Transcript Chapter 3 Effects of IT on Strategy and Competition

Chapter 8
Social Media
Information Systems
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99258
[email protected]
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“She Said WHAT?—On Our Facebook
Page???”
Negative customer comment on Fox Lake’s
Facebook
 User-generated content is double-edged
sword
 Deleting critical feedback problematic
 Critical comments result from process
problems
 Learn to deal with negative feedback
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Study Questions
Q1: What is a social media information system
(SMIS)?
Q2: How do SMIS advance organizational strategy?
Q3: How do SMIS increase social capital?
Q4: What roles do SMIS play in the hyper-social
organization?
Q5: How do organizations use Web 2.0?
Q6: How can organizations manage the risks of social
media and Web 2.0?
Q7: 2022?
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Important Elements
• 1. What is a social media (SM) and social media
information system (SMIS)?
• 2. Three organizational roles played by SMIS
 Business Model vs. Revenue Model
• 3. Hyper-social Organization and its two kinds of
communities: Defenders of Belief and Seekers of truth
 SM in the Value Chain Activities
• 4. Three Types of business capital and How Do
SMIS Increase Social.
• 5. SM and Web 2.0
• Summary: Organizations in 1960s and 2022
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Impact on Social Media Technology
• The U.S. stock market crashed momentarily on Tuesday
(April 23, 2013) afternoon after the Associated Press' Twitter
account was hacked and a hoax tweet was sent out that
suggested explosions at the White House had injured
President Barack Obama.
• The Dow Jones Industrial Average dropped about 150 points
(more than $130 billion) in a matter of seconds before
bouncing back when traders realized the tweet was false. And
it wasn't just the stock market -- currencies, commodities and
bond markets were also briefly shaken.
• Twitter may have caused a flash crash, but the problem is not
Twitter's. Any market so vulnerable to an errant tweet
probably has bigger problems.
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Q1: What Is a Social Media Information
System (SMIS)?
• Social media (SM)
 Use of information technology to support sharing of content
among networks of users
• Social media enables people to form communities,
tribes, or hives
 Group of people related by a common interest
• Social media information system (SMIS)
 An information system that supports sharing of content
among networks of users
• Social media is the merger of many disciplines (see Fig.
8-1). We will focus o the MIS portion in this class
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SMIS: Convergence of Disciplines
Fig 8-1: Social Media is a Convergence of Disciplines
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Three SMIS Roles
• Three organizational roles played by SMIS:
 ________________
User Communities
• a natural human trait and is formed based on mutual interests
and transcend familial, geographic, and organizational
boundaries.
Social Media Sponsors
_________________
• Companies and other organizations that choose to support a
presence on one or more SM sites.
Social Media Application Providers
 ___________________
• Companies that operate the SM sites (e.g., Facebook, Twitter,
LinkedIn and Google create the features and functions of the
site)
• Free to users; Sponsors may or may not pay a fee
• Most earn revenue through some type of advertising model
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Business Model vs.
Revenue Model
• Business model is the architectural configuration
of the components of transactions designed to
exploit business opportunities.
• Revenue model refers to “the specific ways in
which a business model enables revenue
generation.”
• Revenue mechanism is a key component of
the business model because it provides a
sustainable financial source for the business’
effort of innovation (Afuah, 2004).
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Business vs. Revenue Model
Business Model
Value _________
It describes the way in
which a company
enables transactions
that create value for all
participants, including
partners, suppliers and
customers.
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Revenue Model
Value ____________
It can be realized through a
combination of
- subscription fees,
- advertising fees,
- transactional income (e.g.,
fixed transactional fees, referral
fees, fixed/variable
commissions, etc)
SMIS Organizational Roles
Fig 8-2: SMIS Organizational Roles
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Community/Social Media Site Relationship
Fig 8-3: SM Communities
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Social Media Sponsors
Fig 8-4: Not a Casual Commitment
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Five Components of SMIS
Fig 8-5: The Five Components of SMIS
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Q2: How Do SMIS Advance
Organizational Strategy?
• The relationship of IS to organizational strategy is (see figure
below):
• Strategy determines value chains, which determines (structured)
business processes, which determines IS.
• However, social media is by its very nature dynamic, its flow
cannot be designed or diagrammed.
• Therefore, we need to consider how value chains determine
dynamic processes and thus set SMIS requirements.
(structured
& dynamic)
Fig 3-1: Organizational Strategy determines IS
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Two Kinds of Communities in the Hyper-social
Organization that Are Important to Commerce
Defenders of Belief (less on innovation or problem solving)
1. __________________
 Share a common belief and form their hive around that belief
 Seek conformity and want to convince others
•
E.g. a group that believes that Google+ is far superior to Facebook will engage in
behaviors to convince others that this is true.
 Facilitate activities like sales and marketing
 The communities are not effective for activities that involve innovation
or problem solving.
 Form strong bonds and allegiance to an organization
Seekers of the Truth (more with innovation and problem solving)
2. _________________
 Share common desire to learn something, solve a problem, make
something happen
 Share a common problem, but not a common solution to that problem.
•
Such tribes are incredible problem solvers and excel at innovation.
 Seldom form a strong bond
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Figure (Extra) Business Level: The Value Chain
(_____)
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N
SM in the Value Chain Activities
The figure summarizes how social media contributes to the five primary
value chain activities and to the human resources support activity.
Fig 8-6: Social Media in the Value Chain Activities
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Crowdsourcing
• Definition:
– 1) Taking a task traditionally performed by an employee or
contractor, and outsourcing it to an undefined, generally large group
of people, in the form of an open call
– 2) The dynamic SM process of employing users to participate in
product design or product redesign.
• E.g. eBay often solicits customers to provide feedback on their eBay
experience.
• Other examples?
•
• Used by companies to increase productivity, lower production costs, and
fill skill gaps.
• Can be used for a variety of tasks.
• Companies do not have control over the people doing the work.
• Has cost more than traditional methods.
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Social Media and Manufacturing and Operations
• Crowdsourcing
 The dynamic SM process of employing users to participate in
product design or product redesign.
• E.g. eBay often solicits customers to provide feedback on their eBay
experience.
• Other examples?
• Enterprise 2.0
 The application of SM to facilitate the cooperative work of people
inside organizations.
 Folksonomy
• A content structure that has emerged from the processing of many user
tags. (tags are organized into structures)
 SLATES (see Fig. 8-7)
• Workers want to be able to search for content inside the organization
just like they do on the Web.
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Fig. 8-7: McAffee's SLATES Enterprise 2.0 Model
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Q3: How Do SMIS Increase Social Capital?
• Capital
 is defined as the investment of resources for future profit
(Karl Marx)
• Types of business capital
Physical capital (traditional definition): investment
 _________
into resources such as factories, machines,
manufacturing equipment etc.
Human capital: investment in human knowledge and
 _________
skills for future profit.
Social
 _________
capital: the investment in social relations
with the expectation of returns in the marketplace.
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What Is the Value of Social Capital?
• Social capital adds value in four ways (from the relationships in
social networks):
Information
 ______________
 Provide information about opportunities, alternatives,
problems, and other factors important to business
professionals.
Influence
 _____________
 Provide an opportunity to influence decision makers in one’s
employer or in other organizations who are critical to your
success.
 Social credentials: a group of contacts
 Personal reinforcement (professional’s image)
• Value of social capital add to business (in three factors)
 1) number of relationships, 2) strength of relationships,
and 3) resources controlled by those related.
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How Do Social Networks Add Value to
Businesses?
• Historically
 organizations created social capital via salespeople,
customer support, and public relations.
• Today, progressive organizations:
 Maintain a presence on Facebook, LinkedIn, Twitter, and
other SN sites.
 Include links to their social networking presence for
customers and interested parties to leave comments.
• To understand how social networks add value to
businesses, consider the following elements:
 1) number of relationships, 2) strength of relationships, and
3) resources controlled by “friends”.
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Fig. 8-8: Social Media (SM) Communities –
Using Social Networking to Increase the Number of Relationships
What term is related to?
Network __________
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Network Externalities
• Definition - The phenomenon whereby a service
becomes more valuable as more people use it, thereby
encouraging ever-increasing numbers of adopters.
 Network effects
• While the word-of-mouth method is often more
influential in the beginning, analysis may play a
significant role later in the cycle. In other words, you
may adopt a service initially because someone you
know uses it; later, you may adopt a service because
"everyone" uses.
 Network Externality offers a reason for value derived from
plentitude
 IT Role?
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Using Social Networks to Increase the
Strength of Relationships
Strength of a relationship is the likelihood that the
entity (person or other organization) in the relationship
will do something that benefits the organization.
1. Ask them to do you a favor
2. Frequent interactions strengthen relationships
3. Size of assets controlled by those in relationship
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Connecting to Those with More Assets
There is no formula for computing social capital, but the three factors
would seem to be more multiplicative than additive.
Stated in the mathematical terms, the value of social capital is more in the
form of:
Social Capital = Number of Relationships x Relationship Strength x Entity Resources
Than it is:
Social Capital = Number of Relationships + Relationship Strength + Entity Resources
This multiplicative nature of social capital means that a huge network of
relationships to people who have few resources may be lower than that of a
smaller network with people with substantial resources.
Furthermore, those resources must be relevant to the organizations. For
example, students with pocket change are relevant to Pizza Hut; they are
irrelevant to a BMW dealership.
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Q4: What Roles Do SMIS Play in Hypersocial Organization?
•Social capital is an economic perspective on social
media.
• According to hyper-social organization model, using
social media in an old-style organization-centric manner
is ineffective.
• The true value of social media can only be achieved
when organizations use social media to interact with
customers, employees, and partners in a more humane,
relationship-oriented way.
It means that rather than sending messages that attempt to
manage, influence, and control, hyper-social organizations
create relationships in which both parties perceive and gain
value.
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Four Pillars of Hyper-Social Organizations
Hyper-social organizations is an organization that uses social
media to transform its interactions with customers, employees,
and partners into mutually satisfying relationships (marketingoriented) with them and their communities.
become
Consumers  Humans
(defending beliefs or
Market Segments  Tribes seeking the truth)
transmit data,
Channels  Networks (Channels
Networks transmit knowledge)
process to
Structures & Control  Messiness (structured
dynamic process:
complicated)
by Gossieaux and Moran
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SMIS and SEAMS Activities
SMIS play a key role for implementing the SEAMS process.
1. Sense: determine what communities and identifying their structure, goals, and dynamic
2. Engage: engage with those communities by creating relationships
3. Activate: design applications according SOA principles greatly facilitates this task
4. Measure: do not overlook the active lurker
5. Store Tell: develop stories about their interaction with the communities.
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Q5: How Do Organizations Use Web 2.0?
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Web 2.0 and Beyond
• Is Web 2.0 a “Technology Evolution” or “Business Evolution”?
•
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Web 2.0 (5:19)
http://www.youtube.com/watch?v=nsa5ZTRJQ5w&feature=related
The Future Internet: Service Web 3.0 (5:47)
http://www.youtube.com/watch?v=off08As3siM
Eric Schmidt, Web 2.0 vs. Web 3.0 (1:51)
http://www.youtube.com/watch?v=T0QJmmdw3b0&feature=related
Web 1.0 vs. Web 2.0 (2m20s)
http://www.youtube.com/watch?v=YXFYkbQRgY4
What is Web 2.0? (3m)
http://www.youtube.com/watch?v=0LzQIUANnHc
Social Networking Sites Own You (1:36)
http://www.youtube.com/watch?v=LPffYaKc5f4&feature=related
The dark side of social networking (2:03)
http://www.youtube.com/watch?v=KK-8XO7lVSw&feature=related
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What is Web 2.0?
• "Web 2.0" refers to the second generation of web
development and web design.
 It is characterized as facilitating communication,
information sharing, interoperability, user-centered design
and collaboration on the World Wide Web. It has led to
the development and evolution of web-based
communities, hosted services, and web applications.
 Examples include social-networking sites, video-sharing
sites, wikis, blogs, mashups and folksonomies.
 Web 2.0 is the business revolution (rather than
technology revolution) in the computer industry caused by
the move to the Internet as a platform, and an attempt to
understand the rules for success on that new platform.
Source: http://en.wikipedia.org/wiki/Web_2.0
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

Web 2.0 is a loose grouping of capabilities, technologies, business models,
and philosophies that sets e-commerce apart from traditional software
processing. This chart compares the two.
Note that in this text, Web 2.0 and SM are considered to be different because
SM, and especially hyper-social organizations, represent a difference in the
structure of the relationship between organizations and humans.
SaaS
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Fig 8-12 Comparison of Web 2.0 with Traditional Processing
Software as a (Free) Service (SaaS)
• Software as a Service, part of the Web 2.0 movement,
changes traditional thinking about how software is created,
provided to users, and used to create value.
• Its characteristics include:




Uses thin-client programs in browsers
Bulk of processing occurs on servers throughout the Internet
Companies rely on advertising or revenue rather than license fees.
Perpetual beta software because features and functions constantly
changing
 SaaS companies clash with traditional software vendors that rely on
traditional software programs to provide the bulk of their revenue.
 Relies on viral marketing. Users spread word about its virtues rather
than the company that provides it.
 More a Web 2.0-based site is used, the more value it attains
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Testing of New Features, Web 2.0 Style
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In the Web 2.0 World
• No traditional marketing  viral marketing
• Value of site increases with users and use
• Organic user interface and mashups (e.g., Google
My Maps) – an output from two or more Web sites is
combined into a single user experience).
• Participation and ownership differences
 Traditional Web sites are about publishing
 Web 2.0 is about participation
 Traditional Web site lock down all legal rights to
content
 Web 2.0 sites lock down only some rights
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Example of a Mashup: Google’s My Maps
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How Can Businesses Benefit from Web 2.0?
• Advertising is specific to user interests. Two popular
programs from Google are:
 AdWords in which advertisers pay for particular search words.
 AdSense in which Google inserts ads on a Web site that match
content on site. When someone clicks on the ad, Google pays
site owner a fee.
• Mashups
 Mashing content of multiple products
• Providing social networking services that connect people with
similar interests
• Providing mashups between a business and its partners which
combine content of their products. Watch a movie, see a piece
of jewelry you like, click on a link, and purchase the product.
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Q6: How Can Organizations Manage the Risks of
Social Media and Web 2.0 Applications?
• Social media and Web 2.0 represent a revolution in
the way that organizations communicate.
 Twenty years ago, most organizations managed all
public and internal messaging with the highest degree of
control.
 Today, the new model in progressive hyper-social
organizations is that employees are encouraged to
engage with communities and, in most organizations, to
identify themselves with their employer while doing so.
• Two risks are from this participation:
 Risks from employee communication
 Risk from nonemployee, user-generated content (UGC)
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Managing the Risk of Employee Communication
Hyper-social organizations should develop and publicize a
social media policy, which is a statement that delineates
employees’ rights and responsibilities.
Intel’s six guiding principles to employees:
1. Stick to your area of expertise.
2. Post meaningful, respectful comments.
3. Pause and think before posting
4. Respect proprietary information and content, and
confidentiality.
5. When disagreeing with others, keep it appropriate and
polite.
6. Know and follow company code of conduct and
privacy policy.
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Fig. 8-15 : Intel’s Rules of Social Media Engagement
Two major elements in the list: 1) Transparency and truth, 2) Open and above board
That is, if you make a mistake, don’t obfuscate; instead correct it, apologize, and
make amends. The SM world is too open, too broad, and too powerful to fool.
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Managing the Risk of User Generated Content
(UGC)
• User Generated Content (UGC) is the essence of
SM relationships.
• Major sources of UGC problems:
 Junk and crackpot contributions
 Inappropriate content
 Unfavorable reviews
 Mutinous movements
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Responding to Social Networking Problems
• Once such content is found an organization must have a
plan for creating the organization’s response. Three
possibilities are:
 ______ it
• If problematic content represents reasonable criticism of the
organization’s products or service.
 ________ to it
• If the problematic content has caused the organization to do
something positive as a result.
 _______ it
• If the problematic content is obscene or inappropriate
A sound principle in business is to never ask a question to which you do not
want to answer. To extend that principle to SN:
“Never set up a site that will generate content for which you have no effective response.”
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Q7: 2022?
• GPS devices in consumer products?
• How to harness employee social behavior and
partners to foster company strategy
• Employees craft their own relationships with
their employers
• Employers provide endoskeleton to support work
of people on the exterior
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Summary
Organizations
1960s
Organizations
Employees
Organizations
were the
exoskeleton
around
employees.
Organizations
Employees
2022
Organizations
Employees
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Organizations
will be
endoskeleton,
supporting the
work of people
on the exterior..
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• End of Chapter 8
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