Posts filed under 'Social Commerce'
By Kyle Austin
As we begin to talk more smartly about social media ROI as an industry, we need to look closer at what actions are leading consumers to search, click and ultimately buy. A joint-study last week from Performics and ROI Research and the 2009 Razorfish FEED Report, released yesterday, begin to do that.
Performics study of 3,000 consumers, which was released at ad:tech New York last week, looked at how various segments of consumers use social networks in their daily lives, specifically in regard to finding out about different types of products and in relation to other media channels. Two specifically interesting points from their study, were:
- 30 % of respondents have learned about a new product, service or brand from a social networking site
- 28 % of respondents said messages about sales or special deal notifications resonate with them
Meanwhile, Razorfish’s report, which was based on a survey of 1,000 “connected consumers,” echoed the sentiment of consumers engaging with brands online, taking action (recommending / posting feedback) and ultimately purchasing – especially when deals are on the table.
- Nearly 70 % of respondents have read blogs produced by products or brands (e.g., Nintendo) in some frequency
- 26 % have followed a brand on Twitter
- 40 % have “friended” a brand on Facebook or MySpace
- 73% of respondents post product or brand reviews on Web sites (e.g., Amazon, Yelp, Facebook, Twitter, etc.)
- 53% have blogged about a product, brand or service
- 70% have participated in a brand sponsored contest or sweepstakes online
With that data it’s obvious that engagement is continuing to increase, but why are they following? Similar to last week’s study, Razorfish found that the #1 reason for following or ‘friending’ a brand is simple. They want deals.
- 43% of those that follow a brand on Twitter, do so for exclusive deals or offers. This beat out ‘I am a current customer’ (24%) and for ‘interesting and entertaining content (23%)
- Exclusive deals or offers were also the top reason for ‘friending’ brands on Facebook or MySpace
But perhaps the biggest takeaway from the Razorfish study was the data on how online influences (blogs, YouTube, Websites, online customer service, etc) can change brand opinion and ultimately purchase decisions.
- 65 % of respondents said an online experience has changed their opinion (either positively or negatively) about a brand or the products and services it offers
- 97% said that experience has influenced their future purchase decisions
- In addition, 64% said they have made a first purchase from a brand based purely on a digital experience (e.g., a Website, micro-site, mobile coupon, blog, tweet, email, etc)
November 9th, 2009
By Kyle Austin
Facebook has been buzzing again in publicly noting that it’s now over 300 million users, and perhaps even more importantly cash flow positive.
The latter of which surprising even those that follow the company daily. Earlier this year Marc Andreessen, who sits on Facebook’s Board of Directors, said the company “would do $500 million in revenues in 2009, up from an estimated $280-$300 million in 2008.”
However, this latest news means that the company could do even better than Andreessen’s predictions for 2009, with eyes on a potential late 2010 or early 2011 IPO.
The one question that remains is if advertising will be the singular revenue stream for the company. Yes, the ads we see on our profile pages and news feeds are lucrative, driving the company’s current revenue growth, but are they missing other opportunities to capitalize on a site that has now outpaced Yahoo! as the second most traffic’d site on the Web (Alexa graph).
Douglas Macmillan of BusinessWeek hypothesises today that Facebook’s users can afford to pay for Facebook’s services and Facebook should charge them.
His basic thesis: Facebook users are no longer college kids with little discretionary income, media companies are planning to charge so why not Facebook and they’re in the unlikely Internet position of having power over their consumer base who are devoted to their product.
Some quick math asserts that Facebook would reach the billions in revenue – Andreessen believes they’ll reach in a few years – in a year’s time by charging only $1 per month to its 300,000,000 active users. To the tune of $3.6 billion in annual revenue. Even if Facebook did it to offset advertising to a percentage of users that didn’t want to be bothered with ads, it’d still be fruitful.
So would users pay? The jury is out on that. I have to believe that there are more creative revenue strategies through engagement points (think of them as frequent flyer miles) or even corporate accounts (brands paying to host their Websites / Fan pages on Facebook). On the other hand the thought of pulling in $3.6 billion by only asking for $1 per month from each user is pretty tempting.
September 30th, 2009
By Ginger Lennon
With APRs on credit cards doubling out of the blue, investment options dwindling and banks tightening their loan policies, RaceTalk connected with Kim Muhota – CEO of Pertuity Direct – to discuss how online social lending could play a significant role in freeing up consumer credit and helping the U.S. pull out of the financial market meltdown.
A financial services industry veteran, Kim provides insight into the current credit crunch and how social lending (otherwise known as peer-to-peer) is quickly becoming a viable alternative to traditional banks.
Q: Celent predicts that by 2010, there will be $5.8 billion peer-to-peer loans made in the U.S. – an 800% growth from 2007. Why do you think peer-to-peer lending has taken off the way it has?
Peer-to-peer lending has grown quite fast over the last 2 or so years for a number of reasons. Most recently, there is the issue of the liquidity crisis which means that even the prime borrower or small business owner does not have access to credit as they did a year or two ago. Traditional providers are also raising prices pretty aggressively to drive more revenue growth and compensate for added risk – and this impacts the consumer adversely.
There is also the fact that P2P loans are installment loans and are therefore very transparent and user friendly – in other words, there is no penalty pricing, hidden fees or anything like that. The P2P marketplace offers good potential returns for lenders and allows individuals to participate in a vibrant community of borrowers and lenders. So there are multiple compelling reasons why P2P is becoming more of a main-stream alternative than it was just 2 short years ago.
Q: What are the benefits of taking out a loan on a social lending site, as opposed to a traditional financial institution?
Social lending sites offer loans that are well priced (typically between 6.9% – 17.9%) and have fixed rates. Alternatives like credit cards have been increasing their interest rates across the board and have gotten very aggressive with penalty pricing and unfair fees. Social lending sites offer a loan product that allows you to go through the application and approval process in minutes; any time of the day.
The no-hassles loan option is a much better alternative to having to go into the branch, dealing with paper work and high fees. Further, it’s a great social networking opportunity where borrowers can tell their story and lenders can get to see where their money is going. Most of the lenders and borrowers are like minded individuals looking for a better deal than what they are getting from their bank.
Q: JPMorgan Chase — the largest credit card issuer in the U.S. — recently began adding a $10 fee to borrowers’ monthly balances (which accrues interest) and raise minimum payments to 5% from 2%. Is social lending a viable alternative to credit cards help consumers mitigate debt?
Absolutely. The fact that the loans are fixed term and fixed rate loans means that the consumer knows exactly what their loan payment is going to be and they know exactly how long it will take them to pay off the loan. It’s a great mechanism to get proactive around managing debt.
Q: Do you believe that social lending can play a role in helping to reverse the current economic crisis?
Yes. The current economic crisis is driven in large part to a lack of liquidity in the credit markets. Any option that provides much needed credit liquidity will help solve the current crisis – and the social lending model allows for the liquidity in the credit market by the consumer themselves. So in many ways, it’s the consumer driving the solution directly by participating in the social lending marketplace.
Q: How do you see the social lending space evolving in the next 9 – 12 months, following the October 2008 decision by the SEC to crackdown on the industry?
The recent regulatory changes raise the barrier to entry and increases the price to play in the space for the various companies out there. Most importantly, it provides an added level of regulation which is built to protect the consumer – and that’s always a huge positive. I think we will see more people adapting to the social lending marketplace as it continues to gain awareness and traction broadly. As a result, there is a good chance that we will see one or two innovative banks and financial services companies looking to partner with some of the social lending players as a way to get a head start into what is positioned to become a great customer acquisition channel.
For more of Kim’s thoughts on the current credit and liquidity crisis, you can check out his posts to the Pertuity Direct blog here.
Disclosure: Pertuity Direct is a Racepoint Group client
February 26th, 2009
By Kyle Austin
By Kyle Austin
As I log into Facebook each day and quickly read through my “news feed” to see what my friends are doing (much like how “normal” people read the daily paper), I’m noticing a trend. These days news feeds are also populated by advertisers and products that want to update me on free ice cream at Ben & Jerry’sor new candy from Mike & Ike’s (Facebook’s targeted ad system must have me mixed up with a sugar-comatosed eight-year old boy).
However, I’m also noticing that a leading Web company is advertising on Facebook. You may have heard of them before, they’re called Facebook. Yes, as confusing as I made it sound, Facebook is advertising their own ad network in most user’s news feeds. My 17 year-old sister, for one, also has the image I posted above popping up in her news feeds with supporting text that says, “80 million users strong. With Facebook’s highly targeted ad system, how will you connect them? Learn here now.”
That my friends, does not equal the likelihood of a high Click-Through-Rate (CTR). I love my sister to death, but her current understanding of advertising -and interest in it- solely revolves around the latest Prada bag she bought thanks to what she saw in Cosmo.
Why to begin with is Facebook advertising its Ad Network to everyday consumers? Wouldn’t they be better suited to target the advertisements to users in the industry that actually have control over advertising budgets (or even work for a company in my sister’s case).
It really points to the bigger problem that Facebook has. Its targeted ad systems just isn’t that targeted. The company is on the right track in creating social advertising but the holy grail of the next generation ad network will be intelligently engaging in brand discussion with the right group of segmented users. Facebook needs to find a way to better target their advertisements so advertisers (including themselves apparently) will know that their product/advertisement will be recommended to a certain % of consumers that have a high likelihood of buying the product or service.
It’s all about CTR’S, which are created by getting relevant ads in front of interested users. Until they can figure this out, they might want to stop advertising their ad network all together.
July 10th, 2008
By racetalk
As business issues around globalization, sustainability, green IT and social responsibility become crucial for any corporate communications strategy, Racepoint Group is excited to announce today a deepening and expansion of our corporate and public affairs capabilities.
Racepoint has added David Whitmore as executive vice president of our new Washington D.C. offices. David will be heading a growing office that now includes: Brian Lunde, senior consultant of issues management and government relations; Timothy Binning, senior consultant of issues management and government relations; and Rich Blewitt, senior advisor crisis and issues management (who joined Racepoint several months ago).
The new Washington D.C. office will join our offices in Boston, London and San Francisco.
Using Racepoint Group’s expertise in digital and social media, the Washington D.C. practice will deliver a next-generation corporate practice to help companies enhance their reputations and navigate the challenges of 21st century communications.
For more information, read our press release on the new offering.
June 16th, 2008
By racetalk
From energy efficiency to reuse, recycling and sustainability, green is an emotive issue. The subject is covered by the media and bloggers with differing levels of accuracy and relevance. RaceTalk took the opportunity to speak with James Murray, editor at Business Green.
James is one of the UK’s most respected specialists on green issues. Here, RaceTalk gets his insights:
RaceTalk: Hi James, many thanks for taking some time out to talk to us today. Have you been surprised by the growth in volume of communications on green issues?
James: Not really, it’s been one of the longest running but slowest burning issues of the last 10 years! I think the impact Al Gore made was a big kick-off point for the most recent movement – that’s almost two years ago now, so it’s taken quite a while for the majority of companies to get their houses in order.
RaceTalk: In terms of the volumes of PR communication on green issues – have you been seen a dramatic rise in that in the last 6-12 months?
James: Yeah, absolutely, that’s really come through. It took a year for companies to get their heads around green issues and decide whether they wanted to do something.
Now we’re moving into the second year and they are all trying to communicate and push the green message – it’s really taken off. However, while it’s approaching the mainstream, it’s still not completely mainstream and a large proportion of companies have yet to adopt a green strategy so the potential for it to expand is enormous.
RaceTalk: Given the rapid growth of green communications, how would you rank the quality?
James: It varies enormously. It depends on the maturity of the PRs and the companies they represent. What I will say is there’s an awful lot of rubbish out there – PRs just cobbling together a survey saying that: “businesses now care about green issues” or “90% of businesses are starting to worry about energy costs.” It’s so passé and it’s been done to death, but then at the same time you are getting a lot of organisations that have a good solid handle on how to adopt green practices and communicate them. These are the ones that have good stories to tell and products that actually meet green standards. Communication with these guys doesn’t come across as marketing fluff.
RaceTalk: Obviously, you are a specialist in this area and you know the issues inside out. How would you rank mainstream media’s coverage of green issues?
James: From a business perspective that’s part of the reason we launched. The environmental coverage particularly across the mainstream media tends to lean towards ‘tree-hugging’. There is an assumption that all businesses are raping and pillaging the planet.
The business press meanwhile has struggled to get their collective heads round this whole new sphere. It’s there for them to worry about, but they haven’t really got in-depth understanding of environmental issues and legislation to be able to report on it adequately.
RaceTalk: Do you think procurement departments are updating their buying and due diligence approaches by incorporating environmental considerations?
James: Certainly. It’s slow progress but it is happening. All Government departments are legally obliged to do so and now more than ever, you can see multinationals doing it. In fact, a good example is Walmart. They’re actually dropping suppliers that don’t meet required standards now on the environment. On the technology side, HP has a big outreach programme to all it’s suppliers to try and train to improve environmental impact. The importance of the issue is gradually filtering through to mass business and consumer consciousness.
RaceTalk: Does any organisation stand out as excellent communicators in this field?
James: It’s a very difficult one. In terms of the big names it’s hard to fault companies like M&S and HSBC – they’re not perfect but they have communicated their initiatives well. Aside from the big boys, some of the younger, less ‘sophisticated’ companies like Ecotricity, Innocent smoothies have grown quickly from a solid environmentally conscious base – ultimately, they find it a lot easier to communicate because they don’t have skeletons in the closets.
The consumer technology industry is a mixed bag. Most are doing it quite well and the majority are open about the fact that they have got major issues within the industry.
One thing I will say is that there’s a large and growing element of Greenwashing going on. It must be tempting to say that the latest model is green when in fact, more often than not, the greenest thing is for users not to replace the previous product! There is also the tendency towards communicating the benefits of energy efficient devices, but at the same time a lot of nasty chemicals are inside the product or being used in the manufacturing process.
There has been a degree of honesty I think from the IT industry that they’ve got problems, and the level of R&D investments from the big members in improving energy efficient has been pretty impressive so I’m hopeful that in the next 5 years we really will see progress.
Ultimately, the question in the back of our minds is whether the tech companies back away from green issues and revert to pushing as much kit as possible, regardless of environmental concerns, or whether they are genuinely serious about this.
April 22nd, 2008
By Ben Haber
By Ben
So there is a list of reasons why Coke is bad for your health (even though Coke wouldn’t have you believe any of them) – but at least they’re committed to helping the environment.
Coca-Cola is serious about making a difference, and they’re not just talking the talk – they’re walking the walk. Their new initiative moves beyond a traditional bottle recycling campaign to take aim at vending machines.
Marc Gunther wrote an article for this week’s issue of Fortune on Coke’s initiative to make vending machines more environmentally-friendly:
Vending machines and commercial coolers that keep drinks cold run around-the-clock, rely on inefficient compressors and, worst of all, use HFCs, a potent greenhouse gas. So when Greenpeace challenged the Coca-Cola Co. to get rid of conventional vending machines and coolers, the world’s largest beverage company promised to develop replacements that are 40 to 50% more efficient and HFC-free.
Since then, Coke has invested $40 million in research and testing, published a 900-page technical study and organized a coalition of companies that sell cold drinks and ice cream, including Unilever, McDonald’s and (gasp!) PepsiCo., to attack the problem. Last year, at the World Economic Forum in Davos, Coke declared victory: E. Neville Isdell, the company’s chairman and CEO, and Gerd Leipold, who leads Greenpeace, unveiled a new, HFC-free, super-efficient vending machine. About 8,000 of the climate-friendly machines have been deployed, most to high-profile venues like Davos and the 2008 Summer Olympics in Beijing.
Marc later wrote in his blog that he’s become an admirer of Coke as he’s learned about the company’s sustainability work.
It’s great to see a company investing money to make real change, because although recycling bottles helps, that along is not nearly significant enough to spur wide-spread results.
This is explained in a video that BusinessWeek’s Heather Green wrote about yesterday called The Story of Stuff. The video goes into detail about our production and consumption patterns, and exposes the connections between a huge number of environmental and social issues. It’s 20 minutes long, but worth every minute.
The bottom line: Coke’s actions are admirable, but we need a lot more businesses and our government to take action in order to make significant changes.
April 18th, 2008
By Kyle Austin
By Kyle Austin
We recently had the opportunity to connect with Jeremy Caplan, who writes about business and technology for TIME magazine. In 2007, Jeremy was awarded the Knight-Bagehot fellowship in economics and business journalism from Columbia University for the current academic year, and is currently serving as a fellow there. He was just awarded the Wiegers Fellowship to complete his MBA at the Columbia Business School.
Our Q & A follows:
RaceTalk: Jeremy, nice to talk with you again. I know we worked together last before you started your fellowship last September. Can you tell us how that is going so far?
JC: It’s fantastic to be back in school. The fellowship basically provides a time-out from day-to-day writing so I can focus on doing MBA coursework at the Columbia Business School. I’ve learned a tremendous amount thus far from terrific professors.
RaceTalk: I saw on your blog that you are focusing your studies on corporate finance, accounting and strategy.
JC: My first semester I took Financial Accounting, Corporate Finance, Strategy Formulation, Modern Political Economy, and a course on creating effective organizations. I could talk to you for hours about each of these courses. People sometimes perceive business school as dry, but I’ve found much of the material to be fascinating, and I’ve learned a lot from my classmates and study partners. Many have backgrounds in finance and consulting, while others have worked at all sorts of companies abroad, and some come from NGOs and nonprofits.
This semester I’m taking Macroeconomics, Microeconomics, Economics of Strategic Behavior, and Operations. I’m also taking a course focused on corporate social responsibility. In between my own classes, I audit others at the business school, on subjects ranging from behavioral economics to retail strategy. I try to pack in as much as I can each day at school because there is so much to learn.
As part of the fellowship, I’ve also studied topics in journalism, including media law and multimedia reporting techniques. The bulk of my time, though, is spent at the business school.
RaceTalk: Did you choose this focus because of your current beat on business and technology or because they are topics that generally interest you? (Both maybe?)
JC: My focus this year has been on studying core business fundamentals to sharpen my understanding of the subjects I cover for Time. I also wanted to approximate the MBA curriculum, because I plan to complete the MBA program.
RaceTalk: I also caught on your blog that you recently participated in New York City’s Principal for a Day Program and you are making an effort to create a lasting partnership between the school you visited and TIME. It brought me back to your story on volunteerism in America that you worked on last summer entitled “The Case for National Service.” Within that same issue you and your colleague Kristina Dell reported on social entrepreneurship. Both appear to be on a rise in America. Do you see a correlation between the two?
JC: I do, and the growing significance of social entrepreneurship is evident in the growing number of innovative small companies focused on addressing social challenges. This is a subject I look forward to covering regularly in the coming years. On a personal level, I’m intrigued by organizations that draw on the private sector in creative ways that go beyond funding. An example of that trend is Citizen Schools, which brings lawyers, architects, bankers, artists and others into after-school programs around the country. The organization enables professionals to share their expertise and passion with kids while expanding the learning day for students. It’s an example of an innovative program that was effective in Boston and has expanded elsewhere, including New York City, where Citizen Schools will launch this coming fall.
RaceTalk: Is this generation more in tune with helping others through business and personal efforts?
JC: I think it’s easier to find volunteering opportunities now than it had been in the pre-Internet days, and it’s easier to learn about ways to have an impact on an issue that you care about. Some studies do show that volunteering is becoming more popular among certain demographics in some parts of the country, but I think a major change across the board is that the frictions in the volunteering market have been reduced. It’s just easier to get involved now that volunteering information is available online.
RaceTalk: You mentioned in a blog entry on this topic in September that “It will be interesting to see if a dialogue about national service gains momentum over the course of the presidential campaign season ahead.” It seems that Barack Obama has almost taken a Republican type stance on “personal” and “social” responsibility, but has managed to tie it into his greater message for hope. Here’s a quote of his from a speech in Iowa last December:
“As President, I will launch a new Social Investment Fund Network. It’s time to get the grass roots, the foundations, the private sector and the government at the table. We’ll invest in ideas that work; leverage private sector dollars to encourage innovation; and expand successful programs to scale. Take a program like the Harlem Children’s Zone, which helps thousands of kids in New York through after-school activities, mentoring, and family support. We need to make that model work in different cities around the country. And I’ll start a new Social Entrepreneur Agency to make sure that small non-profits have the same kind of support that we give small businesses.”
RaceTalk: What are your thoughts on his message of “social” and “personal” responsibility?
JC: I’m glad to hear candidates focusing attention on the Harlem Children’s Zone (HCZ), because I’ve long thought that it represents an excellent model. HCZ has created a tightly woven network of programs that create a kind of synergy of support. I’m hoping each of the candidates talks about national service as well as social entrepreneurship as the campaign progresses.
RaceTalk: Getting further into social entrepreneurship, I wanted to get your thoughts on a new concept proposed by Muhammad Yunus. I recently asked Steve Hamm of BusinessWeek this same question based off a book review he did on Yonus’ new book “Creating a World without Poverty.” I’m interested into your thoughts on Yunus’ concept of social businesses, which Steve defines as the following:
They’re (social businesses) supposed to be smoothly managed, efficient, and profitable. But in their case, profits are invested back into operations rather than being returned to investors or shareholders. So it’s a form of capitalism that does not reward the capitalist in the traditional way.
RaceTalk: Yunus’ example of this is Grameen Danone, which sells fortified yogurt for pennies a serving to malnourished children in Bangladesh. However, they are still turning around a 1% annual dividend for the company. First off, are you familiar with this concept and have you heard of adoption of this philosophy?
JC: This is a great example of an innovative “bottom-of-the-pyramid” type business. From a market perspective, one of the challenges of this type of “social business” approach is that it may not provide full market returns, and the flow of capital may therefore be limited, ultimately, to those willing to sacrifice potential returns for other, social benefits. One of the strengths of Yunus’ innovation in microfinance was that he grounded the programs firmly in market principles. Yunus is a brilliant innovator, and I’ll be interested in seeing how this and his other projects develop.
RaceTalk: Secondly, do you think that true social businesses with 0% dividends will take off in the next decade?
JC: For some investors, such businesses may be attractive, and the number of such enterprises may grow. What is even more promising, I think, are businesses that are able to focus on profitable areas for social entrepreneurship, because they can attract the capital needed to grow without requiring investors to adopt any particular social point of view. Profits speak for themselves, and if businesses addressing genuine social problems can create effective solutions profitably, their scale and efficacy can grow quickly and dramatically.
RaceTalk: Switching topics, as you cover business technology for TIME, I have to get your thoughts on Microsoft’s pursuit of Yahoo!. I was talking with David Kirkpatrick of Fortune about this recently and he simply said Microsoft doesn’t get involved in situations like this to loose. At this point (4/10 and Yahoo! is still exploring other options with Google and Time Warner) is it still that cut and dry, is the takeover inevitable? If the deal goes through how does it change the industry in your mind?
JC: Internet-related innovation tends to come from both giants and upstarts, and that won’t change whether or not the deal goes through. While industry-watchers are focused on the end-result of this deal bid, my hunch is that many within all the companies affected are focusing much of their attention on the competition from down below, from the small startups flying under the radar with innovative ideas about improving tools for advertising, search and social networking.
RaceTalk: Speaking of Google, I know you think they are a fascinating company. What are your thoughts on its stock price falling more then 300 points since November?
JC: Particularly in this sector, stock prices tend to reflect the temporary whims of speculators, often resulting from short-term considerations, rather than underlying changes in the long-term value of an enterprise. I’m less interested in Google’s stock price one way or another than in their strategy and how the company runs its operations.
RaceTalk: Is it just a bi-product of U.S. economic woes or has Google’s room for growth finally flattened out?
JC: Even though it sometimes seems like we’re already in the thick of the Internet age, a relatively small fraction of overall advertising dollars are spent online, both in the U.S. and overseas. It’s unlikely that the online share of ad dollars will stagnate or shrink in the coming years. That means that to the extent companies like Google, and others, are able to capitalize on online ad spending, and build up their share of that pool of ad dollars, there is still considerable room for growth.
RaceTalk: Is there hope for growth in its recently announced health data service?
JC: Google has taken a very long-term approach to health data, and I do think it holds promise going forward, as do related services from others.
RaceTalk: Finally, you wrote a piece last year on the worst jobs in America. What’s the worst job you’ve had?
JC: I delivered newspapers once – that might have been my worst job. Getting up super early and rushing around with confusing spreadsheets (detailing who gets what paper where) wasn’t a lot of fun. It did make me wonder whether an alternative delivery method might one day make more sense…
RaceTalk: And how would you rate the job of being journalist?
JC: It’s fantastic. I get to dig into fascinating subjects and to spend my time reading, writing, listening and learning. Sometimes I can inform or entertain people, or spread the word about an important issue. What could be better?
April 10th, 2008
By Ben Haber
By Ben
Since the state of Israel was established in 1948, the country’s borders have been constantly changing with every war and peace agreement. The West Bank and Gaza strip have been particularly sensitive areas, with a lot of fighting and uncertainty.
However, in Facebook’s attempt to assign a network to the people living in the West Bank, it automatically assigned them to the Palestine network – a pretty bold move.
As one could imagine, pinpointing an entire region as Palestine did not sit very well. Every person in Israel defines themselves differently depending on their background, family, and religion. To label an entire region of people with such different backgrounds and identities seems to go way beyond Facebook’s goal of being a “social utility that connects you with the people around you.”
David Shamah, a reporter for the Jerusalem Post writes, “I think it’s very unfair of Facebook to take sides in an ongoing dispute by making official (the creation of a state called Palestine), something that the United Nations has not even decided on yet.”
After receiving a lot of complaints and being accused of having a political agenda, Facebook has now started to allow people living in these areas to chose whether they’re listed as being a resident of Israel or Palestine.
March 18th, 2008
By Kyle Austin
By Kyle Austin
One month ago Racepoint Group proudly announced the addition of a world 2.0 focus at the agency. The new focus will be part of a corporate practice designed for corporations, countries and NGOs (non-governmental organizations) to establish on- and offline dialogues and communities to promote their agendas. World 2.0 is aimed to assist clients communicate more effectively in the context of the defining issues of the 21st century such as poverty, education, health, economic development and the environment. We recently had the unique chance to sit down with BusinessWeek’s Steve Hamm, a senior writer for BusinessWeek and author of Bangalore Tiger: How Indian Upstart Wipro is Rewriting the Rules of Global Competition, to discuss his views on globalization, outsourcing and how technology is changing the world of business. Hamm is thought leader in the area and closely follows how companies, countries and careers are being transformed by globalization on his Bangalore Tigers blog for BusinessWeek Online.
The following is our Q & A:
RaceTalk: Your book The Bangalore Tiger published in 2006 looked at the Indian company Wipro, one of the most accomplished tech services providers in the world, and how it changed global competition. At the time Indian companies like Wipro took advantage of the internet and created lower labor rates. They snuck up on American corporations and then made sophisticated services and focused on their human resources to counter American corporations’ efforts to catch up. What is the global marketplace look like to you now, two years later, as America looks at a recession and others globally look at the potential to follow into a global recession?
SH: Since my book was published in October of 2006, the top Indian tech services outfits have globalized even more, setting up operations in Latin America and Eastern Europe in addition to India and China. Because of the rise of the rupee, they have even been building or expanding global service delivery centers in the United States. They are now truly globally distributed organizations, though they’re still India-centric. I expect that if the US goes into a long and deep recession, the whole world will be affected profoundly–since over-consumption by Americans is one of the chief drivers of demand for goods and services produced globally. For the IT services industry, it will be a mixed bag. Large corporations in the US and other developed countries will cut back on their adoption of cutting-edge technologies, but they’ll want to cut costs–so off-shoring of routine software programming and back office tasks will continue or even accelerate.
RaceTalk: Do you get the impression that American corporations have adopted their practices to become more global, innovative and employee centric to counter what corporations in India and other global destinations have accomplished?
SH: It’s more than an impression. Tech services outfits in the West such as IBM, Accenture, and Capgemini have been globalizing aggressively in new ways–doing work at the places in the world where they find the right combination of talent and costs. In addition, top companies such as GE, Cisco, and Unilever are tapping talent around the world and adapting the way they operate so they can succeed in emerging markets. There’s a lot of talk about innovation, and, clearly, some companies take it seriously, but I think it’s just window dressing in most places. Ditto with employees. During economic boom times, talented people are needed, so they’re respected. When economies slow, employees have less value and aren’t treated so well. Only a few companies are enlightened in the way they treat employees in good times and bad. Also, the decline of unions in America has devalued the work of all Americans.
RaceTalk: Due to globalization and interconnectedness of our world, spawned by technology, it seems that corporations are shifting from a product-centric mentality to one driven by corporate responsibility and are increasingly engaging with a diverse set of stakeholders – employees, communities, shareholders, customers and governments. Do you see many companies taking this position or is it a small group of early adopters?
SH: This is an excessively rosy picture, unfortunately. I think only the most enlightened companies see things this way. Most executives are driven by ambition, greed, and fear. It’s true that many companies are talking more about safeguarding the environment, but, in most cases, its defensive (oil and energy companies) or nothing more than an attempt to attach their brands to values that consumers are showing interest in, such as environmental preservation and economic opportunity for poor people.
RaceTalk: What do you see on the horizon for social responsibility and social entrepreneurship? How can companies do a better job of engaging with communities and the countries in which they operate to be more socially responsible?
SH: There’s a lot of interest in social issues right now. I think the realization that global warming is real is the main cause. It woke people up. Katrina sensitized people to poverty. Also, the fact that the US has caused the deaths of so many people in the Middle East may have awakened people here to our interconnectedness and responsibility for what happens to others. I hope that the combination of CSR and philanthropy focused on social entrepreneurship, together with the emergence of successful social entrepreneurship models, will give rise to a new form of capitalism (call it social capitalism, maybe) which can actually move the needle on some of the world’s social problems. There’s an opportunity. It seems to me that the experiments that combine entrepreneurship, innovative business ideas, and partnerships with government and traditional charities are the ones that will have the greatest impact.
RaceTalk: Was really interested in your January 29th blog post on “The Art of Build Global Culture,” which looked at how HP and Manpower have become HR leaders in building their cultures globally. I was intrigued by their ideas of initiating a tightly linked global culture while also allowing flexibility to adjust to local business conditions. Do you think their approach is the right one and do you think other corporations will follow suit? Have you heard from other companies that are taking this approach?
SH: I think it’s a smart approach. HR leaders do share ideas, so I expect this idea to get a fair hearing. IBM does this now.
RaceTalk: You recently reviewed “Creating a World without Poverty,” by Noble Peace Prize winner Muhammad Yunus for BusinessWeek. In your review you talk about his new concept of “social business.” You define it as:
They’re (social businesses) supposed to be smoothly managed, efficient, and profitable. But in their case, profits are invested back into operations rather than being returned to investors or shareholders. So it’s a form of capitalism that does not reward the capitalist in the traditional way.
Yunus’ example of this is Grameen Danone, which sells fortified yogurt for pennies a serving to malnourished children in Bangladesh. However, you point out that they are still turning around a 1% annual dividend for the company. Do you think that true social businesses with 0% dividends will take off in the next decade?
SH: I think traditional foundations and corporations, through their CSR programs, will put some of their money into social businesses. I don’t think they’ll expect financial dividends. This will be a major source of capital for social businesses, and should help the model take hold globally. The question is how big will it get? I don’t see a lot of joint ventures coming in the Grameen Danone model. It’s too complex–mixing profit and CSR. More likely, companies will focus efforts on coming up with products and business models that work in emerging markets–in hopes that those markets will grow up to become mainstream, highly-profitable markets over time.
RaceTalk: In a recent Q&A you did with Paul Hermelin, CEO of Capgemini, he discussed the prowess of a global delivery model for outsourcing. Do you believe this is the most effective outsourcing model?
SH: Yes. I think it’s the only model that will work for large tech services companies. To be competitive, they need the lower costs that off-shoring provides.
RaceTalk: Finally, Lenovo made a big splash at Davos by declaring they were a multinational corporation without a Headquarters. As you pointed out this doesn’t mean they are lacking in social awareness, as they have been one of the leaders in corporate social responsibility in Singapore and Hong Kong. What do you think of this philosophy and will more corporations take to this idea of “world sourcing” without declaring an official home base?
SH: I think most companies will continue to identify primarily with one country, where they’ll have their main headquarters and pay most of their taxes. They may add symbolic second or third headquarters, like Cisco has in Bangalore, for internal and external marketing purposes. A few will go the Lenovo route, mainly new companies that are globally distributed from the start. Among large companies, Lenovo is a special case. It truly is a mix, with major innovation and operations centers in China, the US, and Japan, and sales offices in 160 countries. Because of Lenovo’s desire to emerge as a global brand, it’s important to shed the image of being a Chinese company–with all the negatives that entails right now.
RaceTalk: Thanks for your time Steve and look forward to chatting again soon.
March 7th, 2008
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