LinkedIn Executive Suggests B2B Vulnerability to Social Networks' Disruption at Chicago CMO Lunch

Other Surprises on Tap: LinkedIn Member Demographics Edge out Wall Street Journal and Business Week Readers’

At the BMA Chicago luncheon on November 6, 2008, Steve Patrizi, LinkedIn’s Director of Advertising Sales, led the event’s “Drilldown Session,” and graciously agreed to a “bottomless cup” Q&A session. This is the second installment of my coverage of the event, the first having reported on Patrick Crane’s keynote address. Look for my between-the-lines analysis and transformational opportunities after the reportage of his remarks.

On Imminent Disruption in B2B Marketing and Sales

• Ten years ago, Steve was selling advertising for the Wall Street Journal, and he sees analogous trends now: things are changing rapidly, even though it’s not obvious at first
• LinkedIn encapsulates numerous technologies that increase the options for connecting with people; people can now aggregate and congregate wherever, whenever, however, and their opinions are increasingly heard
• Brand is what a friend tells a friend in IT Toolbox or LinkedIn Answers
• B2B is more vulnerable to disruption than B2C because there are fewer customers, and customers are more likely to ask each other’s advice before buying
• B2B customers are discovering how easy it is to ask each other for advice, as LinkedIn and other venues make this very easy and maximize credibility
• LinkedIn’s member demographics edged out those of several business executive stalwarts, according to (CNBC) research: 42 years old, $109,000 average household income and 60% male.  They were considerably younger and had a higher household income than the Wall Street Journal, Business Week and several others

On Maximizing the Leverage of LinkedIn Profiles

• Leverage your own people, they are your best asset, and they represent your brand (more than your glossies); they are a natural bridge to customers and prospects
• Take an offensive stance and try to set the expectation that every employee have a LinkedIn profile
• He cited IBM’s Social Computing Guidelines for employees; most companies don’t offer guidance to employees, but Steve recommended that companies create their own “social computing guides”; however, don’t use a heavy-handed approach or try to control, don’t enforce it
• Recommendations are transparent, and you show your values when you write them for others
• Although Steve didn’t put it exactly this way, the gist was, “You are your connections”; if you want to get a sense of a person, see which connections you have in common with him/her
• Also interesting is when you view someone’s (“Ken”) profile, LinkedIn tells you (on the right side, midway down the screen) what other profiles people who had viewed Ken’s profile had viewed afterwards
• Don’t be afraid that employees with LinkedIn profiles will get poached by recruiters; employees are out there anyway, so focus on keeping them happy
• LinkedIn Apps are new in November, and they are designed to add value to the profile, reflecting a key strategy of making the LinkedIn Profile a differentiating factor in the service
• On your Profile, you can install apps that let you display your favorite presentations via Slideshare, your trips via Tripit, blog posts, your documents and others
• Unlike Facebook, LinkedIn is very discriminating when evaluating apps; apps have to add value to business productivity, so the bar is high; LinkedIn’s mantra is, “Let people get work done,” and LinkedIn is very sensitive to noise

On Using LinkedIn’s Advanced Features

• Use LinkedIn Answers to listen: relative to your business, what are people talking about?
• Ask yourself, “Who are the experts in my business?” Expertise is transparent on LinkedIn, and (although he didn’t put it in these words) you should treat the experts as you treat analysts now; what experts think and write on LinkedIn can have serious impact on your business
• Groups are very versatile; create groups of customers, accredited groups (for anything), President’s Club groups…
• Surveys are a new option on LinkedIn, and Steve demonstrated some impressive examples: unlike “normal” advertising, LinkedIn knows intense amounts of information about its members who respond to surveys (even though it does not disclose members’ identities to advertisers (companies paying for surveys)
• Polling is a related but distinct option for advertisers as well as direct advertisements
• In general, everyone is clickable in Linkedin, and that means s/he’s accountable
• Steve uncorked this quintessential Web 2.0 suggestion: in some cases, advertisers should give as a call to action, instead of a website, that company’s employees who are on LinkedIn; think about that a minute: especially for B2B, that’s a revolutionary idea
• Events is a new App that enables you to evaluate events based on who else is going, a classic network effect value proposition

Q&A

• Steve stressed that the underlying principle of LinkedIn is the trusted connection; be careful who you accept as a “trusted” connection; LinkedIn is increasingly boosting the value of sharing information among your connections, which increases the trust premium; the nice thing is, it’s easy and relatively painless to disconnect from someone (see Reclaiming Your LinkedIn Network)
• Responding to my question about introducing a feature analogous to Facebook’s “Pages” along with members’ ability to “fan” a Page, Steve said that they currently aren’t thinking that way, that they are focused on people, not companies; I can imagine, though, that some employees would like to endorse companies or products as well, which could be very powerful and lucrative for LinkedIn; I think it could work, given LinkedIn’s transparency: it would be really obvious if someone were shilling
• When an audience member (wasn’t me ,^) asked Steve whether LinkedIn recommended people to help companies to use LinkedIn, he repeated the company’s “hands-off” policy with consultants: LinkedIn doesn’t encourage or discourage consulting; they watch it and consider it part of the ecosystem (they’ve told me the same; this has been consistent over the last three years at least)
• Great suggestion: use Groups to “segment” your 1st level connections. Let’s say you’re an electrical engineer with 450 connections that are technically oriented, and you have a thing for opera. Maybe most of your connections wouldn’t appreciate your incessant opera questions, so you create a group and invite only the people who are interested. Groups now allow private discussions that are only visible to members of the group, and you control those if you’re the organizer
• Steve suggested that the company’s take on Recommendations is that if you have people who recommend each other, it can diminish the value of the recommendation. I want to learn more about the thinking there because the LinkedIn site itself encourages reciprocal recommendations (If I write one for you, when you receive it, the site will ask you if you want to “return the favor”). He also pointed out that recommendations are time stamped, and the more time that elapses between the recommendations (of people recommending each other), the better
• View photos of the event here, courtesy of BMA

Analysis

• Retweeting: B2B is more vulnerable to social networks’ disruption than B2C. This was the most far-reaching point Steve made and completely worth the day by itself—to people who got it and will act on it. It confronts a hidden assumption: that B2B’s late adoption of social networks equates to little impact. B2B has lagged B2C significantly in the adoption of social networks, but Steve’s argument was convincing that, once executives learn they can trust other executives in executive communities, they will adopt profoundly. It is only a matter of timing.
• My general advice to clients: already begin acting as if your clients already find each other and ask each other’s advice about resolving the challenge that your product or service addresses. This will sometimes prove more disruptive than anything you have experienced because online forums offer a far greater diversity of perspectives and solutions that may influence the client to substitute a completely different approach and solution.
• On the opportunity side of the ledger, LinkedIn Answers enables your product or service management executives to broaden their peripheral vision, but they must invest—and it doesn’t have to be a lot of time, but it should be consistent. Have your product team commit to answering and asking a given number of questions in a given time period.
• If you have been a casual member of LinkedIn, you may not have read between the lines regarding the profile and its link to marketing and advertising. This involves a couple of steps, so please bear with me:
  • I have no inside information here, but I’ve observed the impact of collaborative filtering on Amazon.com’s success since 1995 or so (for one, see 2001 Vision #8). In brief, collaborative filtering makes algorithmic “inferences” by triangulating among members’ transactions (if I like Django Rheinhardt and Beethoven, and I buy Zeppelin speakers, it may suggest Zeppelin speakers to other buyers of Django and Beethoven).
  • I don’t know this for a fact, but the greater the diversity of products, probably the more accurate the predictions because the more unusual the combinations; also, the greater number of transactions will undoubtedly improve the inferences.
  • Rich profile information, especially if appropriate meta-information is built around the data objects, could be used to represent decisions made by executives; in this way, LinkedIn might be able to get close to inferring decisions given certain situations; what do you think that would be worth?
  • LinkedIn, if the company succeeds in becoming the Swiss bank for executive profiles, will be able to give advertisers and marketing researchers unprecedented rich information, much more quickly and inexpensively than any other source; keep in mind LinkedIn’s demographics. I can easily imagine this when I look at polls and advertising. Do yourself a favor, pay attention to polls and think about the power of using them. In your mind, look at the depth of information LinkedIn can provide about the people who answered the polls.
  • Relax any privacy hackles: like Amazon.com and IBM’s Atlas, I’m sure the software removes any identifiable information, so privacy’s not an issue. Ask Steve, he’ll know or find out for you.
• In any case, Apps add significantly to the diversity and richness of profile information, which increases stickiness and change costs. I think LinkedIn has a good chance of becoming the destination for executive profiles. By extension, Patrick Crane’s remarks about LinkedIn’s intention to become a collaboration platform paint an interesting context for further exploration.
• To leverage your best asset, employees, you have to let them act like people. Although it’s easy to discredit because it’s so often repeated, the age of the few controlling communications and opinion is rapidly collapsing, and this is true in the context of “brand management” and “employee management.” Employees are free agents in all but name (more on this here, which invokes some interesting IBM research), and this fact helps companies to treat them as variable costs. But companies can’t have it both ways: they have to learn to love two-way mobility.
• Borrow a revolutionary (Silicon) Valley idea: redefine attitude and approach to employees by leveraging LinkedIn. When your company focuses on making the employee experience truly excellent, interesting things happen:
  • Employees like working at your company more, and they stay for the right reasons
  • When employees morph into alumni (BTW, have you ever noticed that companies always have more alums than employees?), and you have encouraged their use of LinkedIn, guess what happens? You have helped them to build a seamless bridge back to your company. Yes, some employees will go to companies you might consider competitive, but more will go to companies adjacent to yours in the value chain net—or to your clients. Wouldn’t that be awful?
  • Seen in this light, Steve’s advice to enthusiastically encourage the use of LinkedIn is generally good general business, but most companies will be doubly rewarded because alums become trojan horses that beget future opportunities when they use a third-party network like LinkedIn because they remain connected to you automatically. Note you only maximize this when you focus on making the employee experience truly excellent (so they want to make rewarding connections) and you trust that employees will do the right thing most of the time.
  • LinkedIn reduces transaction costs of letting employees flow into your company—and out. This will enable most companies to perform at a much higher level.
  • More on this in Using Social Networks for Process Innovation, which I presented at the Social Networking Conference in July 2008
• Highly related to this was Steve’s suggestion to link ads to your employees’ LinkedIn profiles. That sends a very strong message. It’s personal, but it also suggests that you can run highly targeted ads on LinkedIn. Steve, can ads parse links to a group of employee profiles rather than just one?
• I like the way that LinkedIn is approaching Apps; it reminds me of Apple’s intense focus on experience. This bodes well for LinkedIn as a company because it reflects that they are focused on executives’ experience. To succeed, they must build and maintain trust by appreciating their ultimate clients’ time sensitivity and focus.