To Survive In The Networked Economy -Businesses Must Learn To Unlock The Power of Many
First, the Internet networked our computers. Then it networked us. Now it’s networking our jobs.
Today, most of us are part of the networked economy. Shared economy, collaborative marketplaces, on-demand, peer-to-peer — you’ve probably heard these terms many times in the last few years, all of which attempt to describe various ways in which the Internet has changed how business is done and are all part of a single trend. If you look closely, there is a common aspect between the major successful technology companies like Apple, Uber, Stripe, and Etsy: these are not just businesses providing services or building products — they are actually massive platforms that depend on third party stakeholders. The Internet has not only allowed companies to build platforms with greater ease and scale, but also made it easier to bring a network of people together using these platforms, like sellers, developers, and drivers.
Out with the old economy, in with the networked economy
The rise of platforms has revolutionized many industries and turned them into multi-sided networks, from media (readers and advertisers), to software (users and 3rd party developers), to services marketplaces like taxis, hotels, and more. Collaborative and shared economies leverage contracting or outside workforces to connect markets more efficiently. For example, APIs are a key strategy for companies like Facebook and Twitter, and they form a major competitive advantage, but they rely on third party developers to build off those APIs and make them successful — it’s external developers who make the platform vastly more valuable. In the same way, Google uses advertising and the Play Store as a platform to reach its market. Uber has its networked platform for drivers, and Airbnb for homeowners. Even the earliest stage tech companies and offline businesses like financial services, real-estate agencies and professional services are now seeking to tap into the network effects that arise from a platform strategy.
Businesses are relying on external stakeholders to enter the networked economy
These external stakeholders are a strange new breed of constituent — they are far from being your employees, but they are also not your customers or users: they are third-party developers, mentors, drivers, resellers, partners, affiliates, brand ambassadors, freelancers and contractors, business networks, shared-workspace tenants, artists and creators. In fact, such external stakeholders are so critical for businesses that consumers often deal with them more than the companies’ own employees! Users of AirBnb and Etsy will deal with hosts and artists more often than customer service reps based in San Francisco.
This is becoming an absolutely fundamental aspect of the new economy. Businesses as we know them are going through massive organizational changes in order to keep up with these networks of constituents. It’s no longer the company and the market but a three-legged stool, consisting of the company, the market, and the constituent network. New organizational structures and wider commitments to community management/relations are evolving to deal with this new reality — but the tools and strategies to ensure success are still extremely nascent.
Managing, engaging and interacting with these stakeholders is essential
These external stakeholders are a new, defining characteristic of so many companies: they are not a company’s employees, users, or audience. Often these types of stakeholders fall within the “operations” category of a business — but treating them as a commodity asset does a great disservice to their importance and they are so linked with the networked company’s bottom line.
For example, Etsy relies on people all around the world to create and sell their handmade goods and art on the site. Take a look at their S1, wherein they mention the word “community” 78 times. This refers to their community of artists: external stakeholders who make the site valuable to consumers. Similarly, WeWork’s CEO said the word “community” a dozen times on stage at TechCrunch Disrupt this year to emphasize the importance of their members and how different they are from simply being office tenants.
Regardless of what word is used, there is no question that companies are now dependent on managing, mobilizing, and retaining these external stakeholders. Building and maintaining stakeholders is important in order to generate lock-in, build trust, and better mobilize them towards desired actions that will impact revenue.
The challenge is that these people are affecting your business but are not your employees — so how do you manage them efficiently? Today, companies are turning to newly-empowered community management departments. However, these are not traditional community managers who work through social media or manage support portals. Instead, they are in charge of managing mission-critical relationships at scale, across massive networks of drivers, developers, creators, sellers and more.
We need a new paradigm for community management — Meet ‘Network Communication’.
With its new-found importance, community management is now an umbrella term that increasingly transcends departments and is tied to a company’s bottom line. Companies need tools and best practices to make the most of their external stakeholders, and older companies now need to adapt to the changing landscape and rethink how they manage their partners, resellers, and developers. This is such a new phenomenon that there are few theories and strategies for companies to manage outside constituents who are so tightly knit into the fabric of a company.
Here are a few best practices to get the conversation rolling:
1. Hire the right people to manage your external stakeholders
It might sound counter-productive, but after interviewing and working with so many companies on their community management efforts, I’ve found that the closest role that resembles managing external stakeholders is actually a volunteer manager. Think of it this way: your drivers or sellers don’t owe you anything. Sure, you help them make money, but so do five other companies in your industry. In addition, your stakeholders are dispersed and not focused on working for you full-time. An experienced volunteer manager knows how to retain and manage a network of part-time contributors at scale, while cultivating strong relationships and a sense of belonging. When you’re looking for your next head of operations or community manager, take a look at people with volunteer operations experience.
2. Treat your stakeholders as important partners
Your external workforce should not be managed as if they were part of your team, but they also should not be fed canned marketing messages. Speak to them like you would to a partner critical to your success. Understand why they are interested in a partnership, explore the proper cadence for interaction and communication, and provide them with the proper, highly responsive channels to speak with your team.
3. Pour resources into your external stakeholders: in many cases they are the face of your company
By turning towards a platform strategy, you are giving up a lot of control over your brand and reputation. However, if done right, this can be the best thing that ever happened to your business. By really appreciating your partners and showing them love and support, they will convey your messages to your customers in a more authentic way than you ever could. They will speak to your customers about their relationship with the company, and the customer will want to know that you treat your partners well. Help your stakeholders be loved by your customers: provide them with the assets they need to create brand love and build stronger relationships with your customers. Give them a pink mustache, access to perks and great events, or in-depth guides for how to provide great customer service. Once your customers love them, they will love you too.
4. Build leadership and mobility into the network
While you are faced with the challenge of managing thousands of constituents around 10+ countries, your partners are facing similar questions about how to grow their careers and their own personal brand. By giving them opportunities to lead local chapters, events, or topics, you can help scale and unlock their amazing potential. For example, Etsy has Etsy Local and Google has local developer groups. Over the long term, your external stakeholders may become so invested that they become full-time partners with a wealth of knowledge and experience to contribute.
That’s what it means to unlock the power of many.
Tell me about your own strategies for mobilizing external stakeholders in the comments section. The economy is changing and it’s about time that we start to understand what helps companies succeed in the new networked economy.