11 Rules for Creating Value in the #SocialEra by Nilofer Merchant

Traditional strategy is dead. So goes the claim of Nilofer Merchant in her new book, 11 Rules for Creating Value in the Social Era. She claims that in the ‘old’ days of traditional strategy organizations didn’t need to exploit the talent and creativity of its members to be competitive. Today is different. Today we can use social media to engage the hearts and minds of our workforce. Today we can go social and break down the boundaries between our company, our employees and our customers. Join us over the next ten minutes as we go social with Nilofer and identify the new rules to create value.

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The Social Era is about connecting things, people and ideas. Merchant states that today’s power comes from connectivity. Connections in the way we work with others, and connections through collaborative platforms and joint ventures. Merchant claims the Social Era will reward those organizations that realize they don’t create value just by themselves.Anyone can create and contribute. Merchant has defined a term for an individual’s contribution: onliness. Onliness is the thing that only one particular individual can bring to a situation. Skills, passions and purpose. We each have our own personal experience, good and bad, and we need to use this to our advantage.

We must embrace our history and use it to our advantage…including the “dark side”. Equally so, we must make sure that everyone has skin in the game. Every one of your employees need to know your strategy and where they fit with it. If they don’t, you are creating an Air Sandwich – a term Merchant created in her previous book, The New How. It describes the gap between the strategists and those who are tasked with delivering the strategy. If only 5% of your people know your strategy, then you have 95% with no idea where they’re supposed to be running.

LESSON 2: ADAPTABILITY

Merchant suggests that in the Social Era, consumers, who traditionally have been considered as extractors of value, are now seen as a source of value creation and competitive advantage. She claims relationships gain in strength from trying new things and learning from failures, creating resilience as a consequence.

Adaptability is also central to how organizations and people thrive in the Social Era. Instead of seeking perfection the first time, we need to be incremental and continuously innovate to deliver the products or services our customers desire. And the customer needs to be involved.

The value created by organizations that allow people to contribute, is much greater than the value created by organizations trying to control each piece. Instead of a customer appearing at the end of the value chain, more and more companies are embracing consumers as “co-creation” partners in their innovation practices. Sharing power improves speed, and she”s the value equation.

LESSON 3: HIERARCHY FREE

Fundamental to the Social Era is the tenet that organizations are free of hierarchy. Merchant suggests we consider organization structures as concentric circles that change and resize as needed. We play to our strengths and if our strength is not what is needed, we let someone else take a turn. If we need a skill we don’t have, we embrace our connected networks and find it externally.

Merchant asks: If you were going to design an organization from scratch today, what would you design for?

The best answer: flexibility. And consequential to this flexibility? The people involved gain respect and recognition, sharing power and rewards. In other words, Merchant sees work being freed from jobs. Organizations will she” from managing a job function to managing each person based on his or her unique contributions…their onliness. Individuals will not be thinking about “resumé building” but about “portfolio building”. Badges will not be about the organization we belong to but the things we care about — our badges of talent, passions and purpose.

LESSON 4: LOVE, NOT WAR

Merchant points out that if we study the language of traditional sales and marketing we see similarities with war. We take aim at our target market. We capture or defend market share. We attack competition. We win customers. For the Social Era, she suggests a more personable approach, comparing social era marketing to falling in love, following the stages of romance, struggle, commitment, and co-creation.

social Era Marketing Stage 1: Romance. This first phase is about introductions. It’s about getting to know each other, customer and provider. It’s about finding the little things that appeal to you about the other party. The things that make you smile and want more. It’s all about exploring.

Social Era Marketing Stage 2: Struggle. As we spend time together and get to know each other, there is a mutual effort to learn how both parties in the relationship are going to fit together. We get to know their little “bad habits”, things that aren’t quite what we thought they were. In this stage, both parties have to share in the outcome.

Social Era Marketing Stage 3: Commitment. When the relationship stabilizes, each knows what to expect from the other and cares enough to be there, for better or for worse. We can look past small annoyances because the benefit of being committed is worth the trade-offs.

Social Era Marketing Stage 4: Co-creation. In this type of relationship, a customer is no longer merely making a transactional purchase, but participating in the act of creating. Vendor and customer create their own “baby”.

Merchant asserts that marketing in the Social Era is not easy. When customers are central to all we do, they are not easily controlled and they are not predictable. But remember, it is the process of making mistakes — and the ensuing forgiveness — that gives relationships their resilience.

LESSON 5: NEW STRATEGIES

Merchant clearly points out that competition has changed. Value propositions have changed. Work has changed. Many fixed costs have become variable costs. Marginal cost plays a bigger role in the value equation. Barriers to entry have fallen. Size is imprecise as a threat factor. Yet our business models have not changed to keep pace with these shifts.

Aside from market-specific competition from below, there is also competition from disruptive organizations that are finding new ways to get work done.Strategy in the Social Era needs to focus on the general direction and rely on feedback loops with customers to iterate and adjust direction.

Set a course, adjust as needed, and learn until you get it right. Connecting with our customers can provide a way to build in resilience; it enables a deeper connection to the community in which we are creating.The Social Era is new and new business models need to be created. We need to recognize we are in a new game and understand that the measures we use to judge success no longer stand, and others need to redeveloped.

LESSON 6: UNLOCKING TALENT

We have already identified the first step to unlocking talent: recognition of the existence of onliness and the unique contribution everyone can make. But having onliness on its own is not enough, as, by its nature, onliness varies. Merchant suggests we need to establish a baseline of understanding. This shared baseline starts to align onliness to a common purpose and permeates the benefit of onliness from one to another. Success isn’t about how smart or good or experienced an individual is.

Instead, it’s about the resulting outcomes of what happens when all those talented individuals work together in a common community, co-creating, with shared purpose.The final step in unlocking talent is giving your talented people the freedom to make decisions. As already discussed, hierarchies in organizations are not fit for the social era and if we don’t have hierarchies, we don’t have command and control. In response, people will make their own decisions.

Granted, these decisions need to be made within the common aim, but self-managed is self-motivated and self-determining.When we focus only on the boxes in a traditional org chart, we keep people out of the spaces between the boxes. But it is in these spaces where new talent can be unlocked and where we can add value.

LESSON 7: SOCIAL PURPOSE

Merchant suggests in the Social Era we need Social Purpose. It’s no longer beneficial to look down on customers as inanimate objects. We need to engage with then and show integrity. There are things that we do and things that we care about. And then there is the story we tell about it. When those things are in full alignment for individuals, we say they have integrity. The same goes for a business in the Social Era. Merchant suggests social purpose matters in three ways:

Community. If work is freed from jobs, then why should someone work for us? The reason is that we offer a community — a group of like-minded, like-motivated and like-inspired individuals. In these environments, time diminishes, work is pleasurable and we have a shared drive to do something that matters.

Speed. Speed is time reduction. Because we work in pools of unlocked talent and with the freedom to act, we can get to the end point faster. When people know the purpose of an organization, they don’t need to ask questions or permission before acting, they can just do it.

Relevance. Meaning and relevance can be built into whatever market you serve and how you go about your work. If your business is manned by people who understand and live the purpose, things take on relevance. As Merchant says, Social Purpose gives our goals a “why”. Without social purpose, everything is procedural. Without the why, organizations rely on the what.

So, are traditional strategy businesses doomed? Not quite. Like Darwin’s Theory, the business that adapts the fastest to environmental changes will do better. And who doesn’t want their business to evolve?