Leveraging Social Media to Collaborate with Employees and Customers

Last Christmas, a security camera caught a FedEx courier casually throwing a carton containing a jumbo computer monitor over a six-foot fence. If you remember this incident, thank social media.

The video first found its way to YouTube, where it received more than two million views. Then, it went viral on Twitter and countless blogs. Local TV picked it up; and eventually the networks played it. Soon, Jay Leno and David Letterman were joking about the incident on late night TV. The country was having a conversation about the FedEx brand that company executives neither started nor desired.

For CEOs in the age of social media, the only question is this: Will the conversation take place with or without you? Either way, it will happen.

We are likely approaching a tipping point for social media in the enterprise. Today, many CEOs believe that social media is—at best—little more than window dressing and—at worst—a distraction for already over-stretched employees. But by 2013, an increasing number of CEOs will awaken to evidence that social media is where the most important conversations, internal and external, take place and that real business benefits can be realized by harnessing the relationship-building power of social media platforms.

The business case for social media is coming into focus. According to an analysis of 4,200 companies by the McKinsey Global Institute, social technologies stand to unlock between $900 billion and $1.3 trillion of value by 2016. Far from a mere time sink, social media can deliver a surprising boost to productivity, customer development, collaboration with partners, product design, branding and reputation-management across global organizations.

Firms that outperform their peers are 30 percent more likely to identify openness—often characterized by a greater use of social media as a key enabler of collaboration and innovation—as a key influence on their organization, according to an IBM study of 1,709 CEOs.

Collaborating in the Conversation

The FedEx experience underscores the risks and benefits of social media. Many companies faced with a damaging video would hunker down. FedEx knew that was exactly the wrong strategy. Instead, it responded immediately on all the channels in which the conversation was taking place. Within hours, FedEx produced its own video and pushed it out via its blogs, Twitter feeds and Facebook pages, as well as through traditional media. The video was apologetic, self-critical and—most of all in the age of social media—authentic. “Along with many of you, I’ve seen the video of our courier,” said Matthew Thornton, senior vice president of the company’s U.S. operations. “I am upset and embarrassed for our customer’s poor experience. This goes directly against all FedEx values.”

Over the next few days, FedEx countered the event by re-emphasizing its values. It replaced the customer’s monitor free of charge. Instead of running from the video, the company used it as a training tool. The courier in question was disciplined and lost his opportunity to work with FedEx customers. All these points prompted additional conversations designed to promote the FedEx brand. Though it all, FedEx encouraged the high level of interactivity that characterizes social media, welcoming and responding to comments.

FedEx escaped a major hit to its brand precisely because the company has worked so hard on its relationships. On their blogs and Facebook pages, FedEx employees stood up and said they were embarrassed by their colleague. The incident was embarrassing but didn’t put a dent into FedEx’s reputation. Most people, including its critics, understood that the incident was a one-off.

Interactive and Engaging

Social media is best understood as a set of communication technologies that are characterized by immediacy, interaction and connectedness. It is best seen as a two-way conversation. Social media displays itself to an open public and encourages interaction between the CEO and stakeholders, internal and external. What CEOs give up in control of the message and timing, they make up in intimacy, authenticity and opportunities for collaboration on platforms like Facebook, Twitter and LinkedIn.

Participating in social media can have positive, unintended consequences. One day, Josh James, founder and CEO of Domo—an American Fork, Utah-based maker of business intelligence software—casually tweeted about a product feature that he hoped to incorporate into his company’s products. Two weeks later, in a meeting with engineering, he was surprised to see the latest version of the product with that particular feature built in. “I never sent a memo or had a meeting,” James says. “The engineer saw the tweet, took the cue and figured out how to make the product better.”

Kat Cole, the president of the food chain Cinnabon, finds it easy to directly connect the dots between her availability on Twitter with hard dollars created for the chain of 900 stores in 51 countries. More than once, she says, she’s been contacted directly on Twitter by individuals interested in becoming franchise partners that later led to new Cinnabon franchisees.

That’s all fine, critics might object, but Cinnabon has excellent franchise sales directors specifically hired to take such calls. Isn’t the president’s precious time better applied elsewhere?

“Some of those calls would never have been made if social media had not made the Cinnabon president so accessible,” Cole asserts. “Many people looking at such business opportunities don’t want to be caught in the general franchise process; they want to connect with someone at the top.” Because Cole, through her social media presence, became a well-known persona, a number of prospective franchisees felt comfortable and empowered to reach out to her. Her speed of response sent a message that Cinnabon is committed, serious and up-to-date. “It means something different when the president of the company takes an interest in a potential franchisee,” she says.

Derrick Hall, CEO of the Arizona Diamondbacks, is one of just a few baseball executives who are very active in the social media world. Like all Major League Baseball teams, the Diamondbacks have a very perishable product. The profit potential of an empty seat plummets to zero when a game begins.

Twitter has proven to be an effective tool to fill unsold seats. As game time approaches, Hall uses Twitter and offers to sit with fans who buy a ticket. In another experiment, he released 10,000 lower level tickets for $10 each, with half going to charity. The club sold that allotment within 30 minutes. “Social media gives us a real-time connection with fans,” Hall says.

Social media can also be a boon to corporate transparency. When RealNetworks, an online-media pioneer in the midst of a turnaround, faced layoffs, CEO Rob Glaser announced the move on his Facebook page simultaneously with public filings with securities regulators. Glaser’s message offered more nuance into both the business necessity and the emotional impact of the layoffs. “When I came back into Real after having been away from day-to-day operations for more than two years, I thought there was a pretty high likelihood that there would be a day like today,” he wrote.

There are limits to social media. As the FedEx example underscored, social media can’t be controlled and the casual nature of social media can be off-putting to some audiences. Unintended consequences can create critics. However, the response to critics is simple, says Dr. Wallace E. Boston, CEO of American Public University System: just pick up the phone. Dr. Boston swears by the benefits of social media, but when he encounters a critic of the Charles Town, West Virginia-based distance learning institution, he’s discovered that the best thing to do is call. “Social media is great, but there’s no substitute for one-on-one contact,” Dr. Boston says.

Social media isn’t a passing fad. The primary reason that CEOs should be social is because that is where the customers, employees, shareholders, recruits and partners live. As social media becomes more and more mainstream—more than half the U.S. population has eagerly embraced sites like Facebook and more than a third are using Twitter—the only question CEOs must ponder is whether to wade or jump in the water. Right now, the pool is mostly empty. Only 7.6 percent of Fortune 500 CEOs are on Facebook and just four percent are active on Twitter.

It’s understandable why many CEOs are hesitant about going social. This is an entirely new way of engaging with the world. It also requires a significant investment of time and commitment—and it is not without risks. In a world where transparency and authenticity are valued, there is no substitute for social media. In a world where nothing stays hidden, it is good to operate as if you have nothing to hide. If you’re not speaking for yourself, other people will speak for you.