On Wednesday, author, Barry Libert and I did a webinar leading up to the Community 2.0 event. The theme was “Building a ‘WE’ Company: The New Competitive Advantage” and our focus was on how businesses are using social media to fundamentally change the way they do business. If you registered for the event, you should have received an e-mail with a direct link to the archive. For those who didn’t see the webinar, you can go here to register and view.
During the webinar, we promised that we would blog answers to questions that we didn’t get to during the session. Well, we actually managed to get to all the questions but just in case, we didn’t see any harm in posting them here — some of which we augmented a bit.
If you don’t feel like we provided an accurate or detailed enough answer, feel free to reach out to leave a note in the comments, reach out to me on Twitter or e-mail me at aaron AT mzinga.com. If you have additional questions, reach out to us through the blog, Twitter or e-mail.
So far the examples deal with B2C companies. What about B2B?
I’m going to start by saying I think B-to-B companies are just starting to get into the realm because they’re realizing the power of communityh. We (Mzinga) have two clients I’ll mention that are doing a nice job with this. One is WebEx — We’re using WebEx-like technology here for you guys to be able to see this Webinar — they’ve built a community both for developers, and a user community. They’re doing two things with it; one, they are letting it serve as customer service. So let your customers talk to one another and answer each others’ questions.
They also have a tool like this Idea Share tool that we talked about, or this IdeaStorm that Dell is using, where they are allowing people to submit ideas and then rate those ideas and push them up or down based on the popularity.
The other client is a company called iRise – they specialize in software for business analysts and user-interface professionals – and they are running a very cool contest. They’re giving away $15,000 to whomever creates the best user-generated commercial. They actually have done a sort of non-company community; it’s really an industry community. And they’re using it to collect best practices, to have dialogues with other people in the space that don’t necessarily work for iRise. If you want to take a look at that, it is an open community as well; it’s under mycatalyze.org.
One other example of a traditional B-to-B company that’s doing this is EDR. EDR stands for Environmental Data Resources. They are the largest provider of environmental research in real estate. So if there’s a hazardous waste site and there’s some sort of impairment to that site, very traditional real estate activities for people to understand what the hazards under real estate property before they make a loan.
They built out a community called Common Ground, a very cool community for 7,000 real estate lenders and consultants to talk about every single property in America. New environmental hazards crop up all the time, so they’re using the community to fundamentally keep track of the ups and downs of community hazards, environmental assessments, environmental improvements, or degradations.
Do you have any specific examples of the stock market rewarding “WE” companies?
[Barry's answer to the question] I’ve been doing this since 1995, tracking ‘Me’ and ‘We’ stuff and trying to understand what’s called the network effect of companies and to see which ones are more valuable than not. When it’s all said and done boards run businesses for the purposes of shareholder value, not necessarily for customers or employees. Not to suggest customers are not important. Let’s just say they’re more important to some boards than others, and I’m not too sure that employees are as important to as many companies as they’d like to admit or think they admit.
So from a shareholder perspective what we’re able to show increasingly is that open environments where there’s a lot of people interacting have a network effect. Most of us know what a network effect is, and remember the old analogy, if you put one fax to the end of a network it’s only worth so little, put two faxes it’s worth more, four faxes, eight faxes, 16 faxes, a million faxes, it’s worth a lot.
What these new business models are proving is that the more people at the end of the network, the more value they create together. Just look at a simple example of Visa and MasterCard, which are network-based business models, both of them are stellar, stellar public market companies, as they basically rely on the network effect and the B-to-B world. And the same thing even within stock exchanges, which the New York Stock Exchange is now a publicly traded company, NASDAQ the same thing. Same thing on the B-to-C side; I can give you plenty of examples, where businesses are realizing they are nothing other than a large community interacting around products, services, and information.
Did Starbucks try to close-the-loop with contributors? Respond in anyway to the suggestions? (I’ve answered this question with the related Starbucks question below).
With 100,000 entries, I had read there were a lot of redudancy in the ideas. Granted, it’s great interactive research tool. What’s the most effective way to sort the good ideas from the bad, given the volume, and also manage the expectations of the customers who have joined the conversation — especially if their ideas aren’t adopted?
The question of “how to organize all the crowd’s suggestions” is one that many companies who are using community face. We mentioned a tool before that Dell uses called IdeaStorm (we have a version ourselves called IdeaShare on the We Are Smarter site). This is mainly a discussion forum where people can submit ideas, two or three sentences while allowing others to comment on those same ideas. What makes this tool really powerful is its digg or American Idol-style voting, where you can actually let the community tell you what the good ideas are and what they aren’t.
In Dell’s case, like Starbucks, they got hundreds of thousands of suggestions. The public actually got to vote on them, and one of the things they found out was, for instance, that people wanted Linux on their desktops. They didn’t necessarily want Microsoft. I’m not sure how prepared Dell was to do anything with some of these tricky requests but in the end, it’s hard to ignore, 100,000 plus-plus peoples’ voices. As a result, they moved forward with offering Linux as an option on their consumer desktops.
Also, according to my friend Warren Sukernek who was kind enough to chime in during the webinar, “The Seattle Times wrote that Starbucks has 48 people dedicated to moderating their community site.” Based on this information, it sounds like Starbucks is taking their suggestions seriously. Hopefully they’ll put a tool in place like IdeaStorm that allows for Starbucks’ customers to help them separate the good ideas from the not so good.
How does “crowdsource” pricing work?
This is an activity focused on moving from relying on internal experts (product, sales and marketing people) to set the price of a company’s products and services to including the “crowd” or customers to set the price. Now I believe in the Brewtopia case (case study mentioned during the webinar and in the We Are Smarter book) they did that. Another example of a company does this is eBay. An eBay user sets their own price of whatever product they want to sell. Priceline is yet another example where based on availability and ask/bid prices, customers help set the price of airline, hotel and rental cars.
Is there a segment of the market that you are aware of that is more willing and able to adopt a “we” environment? Ex) younger / more IT savvy, etc?
So I think the two easiest places that people see, let’s start with the B-to-B space, is dealing with developers and technologists, especially in the open source environment, where those people are already used to participating and being compensated for their participation. And there’s some really cool examples of companies like that, including Top Coder, or MySQL, which was just sold to Sun. Just great companies where communities are core to the company and to the enterprise, as well as to the constituents
On the B-to-C side I think you absolutely see it already on the fan-based business models, the media-based business models, where they know that their fans are critical to the success. One of our clients is American Idol, and what I love about their story is very simple, that ultimately American Idol only had ten shows ‘ I think it’s approximately ten shows a year. But American Idol fans, and I’m sure some of you are American Idol fans out there, would like to see more than ten shows a year. So they need to keep that community and that fan group alive and interacting year-round. So for them community is 365 by 24/7.
So I think the media markets are the early adopters on the B-to-C side, and I think the technology market are the B-to-B early adopters.
Do you have time to address what Netflix is doing, with its public contest to improve its recommendation match by 10 percent, and also its friends/community area that shows what others are viewing/liking? The more we participate in rating movies, the more targeted their Netflix recommendations are …
You can actually find out more if you go to Netflixprize.com. I also did a podcast a few months ago with the gentleman named Steve Swasey that runs MarCom for Netflix on the We are Smarter site. We talked a bit about the prize during our interview.
To give a little more background here, Netflix has what’s called a Cinematch tool. It’s their recommendation engine. The more people that recommend movies, the more you recommend movies, or rate movies, the better the engine becomes. Netflix didn’t feel it was like necessarily the best tool on Earth, so they’re running a contest, and by 2001, they want someone to come in and improve the tool’s effectiveness by 10% – not a high bar ‘ and they will give that person/company $1 million.
So here’s an example of a company using their crowd, it’s really a community-based company if you think about it, because of the fact that they do a lot of word-of-mouth recommendation, a lot of the actual product itself gets powered by people reviewing these movies and recommending these movies, and then they’re putting their money where their mouth is by saying, ‘We really would like to have you guys participate in this particular contest.’
With social media, how do you create a network effect between B2B relationships in an environment when many of the users sometimes are more senior and have less of an understanding of technology?
Don’t be afraid to leverage online and offline tools to create a network effect, especially when it comes to a more senior audience. Very often, a bi-weekly conference call, a local breakfast or monthy webinar can be a great way to get participation from folks that aren’t necessarily comfortable in the online space. For those that are, you can record and transcribe these alternative events and incorporate that content back into the online community/social media environment.
What “WE” type features would be helpful in an internal Website aside from a group Forum (like your Best Buy example)?
I would argue everything from discussion forums to blogs and wikis, anything, prediction tools, things that like there’s American Idol, which is betting tools, any sort of tool that encourages the engagement of audiences, which could be employees, how about alumni networks, to participate.
Thanks again for all the great questions. If you have more, Barry and I will do our best to answer them in a timely fashion!