Harvard Business Review

Boardroom Lessons from a Social Media Misstep


Posted on Harvard Business Review: August 12, 2011 9:55 AM

Board members need to understand the factors that impact their businesses. Economics, politics, and sector shifts are all vital issues on the agenda in the boardroom. But the agenda needs to keep pace with what is influencing business, and amongst the things that board members need to fully appreciate is the growing influence and power of social media. It is not just about political uprisings any more.

Let me illustrate with a real world experience that has confirmed some of the discussions I’ve been having around the boardroom table:

On the morning of Monday, Aug. 1, I woke up to a Groupon offer in my mailbox. The headline was “Fatboy Buggle Up Beanbag 60% Off”. I’m a big fan of Fatboy’s offbeat beanbags — we have several in our house — so I clicked through to see more. But looking at the website, and clicking through to the supplier, I didn’t see any reference to the Fatboy brand. Further examination led me to realize that this wasn’t a real Fatboy, but rather a knockoff.

Usually I would simply delete the email, but it really made me cross. So, for the first time in recent memory, I wrote two tweets about a consumer issue: The first: “Is it false advertising if @Groupon_UK sends email clearly stating @Fatboy_original Buggle Up Beanbag 60% off, clicking thru it is knockoff?” and the second: “Clearly states Fatboy Buggle Up Beanbag for #89 from ILocal Furniture in @Groupon_UK email, but then BigDaddy Beanbag on @Groupon_UK site”. Both were posted early in the morning.

I might have left it at that, but I began to wonder if there were any of the consumer advocacy agencies on Twitter, so I tracked down the Office of Fair Trading and I discovered the existence of Which? Conversation, a community website run by Which?, a UK consumer organization. I sent a follow-up tweet to both. A few people who follow me online joined in with their thoughts, including a patent and trademark attorney, and some other knowledgeable consumers.

Mid-morning, Groupon’s Twitter team tweeted back that “We can confirm this deal is legitimate, if you have any question please call…” They clearly had not realized the true seriousness of the issue. You can read the details of how the day progressed on Which? Conversation’s website. It turned out that the first couple of tweets that I sent in the morning had set things rolling: Fatboy’s lawyers got in touch with Groupon; Which? was not just in touch via Twitter, but actually called Groupon over the phone.

In the end, Groupon withdrew the deal, refunded the customers (which set off further complaints about the time it took for the refund to process), and wrote an apology on their website, and responded to the story Which? Conversation wrote on their website. All of this was done by close of business the same Monday.

With one tweet, I was able to link up all the impacted and potentially useful organizations: Fatboy, Which?, and the Office of Fair Trading, and let them get on with addressing the issue. Except for decent Klout and Peer Index ratings (which I’m not even sure any of the parties knew), I was essentially any person on the street. I had no particular pull, no previous interaction with any of the parties, am not even a member of Which?, and to date have never even spoken to anyone involved on the phone.

What is the lesson we can take away as board members?

With the growth of social media and the barrier to entry for points of expression getting lower every day, anyone can start a movement or write about their concerns, and if it captures the attention of enough people, it can quickly spread. It doesn’t require a mainstream newspaper taking up the cause either, so it changes the public relations dynamic as well.

For organizations like Groupon, a reputation for integrity and fair trading is much of what their business is predicated upon, especially now that others are nipping at their heels in the world of discount deals and looking so carefully at their corporate structure as Groupon prepares for its IPO.

Social media is a frontline service. It is not a place where you can funnel people into siloed areas via “choose option 1, 2, or 3″ telephone lines. It encounters a multiplicity of queries be it marketing, customer service, legal issues, and more. It therefore should be managed by someone who is empowered in the organization, with the authority, or access to someone with authority, to make things happen in a decisive manner. Also, though this example is a customer issue, the influence and speed of social media touches a broad array of stakeholder related issues, be it a community rising up about an oil spill or unearthing poor labor practices in the third world. No sector is immune.

The more companies operate at a distance, where brands are based on reputation and documented actions, the more companies need to respond in a transparent way. It is not only for the sake of accountability but it also helps to enhance a sense of trust and reliability. In other words, we need to show our math.

As a board member, by asking the question knowledgeably and bringing my experience and expectations as an end user or consumer into the boardroom, I help shape the agenda for the company and help ensure the company is future proofing itself.

The board is not responsible for putting the mechanisms to address this issue in place that is the role of the executive team. But we are responsible for asking the questions about how the company is integrating this new factor into the business, and harnessing it in positive and powerful ways. Is the company addressing the issues of the increased expectations of speedy response? Does it understand the power of opinion that can be quickly massed? Is the company using social media as a means to receive as well as transmit data? We as board members are also responsible for knowing if the answers we are given ring true.

If a couple of savvy tweets can do this, then imagine what a sea of tweets can do. That’s the power of social media and we need to address it in the boardroom now.

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Marcus is the founder and CEO of Marcus Venture Consulting and serves as a non-executive independent director on a number of boards.

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