Economist Magazine Article About Sites Like Failing Enterprise!

[FailingEnterpriseAdmin]

This is a very interesting article in the 2006-02-17 issue of The Economist, my favorite newsweekly (similar to Newsweek and Time, except a hundred times better). This article provides further evidence that Enterprise just completely does not "get" the Internet or the modern world.

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The blog in the corporate machine
Bloggers can be vicious, but they can also help companies avert disasterTHEY have always had their critics, but corporations are having an especially hard time making friends of late. Scandals at Enron and WorldCom destroyed thousands of employees' livelihoods, raised hackles about bosses' pay and cast doubt on the reliability of companies' accounts; labour groups and environmental activists are finding new ways to co-ordinate their attacks on business; and big companies such as McDonald's and Wal-Mart have found themselves the targets of scathing films. But those are just the enemies that companies can see. Even more troubling for many managers is dealing with their critics online—because, in the ether, they have little idea who the attackers are.

The spread of “social media” across the internet—such as online discussion groups, e-mailing lists and blogs—has brought forth a new breed of brand assassin, who can materialise from nowhere and savage a firm's reputation. Often the assault is warranted; sometimes it is not. But accuracy is not necessarily the issue. One of the main reasons that executives find bloggers so very challenging is because, unlike other “stakeholders”, they rarely belong to well-organised groups. That makes them harder to identify, appease and control.



When a company is dealing directly with a labour union or an environmental outfit, its top brass often take the easy route, by co-opting the leaders or paying some sort of Danegeld. Until a couple of decades ago, that meant doling out generous union contracts and sticking shareholders, taxpayers or consumers with the bill. More recently, the fashion has been for “corporate social responsibility”. This might involve spending money on a pressure group's pet project; or recruiting prominent activists to a joint committee, dedicated to doing good works.

In the blogosphere, however, a corporation's next big critic could be anyone. He might be an angry customer or a disgruntled employee—though that sort of tie to the company is not essential; nor does he need lots of industry experience or lengthy credentials to be a threat. All a blogger really needs to devastate a company is a bit of information and plausibility, a complaint that catches the imagination and a knack for making others care about his gripe.

Mike Kaltschnee's site, HackingNetflix.com, became a force to be reckoned with for Netflix, a video-rental outfit that delivers to people's homes. When Netflix said it was not interested in Mr Kaltschnee passing on questions from consumers, he posted the exchange online, hurting the firm's reputation among loyal customers. The company now treats him much more respectfully and his site has gained a large following.

Increasingly, companies are learning that the best defence against these attacks is to take blogs seriously and fix rapidly whatever problems they turn up.

One firm that could have saved itself a lot of trouble is Diebold, an Ohio-based firm that makes automated cash machines. After America's presidential election in 2000, which featured a vote-counting fiasco in Florida, the firm decided to expand a part of its business that made electronic voting machines by acquiring Global Election Systems (GES) in early 2002. The deal turned into a disaster when computer scientists and voting-rights groups educated the public about problems with machines such as those made by GES. The critics complained that GES's voting devices could not leave an audit trail because, among other flaws, they did not print paper ballots. By 2004 the mainstream print and broadcast media were also hammering away on this issue, leading several states, including Ohio, to reject GES's machines.

Evolve24, a consultancy which analyses corporate reputations and watches online trends closely, has used its blog-sniffing software to find out what was available on the internet before Diebold bought GES. It discovered that not only were a couple of voting-rights activists calling attention to the machines' drawbacks on their blogs well before the acquisition, but also that research papers highlighting the problems were available on technical websites. Diebold did traditional forms of due diligence before buying GES, such as verifying its financial health. But by ignoring the blogosphere, it failed to spot some crucial risks.

Although its response was much quicker than Diebold's, Kryptonite, a firm that makes high-priced bicycle locks, also learned the hard way how important blogs can be. In September 2004 word spread quickly through the blogosphere that U-shaped locks by Kryptonite and other firms could be picked, quickly and easily, using only the plastic casing of a Bic pen. Then somebody made a video showing how to do it, and posted it on the Engadget blog site, one of the most popular on the internet. After Kryptonite discovered the problem, it came up with a plan to take care of its customers and improve its locks. But Donna Tocci, Kryptonite's media chief, says that she now checks 30-40 blogs every day.

Not all company interactions with bloggers involve damaging criticism. Sometimes a careful look at what is happening online can help managers to avoid over-reacting. After the invasion of Iraq, when American consumers turned against all things French, a big French drinks company noticed that its brand names were popping up on boycott lists. But an analysis by BuzzMetrics, which specialises in scrutinising blogs and other online forums for corporate marketers, revealed that those who were pushing hard for a boycott tended to be “Budweiser drinkers”, who would not have been natural customers for the firm's wines and spirits anyway.


A hair of the blog
Many big companies have been looking eagerly for ways to tailor their advertising to specific groups of consumers. They have found that web logs and internet discussion groups, which bring together people of similar interests, can help them turn hot links into cold cash. But besides trying to get out their message, companies are also learning that blogs can provide early warning signs of potential problems.

They are increasingly turning to firms that can help them sort through the blogorrhea to find what they need. There is a lot to sift, considering that some 27m blogs are online. Last month, responding to growing interest in their services, BuzzMetrics agreed to merge with Intelliseek, another firm that specialises in analysing blogs for business. BuzzMetrics has ties to Nielsen, a media-research firm; Intelliseek has a clutch of former executives from Procter & Gamble, a consumer-goods giant.

Max Kalehoff, vice-president of marketing at BuzzMetrics, says that many of the firm's clients want it to analyse blogs so as to gauge the seriousness of bad news. Drugs firms, for example, want to know what questions are on patients' minds when they hear about problems with a medication. Car companies are looking for better ways to spot defects and work out what to do about them.

Steve Rubel, of CooperKatz, a public-relations firm, reckons that companies should also have a ready-made plan for influencing bloggers if a crisis does occur. Mr Rubel runs the firm's Micro Persuasion practice, which helps companies improve their marketing by using blogs and other conversational media. He recommends setting up a “lockbox blog” that is hidden behind an internet firewall, but can be made visible to the public at short notice. Any websites or video clips that companies might want to direct the public to in an emergency, for example, could be prepared in advance. Then, he likes to tell clients: “in case of emergency, break glass and blog.”

[formermaerac]

I too subscribe to the Economist as well as Barron's. Both are excellent publications, much better than some of the other trash out there!

As you can probably tell I work in finance. A much better paying and rewarding career than washing cars and selling CDW!

[Disgruntled ExERACer]

Originally Posted by FailingEnterpriseAdmin

This article provides further evidence that Enterprise just completely does not "get" the Internet or the modern world.
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Did you ever see "The Village"??? I won't ruin the "M Night Shamalan Super Secret Twist Ending" for those who haven't seen it but strangely...ERAC is the same way...instead of red flowers they have green Es.

Blog buzz helps companies catch trends
By Steven Levingston

The Washington Post

ConAgra Foods got an early warning from chatter on the Internet that the low-carb craze was fading. The huge food company, based in Omaha, Neb., seized the chance to promote an alternative menu — its Healthy Choice soups, entrees and lunch meats.

"By utilizing online message boards you pick up nuances in the marketplace — customer statements, thoughts — that enable us to distinguish whether something is a trend that has long-term impact or a fad that will be short-lived," said Nick Mysore, director for strategy and insights at ConAgra, which also produces Butterball turkeys, Chef Boyardee ravioli, Rosarita refried beans and scores of other products.

For companies like ConAgra, the individual opinions blasted off in cyberspace are becoming an increasingly powerful force. Together, they form the fabric of online word of mouth that can determine the hottest new product, make or break a TV show, or set off a customer revolt.

Eager to tap into the buzz, growing numbers of companies are turning to sophisticated new technologies that track what's said on Internet social networks, blogs, message boards, product review sites, listservs — wherever people congregate publicly online.

The comments are particularly valuable for measuring customer sentiment because they're gut-level and spontaneous.

"Internet word of mouth is extremely important," said Steve Rubel, a marketing expert and senior vice president at Edelman public relations. "You see what the most vocal consumers have to say about you and about your competitors — and they're saying it without necessarily knowing you're watching them."

Following online conversations is the latest attempt by companies to grapple with the growing clout of their customers. Empowered by the Internet, consumers can broadly express their skepticism of brand icons, demand the lowest prices and mobilize for action. In recent years, many companies have tried to influence consumers by generating their own favorable word of mouth.

But measuring sentiment expressed in cyberspace — whether provoked or not — has always been difficult. The high-powered new technologies aim to fill in the missing pieces by searching, tabulating and assessing Internet postings.

Chatter collection

To capture the chatter, Nielsen BuzzMetrics, a giant in the industry, uses software that collects hundreds of thousands of comments a day. The technology can scan for specific companies, products, brands, people — anything searchable. It can slice data into a range of categories to quantify the number of times a subject was discussed online, the individuals who mentioned it and the communities where it appeared.




The company, formed recently by the merger of BuzzMetrics and Intelliseek, also can assess the tone of opinions by analyzing writing style and even individual words used. For example, if a blogger is discussing a new sport-utility vehicle and says he loves it but isn't pleased with how it handles, the software is clever enough to score the posting as an overall positive with a negative on the handling.

By trawling in cyberspace, ConAgra sensed that consumer interest in portable snack foods is growing as people's schedules get busier. That's the kind of intelligence that helps guide expensive decisions on research and development of new products.

Spurred in part by remarks floating around the Internet, Mysore said, ConAgra is exploring possible new snack foods, which it won't discuss for competitive reasons.

As a food company that uses lots of chicken, ConAgra also scours the chatter online to understand customer perceptions and fears of avian flu and better plan its response should it hit North America.

"What kind of thought processes are consumers going through?" Mysore said. "As an organization, we are able to leverage that information to strategically create marketing programs to address that issue."

Companies that track online word of mouth emphasize that it is only one of many tools they use to assess consumer sentiment. Focus groups, surveys and other offline research complement information gleaned from cyberspace.

"If I were a company, I wouldn't necessarily make any enormous decisions based just on what people are saying on blogs or message boards, but it certainly can help point you in the right direction," said Tim Calkins, a professor of marketing at Northwestern University's Kellogg School of Management.

HP gets insights

Hewlett-Packard, the computer and technology company, lately has picked up from cyberspace that customers really hate leaving their computers at shops for repairs; far better, the company learned, is having technicians repair the machines in homes.

"What that makes us do is that when we think about investing more in that area, we say, 'yes, it's positive to do that,' " said Rickey Ono, business strategy manager at HP. "We drill into the individual comments, and it helps to justify our expenditure on in-home repair."

Even NBC's weak Olympics ratings were partly foreshadowed by chatter in the blogosphere.

A sweep of postings shows that conversations about the Olympics peaked around the time of the opening ceremonies, then fell off precipitously to just above a low hum right before the games began, according to an analysis prepared for The Washington Post by BuzzMetrics.

The survey, which measured the quantity — not the tone of the statements — also found bloggers posted thoughts about the hugely popular Fox TV show "American Idol" with just about as much frequency as they did about the Olympics.

Specific comments online offer a deeper glimpse into why viewers may have stayed away from NBC's coverage. "I hate the Olympics," said one blogger. "The Olympics are so boring and they disrupt my regular TV-watching schedule. So I hate them."

Substantial impact

Another touched on NBC's competitive troubles. The Olympics faced off not only against ABC's "Dancing With the Stars" but also the latest installments of "American Idol."

"Why am I posting about the Olympics anyway?" wrote a blogger. "American Idol is on tonight."

NBC's ratings were sharply lower than those of the last overseas Olympics.

Even a sports fanatic like Jill Manty, who ran an Olympics blog, had divided loyalties. She told her readers during the first week that she would skip NBC's coverage and instead tune in to "American Idol."

Her voice was just one in the nonstop conversation across the Internet. But in the banter, her lone opinion reverberates.

"It surprises me that it is possible to create something that can have that much impact on how people view what's going on in society," Manty said of her blog.