Francois Gossieaux is cofounder and partner at Beeline Labs, a marketing innovation strategy firm, and a senior fellow and board member at the Society for New Communications Research (SNCR). He lives in New York, NY.

Ed Moran is director of Product Innovation for the Global Technology, Media and Telecommunications group at Deloitte and the creator/architect of that firm’s State of the Media Democracy Survey of emergent consumer behavior. He lives in New York, NY.

THE HYPER-SOCIAL ORGANIZATION

ECLIPSE YOUR COMPETITION BY LEVERAGING SOCIAL MEDIA

By FRANCOIS GOSSIEAUX, EDWARD K. MORAN

The McGraw-Hill Companies, Inc.

Copyright © 2010 Francois Gossieaux and Edward K. Moran
All rights reserved.
ISBN: 978-0-07-171402-0

Contents

Foreword: Hyper-Social Revolutions and RevelationsAcknowledgmentsIntroduction: Your Customers and Employees Are Hyper-Social. Is Your
Business?Part 1 Resist the Hyper-Social Shift at Your Perilone How Did We Get Here? How Social Media Drives Hyper-Sociality and Why
Businesses Must Changetwo The Human 1.0 in a Web 2.0 Worldthree The Impact of Hyper-Sociality on Your Businessfour The True Drivers of a Successful CommunityPart 2 The Four Pillars of Hyper-Socialityfive Forget Market Segments and Consumers—Think Tribes and Humanssix Forget Company-Centricity—Think Human-Centricityseven Forget Information Channels—Think Knowledge Networkseight Forget Hierarchies—Embrace Social Messiness at the SEAMSPart 3 Practically Speaking: Your Business through the Hyper-Social Lensnine How Hyper-Social Is Your Company? Measuring the Hyper-Sociality
Indexten Old Management Thinking Won’t Work in the Hyper-Social Organizationeleven Hyper-Social Organizations Use Different Metricstwelve Hyper-Social Businesses Need Different Talentthirteen The Seven Myths of Hyper-Social OrganizationsPart 4 Hyper-Sociality Is Not Just about Marketing: Your New Hyper-Social
Organization Chartfourteen Marketing 2.0 and the Rise of the CMO 2.0fifteen Customer Experience 2.0sixteen Sales 2.0seventeen Product Development 2.0 and Innovation 2.0eighteen Talent 2.0nineteen Knowledge Management 2.0twenty Business 2.0 and Leadership 2.0Epilogue: Your Hyper-Social FutureEndnotesIndex

Excerpt

CHAPTER 1

How Did We Get Here?

How Social Media Drives Hyper-Sociality and Why Businesses MustChange

Most companies that are thinking about leveraging social media as part of theirbusiness—whether in marketing, customer service, new product innovation,employee communications, or public relations—see it as a new way to reachpeople. They focus on the media in social media. Missing fromthis strategy is the idea that social media is not about media, nor is it aboutWeb 2.0 tools or the new rules that govern them. Social media is all about oursocial nature growing to levels never seen in human history. Social media isabout certain Human 1.0 behaviors finally taking hold in the business world,where they’ve been long absent.

Industry guru Tim O’Reilly calls social media a “platform of participation,” andthat is exactly what it is: a massive platform of participation. Social mediaallows us to behave in ways that we are hardwired for in the firstplace—as humans. We can get frank recommendations from other humansinstead of from faceless companies. When things don’t work out, we can get madat people instead of organizations. Our reciprocity reflex, which enables us tobe the only Hyper-Social species without all being brothers and sisters, canonce again take center stage. We can help others and be helped. We can formtribes again—except that this time, our tribes will not be bound bygeography, and we can belong to multiple tribes at the same time.

Social media is what has enabled the hardwired Human 1.0 behaviors to scale tolevels never seen before in business; we call it Hyper-Sociality. Andwhile some people will argue that our social behavior changes when it becomesvirtual and large-scale, as we are seeing now, early research on the topic hasthe social science community thinking that our social behaviors won’t change.

Human 1.0

We may be living in a Web 2.0 world, but the behaviors that this new environmenttriggers are solidly Human 1.0, and they can largely be explained by theevolution of humans to become the only Hyper-Social species without all membershaving to be related.

What we buy and how we buy have been studied extensively by evolutionarybiologists and behavioral economists. For instance, the way people seem to wantto help others and be helped is caused by a reflex called reciprocity; the factthat we like to mimic others is caused by what are called mirror neurons; thereason that we like to look cool, at least on a subconscious level, is that itmay help us find a better mate; the reason we buy the same things over and overagain, even if it makes no sense, is that we are herding animals and in somecases self-herding. What this means is that if we buy a jar of fruit preservefor no good reason, and we sort of like it, we will keep buying that brandforever. We are creatures of habit, perhaps because that consistency makes iteasier for us to make decisions. All of these behaviors have been hardwired intous over thousands of years of evolution, and have permitted us to be assuccessful as we have been.

In contrast, the modern business organization is quite young. Throughout itsshort history, business structures required us to behave in ways that wereunnatural. Think, for instance, about the specialization of skills, or about theunnatural interactions resulting from the information imbalance that existsbetween producers and consumers of goods, or between employers and theiremployees. That unnatural environment has also caused companies to develop manybad habits along the way—both with customers and with employees.

It wasn’t until recently that customers were asked to provide input into thedesign of new products and services, and for a good portion of the history ofthe enterprise, people had very limited choices—you could buy a Ford aslong as it was black. Fake-sounding commercials touting the virtues of goods andservices became commonplace. These messages worked because they were the onlysource of information that consumers had, and because there were few otherchannels of communication that were vying for their attention. In typicalbusiness jargon, companies started using war metaphors to describe theircompetitors, suppliers, and customers—and in some cases they startedbehaving as though they really were at war. Marketers “mounted campaigns” topitch new products, and “fought for marketshare,” against “entrenchedcompetitors,” all the while fighting to “win” new customers and “raise barriers”to entry.

Internally, some companies came to treat their employees as commodities, orinterchangeable cogs in a big machine. Transparency was something to be shiedaway from; instead, companies embraced secrecy and sometimes deception. Therumor mill at the company water cooler had very limited reach and little impact,and it could basically be controlled. Command-and-control methods of managementtook hold (and to a far greater extent than efficient organizational theorywould call for), limiting communication within the company mainly to verticalsilos and between small groups of people who had direct reporting relationships.

A by-product of all this command and control is that trust in business virtuallydisappeared. In fact, according to the 2009 Edelman Trust Barometer, trust inbusiness continues to decrease, with trust and credibility hitting an all-timelow in Edelman’s tenth annual study. When trust disappears from an environment,everything becomes more expensive for everyone. For producers of goods andservices, it means that they need to spend significantly more on marketing andsales to achieve the same results with skeptical customers. For consumers ofgoods and services, it means that they must conduct a lot more due diligencebefore making their buying decisions. Fortunately, as we will see in laterchapters, Hyper-Social organizations can leverage social media to bring trustback into the equation and reduce transaction costs for all parties involved.

What happens now with Hyper-Sociality is that we can behave like humansagain—not like consumers or human resources. We can talk to one anotherand help one another. If we’re not happy with the company or its products, wecan not only talk back directly to the company, but also talk to thousands ofthe company’s other customers if we choose. And if we’re not satisfied with theresponse, we can bad-mouth the company or the employees that wronged us,organize grassroots boycotts, and have an actual and immediate impact.

In fact, this willingness to pay a personal price in order to punish a companyor person that treated us unfairly is a Human 1.0 trait as well. In his”ultimate bargaining game,” Vernon L. Smith, the winner of the 2003 Nobel Prizein economics, asked pairs of people to play a game that would test fairness. Inthe game, one of the two people receives a sum of money, say $50, and isresponsible for deciding how to split it up with the other person. That secondperson can either refuse the offer, in which case neither person gets any money,or accept the offer, in which case both people can keep the money. If you wereto put your economist hat on and consider humans as rational beings, you wouldpredict that the second person would accept any amount of money being offered tohim; after all, refusing an offer would leave him with less money, since the twopeople would have to return the money. Well, in playing the game all around theworld, the researchers found that there is a trigger amount, which differssomewhat from culture to culture, but which is significantly different from $1,at which the second person will refuse the offer. So in effect, there is a pointat which the second person considers an offer unfair and is willing to pay apersonal price (giving up whatever amount of money is being offered to him) inorder to punish the first person for being unfair. That is what you arewitnessing when people go out of their way to bad-mouth your product or service:not only are they trying to warn others because of reciprocity, but they arewilling to pay a personal price to punish you for behavior that they considerunfair.

It is also worth noting that people are more predisposed to punish other peoplethan to punish the organization. It took us tens of thousands of years todevelop this innate sense of fairness for other people. Since organizations inthe modern sense have been around for only a few hundred years, we have notdeveloped that same sense of fairness as it relates to them. When the financialmeltdown happened in late 2008, people became truly outraged when a list ofexecutives and their bonuses was published. Sure, people had been mad as hellbefore at what those companies had done, but the anger became visceral when theycould take it out on people instead of organizations. The same happened in thesummer of 2009, when British people became outraged at the parliamentaryexpense-account fiasco. If the scandal hadn’t had the names of specific peopleassociated with it, the outrage would have likely been much milder.

As a company, you can try to harness this powerful force to your advantage orsee it used against you. But to understand how to harness the power of Hyper-Sociality, you need to understand Human 1.0 more than you do Web 2.0 or othersocial media technologies.

A good example of Human 1.0 in action is the SAP Developer Network, a communitywith more than 1.5 million developers. When SAP first started the community, ithad an incentive system in place that gave individuals a reward for helpingothers and helping SAP. Here’s how it worked: Every time you helped someone,that person could give you points for the help she received. Every time you werewilling to help SAP by providing it with a quote in a press release or by actingas a spokesperson for it at a conference, you would get points. You could thenturn those points into personal rewards. What happened next is that SAP startedseeing some bullying behavior in the community. People became overly competitivewith one another, exhibiting behaviors that could be characterized asaggressive. Eventually SAP decided to switch the reward system to one in whichthe total number of points doled out in the community would trigger donations toa children’s cause at the United Nations. After SAP made that change, the badbehavior soon abated.

If you were tuned into Human 1.0 behavior, you could have avoided suchobjectionable results in the first place. Behavioral economists like Dan Ariely,the author of Predictably Irrational, or Ori Brafman and Rom Brafman,the authors of Sway, could have warned you about what would happen.

The Brafman brothers describe a research project at the National Institutes ofHealth (NIH) that predicts this behavior through neurophysiology. The NIHresearchers placed participants in an MRI machine fitted with a monitor and ajoystick to allow the subjects to play a game. At the beginning of each game, acircle, a square, or a triangle would appear on the screen. A circle meant thatif you succeeded in completing the upcoming task—zapping a figure as itappeared on the screen—you would earn a monetary reward. Different circlesmeant different size rewards. A square meant that if you failed to zap thefigure, you had a penalty of 20 cents, $1, or $5. A triangle meant that no moneywas on the line.

When the researchers monitored which part of the brain was active in the variousstages of the game, they found that every time a circle or a square appeared(which meant that money was at stake), the pleasure center of the brain litup—the same center that is associated with the “high” that results fromdrugs, sex, and gambling, and that can lead to addiction. When triggered, thatpart of the brain releases dopamine, which creates a feeling of contentment andpleasure—and as addicts will tell you, you need increasing doses ofdopamine to achieve the same result over time.

In a separate study, subjects were asked to play the same game, but instead ofmaking or losing money, the participants were told that the better their score,the more money would be donated to charity. Now the MRI revealed that thepleasure center was completely quiet, but instead the “altruism center” of thebrain lit up. That is the part of the brain that is responsible for socialinteractions—how we perceive others, how we relate, and how we form bonds.

Understanding Human 1.0 is more important in predicting how Hyper-Sociality willaffect your business than understanding the tools, the underlying technologies,and the new rules that govern them. And when we talk about Human 1.0, we don’tmean only the individual characteristics that make us human and that have beentapped by advertisers for decades—we especially mean our groupbehavior, that which makes us social. That makes understanding the changesthat are upon us and how to harness them simpler than in many of the previouswaves of change.

This does not mean that the changes are any less profound—on the contrary.As we will see later in this chapter, they are truly game-changing. The goodnews for business is that the impending changes can be anticipated.

What Is Driving the Hyper-Social Shift?

A number of key technological shifts are enabling the Hyper-Social shift, andwithout the confluence of these major, long-term trends, Hyper-Sociality wouldbe an unrealized dream of our primate minds. Several of the more importantdrivers are the emergence of inexpensive social media applications, worldwideconnectivity via the Internet, and the blurring of the line between expert andamateur.

Since humans are so fundamentally social, we have consistently developed toolsand technologies through the ages that allowed us to share thoughts andinformation with others in some form. Cave drawings, art, the printing press,the telephone, television, the citizen’s band (“CB”) radio of the 1970s, and thebulletin boards of the early Internet days all point to the desire of humanityto increase one-to-one communication to one-to-many or many-to-many.

Combined with a number of factors like Moore’s law (a doubling of computingperformance every 18 months at a lower cost), the creation of common standardslike TCP/IP (the technical protocols that underlie the Internet), and theubiquity of wired and wireless connection to the Internet, the stage was set forthe emergence of powerful platforms that would allow humans to act in the socialmode in which they always existed. Indeed, with the scale and reach of theInternet and our natural instincts to behave as social beings, it’s notsurprising that tools like e-mail, wikis, blogs, and online social networksquickly emerged. It’s also not surprising that people are spending so manymillions of hours per month socializing online. When viewed in the largercontext, the Hyper-Social shift is a natural result of the way we’ve alwaysacted as humans. It’s just that social applications and the social networkingphenomenon have allowed that natural behavior to scale to a level never beforeimagined.

Companies have long controlled the tools of production and distribution, andhave attempted to influence public opinion with their large corporate budgetsand access to expensive and relatively scarce informational resources likenewspapers, television, and radio. Now that the tools of production (print,video, and worldwide content distribution via sites like YouTube) have droppedin price and have been democratized, virtually anyone with an Internetconnection has the ability to reach a global audience, and people can easilyidentify and collaborate with like-minded tribes of humans.

As a result, the dynamics of communication and relative power between amateurand expert and individual and company have changed forever. Even governments andpolice forces are not immune. Consider, for instance, how the story of a lostSidekick mobile phone told by an outraged citizen blogger with spare time and abasic knowledge of HTML eventually located the phone and forced the New YorkCity Police Department to arrest the teenager who found the Sidekick and refusedto return it.

As Clay Shirky describes in his book Here Comes Everybody, in May 2006,a New Yorker named Ivanna left her Sidekick mobile phone in a taxi. Since no onereturned the lost phone to her, even though Ivanna’s friend Evan sent an e-mailto the phone seeking its return, she purchased a replacement. When her phonecompany activated the new phone that Ivanna purchased, however, she was able toview her old phone’s picture library, and she saw that a woman with the e-mail”Sashacristal8905″ was now using the phone to take pictures. When Ivanna e-mailed the woman, the woman rudely refused to return the phone. Ivanna’s friendEvan, indignant that someone would keep what she knew wasn’t hers, posted a Website called “StolenSidekick” that explained the situation and provided a pictureof Sasha and her e-mail address. Viewers of the Web site eventually identifiedthe woman by her pictures and her e-mail address on a social network. Based onthe evidence uncovered through subsequent online conversations, the New YorkCity Police Department eventually escalated the dispute from a lost phone to astolen phone, and arrested Sasha. Such a chain of events would not have beenpossible only a decade ago.

(Continues…)
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