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Social Media Sensing for the Competitive Advantage of Firms Strategy, Competitive Intelligence and Media (Excerpt) Skyfollow Consulting Group (SCG) Chris Rigatuso www.Skyfollow.com Abstract Overview The rise in interest of social media has caused a new wave of In this paper, I first introduce David Teece’s notion of “Sensing excitement and investment in startup firms in the last few years, Seizing Transforming” (SST) framework, part of the Dynamic especially in Silicon Valley, California. The growth rates of Capabilities literature, in the context of using social media for the Myspace.com, then Youtube.com, then Facebook.com and now strategic imperatives of the firm. Then I introduce “Social Media Twitter.com have fueled the public visibility of the phenomena. The Sensing” as a new paradigm of analytics and strategic planning that large acquisition valuations for Youtube and Myspace, the allows innovative firms the opportunity to create and expand investment by Microsoft in Facebook, and speculation of potential competitive advantage using the emerging social media platforms acquisitions of Twitter have contributed to mass media and online and channels. Finally, I extend the traditional Porter’s Five Forces media coverage of their growth and success. strategy framework by including two key intersection points with the dynamic capabilities framework: Complementary assets and Co- Social Media is heralded as the next great wave in Web 2.0 specialization of assets. This intersection at the boundary of the firm technology transforming internet usage as well as becoming a media acts as a bridge into Teece’s dynamic capabilities and by extension channel worthy of significant investment dollars as part of an into social media sensing. organization’s evolving communications and marketing strategy. I then show that the properties of social media provide a natural Unlike most prior forms of advertising and communications strategy, avenue of extension of Teece’s framework, as well as an emerging social media offers structural features that make it a standout both as growth area of technology, user generated content, and analytic a divergent form of consumer interaction and as part of the new tools in which to apply the frameworks in practice. Not only does frontier of media influencing strategy for brands, especially consumer this provide a platform for consulting service innovation, but it leads brands for now. Lastly, it is a challenge both to brands and digital naturally to a new basis of competition and to a potential disruption in agencies who serve these firms because of the rapid expansion of the way in which firms will invest in advertising, marketing and alternatives for using the right social media platforms, the right tools, research. This will affect firms in a series of industries overtime, as and understanding various uses of the data to inform strategy and the diffusion of this technology and the paradigm cross from early allow transformative execution within the firms that use these new adopters to mature and “stable” industries. While initially we thought media channels. of social media as just a new media channel; its growth rate, expanding platforms and tools, changes to business models, person- group-person interaction structure and bi-directionality will lead to fundamental changes in strategy and competitive dynamics and these will trickle through several industries over the next decade. 2 Table of Contents 32. Platforms: Developers, Users, and Brands 33. Key questions for your firm 1. Backround 34. Figure 15 Web 2.0 API timeline 2. Dynamic Cababilities Defined 35. Why is Social Media Strategic? 36. Figure 16 Predicted impact of social media survey 3. Figure 2 Analytical Systems Process 4. What is Social Media? 37. Key questions for your firm 5. Figure 3 Top 10 Social Networking sites 38. Sensing in the Dynamic Capabilities Framework 6. Key questions for your firm 39. What is Social Media Sensing? 7. Why is Social Media Happening Now? 40. Key questions for your firm 8. Key questions for your firm 41. Figure 17 Social Media Sensing Cycle of Agility 9. Figure 4. Information Flow with Bandwidth changes 42. Figure 18 Social Media Sensing links departmental objectives 10. Figure 5 Launch Dates of Major Social Networks 11. Learning and Human Expression 43. Top Social Media platforms descriptions 12. Figure 6. Rigatuso Absorption Synthesis Extension Diagram 44. Key questions for your firm 13. Key questions for your firm 45. Figure 19 Social Media Adoption Curve 14. Figure 7 Many Ways to Influence Framework 46. The Transition from Michael Porter’s Five Forces model to 15. Figure 8 Influence Inversion in Social Media Dynamic Capabilities Model 16. Figure 9 Slideshare Usage Data example 47. Key questions for your firm 48. Figure 20 The Architecture of Competitive Advantage 17. Specefic Examples in Social Media Experiments 18. Figure 10 Chicago Crime Scene update Social Data 5 forces + 6 processes + 3 strategic goals experiment 19. Why Social Media Works 49. Structural Holes in Social Networks and Intelligence Process 20. Purchase Influence Survey Results Deficiencies 21. Key Questions for your firm 50. Figure 21: Structural Advantage: rate of return vs investment 22. Social Media Looks across Ecosystem Boundaries amount 51. How to construct an innovation advantage with non- 23. Installed Base Usage 24. Key questions for your firm replicable assets 25. Figure 11 Commonly used social media tools 52. Key questions for your firm 26. Network Effects 53. Conclusion 27. Technology Opportunites and the Platform Effect 54. Appendix A 28. Figure 12. 2 Sided Markets examples 55. Ecosystem Diagram 29. Figure 13 SCG Social Media Complexity from Four 56. References Expanding Universes diagram 30. Figure 14 Strategy Drives Technology 31. Social Media Platforms 3 Background Firms continually look for, develop and execute new means of building competitive advantage. In recent years, more emphasis has been placed on tangible implementation or “execution” by the organization to achieve strategic outcomes in practice. This was popularized by the recent book “Execution”, by Lawrence A. Bossidy. At a naïve level “strategy can be represented and described and shared” and therefore is less protectable than organizational and physical capital, but execution requires specific tangible, physical and intangible assets to make it happen. In particular, employees partners, distribution channels, and access to operating processes and supporting software are very distinct to each firm; and their combinatorial combinations are therefore extremely unique. So by coupling of a specific strategy to leverage a set of specific assets gives the potential for a non-replicable advantage. In the big picture, assets include humans, with their myriad skills and talents. But humans are employees, partners, customers, and the driving force of social media as participants. Figure 1. Different forms of assets influence competitive advantage and strategy Grant, Contemporary Strategic Analysis, 2008 In your firm, what (and who) are your invisible assets? Those that do not occur on the balance sheet? How do you protect and manage those assets? What motivates them to “self-manage”? 4 The Architecture of Competitive Advantage External Environment Firm Boundary Internal Dynamic Capabilities Learn (Seizing) Porters Substitutes Five Forces Goals Listen * Adapt (Sensing) (Transforming) Increase Industry New Entrants Rate of Adoption Rivalry Objectives Communication Alignment Channels * Awareness Buyers Increase Observe ability Revenue Share ability Growth Visibility Evaluation Trial ability Channels * Suppliers Increase Complimentary Select Cospecialization Differentiated ‘Whole Increasing fit & Value Solution’ Evaluate value Propositions Outcomes Methods Alliances Integration Differentiation Partners Performance Distribution Relative Advantage Support * = Social Media Role Licensing Compatibility Services © 2009 Chris Rigatuso for Skyfollow.com Process Fit Figure 20. The new Architecture of Competitive Advantage extends the notion of competitive forces from the Porter view, dominated by external industry analysis, to one of dynamic capabilities and linkage to corporate strategic goals. 5 Chris Rigatuso is co-founder and partner at Skyfollow Consulting Group (SCG). Chris was one of the first artists on the internet in 1994, while he was Director of Marketing at Synergy Computer Graphics. Today he is an analyst, consultant and CEO at SCG focusing on Strategic Social Media Analytics. Skyfollow uses advanced tools and data collection methods to link corporate strategic objectives to social media campaigns and social media sensing imperatives for competitive intelligence, market research, media planning and increasing innovation for product planning and brand postioning. Chris’s background includes investment banking, product management, marketing strategy, business development, training design, competitive strategy and entrepreneurial roles. Info@Skyfollow.com 1/27/2010 cr@Skyfollow.com Skyfollow Consulting Group (SCG) Chris Rigatuso Mobile +1 (650) 274-1045 6 Copyright info The copyright of this work belongs to the author, Chris Rigatuso who is solely responsible for the content. This excerpt paper is licensed under the Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-nd/3.0/us/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. http://www.skyfollow.com 7
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