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Thu, Oct 21, 2010

Ideas & Trends

Adam Smith 2.0: Social Media’s Power to Build Trust

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Guest post by Barry Libert, Chairman and CEO, Mzinga

If the last 10 years has taught us anything, it is that everything changes and nothing lasts forever, including high stock market valuations. Corporate leaders are resigning and no longer leading companies while traditional brands are merging or getting acquired.  This new “normal” is equally true of traditional management theories that have prevailed in business for the last 100 years.

Peter Drucker, the famed business guru, called management “the most important innovation of the 20th century.” It was well-justified praise for the last century, as industrial companies were forced to bring together people and capital to create products and services while reducing the cost of capital and related transaction costs.

In a socially networked world, such old school theories of “management”   are losing their steam while new organizational structures (crowd and open sourced) are emerging — and for good reason.

In fact, when Adam Smith first wrote his classic Wealth of Nations in the relatively simple world of 1776, he postulated that individuals would contract with each other to achieve their personal and financial needs — an idea that was well ahead of its time and more appropriate for today’s networked world.

But the infrastructure to make his vision a reality didn’t exist back then.  Thus emerged the industrial revolution, replacing Mr. Smith’s vision with the concept of the ‘managed corporation.’

The High-Speed Evolution of Management

Today, in an age when everyone is connected (1 billion people with mobile phones, 550 million Facebookers, 140 million twitter users, 150 million bloggers — you get the point), Adam’s Smith vision is finally becoming a reality: individuals are contracting directly with each other (via communities and social networks) to achieve their personal and financial goals (e.g. to be connected and recognized for their contributions) without ‘management’ as traditionally defined.

You see examples of it everywhere, everyday, as more and more people shy away from careers in traditional and hierarchical ‘managed’ organizations.  Monster.com highlighted this reality in its 1999 Superbowl commercial:

An Answer to a Growing Lack of Trust

In the years since that commercial aired, things have only gotten worse.  A recent NBC/WSJ poll revealed that trust in business and leaders are at a serious low point.

As business leaders, if we don’t acknowledge this shift in the employee and customer experience, we’ll continue to face employee apathy, customers who aren’t engaged or bear no loyalty to our organizations and investors who sit on the sidelines rather than being truly invested.

So what is the answer? By connecting people to each other to help achieve individual needs — personally, socially and financially — companies can prosper.

It is in every organization’s best interest to build a social nation of friends and followers who can help each other achieve their full potential and avoid the sentiments so well expressed in the 1999 Monster advertisement.

While Peter Drucker’s ideas about management may have been right for his time, the job of today’s leaders is to embrace connectedness, mastery of skills, and a clear sense of purpose.  It’s time to follow this new pathway or risk having your employees feeling left out, disenfranchised, and underappreciated.

As a leader, it’s your choice!

Read more from Barry Libert from the Monster Resource Center:

How Social Media Drives Employee Satisfaction and Customer Engagement

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About the Author: Barry Libert is author of Social Nation: How to Harness the Power of Social Media to Attract Customers, Motivate Employees, and Grow Your Business and has published five books on the value of social and information networks.

He is Chairman and CEO of Mzinga®, the leading provider of social software, services, and analytics that improve business performance. He can be reached at www.mzinga.com.

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