social platforms

How to Thrive in Social Media’s Gift Economy

So you’ve got your brand on social media. You have a Facebook page and Twitter account. Maybe a Pinterest board. But now what? There has to be more to social media than posting coupons and running sweepstakes. How do you drive real customer engagement?

The answer may come not from Silicon Valley or Madison Avenue, but from places like the Trobriand Islands and the Pacific Northwest.

Indigenous cultures developed what anthropologists call gift economies. As observed by Marcel MaussLewis Hyde, and others, gift economies are quite different from the market economies to which we are accustomed.

The concept of gift economies has been used to explain open source software and the Burning Man festival. But it also provides insight into what works — and doesn’t work — with social media, and what brands can do to be more successful in the online arena.

To understand a gift economy, consider the example of moving into a new apartment. When friends help you move, you express your appreciation by providing pizza and beer — really good pizza and beer. When you hire professional movers, you pay with money. Offer your friends money instead of pizza and beer, and they are likely to be offended. Offer to pay the movers in pizza and beer, and they won’t unload the truck. Your friends are operating in a gift economy; the movers in a market economy.
While both market and gift economies are systems of exchange, they differ in three fundamental ways.

1) Context: Transaction or Relationship
In a market economy, the focus is on transactions. In a gift economy, the focus is on relationships. Trobriand Islanders passed along necklaces and armbands as part of a ritual called the Kula Ring. An item’s value was not determined by supply and demand, or measured by a market price. Instead, its value came from the relationship between the giver and receiver and its meaning in the community.

2) Currency: Financial or Social
In a market economy, people use money as a medium of exchange — a financial currency. In a gift economy, people use social currencies. The purpose of a social currency is not to execute a transaction, but to express a relationship. Social currencies don’t have a price set in the market. In the moving example, pizza and beer are a social currency.

Note that social currencies are not the same as virtual currencies. Facebook “Likes” are social currencies, while Facebook Credits are virtual currencies. There is no price on a Facebook Like, while Facebook Credits have a clear market value.

But just because something has a monetary value doesn’t mean it can’t be a social currency. In the moving example, imagine if one of your friends drove a long way to help you out. It would be entirely appropriate to give your friend some gas money to cover the extra cost. The key point here is that the context is relational, not transactional.

3) Status: Earned or Bought
A tell-tale sign of a gift economy is that status is earned, rather than bought. In the Pacific Northwest, native tribes developed the ritual of the potlatch. Status was given not to those who accumulated the most wealth, but instead to those who gave the most to the community.

On a Google search page, you can see these two worlds of earned and purchased status side-by-side. In the middle of the page, so-called “organic” search results are earned based on a site’s popularity. In contrast, the ads in the top rows and right-hand column are based on how much advertisers have paid for the spot.

Social media are fundamentally gift economies. People are there to cultivate relationships, not conduct transactions. They exchange social currencies, not financial currencies. And status is earned not bought.

This illuminates why many brands are struggling with social media. They have confused market and gift economies. They focus entirely on transactions, buying status, and pushing products and promotions.

Brands that succeed in social media follow the principles of a gift economy. They build relationships, earn status, and create social currencies.

How is your brand doing? Rate yourself with the following simple guide:

1) Build relationships. 
• Push out information to drive transactions: Base
• Create relationships with individuals: Better
• Help people create relationships with each other: Best

A brand that that I give a Best rating to in this category is Vail Resorts’ EpicMix, which turns a ski slope into a social game. The experience keeps people connected anywhere on the mountain.

2) Earn status. 
• Celebrate your own accomplishments: Base
• Celebrate the accomplishments of others: Better
• Enable people to celebrate each other’s accomplishments: Best

A brand that I give a Best rating to in this category is Nike’s running community, Nike+. If you post to a friend’s Facebook wall during their run, they hear virtual applause through their music player.

3) Create social currencies. 
• Focus on discounts and promotions: Base
• Think of your product as a social currency: Better
• Create new social currencies related to your brand: Best

A brand that that I give a Best rating to in this category is Kraft Foods for recognizing recipes as a social currency and engaging customers on the Web, Facebook, Pinterest, and Twitter.

To put these principles into practice, put yourself in the position of your customer and ask yourself the following questions:
• What rituals, traditions, or social conventions involve your product?
• What do people talk about, share or exchange in these activities?
• How might the experience be enhanced with something better or different?

Keep looking until you get an “aha” moment — a social insight you can build on. For Kraft, it was helping people exchange recipes. For Vail Resorts, it was bringing the social experience of the lodge onto the slopes. For Nike, it was enabling runners to bring their friends with them.

Put these insights into practice, and soon your social strategy will start taking off. Begin by contributing to the community and earning trust. Over time, you can mint your own social currencies and cultivate a gift economy. As your customers start connecting with each other, you will generate social gravity that pulls customers into orbit around your brand. The result will be a deep connection with your customers that goes beyond our transactional notions of loyalty.


Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.


Originally appeared on Harvard Business Review. Reproduced with permission from the author.

How Top Brands Pull Customers into Orbit

The most successful companies in business today have something in common. This trait doesn’t just make them better than the competition; it makes them fundamentally different.

Where traditional companies push out messages and products, these companies pull customers in. Instead of treating customers as passive targets, they treat them as active participants. Like the sun in a solar system, they create a gravitational field that pulls customers into their orbit. They go beyond customer loyalty to building customer gravity.

Consider three top companies with orbit strategies: Apple, Google, and Nike. Each has a different approach, but the result is the same: customer-initiated touchpoints between transactions, and the creation of value beyond just product. At the core of each orbit strategy is a platform or service, what might be called a Customer Gravity Generator. Apple has iTunes and the App Store. Google has its search engine and Gmail. Nike has Nike+ and NikeID.

These orbit brands are actively building new Customer Gravity Generators. Apple has launched its iCloud. Google created Google+. Nike just launched NikeFuel.

Orbit brands are organized differently than traditional companies. Traditional brands are like artillery. Their mantra is aim and fire. They spend their time sighting targets (through customer segmentation), calibrating trajectories (by optimizing marketing mix), loading ammunition (with messages and offers), firing their weapons (with marketing campaigns), and celebrating successful strikes (from sales).

Orbit brands are more like scientists building a supercollider. Their mantra is test and learn. They focus on understanding the physics of their market space (through customer behavior), create and improve their technology (on products and platforms), run experiments (for new benefits and services) and analyze the results (for customer engagement).

To get started with an orbit strategy, start by measuring the strength of your gravitational field. Customer satisfaction isn’t enough. You aren’t measuring how well you target and transact. You want to measure the attractiveness of your brand — how well you pull customers in, and how well they pull other customers in with them.

A good test of where you are on the push/pull continuum is your social media strategy. Are you using social media as a channel for delivering messages to an audience? If so, you may be stuck in the push mindset. Or are you using social media as a way to listen and learn, to create an authentic relationship, and to deliver value beyond the products you sell? If so, you are well on your way to being an orbiter.

Next, imagine how you might build your own Customer Gravity Generators. First, revisit the core mission or purpose of your company. Think about what would help fulfill that mission and complement the products and services you sell. There are any number of sources of value: data, content, stories, relationships, experiences, identity.

If you think that only technology companies can create orbit strategies, think again. Nike has created a series of gravity generators, including Nike+, NikeID, and NikeFuel. With each generator, Nike creates a different orbit. One for runners, one for shoe aficionados, and one for athletes. Nike+ is particularly good at building social gravity, as existing users pull in new users like moons around their planets.

You don’t need to be a product company. Vail Resorts, a ski resort operator, created an orbit strategy with its Epic Mix. Starbucks’ “third place” strategy turned its own stores into gravity generators for local neighborhoods. Retailer Sears Holdings — where I work — is creating concentric orbits: ShopYourWay.com, a social network for social shopping; FitStudio, a community for fitness enthusiasts, and Craftsman Experience, a media channel for do-it-yourselfers.

You can also start small. Have you seen the Samsung power towers at busy airports? Road warriors are always huddled around them, tethered via their power cords. Samsung used electricity to generate customer gravity, and this one literally pulls in potential customers.

There are lots of options for creating customer orbits. So next time you hear someone talk about targeting customers, ask yourself, “What could we do instead to create some gravity and pull them in?”


Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.


Originally appeared on Harvard Business Review. Reproduced with permission from the author.

Marketing Can No Longer Rely on the Funnel

One of the central concepts of marketing and sales is the funnel — through which companies are supposed to systematically move prospects from awareness through consideration to purchase.

But consumers are now more informed, connected, and empowered than ever. Does the funnel still work in a digital, social, mobile age?

We asked some of the leading marketers in the world — from companies like Google, Intuit, Sephora, SAP, Twitter, and Visa — to assess the relevance of the marketing funnel.  What we found says as much about the future of business as it does about the future of marketing.

According to these marketers, the primary problem with the funnel is that the buying process is no longer linear. Prospects don’t just enter at the top of the funnel; instead, they come in at any stage. Furthermore, they often jump stages, stay in a stage indefinitely, or move back and forth between them.

For example, consider items that come recommended on an e-commerce site. With a click you can add them to your cart, moving straight from awareness through consideration to purchase in only a few seconds. The same holds true on items discovered in a Tweet, Facebook post, or Pinterest board.

In both B2B and B2C businesses, customers are doing their own research both online and with their colleagues and friends. Prospects are walking themselves through the funnel, then walking in the door ready to buy.

As an example, Julie Bornstein, CMO at Sephora, has seen social media change how people buy beauty products. Recommendations from friends have always been important, but now these recommendations spread “quicker, faster, and further” at every stage in the funnel. The decision on what to buy increasingly comes from advocates who share their experience in a way that pulls in new customers and informs their purchase decision. Sephora’s response has been to bring all the stages of the funnel together into a single place, creating its own online community where people can ask questions of experts and each other about brands, products, and techniques.

One popular alternative to the funnel is the Customer Decision Journey popularized by McKinsey. A key advantage of this model is that it’s circular, rather than linear. Prospects don’t come in the top and out the bottom, but move through an ongoing set of touchpoints before, during, and after a purchase.

The Customer Decision Journey is an improvement over the traditional funnel, but some marketers see it as incomplete. The problem is in the name itself. Brands may put the decision at the center of the journey, but customers don’t. Jonathan Becher, CMO at SAP, believes that for customers, “the pivot is the experience, not the purchase.” The Customer Decision Journey might be circular, but if the focus is still on the transaction, it is just a funnel eating its own tail.

One of the most critical weaknesses of the Customer Decision Journey is the connection between purchase and advocacy. Almost every marketer we spoke to described how social media has disconnected advocacy from purchase. “You no longer have to be a customer to be an advocate. The new social currency is sharing what’s cool in the moment,” says Joel Lunenfeld, VP of Global Brand Marketing at Twitter.

In today’s marketing landscape, people can experience a brand in many ways other than purchase and usage of a product. These include live events, content marketing, social media, and word-of-mouth. Consider all the members of the Nike+ running community who don’t own Nike products or the half million fans of Tesla’s Facebook page who don’t own a Tesla. Or consider companies where employees use their own devices or download their own software until IT purchases the enterprise version for the entire company. In today’s digital age, advocates aren’t necessarily customers. Marketers who think that advocacy comes after purchase are missing the new world of social influence.

Antonio Lucio, Chief Brand Officer at Visa, believes the solution is to shift the focus from the transaction to the relationship.  After exploring the Customer Decision Journey, his team developed what they call a Customer Engagement Journey.  In this model, transactions occur in the context of the relationship rather relationships in the context of the transaction.

As an example, consider a real world journey of a family’s trip from the U.S. to Mexico. Visa has mapped out the entire experience, from where the family gets ideas on where to go (TripAdvisor), to how they gather input from friends (Facebook), to how they pay for their cab (cash from an ATM) or hotel (credit card), to how they share photos of their trip with friends back home (Instagram). Only a few of these situations are opportunities for transactions, but they are all opportunities for relationship. “When you change from decision to engagement,” Antonio says, “you change the entire model.”

Market trends suggest the mismatch will only widen between customers’ actual experiences and the models of the funnel or Customer Decision Journey.  One key trend is the integration of marketing into the product itself.  The funnel presumes that marketing is separate from the product.  But for digital products like games, entertainment, and software-as-a-service, the marketing is built right into the product.  Examples include the iTunes store and Salesforce’s App Exchange.

Caroline Donahue, CMO at Intuit, oversees numerous web-based products for which “the product and the marketing become one thing.”  The funnel changes because “with cross-sell and up-sell, you move from awareness to action instantaneously.” Instead of a Customer Decision Journey, her approach might best be described as a User Experience Journey into which opportunities for transactions are thoughtfully embedded.

Google shares a similar view, taking the fusion of product and marketing one step further. Arjan Dijk, the company’s Vice President for Global Small Business Marketing, believes products should be designed to market themselves. For Google, the question is not “how can we market this product?” but “which products deserve marketing?” Marketing isn’t about “pushing people’s thoughts and actions. It’s about amplification, helping what’s already happening grow faster.”

So where do we go from here?  The funnel and Customer Decision Journey aren’t going away.  They are useful models, and will continue to be helpful in certain contexts.  But marketing today requires a new mental map to navigate a changing landscape. We need a model that informs marketers how to enable and empower, not just persuade and promote.  There are a variety of alternatives including journey, orbit, relationship, and experience.

Whatever model you choose, what’s most important is that it addresses: first, the multi-dimensional nature of social influence; second, non-linear paths to purchase; third, the role of advocates who aren’t customers; and fourth, the shift to ongoing relationships beyond individual transactions.


Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.

Cara France is CEO of The Sage Group, a firm providing marketing and consulting talent to San Francisco Bay area companies, and founder of Marketers that Matter. Follow her on Twitter @SageCEO.


Originally appeared on Harvard Business Review. Reproduced with permission from the author.

Three Elements of a Successful Platform Strategy

We typically think of companies competing over products — the proverbial “build a better mousetrap.” But in today’s networked age, competition is increasingly over platforms. Build a better platform, and you will have a decided advantage over the competition.

In construction, a platform is something that lifts you up and on which others can stand. The same is true in business. By building a digital platform, other businesses can easily connect their business with yours, build products and services on top of it, and co-create value. This ability to “plug-and-play” is a defining characteristic of Platform Thinking.

Consider the market for smartphones. Nokia and Blackberry today are a shadow of their former glory. Their technology and products lag Apple and the Android ecosystem. But the triumph of Apple and Android is not from features and functions. It is from the app store on which external developers create value. Microsoft has gotten excellent reviews for the technology in its new phones, but it is the ability to create a successful platform that will determine its ultimate success.

The use of platform thinking extends beyond the tech sector. Retailers are shifting from distribution channels selling products, to engagement platforms co-creating value. Online retailers like eBay, Etsy, and Amazon led the way, and now traditional retailers are following.

JC Penney has made platform thinking a pillar of its reinvention strategy. Its stores are featuring more and more “boutiques” managed by others. It is no coincidence that JC Penney’s CEO, Ron Johnson, was previously at Apple. Johnson has said, “All those boutiques are the apps. What J.C. Penney is creating is a new interface.” While JC Penney’s pricing strategy has been controversial, analysts have been very positive about the in-store platform.

Nike is also shifting from products to platforms. Building on the success of its Digital Sport products, Nike recently launched its Nike+ Accelerator to help companies build on the Nike+ platform. Nike’s announcement reflects platform thinking. “We are looking for people who want to create companies that build upon the success of [Nike+] to make the world more active.”

The rise of platforms is being driven by three transformative technologies: cloud, social, and mobile. The cloud enables a global infrastructure for production, allowing anyone to create content and applications for a global audience. Social networks connect people globally and maintain their identity online. Mobile allows connection to this global infrastructure anytime, anywhere. The result is a globally accessible network of entrepreneurs, workers, and consumers who are available to create businesses, contribute content, and purchase goods and services.

Readers will recognize a number of intellectual foundations to platform thinking. These range from Geoffrey Moore’s ecosystems to John Hagel and John Seely Brown’s focus on “pull.” Where traditional ecosystems push, these new platforms pull. Platforms also rely on the power of network effects — as they attract more users, they become more valuable to those users. And there’s a growing academic literature that explores the unique quality of value creation on what are called “multi-sided platforms.”

In our view, the success of a platform strategy is determined by three factors:

  1. Connection: how easily others can plug into the platform to share and transact
  2. Gravity: how well the platform attracts participants, both producers and consumers
  3. Flow: how well the platform fosters the exchange and co-creation of value

Successful platforms achieve these goals with three building blocks:

  1. The Toolbox creates connection by making it easy for others to plug into the platform. This infrastructure enables interactions between participants. For example, Apple provides developers with the OS and underlying code libraries; YouTube provides hosting infrastructure to creators; Wikipedia provides writers with the tools to collaborate on an article; and JC Penney provides stores to its boutique partners.
  2. The Magnet creates pull that attracts participants to the platform with a kind of social gravity. For transaction platforms, both producers and consumers must be present to achieve critical mass. Apple needed to attract both developers and users. Similarly, eBay needed both buyers and sellers. Platform builders must pay attention to the design of incentives, reputation systems, and pricing models. They must also leverage social media to harness the network effect for rapid growth.
  3. The Matchmaker fosters the flow of value by making connections between producers and consumers. Data is at the heart of successful matchmaking, and distinguishes platforms from other business models. The Matchmaker captures rich data about the participants and leverages that data to facilitate connections between producers and consumers. For example, Google matches the supply and demand of online content, while marketplaces like eBay match buyers to relevant products.

Not all platforms place the same emphasis on all three building blocks. Amazon Web Services has focused on building the Toolbox. Meanwhile, eBay and AirBnB have focused more on the Magnet and Matchmaker role. Facebook has focused on the Toolbox and Magnet, and is actively building its Matchmaker ability.

In the future, we will see more and more companies shifting from products to platforms. Even those in the extermination business may worry less about building better mousetraps, and more on building mousecatching platforms. For example, imagine a smart mousetrap with sensors that wirelessly communicate to a cloud-based MouseCatcher service. Homeowners and exterminators could monitor the status of the trap on their smartphones, receiving a text message when it is out of bait or needs checking. Smart traps already exist. But the shift from products to platforms would focus on building the service (the Trapp Store?) that enables anyone with a smart trap to connect and communicate.

Every business today is faced with the fundamental question that underlies Platform Thinking: How do I enable others to create value? Building a better mousetrap still might not have the world beat a path to your door. But the right platform might just do the trick


Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.

Sangeet Paul Choudary is a Singapore-based entrepreneur and author of the blog Platform Thinking.


Originally appeared on Harvard Business Review. Reproduced with permission from the author.

People Are the New Channel

In the past, channels delivered messages to audiences. You either owned the pipe or paid to use someone else’s. You controlled the message all the way through that pipe.

In a digital and social age, pipes are less important. People are the channel. You don’t own or rent them. You can’t control them. You can only serve and support them.

This new world is disorienting because pipes and people work very differently as channels. Pipes flow out; people flow in. Content is pushed out through pipes, but pulled in through people.

This reversal is shifting the balance of power. Individuals have access to information, tools, and resources once reserved for institutions. Externally, this means a shift in the relationship between customers and brands. Internally, this means breaking down the silos that once divided functions and departments. What used to be a hierarchy with the company at the top is now a network with the customer at the center.

For marketers, this of course changes everything. As part of an awards program that one of us (Cara) created and the other (Mark) helped judge, we had the opportunity to see how hundreds of top marketers in Silicon Valley are engaging customers and growing revenue in this new era. The two most important principles that emerged are that customers make the best brand advocates, and entire organizations make for the best marketing teams.

• Externally, empower your customers to be brand advocates. Laura Messerschmidt, Vice President of Marketing at Outright (a GoDaddy company), discovered through extensive customer research a new tax law that would significantly affect millions of customers and prospects. Instead of creating a campaign, Laura created a movement. She developed compelling content to educate customers, prospects, advocates, and influencers on the new law. She organized a roadshow meeting with local small business groups in ten cities. She reached out to 5,000 top customer advocates and invited them to share the content on social networks. The results? Monthly sign up rates went up over 225% in just two months and the cost to acquire customers decreased by over 40%.

• Internally, treat your entire organization as your marketing team. Chris Borr, former Vice President of Marketing at McKesson, was responsible for launching a major new campaign for one of McKesson’s divisions. On the belief that everyone in the division would need to support the campaign to make it successful, he spent as much energy cultivating internal ownership as external engagement. Focusing on the division’s 7,500 employees, from the night shift workers to the executives, he looked at every customer touchpoint and ensured everyone understood their new role as it pertained to the brand. The results? $600 million in new business the first year the program launched.

Some key skills and strategies accelerate the shift from pipes to people:

1) Don’t talk, listen. Brent Remai, CMO at FireEye, was hired into a small, venture- funded company with several years of moderate results. His first task was to spend significant time with dozens of customers to understand their problems and the language they use to talk about the issues. He used this information to formulate a marketing strategy that spoke to the customers in a language they understood. He then tested his strategy repeatedly with customers until it truly resonated. The result? In 2012, they were ranked as the 4th fastest-growing tech company by Technology Fast 500.

2) Don’t push products, solve problems. Laura Fay, Vice President Integrated Campaigns and Strategy at Cisco, has helped the global marketing organization rethink the way it approaches marketing. For years, the company had been focused on product launches to create splash, buzz, and engagement. Instead, she implemented an integrated planning process that started with the top customer issue and then created an integrated solution that crossed business divisions. The results? The integrated campaign resulted in Cisco’s share of voice for Cloud computing going from No. 5 to No. 1.

3) Don’t stop at 1-to-1, think many-to-many. Antonio Lucio, Chief Brand Officer at Visa, created a customer engagement strategy for the 2012 Olympics. Instead of pushing out messages, the company used social media to connect fans with each other and with the athletes they were cheering for. In exchange, fans got exclusive behind-the-scenes stories. The results? The most successful campaign in the company’s 26 year history of Olympic sponsorship, resulting in significant brand equity lifts, 13% claimed product usage and 470 million earned impressions in 26 markets.

Ironically, the shift from pipes to people is made possible by intensive use of technology and data — not only to automate but to analyze, personalize, and socialize. Technology brings speed and scale to what previously was impractical or unaffordable. Many of the most innovative marketers cited how social media monitoring enables them to listen and respond on a global scale. In addition, customer and employee communities enable them to identify real problems in real-time. Finally, relationship and content management tools enable them to make connections and capture user-generated content achieving both reach and relevance.

Counterbalancing this use of technology and data is a shared mindset that emphasizes reciprocity in the relationship between a brand and its customers. Top marketers know that they can’t put one over on the customer, nor can they control the message or their customer’s behavior. It takes humility, appreciation, and an orientation towards openness and inclusion.

So what’s the recipe for results in marketing today? Choose people over pipes, and mix one part technology with an equal part humanity.


Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.

Cara France is CEO of The Sage Group, a firm providing marketing and consulting talent to San Francisco Bay area companies, and founder of Marketers that Matter. Follow her on Twitter @SageCEO.


Originally appeared on Harvard Business Review. Reproduced with permission from the author.

The Age of Social Products

We are moving from a world in which physical products are separate to one in which they are connected.  Computers were just the beginning.  Appliances and engines now send alerts when they need to be serviced.  Cameras upload their photos automatically.  Vending machines trigger their own restocking.  Crops feed and water themselves.

This shift has many monikers:  “The Internet of Things” and “The Internet of Everything” are two of the most popular. But the history of the Internet suggests that this is just the beginning.  The real change will happen when products aren’t just connected, but social.  Instead of the Internet of Things, we should be thinking about the Social Network of Things. To take advantage of this shift, you need to start thinking about the social life of your products.

What makes the Internet of Things possible is the confluence of multiple technologies:  inexpensive sensors, wireless networks, and cloud computing.   The ability to access data and computing resources from anywhere means that products don’t need to have computers and memory built into them.  They can just use the cloud.  Put sensors, a simple processor, and a wireless connection together and you have the makings of an intelligent and connected product.

The Internet of Things is already expected to transform customer servicebusiness models, and advertising.  But we should remember the evolution of the Internet.  The early days (Web 1.0) was about computers talking to computers.  A few years later (Web 2.0), people started talking to people.  The Internet was disruptive as a connected infrastructure, but it became explosive when it got social.

Today, most of the discussion about the Internet of Things is about products being connected.  But just because your product is connected doesn’t make it social.  For products, the real revolution will come when objects aren’t just passing information back and forth, but collaborating around a shared purpose.

This insight is behind Google’s recent acquisition of Waze for $1.1 billion.  Google already has the best map and traffic program, so why would they want another one?  Was it just to keep it out of the hands of Apple or Facebook?  We think not.

Among other things, Waze cracked the code on social products.  Google Maps is a data network, while Waze is a social network, in this case of cars, phones and people.  Waze creates a constantly updating repository of traffic information, much like Wikipedia creates a dynamic repository of encyclopedic information.  However, in this case, it is cars, phones and people who are collaborating to create the body of knowledge.  Waze provides a glimpse of how the car can become a social device by using the little data created by each individual car and driver.  According to the head of Google Maps, the goal is “to harness the power of Google technology and the passion of the Waze community to make it easier to navigate your daily life.”

Waze shows us how the cars of the future will not only connect to each other but also leverage the collective intelligence of that community of connected cars. We can see this in other areas as well.  Connected e-readers already help every individual reader benefit from the actions of the community. Nike is betting on a future with connected shoes, where each individual shoe learns from the data aggregated from a network of connected shoes. Social products leverage the power of the community to learn from other products.

So how do you create a social product?

First, you need a product that is smart and connected.  You can build your own (like the thermostats and home alarms from Nest) or use someone else’s device.  It might be a smartphone (think Waze), a consumer device with open APIs (like Nike’s FuelBand), or a commercial device with a strategic alliance (likeOpower and electric utilities).

Second, you need to make the product social.  This requires a platform where people and products are connected in a collaborative network.  Each individual product and each user benefits from being part of a community of fellow products and users. For example, Nest’s thermostat and smoke detector work together.  When the alarm detects carbon monoxide, it tells the thermostat to turn off the furnace.

In the case of Waze, each car and driver benefits from the information gleaned and aggregated from the community of cars and drivers.   That’s not all.   A Department of Transportation study demonstrates how cars of the future will talk to each other.  Cars within 1,000 feet of one another will send out their speed and location to the others, which will then notify the driver as needed.  Google’s driverless cars will be able to make adjustments automatically.  In this future state, is it the cars that are driving, or the social networks?

If you are considering building a strategy around social products, you have a few choices.   You need a connected product, a social network of people, a social network of products, and a collaborative platform for interaction, data exchange, and analytics.  The good news is that you don’t have to do all of this yourself.

  • Instagram leveraged an existing connected product (smartphone camera) and an existing collaborative platform (Facebook) to create a social network of connected camera-phones.
  • Qualcomm Life is creating a new collaborative platform to transform existing connected devices (for mobile health and fitness) into social products.  Recognizing they also needed a social network of people, they recently purchased HealthyCircles to help physicians, patients, and families coordinate care and support.
  • Nike is creating an entire ecosystem of connected products (Hyperdunk+ shoes), social network of products (FuelBand), social network of people (Nike+), and collaborative platform (Digital Sports).

The Age of Social Products will change the basis of competitive advantage.  Companies have traditionally focused on product supremacy, outdoing their competitors with better features and attributes.  In an age of social products, competitive advantage comes not from product features but from network effects.  Companies succeed by having products that better leverage the intelligence of the network of other connected products. This is a shift in mindset from standalone-product thinking to connected-platform thinking.

The Age of Social Products is dawning.  Companies that create products that are smart, connected, and, most importantly, social, will not only survive, but thrive.


Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.

Sangeet Paul Choudary is a C-level advisor to executives globally on platform business models, an entrepreneur-in-residence at INSEAD and the co-chair of the MIT Platform Strategy Summit. He has been ranked among the top 30 emerging business thinkers globally by Thinkers50. He is also a co-author of Platform Revolution (W.W. Norton & Company, 2016) and the April 2016 HBR article Pipelines, Platforms, and the New Rules of Strategy.” Follow him on Twitter at @sanguit.


Originally appeared on Harvard Business Review. Reproduced with permission from the author.

Little Data Makes Big Data More Powerful

You may not know this, but Big Data has a little brother. And together, Big and Little Data are far more powerful than Big Data alone.

Big Data is what organizations know about people — be they customers, citizens, employees, or voters. Data is aggregated from a large number of sources, assembled into a massive data store, and analyzed for patterns. The results are more accurate predictions, more targeted communications, and more personalized services. Big Data is what enables banks to predict credit card fraud by analyzing billions of transactions, marketers to understand customer sentiment by analyzing millions of interactions on social media, and retailers to target promotions and offers by analyzing millions of purchases.

In contrast, Little Data is what we know about ourselves. What we buy. Who we know. Where we go. How we spend our time. We’ve always had a sense for these things — after all, it’s our lives. But thanks to the combination of mobile, social, and cloud technologies, it’s easier than ever to gain insight into our own behavior.

As an example, consider the emerging field of mobile health. Portable devices like the FitBit or Nike FuelBand measure your activity level and sync with your smartphone. The associated mobile app gives feedback, encouragement, and rewards as you reach your goals. New research shows that people who use tracking technologies are more likely to be successful in losing weight and getting in shape.

A similar trend is underway in energy conservation. The company Opower partners with utilities to give customers visibility into how their electricity consumption compares with the average of their neighborhood.

Big and Little Data differ in three primary ways:

  • Focus: The focus of Big Data is to advance organizational goals, while Little Data helps individuals achieve personal goals.
  • Visibility: Individuals can’t see Big Data; Little Data helps them see better.
  • Control: Big Data is controlled by organizations, while Little Data is controlled by individuals. Companies grant permission for individuals to access Big Data, while individuals grant permission to organizations to access Little Data.

Without Little Data, Big Data has a tendency to become Big Brother. We’ve all experienced that unsettling feeling when ads follow us on the web, a practice marketers call retargeting. And retailers have gotten into trouble when Big Data predicts things about people they don’t even know themselves.

On the other hand, Little Data without Big Data is incomplete. One complaint about portable fitness devices is that they aren’t sufficiently prescriptive. They don’t tell you what to do based on your behavior. How much activity should I be getting? If I’m not sleeping well, what can I do to sleep better? This requires a partnership with individuals and health care providers to combine tracking with advice and treatment.

Or consider the experience of grocery shopping. We are all familiar with the coupons we get when we checkout at the register. In the time it takes for you to sign your credit card slip, a massive database analyzes what you bought today, what you bought in the past, and what people like you tend to buy, then matches it to the available offers and prints out a personalized set of coupons. A classic case of Big Data.

But what does this scenario look like with Little Data? Start by applying the three steps:

  • Shift Focus: How can we help individuals achieve their goals?
  • Make it Visible: How can we give people visibility into their own data?
  • Share Control: How can the relationship be more reciprocal?

Putting these together, we can imagine a different kind of shopping experience. The Little Data alone could be used to create a personal shopping assistant that lets you:

  • Generate shopping lists automatically based on what you’ve purchased in the past. This feature could be used to send a reminder while you are right in the store, e.g. “Don’t forget the milk!”
  • Bring promotions to you based on your interests. For example, instead of paging through the entire circular, you could find out if there are specials on any of your favorite brands.
  • Provide useful information to guide purchasing decisions. For example, the assistant could alert you to foods with ingredients that might trigger food allergies.

Things get really interesting when we combine the power of Big Data with Little Data. For example, as a shopper, I’m interested to know which brands have the highest loyalty or what else people might have on their Thanksgiving shopping list. There might even be patterns that could predict which foods I am most likely to enjoy based on what others buy who share similar purchase histories. (Think of this as the Netflix of food.)

This connection between Big and Little Data applies in other areas as well. Consider the smart thermostat made by Nest, which automatically adjusts itself to your preferences and behavior. A utility company could connect the Little Data from Nest devices to the Big Data from its power grid. Nest customers could then benchmark their energy usage against others in the community. Furthermore, the sense of shared purpose and the greater transparency and control give individuals greater incentive to share information and participate in energy saving initiatives.

This partnership between Big and Little Data can apply to almost any industry, from travel and financial services to health care and government. While companies build up their business intelligence teams and hire (Big) Data scientists, companies should also look to create services based on Little Data that empower their customers. These services would enable customers to pull information towards them when they need it, instead of just trying to figure out what message to send and when to send it. They would enable customers to make better decisions themselves, instead of trying to figure it out for them. This is a new way of thinking, and a new way of engaging customers. Perhaps we need a new generation of (Little) Data scientists to figure it out.

There is no doubt that Big Data will transform business. But in an age of connected and empowered individuals, precision targeting must be balanced with personal value. If you want to build loyalty, spend less time using data to tell customers about you, and spend more time telling them something about themselves.


Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.


Originally appeared on Harvard Business Review. Reproduced with permission from the author.

Three Steps to Generating Social Gravity

In a social age, people don’t like to be pushed. As described in my last post, top brands like Apple, Google, and Nike are using a new model based on pulling rather than pushing. They create a gravitational field that attracts customers into orbit around their brand.

This kind of social gravity isn’t just about how many likes you can get on Facebook. This is about enduring, meaningful, and authentic relationships with your customers and the people in their lives.

How can you shift from push to pull and create your own social gravity? With three basic steps: Purpose provides the Why; Platforms the What; and Partners the How.

1. Shared Purpose
The objective of Push marketing is to convince a customer to make a purchase. In contrast, the objective of Pull marketing is to achieve a shared purpose. At Sears Holdings, where I work, the Craftsman brand of tools and equipment has an orbit strategy for do-it-yourselfers. The Craftsman Experience studio in Chicago creates live experiences and professionally produced content to help members of the Craftsman community create and accomplish their DIY projects. The focus isn’t on the immediate purchase, but on achieving the shared purpose of creativity, craftsmanship and accomplishment. This shared purpose attracts existing Craftsman customers, and leads them to bring along their DIY friends as well.

2. Engagement Platforms
While Push marketers focus on products, Pull marketers focus on engagement platforms. These platforms are what engage customers outside the purchase process and deliver value beyond the products being sold. Some of the most well known engagement platforms are Google’s search engine, Apple’s iTunes music manager, and the Nike+ running community. Google, Apple and Nike don’t charge people for using these platforms. But they keep their customers in frequent orbit around the brand, and make it easy for customers to purchase a product, whether an ad, song, or shoe.

Engagement platforms are built from multiple layers working together. The identity layer recognizes the customer. The data layer exchanges information to personalize the experience. The relationship layer enables connection among the brand and community members. Finally, the value layer delivers benefits to the users.

One of the reasons why orbit strategies are becoming so popular is that social networks like Facebook, Twitter, and Google provide ready-made identity, data, and relationship layers. All you have to do is figure out the right engagement strategy for the value layer.

There are five types of engagement strategies that are particularly common.

a. Content, e.g. Huffington Post
b. Conversation, e.g. Facebook
c. Collaboration, e.g. Quora
d. Contribution, e.g. Kickstarter
e. Commerce, e.g. Groupon

These aren’t the only strategies. Pinterest, for example, has popularized a new category around curation. And don’t think you have to be a startup or media company. Kraft Foods has built a very effective orbit strategy around recipes, combining content, conversation, and commerce. And innovation firm PSFK uses curated content to generate gravity for its research and consulting business.

3. Collaborative Partners
Partners are a powerful way of amplifying your gravitational field. By combining forces, you can multiply the value of your service and bring in new constituencies. In addition, partners can add credibility. They reinforce that you are seeking to create value and build relationships beyond pushing products.

Apple’s platforms are integrally connected with partners, whether music companies for iTunes or developers for the App store. When IBM sought to engage mid-market companies, it partnered with GOOD to launch the GOOD Co. project. And Kraft Foods recently partnered with HSN to bring commerce to its recipe community.

Keep in mind that your own customers should be collaborative partners. Threadless sources designs for its t-shirts from its customers, and lets the community pick which ones to produce. And P&G sources new innovation ideas from outside the company through its Connect+Develop program.

There are many ways to create customer gravity. Start with a purpose both you and your customer care about, and for which you have something to bring to the table. Then create an engagement platform that creates value using one of the types of value mentioned here, or create your own. Finally, look for partners who can bring expertise, resources, credibility, and reach.

With purpose, platforms, and partners, you are ready to build social gravity. So stop pushing and start pulling!


Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.


Originally appeared on Harvard Business Review. Reproduced with permission from the author.