Will Facebook stick to its core competency or be waylaid?
This is third of a three-part series on Facebook as an investment. Also see:
• Facebook’s biggest barrier to enormous wealth? Trust
• Facebook will remain king, but social pure plays will fade
Many brands are boosting their investments in social business platforms like Facebook, Twitter, YouTube and Pinterest with every passing quarter, but CMOs are too often focused on next quarter’s numbers. They fail to insulate themselves against platforms’ business risks. Facebook’s IPO will likely cause the company to change its behavior in surprising ways, and without warning, by changing its policies and features. Here, I’ll address how brand executives can insulate themselves from Facebook’s — or any platform’s — fortunes by moving to make their relationships and networks portable.
Seeing beyond the platform
Pure play firms like Facebook, LinkedIn and Twitter have defined language, behavior, features and the very concepts of digital “social networks,” but they are quite expendable when brands manage their investments appropriately. However, brand leaders need to follow the digital ecosystem closely and be ready to adjust quickly.
Here are some principles for avoiding surprises. Specific action steps follow.
Assume pure plays’ gradual obsolescence
Watch the ecosystem’s major players, and the interactions among them, but the trend will be specialist sites maximizing value from “social networking” and fading dominance of pure plays. The latter will continue to exist, but they will not maximize value because they are designed for “socializing” (which people can’t resist), not doing things. Moreover, I use “ecosystem” intentionally because it indicates a pervasive, real-time network that increasingly interoperates. Because it’s digital, it’s more dynamic than any human market we’ve ever experienced. Here are brief comments on some of the players:
Facebook is so entrenched globally that it may remain the dominant general social network for many years. However, there is a big caveat. Facebook’s management team looks like it’s losing focus due to the IPO and too much time with Wall Street bankers. It’s “using the money it raised” for M&A, purportedly considering entering the hardware market (buying RIM). If Facebook’s management team and core competencies included M&A (like, say, Cisco), I would be confident. But they don’t. If Facebook buys RIM, I would seriously question Facebook’s medium-term relevance and long-term survival. Making phones will not help Facebook sell more mobile advertising. Not even Apple’s best-in-class iPhones will likely display much advertising due to user backlash. The device wouldn’t help Facebook enough to warrant the distraction — not even close. Continue reading