Innovation & Design
Business Models Must Change to Adjust to Social Business
| posted 10-30-2009 |
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Yesterday's post (Social Strategies Grow Out of the Culture, Not the Tactics) grew out of the news that the Dachis Group acquired Headshift. Two things you need to know to understand why this news might change the way businesses operate:1. Headshift is Europe's leading social business consultancy helping organizations use smarter, simpler, social technologies to improve business performance, communication, and customer engagement. The significance of those descriptions lies in what is not being clearly stated, which is this new company's purpose isn't primarily to implement social media tools, it is to create a new way of doing business. The Dachis Group, I believe, is much more about help to create a new business model for the establishment of something which the phrase Social Business has been applied. For an apt description, here is what Dachis member David Armano wrote this morning on Logic+Emotion: It’s been five months since I joined colleagues Peter Kim, Jeff Dachis, Kate Niederhoffer, and Jevon MacDonald in a new venture that we believe will alter the way business gets done. In this time, I’ve immersed myself along with the team in fine tuning the vision we’ve developed which we call social business design—a holistic approach to transforming organizations from traditional infrastructure toward a more open, socially calibrated ecosystem. We believe that this is the only way businesses will be able to scale and integrate what’s now commonly known as “social media” on one side and “enterprise 2.0” on the other. And I’m pleased to announce that we are no longer a team of six people. We’ve just acquired Headshift, a European social business consultancy with offices in the United Kingdom and Sydney, Australia. This is the biggest news we’ve had since I joined the team and I’m really excited about the global opportunities it presents us. David states the purpose clearly: We believe that organizations across the globe will begin to view “social media” as social business and when this happens, integration, scale and adoption will become complex issues which will only be solved through a purposeful act of coordinated activities built upon a solid strategic foundation. My comment to David's post is: Nice start, however, I recommend that your group think in terms of business models driving today's companies and how they much change in order to create a social business. When we convince companies that a new business model is in their best interests (costs to change vs. results), the next step would be to completely re-organize operations to efficiently take advantage of the new business model. The Dachis Group doesn't need my advice; the partners are smart, capable and clearly understand where they are going. My response was primarily to the graphic David shows us, which has more to do with results then it does the transformational process. To get from where most businesses are today to where Dachis wants to take them, a new and practical business model needs to be developed, and companies such as Dachis are leading the way. It will be interesting to see which company among those leading the way towards a Social Business model wins the first leg of the race. Meanwhile, building a business model to form the foundation of a Social Business is critical. A business model shows the way in which a company makes money. It can be simple or complex. The model clearly describe where revenues come from and what they look like (i.e., the amount and the frequency of receivables). The structure of Operations arises out of the model, as Operations makes up the structure through which dollars are earned. For example, my restaurant clients need to source food, cook it and serve it in an environment that produces a good customer experience. If they franchise out their restaurants, their business Operations must change, as a new revenue stream is created. In other words, the business model is a plan to generate revenue and to make a profit from operations (ROI). The model includes all the functional areas of the business, as well as the revenues it generates and the expenses it incurs. When the models work, you end up with a Starbucks or a Dell. When the models don't work (think the auto industry and airlines), reinvention needs to occur. In my mind, those industries are ready to be convinced that any new business model they apply results in creating a Social Business. As a frequent flier and a car owner, I would welcome the reinvention of both industries. In this scenario, companies such as GM and United were ready for reinvention yesterday. As you might expect, I have some strong feeling about implementing change within a corporation, as I have more than a little experience in being involved in just such change. Some of that experience felt good; much of it was a disaster. It will take lots of hard work and cultural buy-in to convince businesses to become Social, especially if we start with results and tactics. Instead, we need to start with costs, culture and Operations changes, and why and how becoming a Social Business will be profitable and a good place to work. ______________________________ Lewis Green, Chief Communications Officer & Founder of L&G Business Solutions, a marketing and communications firm, brings three decades of business management experience. He has held management positions with GTE Discovery Publications, Puget Sound Energy and Starbucks Coffee Company. Lewis’s fifth book is entitled Lead With Your Heart. Lewis also has served as a book editor with a large publisher, an Executive Editor overseeing four magazines, and a newspaper department editor. Lewis served eight years in the U.S. Air Force, where he received the Air Force Commendation Medal.Read more about Lewis Green on his blog. |









