Social Networking as a Critical Business Tool

Business deals struck while playing “World of Warcraft,” government recruiting efforts in Second Life¹. There's no denying that social networking isn't just for socializing anymore.

Companies can no longer ignore the potential audience reach generated by social networking mediums such as these. More than 66 million active users comprise Facebook, with 250,000 new registrants signing up per day over the last year.² LinkedIn's online network boasts 17 million professionals from around the world representing 150 industries.³

And according to Forrester Research, more than 19 million consumers worldwide participate in virtual worlds like Second Life and CyWorld. For companies looking for more direct, efficient ways of reaching their audiences, these rich interactive environments are a promising channel.

In this feature, Sun Inner Circle brings together the insights, experiences, and predictions from social networking trailblazers inside Sun. Below they address key questions that company managers are asking about social networking.

Extending the Marketing Arm
To what extent should social networking tools be deployed as marketing and communications tools? The consensus seems to be “it depends.” At Sun, social networking is encouraged as part of the company's culture of openness and trust. Which mediums are best depends on whom a company is trying to reach and what it's trying to accomplish.

“A social media agenda is not just a matter of having a blog or a wiki, or belonging to Facebook,” says Russ Castronovo, director of New and Social Media at Sun. “If you're going to use social networking tools, you'll need to check your traditional marketing notions at the door. Trust and openness mean that you're OK with not checking every piece of collateral or employee blog before they go out the door.”

For many companies, getting off the ground with blogging and a company-wide blogging policy is a good first step. (Sun's own policy can be found here). Since going live in April 2004, Sun has accumulated more than 90,000 blog entries with 4400 bloggers contributing to nearly 4000 blogs. And while Sun CEO Jonathan Schwartz remains one of the few Fortune 500 CEO bloggers, more Sun executive blogs are coming online representing the Privacy Office, Eco Responsibility Office, General Counsel, and more.

“Traditional media outlets aren't as healthy as they once were,” adds Castronovo. “The scope of what they cover is less than it used to be, so companies can't reach their audiences the way they used to. By ignoring social media tools and the nearly endless options they provide, companies miss the opportunity to develop an interactive conversation with customers.”

“Social networking allows us to reach an audience of people we may not physically be able to reach,” says Chris Melissinos, chief gaming officer at Sun. “People join social organizations that support their interests and provide a point of leverage for businesses. If you look at hardware devices like handhelds and PDAs, they went along a similar trajectory. They became business tools not because companies bought thousands of them, but because people were using them for personal reasons and it was easy to port that use over for business.

“Social networks are similar,” Melissinos said. “They are now important communications tools that people are already using in their personal lives. The bridge to business is very simple and the immediacy that social networking provides in terms of giving access to people and information is unprecedented in the history of humanity.”

Connecting Companies to Customers
“Social networking is breaking down the last barrier in terms of relationship building,” says Peter H. Reiser, principal engineer, Global Sales and Services. “That barrier is social context. We are moving from a ‘know how’ to a ‘know who’ model. Previously, the Web allowed us to conduct transactions or 1:1 marketing, but social networking breaks that last barrier, because if you trust someone and they recommend something to you, you're more likely to pursue it. Eighty percent of decisions are made on informal vs. formal information.”

Melissinos adds, “At the end of the day, people don't do business with companies, they do business with people. Credibility is paramount — the feeling that you know the people you're buying from is critical.” He adds that the lines between connecting socially and for business have been blurred for years, whether people went to restaurants, golf courses, or sporting events.

“How different is going online to play a game from meeting on the golf course and striking a deal out there? These environments will become the golf courses of the next-generation business deal,” Melissinos says.

Admitting his own personal bias, Melissinos also says it's vital that companies understand the culture of gaming. He notes that the kids who grew up on video games are now the kids entering college, and will be tomorrow's programmers, businesspeople, and leaders.

“The crossover between games and social networking is very natural,” he says. “Games use chat or even deeper forms of interactivity. We are conditioning people playing these games to expect these sorts of frameworks. So when a business version of an event is introduced, it is completely natural for them to use it. In my opinion, it's vital for any company focused on the Internet, Web 2.0, or anything that hits the consumer to be sure they understand the gaming industry and culture.”

The Risks of Social Networking
Most people agree that the primary risk is data exposure. “Trust is key here,” says Terry McKenzie, senior director, Global Employee Communications and Communities. “Sun prides itself on being open and a model for employing new technologies. Our employees are aware that they are accountable for what they say and do, so there is a level of common sense about what is shared.”

Skeptics also wonder about loss of productivity. “Folks often ask me if I worry about productivity when I encourage employees to socially network,” says McKenzie. “I believe that if people are inclined to waste time, they don't need Facebook to do it. It's no different than using company time to bid on Mickey Mouse memorabilia, play solitaire, or call your mom. It all comes down to company culture and work ethic.”

Social Networking for Recruitment
“If you want college recruits to come work for you, don't be an email culture,” says McKenzie. “College recruits don't use email, they text message or instant message. Social networking is a part of the fabric of who these people are.”

Social networks such as Facebook provide the ability to more specifically target your recruiting efforts. “If you're looking for people with green hair that went to XYZ University, there's likely a community on Facebook where you can find such people,” says Reiser. “You won't likely find this demographic by running an ad in The Wall Street Journal, or even on LinkedIn for that matter. Second Life, MySpace, Facebook — that's where the next-generation 'brains' hang out.”

Executives and Social Networking
To what extent should top management participate in social networking? Again, the consensus is — it depends. It depends on the social network being considered, what is to be accomplished, and the personality and skills of the participant.

“Blogging is one aspect of social networking that executives and managers can use to get their voice heard,” says McKenzie. “We are blessed to have a CEO who is an engaging, articulate writer. When Jonathan writes, it's his voice — nobody writes his blog for him. The press is full of stories where ghostwritten blogs have backfired. If writing isn't your strongest suit, look for another tool. Podcasts, virtual town halls, or audio or video clips that you can broadcast are all useful tools to reach your constituents across the world without traveling.”

In terms of virtual worlds, Fiona Gallagher, senior brand and program manager, Virtual Worlds at Sun, recommends executives get avatars and start exploring virtual universes such as Second Life. She notes that there are plenty of good social events, including concerts, jazz clubs, and art galleries, to allow new users to get their feet wet in “familiar” surroundings.

“Every big event Sun does now has a similar event held in Second Life,” Gallagher says. “Business-to-business events are going on here all the time. Imagine what these can do to reduce a company's carbon footprint.”

Gallagher shares an anecdote that shows the immediacy and efficacy of such alternative mediums in solving customer issues. “There was this guy in Second Life who had downloaded some software and was having trouble. He couldn't find the information or resources he needed, so he decided to look on Second Life. When I bumped into him, he told me his problem and I sent out a message to a group of Sun people on Second Life. Immediately, three people with Solaris experience turned up to help this guy with his problem.”

What's Next: Social Networking and the Enterprise
The big challenge is how to apply social networks to the enterprise. While public social networks like Facebook, LinkedIn, and Ning have had no problems gaining new and active users, social networking is being adopted more slowly within the enterprise. Getting employees, partners, and customers to participate in online communities and social networks requires answering the question “What's in it for me?”

“At Sun, we are addressing this challenge by building a community value system call Community Equity (CeQ),” says Reiser. “The CeQ system dynamically calculates the contribution, participation, skills, and reputation value of a person based on their online activities such as creating, viewing, downloading, rating, re-use tagging, comments, etc. This information then shows up in that person's profile.” (Note: this methodology is in pilot phase within Sun's technical community. Stay tuned for details on open sourcing of this technology and methodology. See Peter's blog for updates on Community Equity).

In closing, Melissinos encourages managers to not be afraid to adopt social networking platforms. “Don't automatically dismiss something because it came out of an entertainment framework,” he says. “To do that puts you at a distinct disadvantage.”

“Because the next generation of consumers, programmers and users are growing up with these platforms, and to ignore them is to firmly plant your feet in the tar,” Melissinos says. “Whether or not we want these things to emerge, they're going to, they will be forced on us. And when it's forced on you, it's often too late.”

1: http://statetechmag.com/issues/january-february-2008/courting-millennials.html
2: http://www.facebook.com/press/info.php?statistics
3: http://www.linkedin.com/static?key=company_info&trk=gfoot_about