Review of 11 Rules for Creating Value in the Social Era by Nilofer Merchant

Perhaps surprisingly, given the title, Nilofer Merchant’s short book is not so much about the ‘how’ of social media, as the paradigm shift it has enabled in the way that most of the world does business.

In the old days, ‘efficiency’ – doing things right – ruled. You made more money by having more efficient processes, and by having the scale to cover your high fixed costs easily. Large dominant players with efficient processes made it almost impossible for small companies to overcome the barriers to entry. In the past those approaches may also have been ‘effective’ – doing the right things – but the context has changed.

In the new world, while scale and efficiency can be good strategies where there are low levels of innovation and change, the inherently cautious response of big, efficient organisations becomes a disadvantage: the ‘right things’ change too fast. High rates of innovation and change have become possible through the power of social media. Merchant says that a new approach is needed, based on embracing what social media enables, characterised by

• Community: A far more flexible way of allocating work;
• Creativity: Allowing co-creation of value with customers;
• Connections: A more open approach than in the past to customer relationships.

Fundamentally this is based on treating employees and customers alike as respected and valued members of a community with a shared purpose. You may think that would be difficult and messy – but ‘soft’ issues often are. Provided that the organisation has a clear and well-understood purpose to align the activities of all participants automatically, this model can give the flexibility needed to win in a world where value can come from responsiveness as much as from scale, and where those who cannot adapt quickly to changing needs will be left behind.

While this book is quite a dense read, it provides a compelling argument for the need for all organisations to have a social media strategy which does more than just try to bolt on a bit of social media activity to the existing model. As Ms Merchant sets out in her provocative opening chapter, Traditional Strategy (for many environments) is dead. Developing a Social Era strategy requires thinking again about the whole approach to doing business.