Its trouble began after an individual posted instructions on a Web site showing how the company's sleek but seemingly indestructible Kryptonite bicycle lock with a Bic pen. The story gradually spread over the Internet as bloggers wrote about the fatal flaw and provided links to the Web site. Within five days, the bloggers' details were picked up by mainstream media outlets such as The New York Times.
Ingersoll-Rand could have limited the damage to its brand if it had used a service to track its reputation on the Web, says David Sifry, chief executive officer of Technorati, a blog tracking and search company based in San Francisco. Instead, the manufacturer was clueless for days that its Kryptonite locks were under digital assault and had to offer a lock exchange program that it estimated at the time would cost it $10 million.
The company has learned its lesson. "Since the Kryptonite situation, we have established a person in a communications role within the communications department who is responsible for monitoring major blogs out there with respect to Kryptonite," explains a company press official at its Montvale, N.J., headquarters. She adds that the company is also looking to find out more about how to.
Ingersoll-Rand isn't alone in seeking to understand the hidden power of so-called social media services such as social networks, wikis and blogs. Most tech and nontech companies alike are equally clueless to the long-term implications of this new tech sector. But they'll need to get smart quick.
"I honestly believe social media software will become an alternative to broadcast e-mail and an established slot in the IT infrastructure in the next five years," says Greg Lloyd, president and co-founder of Traction Software, a social networking software provider that is backed by the CIA's In-Q-Tel venture capital fund. "It will be ubiquitous. It will be the way you work."
Hypercompetitiveness across services and industrial landscapes worldwide is already compelling companies to embrace these new social media technologies, with Big Media companies such as Knight Ridder, leading the way. But how companies further afield employ these new tools will very much depend on how social media application developers and an exceedingly diverse customer base jointly develop new products and services over the next few years.
Start-up and at 'em
Right now the social media marketplace is dominated by a clutch of startups. San Mateo, Calif.-based Socialtext and San Francisco-based JotSpot, for example, are developing applications around wikis, which are online with lightweight content management features. Corporations such as Finnish mobile phone giant Nokia and Burbank, Calif.'s Walt Disney are now trying the startups' wikis to manage projects and for basic content management.
Other startups, such as Providence, R.I.-based Traction Software and San Francisco-based Six Apart, are building applications around blogs, those explosively popular Web diaries presented in reverse chronological order that contain links to other Web pages and pictures. Companies in Silicon Valley as diverse as weighty Sun Microsystems and small public relations firm Eastwick Communications are using them for communicating with customers, self-publishing platforms, information sharing and creating internal company logs or bulletin boards.
Social networks--in which large groups of people with a common personal and professional interest are pooled to find connections and share knowledge with the people who need it most--are gaining even more traction on the back of new applications providers such as aQuantive and Cloudmark, both of Seattle. "I see a big opportunity
in harnessing community and the work of individuals to solve traditional problems of enterprise," says Martin Tobias, a venture partner at Seattle-based Ignition Partners, which has invested in Cloudmark.
Unwilling to be left behind, some large technology companies, such as mighty Microsoft and enterprise database provider EMC, are now incorporating some of these technologiesToday, most corporations still do little, if anything, with blogs, wikis and social networks, but that will change quickly over the next few years as more companies integrate these technologies into their daily routines. And if early signs are any indication, the evolution will lead to blogs replacing blast e-mails, wikis strengthening collaboration software and social networks taking conversations around the water cooler to a meta-level never envisioned by the most enthusiastic evangelist of the Internet boom. . But most of their rivals are still trying to figure out where these various social media tools fit into their technology product offerings. One reason for this delayed response to a now classic challenge by more nimble startups is that most corporate buyers of technology have themselves failed to come to grips with the threat or promise of social media services to their business strategies.
Those buyers and sellers of technology that embrace the power of social media services early in the life cycle of this new tech sector will no doubt gain a key competitive edge over rivals, provided they figure out how best to use the newfangled Web tools. Those decisions could well be the most important ones that the storied C-suite makes in the coming years.
So far, there are few obvious signs of the best corporate strategic use of social media services. The two high-tech powerhouses most out in front of the public curve with blogs are Sun and Microsoft, both of which have established blogging Web sites for customers, partners and employees to see and use. Sun President Jonathan Schwartz and Microsoft evangelist Robert Scoble are two of the best in the corporate blogging business today.
But many others are tapping into the power of blogs behind a veil of secrecy. A major European pharmaceuticals company, for example, has enhanced its competitive intelligence unit with Traction Software. Previously, the company's competitive intelligence team would survey published sources of information such as patent filings or new-drug announcements, talk to salespeople and customers and then summarize the material in a long document that would then be sent out via e-mail to thousands of people in the company.
The problem was that valuable information would often be buried on page 27 of a 50-page report or wouldn't be shared with key distribution and partners and customers because some of the information was sensitive. Traction's software established a Web log for the pharmaceutical company's competitive intelligence unit to share the information with management, sales and marketing executives. When something of particular interest to a specific executive is added to the blog, he will be automatically alerted by using search and syndication technologies. And for those executives that don't want to check the Web site continually, executives can set the service to send them a daily newsletter with information relevant only to them.
Furthermore, distributors and partners can gain access to specific parts of the blog that are of interest to them but will still be prohibited from accessing areas containing confidential information. "It makes the information more actionable and valuable," Traction's Lloyd says. "Another IT customer of ours at a big pharma got a promotion two days after deploying this within the company."
He says that Traction's software is used by 125 companies, governmental agencies and nonprofits, among them Bank of America, the U.S. Department of Defense and the IJIS Institute, a so-called 501(c)(3) nonprofit group for the information technology industry.
Why do wikis work? 'Simplicity'
Wikis are also slowly starting to be deployed by companies large and small. Socialtext, which offers an enterprise-class-hosted wiki, has more than 100 customers, of which 20 are in the Fortune 500.
"A wiki works because of its simplicity," says Ross Mayfield, co-founder and chief executive officer of Socialtext. "Our challenge is to make something as easy to use as e-mail with better
dynamics for collaboration."
That seems to be the case at JM Family Enterprises, a Deerfield Beach, Fla.-based Toyota automobile distributor that is the 15th-largest privately held company in America. Its 125 dealerships use a hosted version of Socialtext's enterprise wiki to collaborate on projects. "We're moving communication from the current point-to-point of e-mail to the new hub-and-spoke model via wiki," Mayfield says.
Indeed, sales and marketing is a. Tech PR firm Eastwick Communications is using a Socialtext wiki to coordinate its public relations efforts on behalf of San Jose, Calif.-based mobile enterprise software maker Intellisync with its client's British, German and Italian agencies. Rather than trying to deal with a nine-hour time difference, different accents and busy schedules, Eastwick established a group wiki to collaborate on press releases, pitch ideas and coordinate major announcements. "Now there's not as much back and forth as there was with e-mail," says Giovanni Rodriguez, an executive vice president at Eastwick.
Joe Kraus and Graham Spencer, the original co-founders of Internet search engine pioneer Excite and now the co-founders of San Francisco-based JotSpot, hope to upend the customer relationship management software market by taking a different approach to building enterprise-class wikis. Armed with $5.2 million in funding from Silicon Valley venture firms Mayfield and Redpoint Ventures, the two repeat entrepreneurs are building software so that other developers, companies and entrepreneurs can use wikis to develop customized enterprise applications. JotSpot has already developed 25 easy-to-deploy applications for customer relationship management, blogging and project management. "We are not going to be better than Salesforce.com or Siebel at CRM, but I would argue that most people don't need heavy-duty CRM," Kraus says. "They need lightweight applications."
Another major advantage to the wiki, Kraus adds, is that each company can easily customize the applications to their own needs using nothing more than HTML code. He notes that currently companies either buy expensive and complicated software or customize their own applications using Microsoft Excel macros. Records kept by corporate dealmaking departments, for example, would probably entail building a structured list in Excel detailing such things as the name of their business partner, the key contact there and the stage of the relationship, he explains. That's fine until the corporate development department chief sends that spreadsheet to the rest of the department and updates are made, resulting in no one knowing who has the most updated version.
And if an executive wanted to import specific e-mail conversations with a key contact or attach a document related to a potential deal they were working on to the spreadsheet, he wouldn't be able to do that in Excel. The application JotSpot is testing now with a few unnamed companies allows companies to keep track of their deals and provide additional functionality such as allowing companies to automatically update their data, attach documents to the list, view the data in a calendar format or get real-time news from the Web about each corporate relationship on the list.
Geoff Yang, a partner at Menlo Park, Calif.-based Redpoint, recalls looking at wiki technology and recognizing a large opportunity to bring it to the corporate market. "The prospect of using a base technology that had been used in the Internet community to develop applications in the open-source world and applying it to an industrial-strength enterprise platform was attractive," says Yang, who has previously backed Internet search engines Excite and Emeryville, Calif.-based Ask Jeeves.
Sidling up to social networking
Social networks are apt to provide companies with even more fertile ground to improve productivity. Take corporate security. San Francisco-based Cloudmark makes security software that determines what messages should be classified as spam by allowing the users of the software to vote. "By having millions of people vote it can solve a problem," Ignition's Tobias says.
Or consider advertising. Avenue A/Razorfish, the interactive agency business of Seattle-based aQuantive, has initiated a test system, called Peers, in which each employee can set up a personal page with personal and professional interests that can be linked to a blog and that shows what they are working on, allowing other employees to review and critique their projects.
Tracy Cohen, a senior content strategist for Avenue A/Razorfish, says the Peers program helped the company better serve a client in the publishing industry that was having trouble integrating its multiple media properties into one Web site. Cohen says that for now the Peers program is just for
in-house staff at Avenue A/Razorfish, but the company plans to begin selling the product to customers shortly.
Avenue A/Razorfish is also beginning to sell a separate enterprise product based on social networking that will allow corporations to build relationships with their users, enabling, for example, a travel company to offer its customers a place on the Web to create profiles and--depending on where they want to travel (the U.K. or Bulgaria, French Polynesia or Kenya) and what they want to see (soccer hooligans or Byzantine ruins, sparkling coral or giraffes)--to market more intelligently to those people.
All of these social networking tools are extensions of the pre-Internet practice of polling thousands or millions of users to make better decisions. Think about the accuracy of Zagat Survey's restaurant ratings, which are based on nothing more than customer surveys. Now the concept can be applied to a variety of places in the enterprise.
Indeed, Charlene Li, principal analyst at Forrester Research in San Jose, predicted this in a recent report: "Forrester envisions a day when new employees on their first day will be handed a sheet of paper with their phone number, e-mail address--and a URL for their blog. The company would give all of its employees a personal internal blog where they could provide project updates, trip reports, and market intelligence, anything that they think others should know about the work that they are doing."
All of this activity isn't going unnoticed by large technology companies. Mark Levitt, a vice president of collaborative software at technology research firm IDC, says the large companies that dominate content management software--including EMC, IBM and Microsoft--all have internal programs to incorporate wikis, social networks and blogs into their products.
But Traction's Lloyd, for one, isn't afraid of the large technology companies' products cutting into his business. "Our solution does 80 percent of what the larger solutions do and it costs 20 percent of what they cost," he argues. "Also, it doesn't tie down users to the desktop and is 10 times easier to support."
Socialtext's Mayfield adds that many big tech corporations are constitutionally incapable of developing these types of revolutionary products. The reason: Like the personal computer, spreadsheets, e-mail and instant messaging, social media applications entered the enterprise from the bottom up. "None (of these software applications) entered from the CIO saying this is a great idea, let's do this," Mayfield says. "Regular rank-and-file people used them as consumers and brought them into the company."
Of course, big tech companies can always buy the technology they need by acquiring social media application startups or partnering with them as they begin to penetrate the corporate arena.
Either way, "We're just at the beginning of the blog and wiki era in corporate use, and it won't take long before these tools are used as often for collaboration as e-mail is today," predicts Lauren Wood, who recently left Textuality Services, a Vancouver-based consulting company, to join Sun.
As more companies develop and then deploy these social media tools, companies such as Ingersoll-Rand will learn that blogs, wikis and social networks have the same power to improve companies' bottom lines as to protect their reputations.
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