Getting The New Social Age. Or, Not.

My terrific editorial assistant has reminded me that the vast majority of people don’t really “get” the whole social network thing. We are living in the social age, yet most companies are still living in the mass market, “Tell em what they are going to get, Johnny” era. This shocks me, but I guess I know it’s true. She convinced me this morning that most people don’t understand that what Obama and his campaign did back in 2007-2008 was crowdfunding. This also shocks me, but hey.

She is right. If Sony and Bank of America don’t get it, why should I expect that some random dude is going to get it? So, while I am off building a social finance platform that assumes and embraces the fundamentals of the social era, there are tons of people and companies who while feeling the social era all around them, have nonetheless failed to understand the context in which it has occurred. We can see this most alarmingly in the way companies continue to assume value is being created (measured by 10 year old marketing goal posts), while either ignoring or failing to understand the impact of social networks, crowdsourcing, virtual workforces, freemium models, and on-line communities.

When traditional businesses begin to do what they call “leveraging social media“, they are developing marketing programs to get consumers to “like” them or “fan” them, as if that increased visibility in a social media context, is meaningful. That behavior sort-of (maybe) captures the marketing opportunities inherent in social media but misses the strategic point. As Nilofer Merchant ( so eloquently points out, “The social object that unites people isn’t a company or a product; the social object that most unites people is a shared value or purpose. When consumers “love” Apple, they are saying they love great design and the shared idea that ‘thinking differently’ is valuable.”

By promoting Drupal, Apache, Joomla!, FireFox, MySQL, and other open-source software, the message form the web development community is “We don’t need no commercial software from the dark side. Our community will build what our community needs.” We don’t need no stinking badges.  We don’t need no education. Teachers! Leave those kids alone. Oh, sorry.

What they are saying is that they believe software ought to be designed by real world users from the base functionality outward and made available “for free” over the web, so that others may contribute to its functionality on an on-going basis. This is truly Crowdsourced software. And it isn’t that it is free. It’s not just a movement. It is a crusade, and it typifies the Social Age. Wouldn’t you like to have a crusade driving your business?

All of a sudden, consumers have the ability to force you to stand for something. To stand for a shared-value. Because if you don’t, it won’t matter how many Facebook friends you have, or how many “Like us on Facebook” tags you put on your website. You won’t be selling anything to them, because they, not you, are now in charge of your markets, which is about time because they, not you, are in fact, your markets. The Clue Train Manifesto taught us all (who were paying attention) 15 years  ago that because of technology, markets were becoming conversations, and the kind of conversations that we could influence, but never control. Steve Jobs understood that. Why do people stand in line for the most expensive products in their niche, year after year? Why is Macworld such an enormous event, with an absolute cult-like following? The message is “We love what you’re doing and we want you to keep doing it. Here’s more of our money to prove it.” You won’t find similar enthusiasm at a Microsoft event.

I submit to you that if Bank of America tried that $5 debit card routine 15 years ago, we would have barely noticed, then swallowed it and moved on. Not today. Because of the Internet, markets move like wildfire. It was a matter of hours before B of A said, “Oops. Didn’t really mean that. Sorry.” Similarly, “Words With Friends” had a sudden jump of 300,000 new gamers 24 hours after Alec Baldwin had a dust-up with a flight attendant.

If Bank of America really had a clue as to the power of the social age, or an ounce of innovation in their DNA, it would have been they that invented the social lending space, and not a couple of entrepreneurs at Lending Club and Prosper. They could have set up a small lending lab and quietly developed a targeted community. But, alas. And frankly, now that Lending Club and Prosper have succeeded in offering investors an opportunity to earn substantially more on their investments than at a traditional bank while working alongside the SEC, they have simply become another bank. Dictating interest ranges. Setting loan ceilings. Abandoning every element of the social lending space they created. I know, I know. It’s not their fault. It is the SEC and Congress. Well, that will soon change. Will LC and PM re-convert to true social lending platforms based on affinity lending models? Don’t bet on it. Based on the amount of venture capital each company has raised for compliance, I assume they will be quite happy to prove their point until Chase or Wells or Citi comes around to acquire.

“Social Age” is much bigger than the marketing programs developed to “leverage” social media. The actual embrace of the Social Age enables a business to become a different business, and requires that the new business fuse its fundamental principles into the spine of the new business model. What are those principles? First, you begin to operate with a shared purpose. You stop telling your market what they will like and what’s good for them. Instead you listen. And adapt. Netflix is a classic talker/bad listener. Instead of telling us what film we should like to see next, why not share with us what our community is watching and loving? Amazon also uses a formulaic recommendation engine. They would be better off crowdsourcing their suggestions.

Why? because collaborating with people through shared purpose allows everyone to work towards a single goal. When people know the purpose of an organization, they are not waiting to be told what to do. They take on ownership and work hard to make the brand successful. It wasn’t great product that made Apple what it is today. It was great enthusiasm for a shared value. The value of great design. Of great functionality. Of great applications of technology. A crusade against a big, entrenched power. A crusade against Microsoft. And then, ultimately a brand new music delivery channel. A brand new company.

With shared purpose, alignment is created, not by mass marketing, but by word-of-mouth and community commitment. Shared purpose makes customers and team-members more than transactions and employees. It allows markets to dis-intermediate markets, and become a part of the business. There is no longer an inside and an outside of the business. There is only the business and the markets; and they have become one and the same, empowered to create product and service that is designed precisely to the needs and goals of the markets. Banks don’t set the rules anymore. The market sets the rules. When Microsoft makes a mistake, they now pay dearly for it. Maybe they should start listening.

Crowdsourced and Crowdfunded websites are springing up like wildflowers because they embrace the fundamental principles of the Social Era. Funding Artists, Musicians, Researchers, Film Makers, Political Parties, Charities and Fashion Designers. All of these sites are run entirely by the crowd. And, their biggest supporters are obviously their own markets. Google once had such a following when it still adhered to its founding mantra of “First, do no harm.” Not so much anymore.

The whole idea behind “Social Lending” was to provide a platform for people to borrow and lend from their real and virtual social networks, without a banking intermediary, based on trust wrought from affinity. Lending Club and Prosper began life that way, but the SEC took the Social out of Lending. But, the world has changed. The world has changed. How companies create value has changed. Organizationally and culturally, the vast majority of entrenched businesses have not changed. It is wholly insufficient to put the word “social” in front of existing business models and expect things to be different. What we need to do is to re-imagine the business enterprise within the context of  the “Social Age” and create lean, adaptive, and community-driven organizations. Soon, “social” will be returning to finance. I guarantee it.


About Steve King

iPeopleFINANCE™ Chief Operating Officer. Former CEO of Endymion Systems, Inc. a $36m Information Systems Services company. Co-founder of the Cambridge Systems Group, the creator of ACF2, the leading IBM Mainframe Data Center Security product; acquired by Computer Associates. IBM, seeCommerce, marchFIRST, Connectandsell alumni. UC Berkeley alumni. View all posts by Steve King

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