Companies in Transition

                                                                                              May 2009

Dear Friend,

      Our lead article in this month’s issue of Companies in Transition is about catching the social media wave. Facebook and twitter are all the rage, but what is their utility as business tools? Can they help a business owner make money or are they just toys to while away the day?

      As the recession continues to squeeze businesses of all shapes and sizes, business owners and managers are casting about for any and all strategies that may be helpful in weathering the storm. Social media represent a low cost way to expand communications with customers and prospective customers and may actually lead to improving revenues.

      We hope you enjoy this issue of Companies in Transition.

Wayne Wilson

Catching the Social Media Wave

By Wayne Wilson

      “Social media is kid stuff.”
      “It’s a distraction and a time waster.”
      “No one will ever make any money using social media.”

      Just when we had convinced ourselves that it was safe to ignore it, a social media wave is crashing over our heads. What do we do now? Maybe it’s time to catch the wave.

      Social media is a burgeoning and rapidly evolving phenomenon. Its most familiar embodiments are those web sites we thought were just for kids – MySpace, Facebook, and now twitter, among numerous others. It also includes professional networking web site LinkedIn as well as some 200 million blogs. [1]

      Structurally, social media (or what some refer to as Web 2.0) is online information content created by people using highly accessible and scalable publishing technologies. It’s interactive, user driven (or includes a high degree of user participation), community oriented, accessible, and visible. [2]

      According to recently published statistics, Facebook now has over 200 million registered users, [3] LinkedIn’s number exceeds 40 million, [4] and twitter is growing at a year over year rate of 3000% with over 17 million users in April 2009. [5] Amazingly, the majority of twitter users are age 35 or older. [6]

      And while much of the material on Facebook and twitter is personal in nature and not particularly useful for serious business people, the phenomenon is turning a corner and can no longer be ignored by businesses. Recently, USAToday reported that Wells Fargo and Bank of America have begun to use twitter to communicate with customers. [7] And numerous other large businesses are seeking to exploit social media. [8]

      How should you approach the social media wave? The same way a surfer does a big ocean wave – proactively lest you be swamped by the wave while recognizing that much trial and error learning will be required before the wave can be mastered.

      Here are a few suggestions for putting your toes in the social media water.

Has your company reached a "strategic inflection point"?

      Andy Grove, co-founder and former CEO of Intel, once defined “strategic inflection point” as “a time in the life of a business when its fundamentals are about to change.” The fundamentals may be changing because of:

• New competitors,
• Emerging technologies,
• Maturing markets, or
• A host of other reasons.

      But the key challenges for the owner/CEO remain the same:

• Recognize that the fundamentals are changing (better yet, anticipate the changes)
• Identify the ways in which they are changing
• Figure our what skill sets are necessary to respond to the changes

      Strategic inflection points often require very different managerial capabilities from those which previously made the organization successful. The companies which adapt quickly will more likely survive and prosper.

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Yogi Berra was right when he said...

      "This is like deja vu all over again."

      Companies in need of transitions frequently suffer from similar ills resulting from similar causes. Here are some of the more common story lines:

• The world changed and they didn't.
• What worked before doesn't work any more.
• They stopped doing what was working.
• The top people topped out personally.
• Profits were taken without re-investing for the future.

      What else might we learn from Yogi about fixing the problem? 

                   

Yogi -	Translation -
"If you don't know where you are going, you might wind up someplace else."	Is the strategy right?
"Baseball is ninety percent mental and the other half is physical."	Do you have the right players?
"In theory there is no difference between theory and practice. In practice there is."	Are they executing the strategy correctly?
"The other teams could make trouble for us if they win."	Are you watching out for competitors?
"It ain't over till it's over."	Do you have the necessary staying power?

      Listen to Yogi and get going.

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