In an earlier life, I had the opportunity to serve as Chief Compliance Officer for an intelligence and risk management firm specializing in regulatory compliance and enterprise asset protection. Our company reduced corporate liability for our clients by assessing and evaluating their supply chain risk, identifying their vulnerabilities, and mitigating this exposure through contingency planning and business continuity strategies.
While at DemingHill, I had the opportunity to observe and engage social media from a “non-traditional” perspective (considering my background in risk management), and what I’ve found is that most executives in corporate leadership are fixating on the wrong conversation as it relates to social media risk. To date, the preponderance of this dialog surrounds the implementation of enterprise-wide “Protocols and Procedures,” an online “Code of Conduct,” and a digital “Policy of Ethics” to minimize exposure and mitigate the risk related to engagement on social media platforms. While necessary, this OBSESSION with rules and regulations in every conversation regarding risk represents a “glass half empty” mindset – a “damage control” perspective attempting to manage the volatility of this new construct so it can do the least amount of harm.
Glass Half Full
Fortunately, a few progressive firms are beginning to recognize that the “pros” far outweigh the “cons” of this medium, and are discovering ways to not just “endure” social media, but rather leverage it to reduce risk across the enterprise. “Across the enterprise.” While those words seem to just roll off the lips, they are – in fact – the secret to effectively addressing risk mitigation.
Transitioning Social Media from a Vertical Silo to a Horizontal Enabler
To maximize the value and ROI of social media within corporations – and to do so consistently and authentically – requires a mandate from senior leadership to fundamentally reorient social media from a vertical component of the organizational matrix (alongside HR, sales, product development) towards a horizontal enabler which spans the enterprise, permeates each of these functional areas, and enables them to perform more cohesively, efficiently, and effectively. Because the social media construct arrived after most firms had already been established, the tendency has been to simply “bolt-on” these tools to existing marketing, sales, and advertising verticals as adjunct vehicles for market communication and customer acquisition. At best, the result has been a frustratingly redundant, disjointed, spontaneous, and situational social media conversation – centered around product-specific campaigns – but lacking a consistent, encompassing, and top-down strategy. And at its worst, social media has become an organizational “hot potato” defined by a lack of ownership, responsibility, or flat-out fear, due to a chronic misunderstanding regarding how to leverage this powerful toolset.
Social Media Reduces Brand Risk
A critical component of DemingHill’s social media solutions involves consulting with firms to methodically reposition social media from a stand-alone vertical into an integrated, horizontal platform designed to benefit personnel and budgets throughout every department. By interpreting social media within the holistic context of the enterprise, and by inviting each stakeholder to participate in understanding and advancing the brand, the workforce is empowered to self-identify with these messages on their own terms. As a result, these brand messages become a living, breathing part of the daily culture, enabling individuals to fluently speak in a consistent brand voice with any audience, and any market, at any time. Instead of the brand as a discrete, foreign language spoken by “people in marketing” or “the CEO,” it becomes a firms’ native tongue. By positioning social media as a horizontal platform to facilitate communication of the brand so completely that it effectively becomes a second language, firms discover (quite counter-intuitively) that brand risk is actually reduced.
How Social Media Mitigates Risk – In Plain English
When done correctly, social media enables effective contact, communication, and conversations with your target market. These interactions are the basis for creating relationships, and it is these relationships that establish trust and credibility. Trust and credibility represent the “Holy Grail” of social media interaction because it forms the foundation on which all future, successful transactions occur. And conversely, without trust and credibility, social media can quickly become a waste of time and money.
Trust and Credibility:
While trust and credibility is essential for ANY relationship (not just online), it is especially important for virtual firms to establish as a way to overcompensate for the inherently removed and physically distant nature of social media interaction.
Smart companies are starting to realize that the value of trust and credibility is a truly a two-way street: External and Internal.
When trust and credibility is established with a firms’ target audience, the results are pronounced and self-reinforcing. Their perception as a thought leader increases their brand awareness, which increases their potential for getting “found” and maintaining top of mind awareness with their target market, which in turn builds up the strength of their tribe and community, thereby funneling in a steady supply of inbound leads and ongoing conversations, all of which result in accelerated sales cycles, increased closing ratios, and desirable profit margins.
At the same time that firms are busy establishing trust and credibility with their audience, their audience is busy establishing trust and credibility with them. Just like in the “real world,” if you were looking for a responsible babysitter or an honest mechanic, you would seek to mitigate your risk by engaging people that you know and trust. The relationships created and enabled by social media expose firms to individuals (and their ideas and feedback) that can mitigate their corporate risk in a variety of ways.
Social Media Risk Mitigation: Case Studies
Example A: Human Resources can leverage social media to greatly reduce the cost and risk of talent acquisition. By participating in ongoing social media exchanges and conversations around the brand on the company website, Facebook, or other community endeavors, observant HR personnel can identify individuals that are passionate and informed on their products (not to mention their level of proficiency and professionalism) and also those that separate themselves as group leaders driving conversations surrounding the company brand. Over time, these data points can be harvested to reach out to individuals when a hiring need surfaces, eliminating much of the employment risk associated with bringing on new candidates, as the accumulation of these casual conversations can effectively serve as protracted and rigorous screening process.
Example B: R&D and Product Development can spend millions designing and structuring traditional focus groups targeting a tiny subset of the market to solicit their feedback on various aspects of a product launch. By creating and populating these same focus groups online, companies can not only save costs associated with product development (some of which could be done remotely) but it also enables firms to stay in constant communication with their market, and even evolve markets over time as they age and go through various stages in life. The lifetime value of a customer is tremendous, and structuring these dialogs to maintain contact over years or decades can pay significant returns. Social media can assist product developers by eventually soliciting the market directly for both their suggestions and their creativity for introducing new product variations or even helping to innovate completely new products. By engaging the market on the front end, firms are able to reduce business risk by effectively “pre-selling” the community on the final product, in much the same way that American Idol pre-destines the recording success of their finalists by having the audience repeatedly selecting and emotionally supporting the performer they want to win.
Turning Risk Into Reward
At the end of the day, risk management is all about making assumptions, establishing probabilities, and hedging against possible outcomes, and these decisions are only as good as the information they’re based on. If structured opportunistically as an enabling, “horizontally-oriented” data capture tool within organizations, social media platforms can serve as a catalyst for processing and synthesizing real-time market response, and then applying this direct, authentic, unfiltered feedback to perform pattern recognition and identify trends and opportunities across any number of market subsets, thereby making better-informed, higher-quality, risk-mitigated decisions – while avoiding the ultimate risk of market invisibility, revenue short falls, and going out of business.
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