posted by Lisa
For businesses, the lure of diving into social media can be irresistible – Facebook now has more than 500 million users, and Twitter now tops 200 million. But along with access to those millions of new customers comes the flip side of social media – risk. And because the risk occurs on platforms that are unfamiliar to many in top management, assessing and managing those risks can be problematic.
In the October issue of Risk Management magazine, alumnus Jeff Hunt (BJ ’84 PR) and UT Professor Bill Cunningham explore a few of the issues facing companies as they embark on a social media strategy.
In “Online, Your Are Your Reputation”, Cunningham and Hunt explore how “consumerism on steroids” and social media can damage a company’s reputation:
Now, nearly any risk-a product liability allegation, a poorly handled natural disaster, a financial problem, you name it – can hurt a company’s reputation. And while reputational risks may not feel as tangible to the board as traditional perils, they can be every bit as likely – and even more damaging.
Both Dell and AT&T, the examples cited, were nearly blindsided by unexpected groundswells from angry consumers. But lessons learned foreshadowed some of the keys to corporate survival in this new era of social media:
Active listening is paramount, and engagement is the new currency for securing customer loyalty.
In their second article IBM’S Delicate Social Media Balancing Act, Cunningham and Hunt detail how “big Blue” has unlocked the power of idea-generating “crowd sourcing” through internal IBM “jam sessions” on their internal network. IBM currently has 60,000 users on its internal social networking platform and a million daily page views on its internal WikiCentral.
IBM’s success at harnessing social media is no accident – a deliberate strategy by IBM senior management created a process that both recognized that social media was critical to success and was a risk, properly managed, worth taking. Cunningham and Hunt argue that the key takeaway from IBM’s story is:
…a comprehensive risk management approach recognizes both the risks and benefits of social media – managing the former without stifling the latter…. IBM’s intent… is to manage social media risks with the same goal in mind that it has when it manages all other risks: generating business value.
The entire set of articles on social media risk from the October issue are available on line here: More Media, More Opportunity, More Risk
William H. Cunningham is the James L. Bayless Chair for Free Enterprise at The University of Texas’ McCombs School of Business and the former chancellor of The University of Texas System.
Jeff Hunt is a principal and co-founder of PulsePoint Group, a management consulting and digital firm that specializes in crisis management and boardroom communications. He is a 1984 graduate of the School of Journalism at The University of Texas and a member of the College of Communication Advisory Council.