How to Lead in the Social Era

Nilofer Merchant, one of Steve Job's first employees, talks about her book on the changing rules of leadership.
President & CEO, Predictable Success
October 12, 2012

Since her business career started as one of Steve Job's earliest employees at Apple, corporate director and author Nilofer Merchant has had an enviable, front-row seat to the development of the new rules of leadership in the social era.

Companies like HP, Logitech, Symantec and Yahoo turn to her for advice on navigating the new rules of work. OPEN Forum recently sat down with Merchant to discuss her important new book, 11 Rules for Creating Value in the Social Era, and hear what she has to say about the state of leadership today. Here's an excerpt from that interview:

Les McKeown: What do you mean by the 'Social Era'?
Nilofer Merchant: It's the context for business in the 21st Century. In the Information Era, value was created through and by the organization itself. Today, in the Social Era, you can create value by connecting individuals who don't even belong to your organization.

A great example is Etsy, where individual artisans have a shared platform to sell their unique offerings, even though they don't actually belong to the parent organization.

LM: What's the connection between the Social Era and social media?
NM: Social media comprises a small sub-set of the Social Era—a set of tools we use to communicate better. And while that's important, business leaders are now recognizing that we can use social interactions in a much broader sense to create value in all parts of the business—HR, product development, distribution, marketing and sales.

A great example of this is what Microsoft has done with its Xbox Kinect controller— essentially a tool for people to interact socially by playing games together. It has become a vibrant platform for people like artists and roboticists. In itself, the Kinect handset has nothing to do with social media, but everything to do with the Social Era.

LM: Why is it important for business leaders to understand the Social Era?
NM: Because it brings new ways to scale and to create value. In the Social Era, the ability to scale is no longer a direct function of size. A company like Zynga, that makes apps like Words With Friends, can get to over 300 million users in 4 years by leveraging handheld devices (made my multiple other organizations) and Facebook's members.

The basis of value creation has also changed. No longer is value created only by large, single firms—instead, the cumulative impact of all these ways of being social provides the ability to scale through and with connected individuals. Organizations that get this are changing the way they create, deliver and capture value—and along the way, creating entirely new business models.

As an example, look at what TED has done with TEDx—in essence, allowing many people to create value by curating their own events (and video content) on ideas that matter.

LM: In a nutshell, what are you telling business leaders in this book?
NM: That you can—and should—redesign your organization to be faster and more fluid and in doing so, gain market power.

The core question I address is: Why do we keep thinking about things in old ways? For example, why do we need to have everyone inside one building to collaborate? Why do we insist people come to work at a set spot each day, instead of going to where they are most creative? Why do we define work as a thing people do to get a paycheck, rather than something we do to create value?

LM: What is the first step a business leader should take to start bringing their business fully into the Social Era?
NM: Well, once we accept that we must re-imagine what an organization can look like, the first step is to identify ways to use community—decentralized power—as a way to create value in the next-generation organization.

Look at what Apple has done for mobile developers, for example: An entire industry seemingly created and "given away" by Apple to other independent organizations and individuals now delivers $17.5 billion to those independent organizations and at the same time fuels Apple's sale of handheld devices to the point where it is now the largest company in the world.

The industrial era traditionally defined an organization's value as being the profits it generated internally, and suggested that the organization can then "do good" by involving others as charitable acts afterwards. That construct makes profits the core, and things like "purpose" and "meeting people's needs" are the frosting on the cupcake. But by finding ways to build value through community, "purpose" and "meeting real people's needs" stops being the frosting and becomes the core—a bigger, better cupcake.

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