Social Power

By

Barry Libert

CATEGORY: BUSINESS

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PRODUCT DESCRIPTION

Social power –the ability of social media and mobile technology to help people unite and

share their anger and ideas to force change – is a vital new force in the world, affecting

governments and businesses alike. Here, from bestselling author and social media

pioneer Barry Libert, is what you need to know.

AUTHOR DESCRIPTION

Barry Libert is a leading social enterprise investor and advisor to boards and their

leaders about the impact of social, mobile and cloud technologies on their organizations.

He is also the Chairman and CEO of OpenMatters.com

A New Beginning

The rebellion that is upending the Middle East is about much more than a few

autocratic regimes. It is driven by social power – that is, the ability of Twitter, Facebook,

YouTube, and smartphones to connect people - all of us who are fed up with top-down

control. All of us who are fed up with top-down control can now topple the powers-that-

be, and I predict we will accomplish our goals.

As the events in the Middle East – beginning in Egypt and Tunisia - have shown,

people can organize through social networks, and even when governments shut down

the Internet, protesters can find ways to circumvent those (and other) defenses. What

weʼve seen in Libya, Yemen, Iran, Syria, and even China is that brutal crackdowns lead

to almost certain failure. But, in the end, movements driven by social power encouraged

the open expression of ideas and affirm the passions and desires of people leading to

their ability to connect, revolt, and overturn those in power.

These lessons should not be lost on business leaders. I advise global

companies and government officials on how to cope with the new world that is

increasingly driven by social power and have built and managed 15,000 on-line

communities with 40 million users. I want to share what Iʼve learned.

One Man + Social Power = Coup

The Arab rebellion began when one man, Mohamed Bouazizi, a Tunisian fruit

vendor, set himself afire to protest a series of injustices and humiliations at the hands of

the regime of the longtime ruler, Zine el-Abidine Ben Ali. Bouazizi was not among the 15

percent, or 1.6 million of Tunisiaʼs population, who use the Internet. Nevertheless,

Facebook users quickly spread the news and images of his desperate act, thus inciting a

spontaneous, leaderless protest. Activists coordinated the demonstrations on Facebook

pages and with tweets, drawing little resistance from the regime. Ironically, Ben Ali, who

feared a coup from within the ranks of his army and security forces, had so weakened

the military as to make it impotent.

Within days, the peaceful throngs demanding Ben Aliʼs departure achieved their

goal - but not before mobs of demonstrators gathered in the Arab crescent from Algeria

to Iran to express sympathy for the protesters in Tunisia while insisting on redress for

their own grievances. Their forthright approach reflected the influence of the second

main facilitator of the Arab rebellion, the satellite cable networks of the BBC, CNN, Al

Jazeera, and Al Arabiya. Without their courageous and credible reporting, the contagion

of protest would have swept much less quickly to Egypt, Yemen, Oman, Bahrain, Iraq,

Iran, Libya, and Syria.

Social media showcased the peopleʼs technological ingenuity and adaptability in

Egypt, where the continuance of Hosni Mubarakʼs 30-year reign hinged on his ability to

persuade the army to keep him in power. After the first days of peaceful demonstrations

in Cairoʼs Tahrir Square, Mubarak tried to pull the plug on social power by cutting off

access to the Internet and sending in thugs armed with whips, clubs, and sabers to beat

and intimidate the protesters. But the people fought back bravely and found ways to

circumvent the Internet shutdown.

In a single weekend, Google and Twitter engineers devised a speak-to-tweet

application that let the demonstrators phone in a voicemail, which automatically became

a Twitter post. The technology enabled leaders of the protests to coordinate

demonstrations around the country while keeping the world informed. When the army

was dissuaded from opening fire on the Egyptian people in the square, Mubarak fled.

A Media Evolution Amidst the Revolution

Social media - and social power - continued to evolve over the 18-day span of

the Egyptian upheaval as people came to understand their breathtaking ability to topple

the status quo and the leaders controlling it. Leaders as something young people used

dismissed Facebook, the most popular social destination by far at the outset of the

demonstrations.

But a survey taken by Media Republic in the midst of the chaos showed that 53

percent of respondents were checking Twitter ahead of Facebook, presumably using

mobile devices. The marketing firm found that 66 percent were using Twitter to look for

bulletins posted by news Web sites instead of accessing the sites themselves. For the

first time, protesters could get real-time, on-scene reports and video showing, for

instance, where tear gas was being used, thus allowing them to move to safer ground.

That's social power.

What is more, young people werenʼt the only ones tweeting on mobile devices.

Adults who had something to say were using Twitter to get their messages out. The

social revolution that started and grew as a place to connect with friends had taken on

even greater and more profound significance as a platform for revolt.

The next major clash came in Libya. It was more difficult to organize protests in

a desert state that New York Times columnist Thomas Friedman describes as “a tribe

with flags” as opposed to a nation like Egypt, which has an ancient civilization and strong

national identity. Perhaps more important to a social-power powered revolution, fewer

than 6 percent of the 6.5 million Libyans are Internet users, and only half of those visit

Facebook.

But expatriate Libyans who had migrated to other parts of the world were

galvanized by the events in Egypt. Copying the January 25 “Day of Rage” that sparked

the Egyptian movement, they set February 17 as Libyaʼs Day of Rage and created

Facebook pages and Web sites, such as “Feb17.info” and “Libyafeb17.com,” and a

Twitter feed called “Feb 17 Voices” to publicize events and organize support.

As the protest grew, the number of Facebook and Twitter users in Libya rose

dramatically. Google set up a speak-to-tweet service for Libya, too, and Libyans used

Web-radio technology to create “Free Benghazi Radio.” A Twitter user named Arasmus

assembled a mash-up map of Libya showing the location of anonymous tweeters. Users

could click on icons for each region and get information about police activity and

protests.

Jubilant demonstrators were joined by sympathizers around the world, while

fearful governments in Iraq, Iran, Jordan, Oman, Syria, and Yemen nervously followed

the battle.

Outside of a handful of protesters who were arrested, dissent in Saudi Arabia has

been held in check by King Abdullahʼs promise of higher wages and more jobs for the 14

million or so Saudis under the age of 30. But when turmoil in neighboring Bahrain

appeared to be getting out of hand, Saudi and United Arab Emiratesʼ soldiers rolled in to

restore order. Nevertheless, fears that the worldʼs largest crude-oil producer might be

forced to limit production sent global prices spiraling upward.

Repressive Regimes Will Quake

In China, too, leaders were clearly shaken by the ability of social power to

galvanize peaceful, unarmed protesters, enabling them to topple autocratic regimes. By

some estimates, China has quelled hundreds of thousands of mini-riots in recent years

as its populace vents its anger over legal injustices, environmental threats, income

inequality, and government repression of civil rights.

Thus far, economic growth and rising prosperity for the lucky ones have kept

Chinese rage in check. But if protests around the vast country could be coordinated, the

regime might be in danger. Given the cracks that have occurred in Chinaʼs electronically

powered Great Firewall during the Arab rebellion, allowing news of the protests to reach

Chinese citizens, the authorities may have reason to worry about social power. And

recently, a call, via social media, for protest in China itself found an audience.

No wonder security forces have lately been sent into cities around the country to

lock down public squares and shopping malls. Foreign reporters have been detained,

harassed, and in at least one instance, a journalist was severely beaten. Equipment has

been confiscated and digital pictures forcibly erased.

Odds are that the stateʼs rigid discipline will hold, at least for now, but in the long

run, Iʼd bet on social power. At the end of 2010, China alone had 384 million Internet

users, and eMarketer, which provide research and analysis, said 265 million of them

used social networks, including homegrown Chinese networks. By 2015, eMarketer

predicts that at least 488 million Chinese will be participating in some sort of social

media.

The Generators Behind Social Power

As the Arab rebellion has shown, social power allows people to express and act

on their collective anger. And now that mobile computing has arrived in force, the

campfire that was social media is exploding into a conflagration.

Facebook, which had just 50,000 mobile users in 2009, counted 200 million one

year later. Researchers at Morgan Stanley report that, for the first time, smartphones

and tablet computers outsold desktop and laptop computers in the fourth quarter of

2010. By 2015, they predict, sales of mobile devices will nearly double PC sales.

In the Japanese market, the transition is nearly complete. Since 2006, page

views on Mixi, the countryʼs leading social network, have risen nearly six fold, to 30

billion a month. And while 86 percent of the viewers in 2006 were using PCs, fully 85

percent now use smartphones or tablets.

Tweets of Wrath

Itʼs easy enough to understand why people in the Middle East, having suffered

decades of repression by autocratic governments, would be angry enough to risk

imprisonment, or worse, to protest their lot and agitate for change.

What isnʼt always obvious - though itʼs very real - is the bubbling cauldron of

long-simmering rage that threatens leadership of every kind, be it of national

governments or businesses, both here in the United States and around the globe.

The Tea Party movement is, to date, the most visible sign of this rage in the

United States. But the Tea Party is just the discernible part of a looming iceberg. Still

largely hidden is the enormous anger and sense of unfairness bred over a century of

autocratic behavior by the heads of some of our largest and most well-known institutions,

whether they be the leaders of our purportedly democratic governments or the

executives of the businesses for which we work, from whom we buy, and in whose

stocks we invest.

Broad-based anger and peopleʼs ability to share that anger (social power)

created an embarrassing situation for Chrysler when a disgruntled employee of its social

media agency mistakenly posted an off-color tweet on the car companyʼs Twitter account

rather than on the employeeʼs personal account. The tweet derided Detroitʼs abilities: “I

find it ironic that Detroit is called the Motor City and yet no one here knows how to f***ing

drive.”

Chrysler quickly responded on its blog, dismissing its social media firm amid

speculation that it might retreat to the perceived safety of its traditional advertising

agency. Lauded for its swift and honest response to the rogue tweet, Chrysler was

nevertheless criticized for looking backward to an old media model when what it

apparently needs is an agency well versed in managing real-time communications.

ESPN felt the sting of condemnation when its attempt to control employeesʼ

online connections came to light in August 2009. The critics characterized the

companyʼs policy as “extremely strict.” ESPN, of course, didnʼt see it that way, saying

that its “first and only priority” was “to serve ESPN sanctioned efforts, including sports

news, information and content.”

One rule banned personal Web sites and blogs that include sports content,

another demanded that employees receive permission from a supervisor before

participating in social networking related to sports, a third gave ESPN the right to review

all posted content, and a fourth cautioned against discussing internal ESPN reporting,

writing, and editing policies. ESPN also reserved the right to use its employeesʼ sports-

related social media content. A series of seemingly commonsense guidelines - donʼt

tweet something you wouldnʼt say on air or write in a column, be mindful that you

represent ESPN, be respectful of colleagues and fans - rounded out the list.

The reaction was mixed. Some people thought the rules were draconian; others

viewed them as a reasonable requirement aimed at making its paid employees protect

the brand.

Brand protection had nothing to do with the firing of an employee at American

Medical Response of Connecticut (AMR). She was let go for posting unflattering

comments about her supervisor and for responding to co-workersʼ comments on

Facebook. But the employee didnʼt go quietly, deciding to file a complaint with the

National Labor Relations Board (NLRB). In February 2011, the NLRB determined that

AMRʼs blogging and Web posting policy was overly broad. Now AMR is rewriting its

policy to make sure it doesnʼt illegally stop its people from discussing pay and working

conditions with their peers.

As these incidents suggest, social-power driven revolt is not just fomenting in the

Middle East, but right where you and I live and work.

A Well-Funded Revolution

Past revolutions have been decidedly unequal, pitting barefoot sans-culottes

against French aristocrats and low-paid factory workers against wealthy industrialists.

But this one is different. Social power, and the tools that make it work have been

created and funded by some of the same people they are destined to overthrow.

Facebook, Twitter, and YouTube were developed by entrepreneurs and financed by

world-class venture capitalists to rake in profits. Most of these people operate as

capitalists always have, using traditional modes of governance.

During most of the Industrial Age, there were good reasons for running

governments and businesses the way they were run. Managers charged with reducing

the cost of goods and services to citizens, customers, and employees consolidated

power and were rewarded for it. But todayʼs leaders donʼt truly understand that the day

of from-the-top decision-making is finished, and a mindset that once made them great is

now killing them. Indeed, their outdated style of management is actually hastening the

social power revolution and ultimately their own demise.

Given the cost of information, returns will be reduced along with increased

access and innovation. But as the world begins to open up and share ideas, the old

asymmetry of information and control that created outsized returns for leaders and

institutional investors will fade.

At last count, Facebook was valued at $50 billion and Twitter at $10 billion, while

startups like LivingSocial and GroupOn are worth billions more. These enormous

valuations suggest that the power of social power is growing. Nevertheless, untold

millions of VC dollars will continue to be raised because investors donʼt realize they are

funding the agent of their demise. Instead, they will continue to reduce the cost of

plugging into social power, putting more and more rebels on the front lines of

monumental change. Already, you can publish a book on Amazon.com for $1.99, or

build a Web site on GoDaddy for $7.49 a month. The revolution has not only begun; it is

capturing once well-barricaded landmarks at a rapid pace (think the demise of

Blockbuster).

The problem is that most business leaders, institutional investors, and corporate

directors still donʼt understand the threat posed by social power. Like Chinaʼs leaders,

managers think they can ride out any storm by battening down the hatches, enlisting

loyal seamen and women, and holding to their course. Their policy might work for a

while if they hew to the following time-honored tactics:

• Enforce traditional discipline. Monitor all computers, phone calls, and e-mail

traffic. Limit technology to what you can control. Donʼt hand out iPhones and forbid

access to social media; just because information has been made public, that doesnʼt

give your people the right to know it. Even the supposedly modern Obama

administration tried to deny government workers access to the WikiLeaks trove of State

Department cables.

• Keep close the cards you are dealt; censor information. Tell employees and

customers only what you think they need to know about your plans, operations, and

financial well-being. Make sure everything posted on your Web site, including any

customer comments or product reviews, toes the company line.

• Control communication within the company. Make sure all messages flow

through the main office. Never allow the branches to speak directly to one another.

Similarly, discourage fraternization between departments, and donʼt promote people

across divisional lines.

• Continue to use old technologies. Make sure you invest in traditional on-

premise computing and software. In essence, stay with what you know and avoid

todayʼs reality.

At best, these tactics are the counsel of despair. No matter how furiously

antediluvian leaders try to hold back the tide, I believe that social power will dominate.

Especially in the corporate world, events and conditions often conspire to defeat secrecy

and the leadership models and forms of governance it engenders.

Endlessly copied and transmitted from one hard drive to the next, digital

information piles up and multiplies, making it impossible to monitor, let alone secure. As

The Economist recently observed, companies that were once safe boxes for information

are becoming more like sieves, spilling data through every pore. Bradley Manning, the

soldier accused of leaking State Department secrets to WikiLeaks, allegedly downloaded

and sent some 250,000 documents with a few clicks of a mouse. A few years ago, it

would have taken him months or years to photocopy and smuggle out all those papers.

And whether organizations like it or not, we are in the early stages of an

explosion of information and mobile technologies that will empower all of the people, with

the cloud serving as the repository from which information can be cheaply scattered

everywhere to everyone. The market research firm IDC reckons that the Digital

Universe, the amount of digital information created in a year, totaled less than one

zettabyte (1 trillion gigabytes, or 250 billion DVDs) in 2009. By 2020, IDC predicts, the

yearʼs output will be 35 zettabyte. And by then, smartphones and tablets will outnumber

PCs, spewing out data and sending what used to be secrets to anyone, in real time, on

the go.

New firewalls and leak-detection systems come on the market every month, but

in the long run, the confluence of the cloud, user mobility, and social media will break

down the walls that business and government have and continue to erect. We will all

have to live with, and even embrace, transparency and engagement as a way of life, and

that will be a good thing. Productivity will increase, and transparency will defuse the

pent-up anger now threatening institutions of all kinds, including businesses.

A few corporate leaders understand the dynamics of social power. Writing in the

March 2011 Harvard Business Review, Dominic Barton, managing director of McKinsey

& Company, warned of rising public anger toward both business and government.

Capitalism must reform or confront rebellion, he said. Among other things, Bartonʼs

“Capitalism for the Long Term” argues that companies must focus not on short-term

profits but on serving the interests of all their major stakeholders, including customers,

employees, suppliers, communities, and even the environment. He presents this

proposition in the familiar guise of maximizing long-term value to shareholders, but I

think thatʼs a fig leaf. His true objective is sheer survival. If business doesnʼt change its

basic ways, he writes, “The social contract between the capitalist system and the

citizenry may truly rupture, with unpredictable but severely damaging results.”

A very few leaders are already operating in a style suited to the social-powered

world. Warren Buffett, CEO of the phenomenally successful Berkshire Hathaway

holding company, cheerfully owns up to his mistakes and makes no pretense of being

indispensable. In one of his avidly read annual reports, he told stockholders, with

Twitter-like candor, that they would have been better off if he hadnʼt come to work all

year. But no one was put off. After all, $1,000 invested in Berkshire Hathaway in

January 1990 was worth $12,000 20 years later. Thatʼs nearly triple the rise in

Vanguardʼs Standard & Poorʼs 500 Index Fund.

Equally impressive is the transformation of General Electric, once the showpiece

of the autocratic Jack Welch. His successor at GE, CEO Jeffrey Immelt, has opted for

transparency, corporate humility, and vulnerability. Speaking at the Web 2.0 Summit in

San Francisco in October 2009, Immelt noted that “if youʼre not willing to be completely

transparent on just about everything you do, and if you canʼt tolerate life in a world where

youʼre sharing information openly, where youʼre getting input from lots of different

people, where they have the ability to critique, criticize, have inputs . . . you better find a

new profession.” Todayʼs world is about “transparency, openness, two-way dialogue

with your constituents,” he added.

GE guides, advises, and counsels its customers, showing them how to improve

their operations even if it means less business for GE. A GE medical service that used

to be all about billable hours and efficiency now focuses on patient services and pays

heed to the feelings of its doctors and nurses.

A Handbook for the Savvy

Buffett and Immelt are the rare birds in the corporate leadership aerie, because

negotiating the transition to a new style of management is simply too difficult for many

leaders. But if you are a traditional boss with vision for your future that includes

participation, transparency, and engagement, and you want to embrace and even

harness social power, hereʼs what you must do:

• Admit that what youʼre doing is wrong - wrong for your business, wrong for

your stakeholders, wrong for yourself in the long run. In other words, acknowledge that

what made you successful will no longer keep you successful. It will seem like an

inconceivable betrayal of faith, but it is essential.

• Accept that your customers, your employees, and your investors are angry - at

you for the way you have treated them, the products you have sold them, and the

support you have provided them. Apologize in every way possible, including a Facebook

post and a tweet. You can explain why you thought you had to act the way you did, but

you must be genuinely contrite and ask forgiveness. Obviously, it wonʼt be easy.

• Change as quickly as you can. That will be the most difficult of all. Embark on

a journey of understanding, trying to see things from your stakeholdersʼ points of view.

Become compassionate, embrace transparency, and be willing to sacrifice short-term

profit for sustainable operations in a new world.

• Allow people to connect, and welcome the suggestions they offer based on

what they have learned. Encourage communications and tweets across divisional lines.

Eliminate huge pay discrepancies between executives and workers, and cut your own

bonus and stock options to prove your sincerity.

• Embrace social media, the cloud, and mobile devices - and this is perhaps

most important in terms of your business success. These technologies can help you run

your company more productively and efficiently by engaging all constituents in open and

honest, two-way communications. Others are already on board. IDC estimates that fully

1 billion workers, or 25 percent of the global workforce, are equipped with company-

issued mobile devices, and the numbers will only grow.

The benefits from using social and mobile technologies are myriad. For instance,

you can cut recruiting costs by using Twitter or LinkedIn to reach potential employees,

and a Facebook page can connect your brand to customers and prospects that might

ignore conventional advertisements, broadcasts, and publications. New technologies

such as sentiment tracking and social-media analytics can help you access and

understand what people are saying about you, and how they feel about your product,

service, and organization.

Social media in conjunction with mobile and cloud technologies will make it

easier for your customers and prospects to do business with you. For example, 1st

Guard, a company that specializes in selling insurance policies to truckers, allows drivers

to use their smartphones to fill out and electronically sign an application. A driver on the

road can apply in the time it takes to fill the truckʼs tank with diesel, while a company

operator monitors the process to make sure all the blanks are filled correctly.

Some retailers are using GPS to send advertisements to the mobile devices of

potential customers in the vicinity of their stores. Such location-based services can be

fine-tuned to take into account the device ownerʼs age, gender, occupation, and personal

preferences. The research and analysis firm, Gartner, is advising companies to develop

specialized applications that allow mobile-phone owners to research products, compare

prices, and then, with the information in hand, buy the product on the spot.

Now is the time for all government and business leaders to embrace social

power. Otherwise, they face the fate of the regimes toppled in the Arab Revolution. So

get on board and plug into social power.

ABOUT THE AUTHOR

Barry Libert is a technology investor and advisor to boards and their leaders

seeking growth and innovation by becoming social enterprises. He has spent the last 10

years investing, founding and running social media and open innovation companies that

together manage more than 15,000 on-line social (employee and customer) networks for

more than 350 leading brands. Barry is also the author of 5 books and 13 e-books on

the power of social media in business.

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