The power behind social media

The power behind social media is not the tools. It’s not the hash tag, the update, the Zuckerberg or the follow. It is the evolving way we are approaching collaboration.

eBay created trust mechanisms such as public feedback that played an important role in its growth. But fundamental to its success, and the success of all sorts of crowd purchasing platforms is the diminishing trust of big brands to offer a fair deal, and consumers own self interest driving them to collaborate in groups with people they largely know nothing about.

Self interest is driving us to work together to achieve a better deal. Not solving our community's needs, although for some of us that is an important outcome. Adam Smith understood this in 1776, Ricardo in 1809 and more recently encapsulated in popular culture with Gordon Gheko's proclamation that 'greed is good.'

We know inherently that the crowd is wiser than us, that's why we naturally follow it. But we follow it for us, not for the crowd's sake. Social media and the commerce that has become associated with it comes from our own self interest. Which when you think about about it, and the language social media 'experts' use, that is quite an irony.

Is your Exec becoming obsolete?

A friend of mine asked me how they should engage their senior leadership team is social networking. I said tell them that ‘if they don’t get on board they will be obsolete in 5 years.’

This is of course is as ridiculous as the claims made around the turn of the century about e-commerce. It has in fact taken 15 years for e-commerce to threaten high street spending. There is no such thing as a high street retailer or supermarket without an integrated e-commerce infrastructure.

Before e-commerce, the same was said of corporate e-mail.  IT Director’s, as they were called then, said ‘why would every member of staff in say a bank or insurance company need access to email?’

I once said the same about text messaging (SMS). ‘Why would I need a mobile phone that can send a text message when I have a perfectly good pager service?’

New communications tools come, and they go. The issue for executives that want to lead well performing organisations is not whether they should engage with new technologies, but how, and social media is no exception.

I don’t know an Exec that doesn’t use email, text messaging or e-commerce, even if it’s only to collect an e-ticket at the airport. Social media is more disruptive to organisations than any technology to date, because it is social. Social media is about people and groups of people interacting more openly than ever before, while the boundaries of the organisation blur.

So I do think that Execs that don’t get social media will become obsolete, if not in this decade, then the next one.

A New Stimulus: Quantitatively ease my mortgage

As we are coming up to budget time and the UK economy continues to go to hell in a hand cart, I thought I would take a little time out to help Chancellor of the Exchequer, Gideon Osborne, get the economy going again while simultaneously winning some votes. I’m not going to list all the economic leavers, or opine on the theory of fiscal and monetary policy. 


I am suggesting just one way to put money in the pockets of families that will make a significant contribution to increasing aggregate demand and getting our economy moving again.

It’s a kind of quantitative easing that will not just work, but actually feel like it’s working.

A large number of my colleagues were just told they are likely to be laid off. As relieved as I am not to be directly impacted, I was laid off in December 2009 and also faced something similar about 18 months before that. But despite this, like many other white collar middle class homeowners I have done everything I can to make sure my mortgage is paid. We have sold our second car and settled for short, domestic holidays. We have scaled back every utility and every luxury. We don’t go out, we and we make do and mend.

While my gross salary has remained static since 2008, I estimate my net salary as reduced by around 12% in real terms. We have lost our family allowance and we have paid our increased direct and indirect taxes. Our credit rating is intact and we continue to be net contributors to the exchequer.

So now it’s time for our payback, and it won’t cost the Government a penny. The mortgage I have worked so hard to cover is provided by RBS. The bank that the Government holds around 80% of the shares on my behalf.  I have a fixed rate mortgage at around 5% because when we took it out we were curiously optimistic about the economy and thought interest rates could rise. I know, not the best decision with hindsight. If we were on the bank’s tracker rate we could be saving around £300 per month.

That’s around £7,000 per annum in gross salary we could have made available to us. However, to access this deal I would have to pay more than that in penalties. Now RBS and the other virtually nationalised bank, Lloyds HBOS, represent about 40% of the UK mortgage market. So imagine the aggregate demand that could be generated if people like me could simply remortgage, keeping the same term, but at a lower interest rate and without the penalties?

Now I’m not completely naïve, I know there are counterparties to my mortgage holding bonds etcetera. But it strikes me that buying their paper is a wholly more popular and real use for the £50 billion the Bank of England has just spunked on buying back Government debt form pension funds that they call quantitative easing.

And it doesn’t have to stop with these two banks. If the Government hadn’t shored these institutions up Barclays and HSBC would have gone the same way. I can’t think of a better way to offset the unpopularity of the bonuses of all banks than by rewarding those people that have done everything they can to keep their heads above water in one of the toughest economic environments for several generations.

Executive Pay Addiction

Smokers like to point to the calming effects of smoking, relaxing after long day with a drink and a drag - the satisfying puff after a lovely meal. But they also like to draw attention to the charging effect of smoking, how when driving long journey or fighting jet lag a smoke will help to generate some energy.

Until a friend of mine, a frequent ex smoker, drew my attention to how untenable this position is; I had not realised that my habit was not a useful habit with some risky side effects that will never catch up with me, but an addiction. Of course, with hindsight, it is ludicrous to think that an artificial stimulant can also work as some kind of calming influence. It’s just an addiction.

The first step in dealing with smoking addiction, for me, was to choose to fight it. Of course I had some great incentives, a new family and loving wife, but at the end of the day I had to choose to do it for myself. Part of that process of choosing to fight the addiction meant deconstructing the arguments for smoking. And the first one was, this drug does not solve anything, least of all the effects of stress or tiredness.

Those in our community that deny executive pay is excessive invoke ‘the global market.’ And why not, what could have a nicer ring to it than the market itself, and global one at that. After all, two-thirds of FTSE 100 companies are global operations, for whom the UK is a small part of their operation.  However, these same people also use the global market as the same reason why low wages are very low and high wages are disproportionately high. 

How can one overriding factor drive leaders of our largest organisations to have salaries 40, 50, 60 even 100 times higher than the lowest in their organisations, while simultaneously driving the gap between the two wider?

The same reason 10 million people smoke in the UK – addiction.