Social Media Are Growing Up

EP - Detail of a New York Times Advertisement - 1895I was quoted in the New York Times today with speculations about the impact of social media on the finance world where I worked for a while, an avalanche of arguments created by David Rubenstein of Carlyle Group, one of the world’s largest private equity firms. Rubenstein predicted unprecedented “social media activism” remaining somewhat vague on the exact shape this change would take. A new article by Frankfurt-based journalist Rhea Wessel cites a number of interesting examples.

What I had said sounded almost a little belligerent in hindsight, as if a war was coming on:

“[Social media have] the potential to move groups of shareholders from passive administrators to active participants. […] The financial industry in particular ought to be wary of social media as a means of creating assemblies where people learn to articulate, sell and distribute their adverse views.”

I’d like to qualify and explain this a little more because there’s something big and real brewing and it’s fun to speculate where it came from and where it may be going.

To begin with, social media of course were not conceived for activism or Tsunami-news, that is a bye-product. But they’re also not simply modern-day substitutes for mail shots and phone calls as some commentators have suggested. So – what are they?

Social media tools are community building tools. If an activity is meaningful to a community, it can use social media to build information, momentum and relationships much, much faster than ever before. That these tools are related to “community” (a wider group with common interests) rather than “friendship” can be gathered from the many facebook pages that are dedicated to a cause.

Community networks don’t just chat, they play games and they look for ways to apply the power of their community – in most cases,  building information around the common interest will be the result. In other cases, the virtual/electronic community becomes real – shareholder community networks are an example. Their true interest does not lie in being connected but in maximizing shareholder value. The community is a conduit for that. For small shareholders, it is a conduit that did not exist before.

When Don Tapscott and others are talking about “wikinomics” and the “wiki way” (see also an article in the Economist) – wikis being another one of the social media/web 2.0 tool box to which facebook/twitter do also belong – they mean an approach to business that is at once

  • more concerted (assembling people online is easy),
  • highly informed (creating and sharing content online is easy),
  • targeted (getting behind a vote or a cause online is easy),
  • learning-based (most online processes are less consumptive and more interactive than, say, TV, and appeal to more learning types, too)
  • egalitarian (rather than hierarchical – the online world is access-flat)
  • open (it is easy to get to stuff as long as it exists and you can find it online; also, closed communities don’t grow).

Using this approach for shareholder activism provides all these advantages in the context of communicating with other shareholders and getting to “yes”, to “no” or, better, to a different platform of opinions. It could be a way to overcome the simplified “Yes/No” world of the general shareholder assembly, which is dominated by the big players. It could be a way to establish learning before, during and after real meetings – thereby effectively changing the relationship of shareholders with one another and also with the information (on which the value of a share is, after all, based).

Social media tools have the potential to move groups of small shareholders from passive, disconnected administrators of their own (small) company share to active, connected participants in company wealth creation – via the creation of information & community platforms. Wiki, Facebook, Twitter are software solutions used for that at the moment. I have no doubt that we’ll see these developing rapidly as the emphasis moves away from chatting and towards doing and organizing collective intelligence.

In a way, social media are both a consequence and a cause for globalization. If we didn’t have them already, we’d have to invent them now. This is one of those systemic paradoxes that I like so much because they break through the simple causality that we try to employ to explain what happened to ourselves.

Congressional Secretaries, 1920

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