Post #7 - Social Technology Misuse

Social tools have become an extremely valuable tool for organisations and businesses but it is important to consider the risks concerns that come with them. The primary risks in Enterprise 2.0 are;

• Loss of Control
• Reputation
• Resources
• Reliability
• Productivity
• Security

An incident regarding Seven News' Facebook page illustrates the risks that a misuse of social technology can  have on an organisation. 

Seven News is the primary news service of the Seven Network and is one of Australia's most popular televised news programs. They began broadcasting in Australia in 1958 and have remained a strong competitor in the country's media sector. With the increase of popularity of social technologies Seven News has invested in all the major social media services such as Facebook and Twitter and have even created their own mobile application. Their Facebook is updated several times a day and is a major source of their viewer ship with links redirecting back to their online homepage which is in a 50-50 partnership with Yahoo as of January 2006.

The incident began when a reporter trespassed and recorded footage of the mother of a 13 year old girl who was killed in a quad bike accident. The mother proceeded to express her dismay on Seven News' Facebook page in a post that suggested that they had been exploited and harassed. The post spread through social media and collected 32,000 likes causing a great deal of negative exposure for the network. The way Seven News chose to deal with this incident is a good example of social technology misuse.

The way Seven News decided to deal with the post shown above was to simply remove it from their Facebook page. Having an active post with over 32,000 likes and 2,000 comments being deleted is not something that is often going to go unnoticed and the enormous backlash this action caused was not something Seven News had anticipated. Their unethical behaviour caused a storm of hate filled comments to flood their Facebook page which caused a great deal of bad publicity. Eventually Seven News realized their mistake and issued an apology claiming that "Mrs Goldspink-Lord's comments were removed from our site in error." and posted a screenshot of the deleted comment on their Facebook page but the damage had already been done. This PR damage can be seen in trend graph below showing a spike in interest for searches of 'Seven News' in mid July which is the time of the incident. Although an increase of brand interest is normally good this falls under negative exposure which hinders them in the long run.

Looking back on the primary risks in Enterprise 2.0 it can be seen that Seven News had to deal with the consequences of two of these risks in particular. The loss of control of the information flow can be contrasted to the spreading of the negative comment. Although the comment was posted to a page created and controlled by Seven News it is very easy for people to take screenshots of anything posted on that site and removing something once it begins to spread is nearly impossible. Another element of Enterprise 2.0 Seven News experienced is the risk of their Reputation. Having one of their primary viewer sources being filled by negative comments is extremely damaging to their reputation. This in conjunction with the fact that the average Australians trust in their media is already the lowest in the developed world makes it difficult to maintain a loyal viewer base. The trust that Seven News lost, although damaging their reputation, is a non-tangible impact so it cannot be measured by a scale.

There is also the question of the ethics behind Seven News' decision to remove the derogatory comment. Rogerson writes about eight important ethical principles that need to be maintained keep the organizations image in a positive light. The ethical principle that was breached the most was Honour. Rogerson describes this principle as "Is there anyone from whom you would like to hide the action?" which reflects on their attempt to remove the comments exposing their negative actions. It would also be very easy to argue that their actions were neither fair or considerate to the grieving mother and the Australian public, two further principles of ethics.

This problem could have been mitigated greatly if Seven News had just posted the apology on the woman's original comment rather than attempting to hide the message from the public. It was a grave mistake and a lesson that their social media department had to learn the hard way.

Post #6 - ROI

In the lecture a Return on Investment (ROI) case study was analysed showing how it is possible to calculate the monetary value from a project. This weeks blog will focus on taking an Enterprise 2.0 case study and determining if the method used to calculate the ROI is effective. I've chosen to analyse a case study on IBM's social collaboration tools which is one of the earliest cases of analysing the monetary value of an Enterprise 2.0 project.

Since businesses have been increasing their interest in social technologies the ability to calculate the ROI of a project is exceedingly important. However it is often difficult to associate a figure to many of the benefits that these Enterprise 2.0 projects bring to the workplace. Being able to calculate the monetary value of a project has immense benefits for the company that wishes to implement social technologies.

The majority of the data from this case study was done by interviewing the IBM marketing and sales personnel and analysing the financial framework of the company. The purpose of the IBM Social Collaboration project was essentially to increase idea generation within the employees. The image below shows the new product development process where the Idea Generation segment determines the quantity of commercialized products. The amount of ideas generated would then be one method of measuring the success of the project.

To calculate the ROI of the project the case study had come up with four benefits and attempted to attach a monetary value to them.

The first benefit was the revenues of incremental new products which is calculated from tracking revenue from new products. The case study determined that 7% of the total revenue is from new products which would equate to $1.4 billion for the $20 billion company. which equates to $2.8 million per product line when taking into the account the 150 products per year. After assuming that only 2% of ideas are commercialized they determined that 7,500 ideas were generated each year. They determined that project had a 'likely' value of $2.1 million based on this benefit alone.

The second benefit was based on the time it takes for a product to reach market and they gave it a 'likely estimate' of $336,000.

Another benefit was based on the fact that the Social Collaboration tool would allow the sales communities to share their practices and product expertise to increase their ability to make sales. The 'likely estimate' the case study had given this benefit was $150,000.

The final benefit discussed in the case study was the savings from increased staff productivity. Essentially the benefits from employees being able to find information faster was given a 'likely estimate' of $455,800.

Typically a ROI analyses the tangible and intangible benefits as they both have importance in a business. The four benefits above would all be considered tangible benefits however there may be many other intangible benefits of the project such as employee satisfaction due to increased communication between employees.

The above formula allows us to calculate the ROI for the project based on the investment gain (value from benefits) and investment cost. The case study states the following costs for the project based worker hours required and hiring rates.

• License fees (20,000 seats at $75 per seat) = $1.5 million
• License maintenance = 20% (recurring $300,000)
• Server hardware (1 per 20,000 seats) = $13,000
• Server maintenance = 10% (recurring $1,300)
• Implementation/planning (700 hours at $60/hour) = $42,000
• Professional service fees (100 hours at $150/hour) = $15,000
• Communication plan (120 hours at $80/hour) = $9,600
• IT administration (200 hours at $60/hour) = $12,000

Using these to calculate the ROI gives the following results.

Investment Gain = 2100000+336000+150000+455800 = 3,041,800

Investment Cost = $1500000+13,000+42,000+15,000+9,600+12,000 =1,591,600

Substituting these values into the ROI formula gives a value of 91.12% which is a significant investment considering the majority of costs will only apply initially.

The methods used by Forrester Consulting to calculate ROI have various strengths and weaknesses. Although the costs are relatively definitive there is a considerable amount of ambiguity in the benefits discussed in the case study. Associating the increase in new products to directly correlate with the value of  the project can be a problem as there may be many other factors that have caused the increase in products especially in a large company. New technologies being released and pressure from competition are factors which have not been taken into account in the case study.

If you take into account that the case study produces a very rough estimate for the ROI of the Enterprise 2.0 project then the information can be very useful. I feel it is important to consider what outside factors may cause inaccuracies in the data which may skew the results.

Post #5 - Social Technology in Retail

In the past few posts frequent readers may have noticed a trend of topics revolving around the use of social technologies in corporate businesses and the importance of McKinsey value levers. This post will analyse both of these things in reference to a company dealing in the retail sector. Myer was chosen for this analysis as its Australia's largest retail chain and understands the importance of keeping ahead of its competition using growing trends. The chain merchandises a wide variety of products such as from clothing, accessories, footwear, cosmetics, fragrances, furniture, bedding, toys and electrical products.

As with all other major retail chains, Myer has invested in creating and maintaining pages on the major social media websites such as Facebook, Twitter and Youtube. However, there are many niches in the way they use social technologies that help them to stay ahead of the pack.

The Myer blog, although being a relatively recent page, has already had a significant impact on the sales of the store. The blog focuses on the clothing and beauty side of the merchandise to give it the appearance of a high-end fashion blog. The posts are all very well written to showcase the stores new products as if it were an article in a fashion magazine rather than being obvious advertisments. This ingenious writing style is combined with several social media plug-ins such as an Instagram image slider showcasing the products in use alongside Facebook and Twitter plug-ins. The blog has had noticeable improvements on store sales with the youth fashion sector experiencing double digit growth due to the Miss Shop Blogger Project, a project that has 15 high level bloggers promoting a new range of clothes.

Myer has invested so heavily into their blog as they know that the newer demographic is engaged primarily online whereas the previous methods of reaching customers were through magazines and television.The graph above shows the high engagement visitors to the website have as well as its high ranking. The Myer blog is currently Australia's most visited retail blog and its success  can be somewhat credited to its close following with the McKinsey value levers. The blog being an interactive environment applies to lever four, Derive customer insights. Allowing supporters to comment, share and even upload their Instagram photos creates an engaging environment that attracts a userbase and also allows the designers to take in this feedback to use to enhance future products.

Another use of social technology implemented by Myer, although not a blog or wiki, is the Myer one mobile phone app. The application is described as 'One less card. One great app.' as it is aimed at being a replacement for the regular plastic Myer one card and Myer one Reward card. This feature has a noticeable effect on customers shopping habits as it combines the typical retail store rewards with gameification elements. Having the Myer one icon on the users mobile home screen will act as a consistent reminder to shop at Myer and the collection of redeemable points for their purchases makes the shopping experience similar to a mobile game. The social technology element comes from the ability to display your points among your friends giving the shopping experience a competitive element.

The app also features other useful features such as access to the store catalogue, store locator and exclusive offers to encourage app usage. When referencing back to the McKinsey value levers it can be seen that the Myer mobile app represents lever five, 'Use social technologies for marketing communication/interaction'. It assists marketing interaction by allowing customers to return feedback to the store. This is important as it gives Myer invaluable research on customer desires and habits for no cost.

The use of social technologies to increase company awareness and product sales can be seen everywhere and the businesses who use them more effectively will ultimately have the competitive edge.