The truth of this can be seen categorically through the power of today’s social networking: Facebook, blogs, emails, instant messaging, chatrooms, text messages, you name it. Information will out.
Here are a few examples of how disruptive these trends are proving to be.
First, the Bear Stearns executives who thought they could share ideas secretly. Their cunning plan was to send emails between their wives’ email addresses. Nobody will ever look there will they? But investigators did, and indicted them in June. Their mistake was that they believed emails to be private communications and did not realise that all of their emails go through host internet service providers who keep a copy.
Another example was the very public case of HSBC last year, which decided to charge interest on overdrafts for UK students when they had previously been free. Within a day of making the announcement, the National Union of Students launched a Facebook campaign to reverse the policy and gained so many members online that HSBC had to halt the plan.
A third example is when you look up banks in social networks. The typical customer group has a title “I hate XYZ Bank”, but the more interesting groups are those with titles such as “I work at XYZ Bank”. I often find chats such as:
A: “What do you love most about working here?”
B: “The end of my shift.”
As well as a lot worse.
The bottom line is that you cannot hide anything anymore, with customers and, more importantly, employees using Facebook, Bebo, Mixi, Cyworld and other social networks to talk and share ideas about their life and work.
Therefore you have to work out how to use blogs, social networks and viral chat as an aide to business rather than a threat.
The best example of a firm that turned the online social networking world from a threat to an opportunity is Dell. Dell has had a blind dedication to Microsoft and Intel for years, but nobody minded. That was until Jeff Jarvis wrote a blog entitled ‘Dell Hell’ in 2005 and revealed a whole mass of angry Dell customers. His story was linked to so often online that, at one point, if you entered Dell into Google, his story came up first.
This resulted in disastrous results for Dell, which has now turned it around completely and has various websites where employees and customers can share knowledge and exchange ideas, such as Direct2Dell.com, as well as Facebook groups to talk directly to their audience and network.
They still do not necessarily get it right, but they try hard.
In banking, the Royal Bank of Canada is one of the most innovative banks in this online space, with various student-oriented services on Facebook and online, such as rbcp2p.com. Wells Fargo is also very active in this space, and is co-founder of the Blog Council, designed to assist firms with being open online through social networks and blogs.
So, for those wavering on the fringes of the network, dive in. The water feels cold at first but you soon get used to it and, before you know it, you’ll be swimming with the sharks.
Chris Skinner is an independent financial commentator.www.balatroltd.com
