Social Media is the 4th Phase of Industrialization

Thomas Burns, the iconic economist, originally authored the classic classification scale many use to describe market maturity.  On his scale, the most complete, or evolved market he identified as a phase three and described as being focused on ”stimulat(ing) consumption (with) advertising, product development, design, consumer research, market research, and marketing promotion.” (Hatch, 1997, p. 23)  The question, though, is have we actually now passed into a 4^th phase, where the market self moderates and discovers needs or desires for product on its own?

If social media, indeed, does represent the 4^th phase, then the impact it will have on organizations is significant.  “We often hear of social media being equated with tools & platforms. But it’s really much more than that.  If you’re adopting these technologies and behaviors at your company, it’s not about the shiny new toys. It’s fundamentally about culture change. And that type of transformational change – which may include updating business practices – must come from the top. But more than a top-down dictum, it’s got to be part of leadership.”  (Monty, 2010)

One such case where leadership and organizational change is adapting the social advancement of the web is Ford Motor Company.  Ford has embraced the social web, and has made significant changes to the way in which the firm goes to market.  Ford’s CEO, Alan Mulally, really gets social media. As stated on the firm’s Social Media Marketing Blog: “He promotes a culture of transparency and openness that is completely aligned with the way Ford is trying to engage with consumers online.  Mulally thinks about how Ford does business. Consistency of purpose and of message is key.” (Monty, 2010)

Ford clearly understands the power of the social web, and is looking to leverage the new found paradigm as a means to reach consumers.  Their open transparent approach is designed to develop an ongoing trust based relationship with consumers that establish dialogs, commitment, and engagement.  They seek to extend and expand the emotional connection by providing greater access to information (hello Toyota) and facilitating the subsequent sharing or spreading of experiences amongst the Firm’s friends, family, customers and fans.  Ford is demonstrating the adaptable leadership required by today’s organizations, and is demonstrating that organizations can drive change when they listen to their market, to their consumers and have committed leadership.

As organizations look to embrace the social web it is critical that leadership recognize that socialization of the web and thus their brand is a new paradigm.  In this new fourth phase of industrialization organizations must look beyond their own advertising and promotion to accommodate the reality of social conversations generated by the market about their brand.  The social web is vast, spanning well beyond advertising and promotion, and can spread points of view, both good and bad, like wildfire.    The market can turn on a dime, or a brake pedal, and brands need to be ready to react. Brands must recognize the power of word of mouth and plan accordingly.

Look to Ford again.  At the turn of the 18^th century they helped usher the world into the industrial era with the famed assembly line.  What could you have learned from them then?  Could you have applied the assembly line to your own business?  Ford, under the direction of Mulally, is doing it again.  They are leading the way into the 4^th phase with the socialization of their brand with consumers, their customers, their prospects, friends, family, and now fans and followers. Can you learn from them?  Can you learn how to socialize your own business?

The Social Consumer Drives Need for Organizational Change

As most marketers are aware, consumers have more control of how information is leveraged than ever before.  The internet and the access it provides has empowered consumers with knowledge and has forever changed the way consumers perceive and understand goods, services and information.  Consumers are enlightened, and “are acutely aware and educated as to the current state of our society.  They make their buying decisions more astutely as a result of information they now access.”  (Hickman, 1998, p. 505)  Necessarily, organizations now find it much more difficult to ensure they are aligning with customers.  Consumers are aware.  The implications for marketing organizations are significant.  The structures we’ve built and optimized were aimed at a target that has moved.  To remain relevant, therefore, the marketing organization must find ways to change and adapt to the reality of the socially vocal, empowered consumer.

The key enabler to all of this is information.  Greater information access allows consumers to align their beliefs and their values around an organization’s business practices more rapidly than ever before.  The net result being customers are also forming emotional connections faster than ever.  They are falling in love… getting married… and divorced… in time measured by clicks, not days or months.  Although it may not seem so, this is not the first time marketers, or the world has been confronted with momentous change.

History is the story of change.  We’ve seen all of this before.  Turning back the clock to the industrial revolution, we see a world poised on the brink of change no less daunting than what we face today.  Change does not happen overnight.  As Thomas Burns, one of the leading economists of the time, describes by breaking the industrial revolution into three discreet phases.

Burns outlines the first phase as being “tied to the advent of specialized factories and machines dedicated to one type of task or function.”  Where phase two saw this evolve to a “series of complimentary, co-dependent machines managed via a complex production processes.” (Hatch, 1997, p. 22-23) Think of the Henry Ford’s assembly line.  The third phase, which many argue we are still in, is marked by the production of surplus goods and “enhanced sensitivity to the consumer, to new techniques to stimulate consumption like advertising, product development, design, consumer research, market research, and marketing promotion.” (Hatch, 1997, p. 23)

The rate of change is what is truly daunting.  It took the world decades, if not centuries to evolve from isolated job shops, to the consumer orgy we know today.  In contrast to Mr. Ford, the Internet is still in its infancy, or at most early teens, while social is just the glint in someone’s eye.  From a marketing standpoint, though, this relatively short time period actually may be the most momentous.

As markets develop, technology advances and new distribution channels emerge.  This is classic and well know.  In the digital world, however, while the web brought new found ways to access information, and to conduct commerce, the social networks bring new ways of creating media and delivering information to many people, very quickly.

Social media (content created by the community) and the Social Networks (e.g., Facebook, LinkedIn, MySpace, etc.) enable unsolicited “word of mouth”, testimonial which now plays a significant role in how consumers now develop an understanding of a brand.  Social networks also generate social media which shifts how people discover, read and share news, information and content.

The rapid advancement of the social network and the media these networks generate has put pressure on organizations to act responsibly like never before.  While social networks can bring about new sales and distribution they also bring rapid fire word of mouth scrutiny that organizations haven’t needed to accommodate in the past.  Social networks now create the opportunity for the consumer to communicate their POV to family, to friends, and to their potential thousands of followers on twitter, and friends and fans on Facebook.

This creates new challenges and opportunities that must be addressed.  In the past, brands have never been required to engage with individuals in such a social, communicative way.  The new access to information consumers have, the speed at which information and opinions can be shared through the social web, and the need companies have to grow, promote and stimulate the consumer to purchase have brought on needs for change – strategic organizational changes.

Are you making changes?  How well structured is your organization to capitalize on the emerging conversation with your customers?