May 17, 2012

Facebook IPO and the Ecology of Social Business

Facebook is on the brink of a huge and unprecedented IPO, leaving many miffed at the valuation. The latest hand-wringing about the Facebook IPO comes in response to the announcement by General Motors that it was going to pull back from its $10M Facebook advertising spend.

The GM move is certainly a minor embarrassment for Facebook – kind of like losing your Internet connection just as you’re about to demo your recommended cloud platform to dubious stakeholders. Or an untimely snowstorm the evening of your presentation on global warming. Ironic, as Alanis Morissette would say.

The public foofaraw is about whether Facebook really has a viable and sustainable platform for driving advertising revenue. One can hope that Facebook doesn’t lose sight of the long-term ecology of the social forest, for focusing on the quarterly health of a few trees. But anyone focused on Q2 2012 advertising revenue is missing the point of the astronomical Facebook value.

For one thing, it’s obviously shortsighted to look at Facebook today and extrapolate to envision its revenue model going forward. Facebook has been fearless and relentless in its introduction of new features, new acquisitions, new user experience – everything about the landscape is evolutionary.

And though many grate at the constant changes, on the whole Facebook has been insightful and forward-looking in managing its own evolution, and that is perhaps the best lead indicator of its future relevance.

The New Ecology of Social Computing

But there’s another, deeper point driving Facebook’s soaring valuation.

Back in 1993, Neil Postman wrote an engaging and cautionary book called Technopoly, the Surrender of Culture to Technology. Though not a book often cited in the technology industry, he described the emergence of new technology media in an interesting and compelling way:

Technology is neither additive nor subtractive. It is ecological… A new technology does not add or subtract something. It changes everything.

And that’s just the point. Facebook represents not just another advertising platform; it is not additive to use Postman’s word, but an ecological change in how we engage with each other and our environment.

Postman goes on to say:

New technologies alter the structure of our interests: the things we think about. They alter the character of our symbols: the things we think with. And they alter the nature of community: the arena in which thoughts develop.

The Facebook valuation is a bet that the new ecology, in which almost a billion people are already engaged, will fundamentally change the structure of our engagement and commerce.

As Dion Hinchcliffe has pointed out, in a network like Facebook, the audience is the product. Facebook’s real value, if they can manage it discreetly, is mining the user data effectively. Dion goes on to list a range of possible monetization options that make the advertising angle seem simplistic, including CRM, mobile, open data and APIs, Big Data and more. The range of possibilities is deep and broad, because the change is ecological.

Social Business Ramifications

On a more practical level, the Postman ecology insight applies well to social business networks: the use of social platforms within and across organizations.

In fact, we’ve seen that those organizations that treat a social platform as merely additive – that is, just another communication tool to juggle – are almost certain to see their network fall short of expectations.

Our most successful networks have jumped in with both feet, and in many cases have reduced email usage by 50% or more. And, more importantly, have fundamentally changed how they do business, improving employee engagement, productivity and responsiveness.

In other words, organizations successfully adopting social platforms treated them as ecological, a different and multivalent way of working.

Is your organization ready for the ecological shift? In a recent post, Organizational Culture and Social Business Networks, we talked about four kinds of corporate culture, and theorized which would be most conducive to adopting and benefitting from social business apps like Convo. In this context, one can imagine that the control-oriented cultures might be more apt to treat new tools as additive, and cautiously adopt the environment alongside the old way of getting things done. Flexible and adaptive organizations, meanwhile, might be much more likely to embrace the ecological change enabled by the new environment.

Ready for the Evolution?

If your organization has the ability to embrace a new and evolutionary way of working together, and is not simply looking for incremental or additive tweaks to an existing collaboration model, check out Convo. Complete ecological adoption will have far-reaching and positive consequences.

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