Social Media and Innovation

While consumers are enjoying their new found "social media" power to dictate the conversations and influence companies as never before, there are real risks lurking in any marketplace that is "out of balance," regardless of whether it's to the company or the consumer side.

Previously, when companies had the upper hand, consumers suffered primarily from the lack of pricing and selection information. Certainly not ideal, but of no permanent harm to consumers.

However, the Internet's unlimited information has shifted the balance of power far to the consumer's side, while "consumer technology cycles" have shortened to the point that companies literally can no longer keep pace, forcing companies into "reacting" instead of "responding." There are so many choices, strategies, and niches - and the variables are changing so rapidly that company responses are out of touch even before they're approved, and as the wise Hollywood screenwriter, William Goldman said, "Nobody knows anything," in this chaotic environment.

As companies dedicate the resources necessary to "listen and react" to the ever shifting consumer "social media-scape," the risk arises of fostering a "listen and react culture" within companies that will eventually erode innovation - the willingness to risk building what the company believes consumers WILL want BEFORE the consumers want it.

Starbucks, iPods, iPhones, Krispy Kreme donuts, YouTube, eBay, and extra chunky spaghetti sauce are just a few examples of what consumers didn't know they wanted until after they existed. As Henry Ford said, "If I'd have asked my customers what they wanted, they would have told me, 'A faster horse.'"

While there is no doubt that there are more consumer conversations and collaborations than ever before, it is the rate of growth and evolution of social media that poses the greatest risk to companies to create the products and services that consumer do not yet know they want.

In the next installment I'll talk about the importance of Information-Marketing™ to companies and consumers, and why it may be the singular most important strategy for companies facing social media today.