What is the Social Age?
Building on last week’s blog on the Early Warning Signs of the Social Age, this week I delve into defining what the Social Age is and what it looks like in practice. Ready? Let’s go.
The Social Age Defined
There are several terms that are used interchangeably with the Social Age that help us understand it a little more. Today’s era, that I refer to as the Social Age, is often referred to as the Social Era, the Connection Economy and the Attention Economy. It’s also worth stating that “social” is not always followed by “media” as in social media. Social media is a tool that in many respects is driving a new way of business which has changed the way individuals and companies connect and create value in the market place. In practice, the word “social”, in the context of today’s economic era is more than marketing tools and communications related work.
The best definition of the social age is one I stole from Seth Godin’s blog where he stated: In the Connection Economy (the Social Age) value is created by connecting buyers to sellers and the passionate to each other.
What does this really mean? Nilofer Merchant, an author, corporate director and speaker, does very well to drive sharp awareness on this subject in her book 11 Rules for Creating Value in the Social Era. Her explanation is the most authoritative and logical I’ve found to date. According to Nilofer, the simplest way to define the Social Age is to contrast it to the industrial age and the information age.
- In the industrial age value was created through big institutions (i.e. IBM, General Motors, GE, etc.). They created products and services and dominated the business market.
- In the information age data helped big institutions create greater value. Data and information processing enabled greater efficiency to do the same things that were done in the industrial age.
- In the Social Age value is create though connected individuals. Passionate individuals are connecting around ideas which in turn are driving the creation of new businesses that are based on trust, authenticity and purpose. In the Social Age market dominance is not the sole realm of big institutions.
Business Models of the Social Age
A number of business models have emerged that give us a very good insight into this changed economy.
Business model shifts of the Social Age include the following interesting models:
- Co-creation – This is where businesses are working with their customers to drive new services. Starbucks, for example, are engaging customers to suggest ideas to create a better experience at their coffee shops. We also see major brands participating on social media where customer can speak their mind. There, they are paying close attention to free-reign comments to better understand and connect with their customers and in turn drive business direction. GoPro, the action sports camera maker, is another example of a business who are connected to their customers. Peoples experiences are shaping the direction of the business. A GoPro user can even share their images through GoPro's social media channel on Google+.
- Peer communities – Here we see passionate product users providing valuable support services. McAfee has a support model based on a community of users who have developed mastery over their products. In the IT industry the ITIL framework for Service Management is entirely driven by communities of passionate users, namely the itSMF.
- Crowd-funding – In the industrial/information ages a few big investors would fund the creation of a product. Now products can be created by many small investors. This is the realm of Kickstarter. It’s a remarkable platform where people can source funds from keen enthusiasts to create a product that they care about. Effectively it negates reliance on big institutions and allows individuals to take an idea straight to the market without the red tape.
- Open Marketplaces – think about Etsy where anyone can sell something. Shopify allows anyone to create an online shop. Think about AirBnB and TaskRabbit.
- User Driven Production – Threadless.com, a t-shirt company opens up their production to a vote. The t-shirt designs that get the most votes get made. In the preceding ages this was typically the domain of the middleman and warehousing.
- Customer Love – Evernote have created a compelling product and its free for the most part. The development of the business hinges on people being so passionate that they spread the word. For those that have high volume needs there is a paid version, but mostly this allows masses to get a remarkable product for free. This pay it forward approach is reaping its rewards. The success of Google is way beyond providing the world’s best search engine. Almost everything they do they give away. Despite their dominance they differ in that we all feel a part of the Google experience – we are connected to it. Microsoft on the other hand pays nothing forward and takes more than the value they provide – we don’t feel so connected to them - and their market decline is indicative of this.
“The companies thriving today are operating by a new set of rules — Social Era rules. Companies like REI, Kickstarter, Kiva, Twitter, Starbucks — they get it. They live it. And to them, notions like distributing power to everyone, working in extended community to get things done, or allowing innovation to happen anywhere and everywhere are, well, ridiculously obvious. But too many major companies — Bank of America, Sports Authority, United Airlines, Best Buy, and Wal-Mart to name just a few — that need to get it, don't.” –Nilofer Merchant.
In the Social Age everything seems to be driven digitally. Our digital minds are getting spoilt for choice and the purpose of all this technology needs to, at some level, help us be more human. The business model shifts of the Social Age indicate there is a growing list of businesses that are doing just this and satisfying our analogue hearts.
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This post is the third in a series on the Social Age. Other posts on the Social Age:
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