Thinking like a social media firm

Listening to what customers are saying online is vital for disruption

In the recent years of perpetual change, we have seen a number of success stories where companies such as Airbnb, Uber and Netflix have exploded the status quo by challenging the time-tested business models of established organisations, and in some cases even making these obsolete. While Airbnb has threatened the hotel business, Uber has tormented providers of traditional taxi services and Netflix has challenged the bottom line of broadcasting firms. The central theme common to all these cases is the acceleration of digital disruption.
 
The Oxford English Dictionary defines disruption as a disturbance or problem that interrupts an event, activity or process. Digital disruption is thus the interruption caused by technological evolution or revolution (an innovative technology that changes the way people or businesses work). The root cause of the disruption is often the ability to create greater value as perceived by the customer, alongside superior customer engagement and experience, often at lower cost.
 
Harnessing technology has removed traditional barriers to making connections globally and locally, resulting in an increasingly dispersed customer base for many. This creates further strategic and operational challenges. What distinguishes the game changers from the passive followers then becomes the capacity to consider risk as a matter of choice rather than of chance — to win through creating disruption for others, whilst maximising the digital opportunities for themselves.
 
How can companies with a dispersed customer base turn the digital disruption table on their competitors and benefit themselves? The solution to this lies in exactly what James McQuivey has to say, “The only source of competitive advantage now is a focus on knowledge of and engagement with customers.” Listening to what customers are saying online is the secret ingredient here. This effectively makes User Generated Content the heart of the solution, which can have many avatars — crowdsourcing ideas from customers and smartly eliciting feedback being key examples. This is what we can call “thinking like a social media company”.
 
Two researchers from MIT Sloan have recently developed a 2x2 model demonstrating how (consumer) businesses can make a conscious choice around how to manage the threat of digital disruption and turn it into a potential opportunity by “thinking like a (social) media company”. This entails dual-dimensional strategic thinking, i.e. deciding where they want to position themselves vis-à-vis their understanding of customers and their perception of the business ecosystem.
 
“Ecosystem driver” is the aspirational organisational type for the more ambitious and forward thinking players. This can enable enterprises to strategically embrace digital disruption with optimism, powering performance by leveraging the related digital disruption risks to convert these into sustainable business opportunities. Less driven enterprises can choose to be more adaptable and resilient to ecosystem environment changes, while living with their limitations. Alternatively, they can elect to better understand their customers at the cost of a narrower ecosystem view.

Sanjoy Sen
Doctoral research scholar, Aston Business School
 
Sally Eaves
Director of education, Global Asian Entrepreneurs Association, UK