June 13, 2012

Facebook will remain king, but social pure plays will fade


Facebook collage by Jennifer Daniel

Look for the rise of sites with deep social features

This is second of a three-part series on Facebook as an investment. Also see:
Facebook’s biggest barrier to enormous wealth? Trust
Brands: How to cut your exposure to Facebook business risk

Christopher RollysonFacebook will remain the dominant popular social network in many markets for many years, and it won’t have to worry about being “displaced” by another social network the way that it displaced MySpace. In the near term, this lack of competition will give the company some breathing room, but a more daunting threat awaits: the waning of social network pure plays’ influence by 2017. Nonetheless, the fate of pure plays should be top of mind for serious Facebook investors: to produce the fabulous returns that current investors expect, Facebook will have to move far beyond adverts.

In part one of this series, I argued that Facebook had a significant trust gap with users that would inhibit its ability to monetize its most unique and valuable assets, and that the trust gap was recently compounded by its “IPO irregularities.” Below I’ll take a different tack and analyze the investment prospects of Facebook the platform.

Social networks’ disappointing investment results

Pure play social networks (Friendster, MySpace, Facebook, LinkedIn) have not lived up to investors’ ROI aspirations, despite the fact that people (‘users”) have loved the networks and lavished mind-boggling amounts of time on them. The Web 1.0 logic behind investor expectations held that the more time people spent on the sites, the more ads they would see and the more they would click. #fail

In retrospect, it is understandable that pure plays’ management and investors didn’t appreciate social networks’ social context. It turns out that very few people understand the intricacies of “sociality,” much less how to wire it into a value proposition or a business ROI. Continue reading

March 6, 2012

2012: The year of B2B social business adoption

How B2B firms can reduce their cost of sales 30-50% by using social platforms

Christopher S. RollysonBased on CSRA’s recent research as well as my 25 years’ experience with guiding B2Bs’ adoption of disruptive technology, I predict that 2012 will see significant social business takeup among B2B pioneers. First, a critical mass of B2B executive leaders are familiar enough with social technologies to consider them for the first time. Second, the business driver will be the economy. During the past 4-5 years, enterprises have continue to cut costs wherever they could, but few are performing at the level they want to be. B2B sales and marketing are under more pressure to perform very efficiently than ever, and some leaders will enlist social business because they have tried everything else.

B2B adoption

Although I have served numerous B2C enterprises, I have a more profound understanding of B2B because my businesses and employers have sold to businesses. Web 1.0 (“The Internet”) adoption is a very useful pattern for understanding Web 3.0 adoption (we’re way past Web 2.0 now). For brevity, I’ll use it, along with some other patterns, to explain why my crystal ball says that 2012 will see serious B2B adoption of social business.

  • Adoption of disruptive technology begins with consumers because their cost of trying new things is far lower than businesses’. In addition, families, since they include people of all ages, are hotbeds of disruptive technology adoption. What’s better than confounding parents by doing marvelous things that they don’t understand?
  • B2B executive parents, being upstanding responsible adults, always reject such frivolities at first; however, they cannot stop themselves from peering over their kids’ shoulders. When a situation occurs in which the disruptive innovation adds surprising value, their attitudes begin to change. They start experimenting (what’s the No. 1 reason execs joined Facebook?), but since they have preconceived notions about how things should work, the learning process is slow. But they eventually learn to adopt the disruption in their personal lives.
  • Once executives get comfortable enough with the disruption, the adventurous portion of them starts taking its disruption-enabled “approaches” to doing things to work. Experimentation continues for a while, during which the disruption is a “nice to have” option. In some cases a situation develops in which the innovation adds surprising value in the work context, which drives adoption further.
  • Social business — applying social technologies to evolve business processes — is reaching this point. Another Web 1.0 lesson is that the early 2000s’ bad economy helped Internet adoption after the meltdown. Although most executives were too ready to dismiss “the Internet” as a fad, enough of them persisted and proved the value in increasing areas of business.
  • At PricewaterhouseCoopers, I helped B2Bs apply Internet applications to their business processes. Once they dropped the assumption that the Internet was about Pets.com and money-losing online bookstores, they could start thinking about how they could save serious money by empowering stakeholders with real-time information and the ability to transact with their enterprise systems.

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April 29, 2009

Web 2.0 investment strategy

Outperform rivals by using Adoption Cycle

Christopher S. RollysonIn the Web 2.0 Adoption Curve, I asserted that executives had a career-defining opportunity to leapfrog competitors by using risk management to manage through the Web 2.0 adoption cycle. The cycle will also feature a backlash against—and investment gap in—Web 2.0 beginning next year.

Here I’ll discuss in more detail how to avoid the downdraft and outperform competitors over the next several years. Web 2.0 will transform organizations and society because it changes how people discover, build and maintain relationships. All organizations need to understand these dynamics, so they can become stronger and more relevant.

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