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Sunday, July 06, 2008

Could Social Media be a Measure of Business Performance?

Strategy: What Say You?

By Jay Deragon, Contributing Writer

The historical measure of business success has been centric to financial results. Today markets are driven by feelings of the quarterly financial results accompanied by news and market spin.

The “system” on Wall Street has operated on a certain set of financial variables for years and these variables determine a company’s performance within the investment community.

Is The Old System About to Shift?

“Business” has historically been measured in a narrow economic sense rather than relational one. The variations caused by economic measures are built into the markets sentiment about a particular company’s performance.

The ecosystem of any business is what ultimately produces the end results. Yet little has been done to measure, monitor and report the elements of a company’s ecosystem as a primary influence on end results, financial performance. This idea emerged from James F. Moore’s The Death of Competition (1996) Moore examined the importance of the company’s context – its ecosystem. Moore defined the business ecosystem as follows:

An economic community supported by a foundation of interacting organizations and individuals – the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies” (p. 26)

One wonders when the sentiment of people, (suppliers, employees and customers), will play a significant role in the overall markets perception of a company’s performance.

Could Social Media be a Measure of Business Performance?

Social media is building momentum as an influence over markets. Comcast, Southwest Airlines and Marriott, to name a few, have just begun to recognize the influence of people expressing opinions on experiences with brands, products and services.

Soon these collective voices will be organized into a new measure of business performance. The measure will be correlated with a company’s financial performance and subsequently influence the old markets perception of value. The old market has been driven by Wall Street and now traders will begin to consider the “peoples” experience and opinions as a measure of performance, past, present and future.

The impact of this measure will be significant, disruptive and create massive shifts in capital, the ultimate market influence. If you think this is another prediction of the future think again. We just witnessed a company who has built the statistical database and the subsequent indexes for reporting these measures. The new business measures will hit the “markets” this fall.

As Doc Searls says, “Markets are conversations”

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The Emergence of The Relationship Economy
The Emergence of the Relationship Economy features TNNWC Founder, Adam J. Kovitz as a contributing author and contains some of his early work on The Laws of Relationship Capital. The book is available in hardcopy and e-book formats. With a forward written by Doc Searls (of Cluetrain Manifesto fame), it is considered a "must read" for anyone responsible for the strategic direction of their business. If you would like to purchase your own copy, please click the image above.


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