Chapter 8 Social Media Information Systems

Chapter 8Social Media Information Systems Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99258 chen@jepson.gonzaga.edu

“She Said WHAT?—On Our Facebook Page???” Negative customer comment on Fox Lake’s Facebook • User-generated content is double-edged sword • Deleting critical feedback problematic • Critical comments result from process problems • Learn to deal with negative feedback

Study Questions Q1: What is a social media information system (SMIS)? Q2: How do SMIS advance organizational strategy? Q3: How do SMIS increase social capital? Q4: What roles do SMIS play in the hyper-social organization? Q5: How do organizations use Web 2.0? Q6: How can organizations manage the risks of social media and Web 2.0? Q7: 2022?

Important Elements • 1. What is a social media (SM) and social media information system (SMIS)? • 2. Three organizational roles played by SMIS • Business Model vs. Revenue Model • 3. Hyper-social Organization and its two kinds of communities: Defenders of Belief and Seekers of truth • SM in the Value Chain Activities • 4. Three Types of business capital and How Do SMIS Increase Social. • 5. SM and Web 2.0 • Summary: Organizations in 1960s and 2022

Impact on Social Media Technology • The U.S. stock market crashed momentarily on Tuesday (April 23, 2013) afternoon after the Associated Press' Twitter account was hacked and a hoax tweet was sent out that suggested explosions at the White House had injured President Barack Obama. • The Dow Jones Industrial Average dropped about 150 points (more than $130 billion) in a matter of seconds before bouncing back when traders realized the tweet was false. And it wasn't just the stock market -- currencies, commodities and bond markets were also briefly shaken. • Twitter may have caused a flash crash, but the problem is not Twitter's. Any market so vulnerable to an errant tweet probably has bigger problems.

Q1: What Is a Social Media Information System (SMIS)? • Social media (SM) • Use of information technology to support sharing of content among networks of users • Social media enables people to form communities, tribes, or hives • Group of people related by a common interest • Social media information system (SMIS) • An information system that supports sharing of content among networks of users • Social media is the merger of many disciplines (see Fig. 8-1). We will focus o the MIS portion in this class

SMIS: Convergence of Disciplines Fig 8-1: Social Media is a Convergence of Disciplines

Three SMIS Roles • Three organizational roles played by SMIS: • ________________ • a natural human trait and is formed based on mutual interests and transcend familial, geographic, and organizational boundaries. • _________________ • Companies and other organizations that choose to support a presence on one or more SM sites. • ___________________ • Companies that operate the SM sites (e.g., Facebook, Twitter, LinkedIn and Google create the features and functions of the site) • Free to users; Sponsors may or may not pay a fee • Most earn revenue through some type of advertising model User Communities Social Media Sponsors Social Media Application Providers

Business Model vs. Revenue Model • Business model is the architectural configuration of the components of transactions designed to exploit business opportunities. • Revenue model refers to “the specific ways in which a business model enables revenue generation.” • Revenue mechanism is a key component of the business model because it provides a sustainable financial source for the business’ effort of innovation (Afuah, 2004). N

Business vs. Revenue Model Business Model Revenue Model Value _________ Value ____________ It can be realized through a combination of - subscription fees, - advertising fees, - transactional income (e.g., fixed transactional fees, referral fees, fixed/variable commissions, etc) It describes the way in which a company enables transactions that create value for all participants, including partners, suppliers and customers.

SMIS Organizational Roles Fig 8-2: SMIS Organizational Roles

Community/Social Media Site Relationship Fig 8-3: SM Communities

Social Media Sponsors Fig 8-4: Not a Casual Commitment

Five Components of SMIS Fig 8-5: The Five Components of SMIS

Q2: How Do SMIS Advance Organizational Strategy? • The relationship of IS to organizational strategy is (see figure below): • Strategy determines value chains, which determines (structured) business processes, which determines IS. • However, social media is by its very nature dynamic, its flow cannot be designed or diagrammed. • Therefore, we need to consider how value chains determine dynamic processes and thus set SMIS requirements. (structured & dynamic) Fig 3-1: Organizational Strategy determines IS

Two Kinds of Communities in the Hyper-social Organization that Are Important to Commerce (less on innovation or problem solving) Defenders of Belief 1. __________________ • Share a common belief and form their hive around that belief • Seek conformity and want to convince others • E.g. a group that believes that Google+ is far superior to Facebook will engage in behaviors to convince others that this is true. • Facilitate activities like sales and marketing • The communities are not effective for activities that involve innovation or problem solving. • Form strong bonds and allegiance to an organization 2. _________________ • Share common desire to learn something, solve a problem, make something happen • Share a common problem, but not a common solution to that problem. • Such tribes are incredible problem solvers and excel at innovation. • Seldom form a strong bond Seekers of the Truth (more with innovation and problem solving)

Competitive (_____) Advantage Figure (Extra) Business Level: The Value Chain N

SM in the Value Chain Activities The figure summarizes how social media contributes to the five primary value chain activities and to the human resources support activity. Fig 8-6: Social Media in the Value Chain Activities

Crowdsourcing • Definition: • 1) Taking a task traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people, in the form of an open call • 2) The dynamic SM process of employing users to participate in product design or product redesign. • E.g. eBay often solicits customers to provide feedback on their eBay experience. • Other examples? • Used by companies to increase productivity, lower production costs, and fill skill gaps. • Can be used for a variety of tasks. • Companies do not have control over the people doing the work. • Has cost more than traditional methods.

Social Media and Manufacturing and Operations • Crowdsourcing • The dynamic SM process of employing users to participate in product design or product redesign. • E.g. eBay often solicits customers to provide feedback on their eBay experience. • Other examples? • Enterprise 2.0 • The application of SM to facilitate the cooperative work of people inside organizations. • Folksonomy • A content structure that has emerged from the processing of many user tags. (tags are organized into structures) • SLATES (see Fig. 8-7) • Workers want to be able to search for content inside the organization just like they do on the Web.

Fig. 8-7: McAffee's SLATES Enterprise 2.0 Model

Q3: How Do SMIS Increase Social Capital? • Capital • is defined as the investment of resources for future profit (Karl Marx) • Types of business capital • _________ capital (traditional definition): investment into resources such as factories, machines, manufacturing equipment etc. • _________ capital: investment in human knowledge and skills for future profit. • _________ capital: the investment in social relations with the expectation of returns in the marketplace. Physical Human Social

What Is the Value of Social Capital? • Social capital adds value in four ways (from the relationships in social networks): • ______________ • Provide information about opportunities, alternatives, problems, and other factors important to business professionals. • _____________ • Provide an opportunity to influence decision makers in one’s employer or in other organizations who are critical to your success. • Social credentials: a group of contacts • Personal reinforcement (professional’s image) • Value of social capital add to business (in three factors) • 1) number of relationships, 2) strength of relationships, and 3) resources controlled by those related. Information Influence

How Do Social Networks Add Value to Businesses? • Historically • organizations created social capital via salespeople, customer support, and public relations. • Today, progressive organizations: • Maintain a presence on Facebook, LinkedIn, Twitter, and other SN sites. • Include links to their social networking presence for customers and interested parties to leave comments. • To understand how social networks add value to businesses, consider the following elements: • 1) number of relationships, 2) strength of relationships, and 3) resources controlled by “friends”.

Fig. 8-8: Social Media (SM) Communities – Using Social Networking to Increase the Number of Relationships What term is related to? Network __________

Network Externalities • Definition - The phenomenon whereby a service becomes more valuable as more people use it, thereby encouraging ever-increasing numbers of adopters. • Network effects • While the word-of-mouth method is often more influential in the beginning, analysis may play a significant role later in the cycle. In other words, you may adopt a service initially because someone you know uses it; later, you may adopt a service because "everyone" uses. • Network Externality offers a reason for value derived from plentitude • IT Role?

Using Social Networks to Increase the Strength of Relationships • Ask them to do you a favor • Frequent interactions strengthen relationships • Size of assets controlled by those in relationship Strength of a relationship is the likelihood that the entity (person or other organization) in the relationship will do something that benefits the organization.

Connecting to Those with More Assets There is no formula for computing social capital, but the three factors would seem to be more multiplicative than additive. Stated in the mathematical terms, the value of social capital is more in the form of: Social Capital = Number of RelationshipsxRelationship StrengthxEntity Resources Than it is: Social Capital = Number of Relationships+Relationship Strength + Entity Resources This multiplicative nature of social capital means that a huge network of relationships to people who have few resources may be lower than that of a smaller network with people with substantial resources. Furthermore, those resources must be relevant to the organizations. For example, students with pocket change are relevant to Pizza Hut; they are irrelevant to a BMW dealership.

Q4: What Roles Do SMIS Play in Hyper-social Organization? • Social capital is an economic perspective on social media. • According to hyper-social organization model, using social media in an old-style organization-centric manner is ineffective. • The true value of social media can only be achieved when organizations use social media to interact with customers, employees, and partners in a more humane, relationship-oriented way. • It means that rather than sending messages that attempt to manage, influence, and control, hyper-social organizations create relationships in which both parties perceive and gain value.

Four Pillars of Hyper-Social Organizations Hyper-social organizations is an organization that uses social media to transform its interactions with customers, employees, and partners into mutually satisfying relationships (marketing-oriented) with them and their communities. become Consumers  Humans (defending beliefs or seeking the truth) Market Segments  Tribes (Channels transmit data, Networks transmit knowledge) Networks Channels  (structured process to dynamic process: complicated) Messiness Structures & Control  by Gossieaux and Moran

SMIS and SEAMS Activities SMIS play a key role for implementing the SEAMS process. 1. Sense: determine what communities and identifying their structure, goals, and dynamic 2. Engage: engage with those communities by creating relationships 3. Activate: design applications according SOA principles greatly facilitates this task 4. Measure: do not overlook the active lurker 5. Store Tell: develop stories about their interaction with the communities.

Q5: How Do Organizations Use Web 2.0?

Web 2.0 and Beyond • Is Web 2.0 a “Technology Evolution” or “Business Evolution”? • Web 2.0 (5:19) • http://www.youtube.com/watch?v=nsa5ZTRJQ5w&feature=related • The Future Internet: Service Web 3.0 (5:47) • http://www.youtube.com/watch?v=off08As3siM • Eric Schmidt, Web 2.0 vs. Web 3.0 (1:51) • http://www.youtube.com/watch?v=T0QJmmdw3b0&feature=related • Web 1.0 vs. Web 2.0 (2m20s) • http://www.youtube.com/watch?v=YXFYkbQRgY4 • What is Web 2.0? (3m) • http://www.youtube.com/watch?v=0LzQIUANnHc • Social Networking Sites Own You (1:36) • http://www.youtube.com/watch?v=LPffYaKc5f4&feature=related • The dark side of social networking (2:03) • http://www.youtube.com/watch?v=KK-8XO7lVSw&feature=related

What is Web 2.0? • "Web 2.0" refers to the second generation of web development and web design. • It is characterized as facilitating communication, information sharing, interoperability, user-centered design and collaboration on the World Wide Web. It has led to the development and evolution of web-based communities, hosted services, and web applications. • Examples include social-networking sites, video-sharing sites, wikis, blogs, mashups and folksonomies. • Web 2.0 is the business revolution (rather than technology revolution) in the computer industry caused by the move to the Internet as a platform, and an attempt to understand the rules for success on that new platform. Source: http://en.wikipedia.org/wiki/Web_2.0

Web 2.0 is a loose grouping of capabilities, technologies, business models, and philosophies that sets e-commerce apart from traditional software processing. This chart compares the two. • Note that in this text, Web 2.0 and SM are considered to be different because SM, and especially hyper-social organizations, represent a difference in the structure of the relationship between organizations and humans. Fig 8-12 Comparison of Web 2.0 with Traditional Processing SaaS

Software as a (Free) Service (SaaS) • Software as a Service, part of the Web 2.0 movement, changes traditional thinking about how software is created, provided to users, and used to create value. • Its characteristics include: • Uses thin-client programs in browsers • Bulk of processing occurs on servers throughout the Internet • Companies rely on advertising or revenue rather than license fees. • Perpetual beta software because features and functions constantly changing • SaaS companies clash with traditional software vendors that rely on traditional software programs to provide the bulk of their revenue. • Relies on viral marketing. Users spread word about its virtues rather than the company that provides it. • More a Web 2.0-based site is used, the more value it attains

Testing of New Features, Web 2.0 Style

In the Web 2.0 World • No traditional marketing  viral marketing • Value of site increases with users and use • Organic user interface and mashups(e.g., Google My Maps) – an output from two or more Web sites is combined into a single user experience). • Participation and ownership differences • Traditional Web sites are about publishing • Web 2.0 is about participation • Traditional Web site lock down all legal rights to content • Web 2.0 sites lock down only some rights

Example of a Mashup: Google’s My Maps

How Can Businesses Benefit from Web 2.0? • Advertising is specific to user interests. Two popular programs from Google are: • AdWords in which advertisers pay for particular search words. • AdSense in which Google inserts ads on a Web site that match content on site. When someone clicks on the ad, Google pays site owner a fee. • Mashups • Mashing content of multiple products • Providing social networking services that connect people with similar interests • Providing mashups between a business and its partners which combine content of their products. Watch a movie, see a piece of jewelry you like, click on a link, and purchase the product.

Q6: How Can Organizations Manage the Risks of Social Media and Web 2.0 Applications? • Social media and Web 2.0 represent a revolution in the way that organizations communicate. • Twenty years ago, most organizations managed all public and internal messaging with the highest degree of control. • Today, the new model in progressive hyper-social organizations is that employees are encouraged to engage with communities and, in most organizations, to identify themselves with their employer while doing so. • Two risks are from this participation: • Risks from employee communication • Risk from nonemployee, user-generated content (UGC)

Managing the Risk of Employee Communication Hyper-social organizations should develop and publicize a social media policy, which is a statement that delineates employees’ rights and responsibilities. Intel’s six guiding principles to employees: 1. Stick to your area of expertise. 2. Post meaningful, respectful comments. 3. Pause and think before posting 4. Respect proprietary information and content, and confidentiality. 5. When disagreeing with others, keep it appropriate and polite. • Know and follow company code of conduct and privacy policy.

Fig. 8-15 : Intel’s Rules of Social Media Engagement Two major elements in the list: 1) Transparency and truth, 2) Open and above board That is, if you make a mistake, don’t obfuscate; instead correct it, apologize, and make amends. The SM world is too open, too broad, and too powerful to fool.

Managing the Risk of User Generated Content (UGC) • User Generated Content (UGC) is the essence of SM relationships. • Major sources of UGC problems: • Junk and crackpot contributions • Inappropriate content • Unfavorable reviews • Mutinous movements

Responding to Social Networking Problems • Once such content is found an organization must have a plan for creating the organization’s response. Three possibilities are: • ______ it • If problematic content represents reasonable criticism of the organization’s products or service. • ________ to it • If the problematic content has caused the organization to do something positive as a result. • _______ it • If the problematic content is obscene or inappropriate A sound principle in business is to never ask a question to which you do not want to answer. To extend that principle to SN: “Never set up a site that will generate content for which you have no effective response.”

Q7: 2022? • GPS devices in consumer products? • How to harness employee social behavior and partners to foster company strategy • Employees craft their own relationships with their employers • Employers provide endoskeleton to support work of people on the exterior

Summary Organizations Organizations were the exoskeleton around employees. Employees 1960s Organizations Organizations Employees Organizations will be endoskeleton, supporting the work of people on the exterior.. 2022 Organizations Employees

End of Chapter 8

Chapter 8 Social Media Information Systems