The Pitfalls of Inorganic Growth on Twitter

Social Media5 Comments

With the rise in Twitter usage and the publication of a plenitude of stories on influential news sources, there has been lots of guidance provided recently on how to get thousands of followers using “follower-pumping” practices. These usually recommend using “pyramid-scheme-” type tools, following people with similar interests who will follow you back, writing press releases, among other approaches. The more followers you amass, the greater the likelihood that the new people that you follow will follow you also. The use of Twitter-related rating services like Twitter Grader can also work in tandem with having a large number of followers to attract even more people, since numbers of followers is one method such tools use to calculate influence scores.

So what is the downside to such approaches compared to getting followers organically? Getting lots of followers increases your influence, right?

These tactics can be likened to startup companies that obtain venture capital funding early in their existence but don’t have a compelling value proposition. Just like VC funding can speed the development of promising platforms, rapidly increase a company’s market share due to spending on advertising and help a company grow rapidly in size, tactics to increase followers using schemes do work well enough to guarantee that one builds a large following.

But what happens after that? What do you do after you get a few thousand followers? Are your tweets interesting enough or valuable enough to sustain that number? Have you interacted directly with enough of your followers that they’ll remain with you even as you focus on gaining more followers? Are you producing enough content on other channels to sustain the number of followers you’ve amassed?

If your answer to these questions is “no” then you run the same risk as a promising startup that has created initial market momentum through outside funding, but doesn’t have a good enough product or management team to continue building profitable growth. Inevitably the funding runs out and since the company doesn’t generate enough revenue to remain profitable with a less-than-compelling product, it goes out of business. Likewise, on Twitter your followers will eventually leave you if you cannot sustain your follower count with authentic and useful interactions and you’ll be left with little credibility. Building a new audience when your reputation has been compromised is even more difficult than building that audience organically, one person at a time, through authentic and direct interaction.

Social Media Bombs

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Most social media articles cover the marketing side of social media. How marketshare can be gained, products sold, reputations built on the savvy use of web 2.0 tools. But as with any compelling new technology, this medium can also be used for other purposes. One of these is the social media bomb. Defined as a series of coordinated acts on social media networks, the social media bomb is intended to attract attention through a viral dissemination of a specific message. Recently, Amnesty International asked it’s supporters to send out a message at 1:10 p.m. on Friday, March 6 on Facebook, MySpace and Twitter. The message: “Each year, 1 in 10 women in Britain experience rape or other violence,” was intended to raise public awareness of this issue. The results of this social media bomb are not yet known, but one can see a difference in impact between Twitter, where pages of retweets still appear and MySpace and Facebook, where nary any evidence of the message exists. Nonetheless with the profusion of social networks, and the ability to communicate on them ubiquitously, one can imagine more such awareness raising efforts in the future.

Evaluating How to Use Twitter for Your Business?

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Here are some helpful articles that provide practical and detailed information regarding business use and twitter analytic capabilities:

Looking for companies who tweet today? Here is a list of 100+ brands that are on twitter: and here is a list of how 16 companies use twitter:

Last but not least here is a link to a wiki created by Peter Kim that is a fantastic repository of social media marketing examples:

New Business Models in the Same Old Environment

Business Strategy1 Comment

To say that the recent downturn in the economy has gotten many to think about how businesses are run would probably be an understatement.  However if there is one principle that seems operative in this environment, it is that the more things change the more they stay the same.  In the past week we have seen stories highlighting Merrill Lynch’s CEO, John Thain,lobbying to receive his $10M bonus.  The reasoning seems clear, he wanted to receive adequate compensation for orchestrating the sale of the 94 year old firm to Bank of America, widely considered to have been the only reason Merrill will continue to exist, at least in some form, for more years. Nonetheless that deal was made after Merrill had already lost about $11 bilion in 2008, though most of that loss has been attributed to Thain’s predecessor in the job, Stanley O’Neal.   Thain had already received a $15M signing bonus upon taking the position.  Thus, argued New York Attorney General Andrew Cuomo, in a letter sent to Merrill’s board of directors, “Clearly, the performance of Merrill’s top executives throughout Merrill’s abysmal year in no way justifies significant bonuses for its top executives, including the CEO.”  But the same old ways of doing business, whether they are outdated or inappropriate approaches to the marketplace still seem to be the most widely practiced.

According to the Corporate Library, the nearly 2000 CEOs of major corporations will still receive about a 7.5% raise overall in 2008.  Although this is far smaller than the double digit gains in previous years, this still seems out of step with the experience of employees of many corporations who are seeing unprecedented numbers of layoffs.  Indeed the average raise for a U.S. households routinely falls below 3%.   Ironically, after the CXO-led financial scandals at Enron, WorldCom and Adelphia, the Sarbanes-Oxley Act was passed in 2002 to, among other things, hold senior executives at companies accountable for the accuracy of financial statements. One of the provisions also highlighted what was thought to be one of the significant causes of these abuses–options compensation and large bonuses that were contingent upon good financial performance that, it was claimed, pressured executives to commit fraud.  Though Sarbanes-Oxley has been widely credited for the elimination or reduction of stock options as a means to provide incentive compensation, the increasing gap in CEO versus line employee pay as highlighted by this continued divergence in salary increase percentages as well as continued evidence that boards of directors have not really changed compensation practices at the highest levels of companies, reinforces again that companies are managed  no differently than they ever were.  And add to that the result of these compensation practices in 2008–scores of major investment and retail banks collapsing, economic recession and the loss of many jobs.  But there is more to this story than simply that outdated compensation practices continue and corporate malfeasance of a sort continues to have a negative impact on the economy.  Outdated practices for running business, what we’ll call “operating models,” also continue.  Peripatetic executives and location-locked line employees continue to be the rule, even as technology should be changing this model. Like outdated compensation packages, outdated approaches to running businesses will not improve our productivity and the work experience that most employees have, leading to unprecedented levels of job dissatisfaction.

Other changes to operating models and incentive compensation could be adopted as common practice.  Businesses no longer have to be relegated to giving total credit for the accomplishments within companies to single individuals like CEOs.  In fact one could argue that the average CEO is getting too much credit for what amounts to creating the proper environment for great products to be created, for example.   How often can one directly attribute the performance of a company to the direct actions of its CEO?  With our abilities to now collect and analyze data it should be more possible than ever to quantify the actual contribution every employee makes to the success of the company and to reward the highest contributors accordingly.

Likewise other aspects of business might also be improved through re-engineering operating models to accommodate a workforce that now actually has the ability to work in virtual environments without the loss of access to data or to corporate information systems, thus leading to reduced commuting times, better work-life balance, more satisfied and fulfilled and therefore more effective employees.  This is a direct result of the accessibility of broadband and mobile technology.  We are no longer in a world where a 1.5 Mbps data connection costs thousands and on-the-go access to email and business applications is costly or unprocurable.  So why haven’t more companies adopted virtual workforces and eliminated capital costs associated with providing most employees with on premise office space and data connectivity?  Because the market has not yet had a competitor that outcompetes other similar businesses though the use of these new technologies.  Most businesses are still doing business the old way-by emphasizing face time, rewarding employees who have more of it under the delusion that that equates to more productivity.

However that doesn’t have to continue to be the case.  LightThread was formed in part because each of us shared a vision that it is possible to succeed in business using vastly different approaches to it.  Indeed it is our goal to be that company that outcompetes all others on that basis.  And these new approaches encompass everything from how a business is operated, leveraging the data aggregation, storage and its manipulation; how products are brought to market; how the equity participation model can be changed to not simply reward only CEOs, to even the idea of what is a company?   Other non-traditional operating models that we will pursue include a more appropriate balancing of family life with work life, so those who choose one over the other aren’t unduly penalized in one way or another.

If any of these topics interest you, please talk to us about them.  We are interested both in the ongoing dialogue to sharpen our thinking, and in your thoughts on what might be the most important things to consider as we begin to build out this non-traditional operating model.