Few transaction costs = easy group formation = new corporate risk

Corporations default to functional silos, despite the efforts of most to recognise the horizontal cross functional nature of processes, the things that gets stuff done. This is because in the past, you required hands to move things around, make calls, stuff envelopes, travel, all adding to the cost of completion.

Individuals personal networks tend to also run  in silos, the football group, the school friends, workmates, and so on, but the demarcation is a bit more blurred than at work.

Social networking tools have further blurred the demarcation , and networks can go way beyond the face to face relationships of old, and those networks can be leveraged across many tipping points and considerable social energy can be built, simply by harnessing the dynamics of the group.

Corporations are coming around to this self-evident (if you happen to be under 35)fact, but they are largely run by people not engaged with social networks so the evolution is far quicker outside corporations than inside them. Remember the huge embarrassment of Nestle a while ago, in relation to use of non sustainable sources of Palm oil, embarrassment that could have been easily mitigated had someone in a senior position watched their own facebook site, twitter, or even listened to someone who was.

The formation of groups around a question, issue, or cause is suddenly quite easy, and for corporations adds a huge risk to their intangible assets, and they usually are blissfully unaware in the boardroom.

The risk can be mitigated, but it requires individual with the organisational power  to cede control of the details of “management” of the on line groups to individuals who are engaged in the processes, as the risks can emerge almost instantly, and requires instant response.

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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