut standards in place for things like blogger outreach other than the FTC’s strange effort starting in 2009; there are guidelines offered by orgs like WOMMA, but there are still no real comprehensible legal standards to follow or lean on. For another, there are no brand or category standards in place for how companies deal with online communities (such as reputation management) other than what they themselves may put into place. And while social media agencies and the like can prosthelytize all they want about getting clients “to go social”, the fact remains that few of them have any grasp on the implications.

What happens next is no different than what we’ve seen over the last two decades — a client buys the service product, and is faced with an immediate customization challenge, not to mention its own challenges of scale, because its customers and respective communities are unique and nuanced.

The three elements of privacy, “piracy” and community are also contributing to what I call the emergence of “controlled private social networks”. CPSNs have arisen out of all the filtering and monitoring that is done through the social web, and are an answer (at least right now) for things like link-baiting, cookie deployment, and a host of other atrocities that plague our digital and social

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networking environments. Basically, CSPNs are the progeny of advances we will be forced to implement in the areas of VPN (virtual private networks), VRM (vendor relationship management), and DRM (digital rights management), domains that deal directly with privacy, “piracy” and community.

Put more simply, between what we share, how we share it and with whom we share it, we have the construct for ‘social business’. Problem is, I don’t see the Salesforces of the world taking any of these elements head on.

So, the CSPN, as a social business construct, is essentially a platform that provides all the computing power one might need, with all the personal protections and social etiquette one is inclined to need in order collaborate within the enterprise, or beyond it. It amounts to providing the individual user with a blueprint for navigating enterprise spaces.

One intersection (between VRM and DRM) deals with a more open framework for distribution, aligning critical pieces like policy formation with business intelligence.

Another intersection (between DRM and VRM) deals with how communities can regulate the exchange of content, and help shape “freemium to premium” models in the publishing space, as just one example.

Another intersection (between VRM and VPN) deals with how open and closed communities can share and interact, all the while providing deep intelligence on how individual users are empowered and protected.

All said with the caveat that none of this has been built yet in a well-defined, viable business model.

There is a whole other side to this equation as well. A lot of the talk about the social business phenomenon is tied to the notion that the lines between marketing, product development and supply chain management will be blurred or even erased. That is all well and good, but I struggle to understand the value in that if we haven’t even come close to mastering these domains individually. It’s analogous to putting a band aid on a broken leg, and then cutting the leg off at the knee.

Clearly, there’s lots to think about.

What’s your take on this whole social business thing? What would you add or revise to the model presented above?






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  • Francesca

    Here’s my problem with any so call ‘social marketing’ business. It’s just a technology layer on top of something nobody can own: people’s data.
    Ultimately that is the key flaw in Facebook’s business model, isn’t it?
    If tomorrow people will stop signing in or interact, and migrate somewhere else, the whole business would collapse. Because it is nothing but people’s data.
    Legislation shouldn’t allow businesses to profit just by using people’s personal data, without offering real, tangible value. The marketing business of making money without producing or creating value is (almost) over.
    What I see possible for your model to happen is if it becomes part of the way company create and deliver their product and services. Companies could establish a ‘control private social networking’ under the agreement of protecting people’s data in exchange of better, more valuable and more efficient products and services.
    In this scenarion ‘social media’ as a ‘thing’ will disappear- just like the internet did before- and social connectivity will become just business infrastructure.

    • Gunther Sonnenfeld

      Francesca – I agree with you completely. It’s why I think ‘open privacy’ standards – as oxymoronic as that may sound – are essential. Folks like Tim O’Reilly have posited that in the future data will be, and should be, free. And yes, in embracing this, and in creating a marketplace around opt-in functions, it would allow for the best products and services to be made.