Thought du jour from Harvard Business School (motto: “There’s no B.S. like our B.S.!”)

Columbia Business School professor Rita McGrath studies innovation, corporate venturing, and entrepreneurship.  Her latest book is Discovery-Driven Growth (2009):

My biggest concern with the commercial model for social media . . . is that I don’t see how they are going to deliver complete user experiences in exchange for payments or advertising. I’ve written for a long time about the need for companies to create a complete “consumption chain” in order for their products or services to be successful. A consumption chain is the total set of activities a customer goes through in order to get their needs met, or their jobs done. When a link in the chain is broken or unfulfilling (or offers more than the customer actually wants), the business model breaks down.

Social media have some of the links in the chain covered perfectly. But they don’t make payment easy, delivery is unspecified, and there is no particular social benefit to buying from one party or another. On Amazon, in contrast, you expect to be sold something (it isn’t an interruption in a social conversation); they cover every link right through to final disposition; and it is easier to do business with them than to cobble together a solution from many different players.

Contrast the two experiences. Say you hear about a cool new something or other — say a handbag — from a friend on Facebook, or through a Facebook ad. If you want to buy the handbag, you have to visit the vendor’s site. Then find the model you want. Then dig out your credit card and enter a ton of information about shipping and payment. Then (probably) pay more for shipping, etc. The experience takes a lot of effort, and it’s fragmented. Shoppers are very likely to drop out somewhere along the way. Let’s take the same experience on Amazon. An image pops up saying, “People like you bought this handbag.” You click on the handbag. There it is. You click on one-click — there is your payment and delivery information. And if you are a “prime” member, there’s no delivery charge. It is easy and effortless, all the way through the entire purchase and delivery process. Facebook and other companies similar to it are a long way away from having something like that to offer advertisers. And of course, if the advertising on Facebook is truly engaging and interesting, why would an advertiser pay them to feature it?


2 thoughts on “Thought du jour from Harvard Business School (motto: “There’s no B.S. like our B.S.!”)

  1. Wow this is very insightful and makes one heck of a point! I know I’m always disappointed if I can’t find a book in audio version. I make the same statement using that example. I’ve always wished books would be marketed in all possible varieties – paperback, kindle, and audio. I’ve probably missed out on a lot of good books because they weren’t in my preferred method (audio)

    1. Dawn, I’m passing along this info to our local Indie Pub group. I really think audio is where most of us need to expand next.

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