Crowd sourcing was one of key topics covered during the 2013 Web Summit, which took place on the 1st of March in London. Live-mapping and navigation application, Waze, was at the center of the crowd sourcing discussion.

The idea of crowd sourcing refers to the solicitation of ideas, services and information from a wide group of people, especially through online social media platforms.

By having each person make a small contribution, the general pool of information gets bigger, more reliable and more helpful – the overall result thus becomes much more interesting and useful.

Waze describes itself as ‘community-based traffic and navigation app. Nothing can beat real people working together’, the company writes. ‘Imagine 30 million drivers out on the roads, working together towards a common goal: to outsmart traffic and get everyone the best route to work and back, every day.’

By gathering real-time information from drivers, app users are able to access crucial information of the road situation directly from road-users, and make instant decisions as to which roads to take, which gas stations to stop by, which road hazards to avoid and traffic jams to circumvent, among other types of information.

Di-Ann Eisnor, speaker at the Summit and head of Waze’s US operations, says that the application is completely crowd sourced by its users, made up of an expanding user base of more than 40 million drivers thus far.

She further adds that this kind of system gets more and more interesting the more people there are, because crowd sourcing ‘needs crowds’ to operate as efficiently as possible.

Di-Ann Eisnor explains that the concept of crowd sourcing and Waze itself became considerably more valued in the aftermath of the Carmaggedon episode in 2011, during which a major route was shut over two days in Los Angeles.

During this event, Waze was pushed on the front scene by playing a significant role in providing real-time information and updates on traffic situations.

This episode led the Mayor, as well as many others, to realize that the ‘only way to keep track of traffic in real-time is crowd sourcing’, which allows immediate information to be given by and provided to millions of people.

Mobile technology is a big part of real-time crowd sourcing as it allows users to be connected at all times and send and receive information instantly. The more advances are made in this field, the more crowd sourcing opportunities will be made available.

Di-Ann Eisnor further says that this ‘mass participation’ trend will lead towards the development of ‘the smarter city’. ‘Smart cities are the future of crowd sourcing’, she says, which are characterized by a ‘truly mobile citizen’ and great connectivity.

Connected cities will have so much potential, according to Di-Ann Eisnor, and it is only a matter of time before we start reaching for it – a revolution that has already started.

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The 2013 Web Summit that recently took place on the 1^st of March in London was a great channel for the growing importance of crowd funding, which it put forward through one of its key panels.

Crowd funding refers to the collective cooperation of individuals who each make a financial contribution towards a particular project they like or believe in – through online platforms.

This common financial effort, or crowd funding, is becoming an increasingly important source of capital for nascent ideas and start-up businesses.

Danae Ringelmann, co-founder of international crowd funding site Indiegogo and speaker at the Web Summit, says that crowd funding platforms are putting ‘money back into the creators’, which gives them the opportunity ‘to prove their worth’.

She adds that these social media tools allow ideas that are deemed worthy of funding to rise to the top, because the world wants them. This, in turn, creates  a ‘fairer financial ecosystem’.

Thus, it is no longer up to those who hold large financial capital to decide which direction the market should take by deciding on which projects to fund or to reject.

Today, with the rise of social media; everyone around the world can donate from as little to as much as they wish and invest in an idea they would like to see materialize.

In return for individuals’ financial involvement, funders can get some kind of remuneration directly from the creator such as a free product, a discount on a future purchase or even some involvement in the project itself.

If an idea however does not get crowd funded, Danae Ringelmann further explains, this means that ‘the world does not want it and that creators have the possibility to save both much time and perhaps life savings’ because they know beforehand if their idea has the potential to be successful or not.

Samir Desai, business strategist at Funding Circle and speaker at the Web Summit, explains that his organization allows people and organizations to lend money directly to small businesses.

He then asks: ‘How many people here hate banks?’, addressing the entire audience at the Summit. While hands are being raised, he makes the point that the system that we still use now – relying on the banking sector for funding – is not the only available funding model anymore with the flourishing of social media.

He further explains that having individuals fund new ideas through FundingCircle does not only help the creators, but also the funders themselves as the latter are able to make returns on their investments when ideas become successful.

Thus, the more funders spread their financial contributions across different projects, the more opportunity they have to make important returns on their different investments.

Danae Ringelmann ends up by saying that we are entering a ‘crowd funding revolution’ that is gradually ‘becoming a permanent piece of our financial ecosystem’. This, in turn, will ‘empower the world to fund what matters to them’.

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Would Facebook be as successful without YouTube? Perhaps. Would YouTube be as successful without Facebook? Perhaps. But the fact that both coexist on the social media landscape allows them to reinforce and support each other in an unprecedented way.

Facebook uses the advantage that YouTube gives – the opportunity to create and upload bite-sized videos quickly and easily – in order to aliment its pool of information and offer its users the chance to enjoy a more varied and dynamic experience in content sharing. In turn, YouTube uses Facebook to spread its videos by reaching even more people than its YouTube user base and by attracting Facebook users to its site. Similarly, Pinterest, Facebook and YouTube are again all interlinked by the fact that Pinterest users can share their pins on Facebook and that YouTube videos can be uploaded on Pinterest, among other ways of using the three sites in interconnectivity. A perfect online synergy is thus created through various social media platforms.

Each social media platform is essentially a game of numbers. There are more than 800 million unique users visiting YouTube every month. Pinterest has almost 12 million unique visitors every month since it launched only two years ago, and this number keeps growing. Twitter has more than 300 million members – this is 4 times the population of the United Kingdom. Facebook has more than 1 Billion members – if Facebook were a country; it would be the third largest one in the world after China and India, or twice the size of the US population. LinkedIn has more than 200 million members. It is, however, not very useful to put into writing precise social media statistics as these constantly keep changing on a daily basis because each platform keeps growing day by day.

At the core of these huge statistics though is the concept that once you become part of a social media platform, you instantly become connected to a hub of other users, whether family, friends, acquaintances or people who share the same interests. Each of these connections, in turn, is connected to its own hub of connections, which means that you immediately become connected to their hubs at a second degree level. The story does not end here, but instead an endless connective curve of hubs is created by the single act of becoming a member of a social media platform.

The interconnectivity of social media platforms, such as in the above example of three social media giants; Facebook, YouTube and Pinterest, brings this game of numbers to a much higher level. It allows one single user to become at the center of enormous hubs of connections on different fronts – Facebook, YouTube, Pinterest or Twitter, among many others. This interconnection of hubs thus means that an enormous level of traffic can be circulated between different social media sites, and at an incredible pace. As more social media platforms are created, the potential for this massive interconnectivity further increases. Such is the power of social media, and one that can be leveraged by companies like never before for their own business advantage.

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The manager has a crucial role in directing and implementing a social media project within the DNA of his or her organization. Here are six ways in which a manager needs to be involved when it comes to social media implementation within the realm of business:

Common language

The manager’s or business leader’s role in a social media project – we will use ‘manager’ here for the article’s purposes – is central. At the core of his responsibilities is to allow everyone in the organization to get a clear understanding of what social media represents for the company, and allow all to participate in an equal manner, rather than let those who know more dominate the social media discussion. The most experienced technical people may not be the most experienced business ones, thus a blend of all the right skills is needed for the project to be a success. Creating a common language before getting deeper into the social media project is a crucial step that management has to consider in order to establishing common grounds, build discussion and thus move forward.

Mindset

Having a negative mindset from the beginning about the project will not help it succeed, nor motivate the project team to achieve positive results. Positive mindset is key. Having management support the project, or simply show positive attitude towards it can make a very big difference in how much efforts will be put into it, and consequently in project results. The relation between mindset and results is so closely tied that the sort of mindset management will adopt will greatly affect team members; an aspect that managers need to consider.

Organizational goals

Managers need to clarify organizational goals to all project members before they articulate the social media project. Shaping a social media project according to the specific business goals that the organization wants to achieve is one of the most important aspects to keep in mind. If social media does not support the organization’s wider business goals, the organization runs the risk of going enthusiastically in the wrong direction and achieving purposeless results. Business goals thus always need to be kept into perspective during the entire implementation process, and the manager needs to make sure these are clear to all from the very beginning.

Not underestimating the time needed

Time is the most significant cost and this is an aspect that can easily be underestimated by managers. Implementing a social media project hastily may bring more problems than benefits, which is why managers need to weight the time factor properly and make sure the project is carefully studied before and during its application. Training will probably be needed, and investing in it will save time on the long-run. Analyzing the organization’s business environment properly and accurately will also need time to avoid encountering subsequent problems during the implementation process. Risks and challenges can be avoided or mitigated with proper preparation and analysis – two elements that need the required amount of time. Thus, an important aspect of managers’ role in relation to the social media project is not to underestimate the time factor.

Organizational culture

Culture is a crucial component when it comes to social media as it will determine how successful a social media project can be. Organizational culture generally fits somewhere between a closed to open continuum, and the more open it is, the more a company will have the freedom to take advantage of social media. Opening a company’s culture is perhaps the single most important task to achieve by the manager in order to implement a social media project successfully. Banning social media is not a solution any longer, even autocratic political regimes have failed to do so, but using it within a conducive yet regulated cultural framework is the ideal response to the Internet revolution.

Vision for the future

Social media is not just a marketing tool for the marketing department. It is a strategic resource and a new dimension to corporate strategy. A manager needs to be a forward-thinker for his/her organization, understand the growing power of social media and incorporate it into the DNA of his/her organization – that is why social media needs to come from the top rather than a particular department. If not incorporated within your business strategy now, your competitors will do so before you and it will then be a matter of catching up instead of innovating. Managers thus need to have or develop a vision for the future in order for their organizations to move forward in the Internet evolution and revolution.

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With the constant expansion of social technology; more and more companies are making use of the business potential it provides. Some industries, however, remain behind.

As a study conducted in 2012 by MIT, in collaboration with Deloitte (MIT/Deloitte), finds; entertainment, media and publishing as well as IT and technology are both leaders in social business, whereas industries like energy or manufacturing lag behind.

Another study, from the Harvard Business Review Analytics Services (HBR), draws similar conclusions: ‘nearly two-thirds of the 2,100 companies who participated in [the study] said they are either currently using social media channels or have social media plans in the works. But many still say social media is an experiment, as they try to understand how to best use the different channels [and] gauge their effectiveness […]’.

According to both reports, a lack of holistic understanding of social media opportunities is one of the main obstacles facing those business leaders who are still hesitant as to the usefulness of social media in business. In line of this perspective, this article seeks to shed light on: why is social media important for your business?

• External functions

Social media is a powerful tool to create and connect with potential leads, customers and clients. By accessing or creating communities of social media users and by offering multimedia channels for communication, companies are now able to connect to huge numbers of people and engage in a dialogue with them about their product and/or services. As the MIT/Deloitte report states, ‘organizations are using social software, social media and social networking to improve their relationship with customers in a number of ways: monitoring online communities; creating and supporting virtual communities; developing new communication channels; and fostering a wide range of customer engagements, including coupons, contests and other sponsored events’. Moreover, as social technology expands and new social media channels are created and used, this opportunity of connecting to external hubs of people is only inflating. According to the HBR report, ‘the exponential growth of social media, from blogs, Facebook and Twitter to LinkedIn and YouTube, offers organizations the chance to join a conversation with millions of customers around the globe every day.’ Ignoring these hubs of connected users can present serious drawbacks to an organization’s competitive advantage.

• Internal functions

Social media’s full potential still remains undiscovered by many industries, as pointed out above. While its external functions are clear to many, its internal ones are less so. Social media tools not only provide opportunities to establish more efficient external connections, but it has the equal power to help a company thrive internally, within its own staff. By offering a plethora of tools that defy geographical boundaries and time zones, employees are today able to take advantage of a range of platforms that can help them increase the efficiency of their collaboration, and that can give them the potential to form a more connected internal community. As the MIT/Deloitte study reports: ‘from the perspective of operational performance, social business offers value by enabling knowledge to flow within […] an organization’. Moreover, the new generation that is coming to the workforce is increasingly more social media-savvy and study further states: ‘a new generation of workers is building momentum for new modes of collaboration and communication enabled by social business’. Whether it is to enhance internal communication, create a solid and sustainable community at work or allow for more efficient collaboration to take place, social media can help a company be more productive at many different levels.

• Research

Social media not only allows both internal and external growth, but one of its other key functions is collective intelligence. As more and more people interact on social media channels to share their opinions and comments, a pool of growing information is made available online instantly and constantly. This, in turn, can be converted into crucial business intelligence. Companies can use this online data to identify weakness areas in their products/services, suggestions for new ideas, recommendations for existing products, customer trends and other elements that will allow them to take their business forward by either adapting their product/services to users’ feedback, or creating new ones. As the MIT/Deloitte study states, ‘companies are using social business activities to source new ideas and refine existing products and services.’ Thus, the active participation of customers has, today, become a crucial asset that companies can leverage to their advantage. MIT professor Eric von Hippel states that ‘consumers themselves are a major source of product innovations’; and companies need to tap into and make use of this collective intelligence in order to gain competitive advantage and get ahead of their competitors today. ‘Publishing tools like TypePad and WordPress offer any company or customer the chance to write a blog, while microblogging on Twitter allows a rapid-fire stream of real-time commentary, complaints, and recommendations’, according to the HBR report. With the increasing proliferation of social media, this social media opportunity is bound to increase as well.

• Snowball effect

Each time a business connects to one social media user; it has the opportunity to connect to a part of this user’s network as well. Social media channels are virtually designed to allow referrals to be made in one simple click. This feature is perhaps one of the most important aspects of social media. Consumers typically prefer to purchase a product or service that has already been tried and recommended by someone they know. By spreading the word about your business, online users thus take part in your marketing efforts too. ‘Never before have companies had the opportunity to talk to millions of customers, send out messages, get fast feedback, and experiment with offers at relatively low costs. And never before have millions of consumers had the ability to talk to each other, criticizing or recommending products — without the knowledge or input from a company’, states the HBR report. This facet of social media can either be a great advantage to your company, or instead, a detrimental disadvantage, depending on whether customers like your product/service. Businesses thus need to focus their efforts on listening to their customers and turning their product or service into a desirable one; the rest of the work will be done by happy customers. As Paul Gillin, author of The New Influencers, writes: ‘conventional marketing wisdom long held that a dissatisfied customer tells ten people. But…in the new age of social media, he or she has the tools to tell ten million.’

To conclude, social media offers a range of business advantages that business owners have the opportunity to leverage in this day and age of Internet revolution.

As social media keeps on expanding and as new tools are created and used every day – especially in the field of mobile technology – companies need to keep up with the changes in the social media landscape and adapt to these innovations, if they do not want to end up lagging far behind, far too quickly.

Sloan School of Management professor Wanda Orlikowski, who researches the interface between technology and organizations and the implications of new digital tools in the workplace, says: ‘companies need to get started because this is here and it’s here to stay, especially for the Millennial generation. This is what they are used to.’

Thus, it is no longer a question of whether to do it, but of how to do it. Businesses need to turn social media into a strategic resource sooner rather than later in order to stay ahead of the social revolution and maintain competitive advantage over others in their industries.

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