Pureplay Report: Advisory & Services Firm Social Business Adoption 2012

Pureplays address social business as transformation by definition because they have been launched to address emerging market needs that established players either do not yet understand or have yet to organize to address. Moreover, Pureplays are not adding social business to their existing services; they have been formed to practice social business. They are a small cohort in this research survey because they were constrained to social business and transformation as were advisory firms in other categories.

Pureplay firms are often smallish startups, so they are quite limited in some areas when compared to established legacy firms as in this research survey. From a market and client perspective, Pureplays represent a vital part of the market and can offer unique capabilities; however, clients need to approach them with “eyes wide open” because the way they serve clients varies considerably.

There are thousands of social media advisory Pureplay firms that are focused on marketing and promotion. Pureplays’ capabilities are largely colored by their founders’ backgrounds. Dachis Group, SideraWorks and SocialxDesign directly address social business as transformation. StrawberryFrog is an outlier in that is was founded in 1999, but it approaches transformation from a very social perspective. Its overall focus is creating “social movements,” but it’s a global firm with a fairly broad set of services. It does show up in social business and transformation searches, hence its inclusion here.

Advisory and Services Firm Social Business Adoption 2012 is a research survey that evaluates and quantitatively ranks the maturity of agency and consultancy social business practices. The survey ranks Strategy firms, Big Four, Marketing/Advertising/PR agencies, Analysts, Enterprise I.T. firms and Pureplays on their social business practices, service offerings and leadership—specifically according to their relevance for leading client organizations’ transformations to more human entities that are grounded in listening and responding, not marketing.

Capabilities

Social business Pureplay firms are focused in the middle of the Social Business Life Cycle. Their websites, like most advisory firms studied, are short on specifics on their social business services, but their message is social business with a transformational message, and several explicitly address culture change.

As do all boutiques, Pureplay firms have varying capabilities as a function of their founders. According to the use case, I assessed them based on the facts given or observed.

• Feasibility is a comprehensive assessment of the adoption of social technologies by a client’s stakeholders as well as certain aspects of the client organization. The Pureplays studied presented their services in the context of projects, not the enterprise. No firm showed that they understood the importance of engaging specific stakeholders to increase trust and business, although they mentioned this in passing. Their firm category has a capability higher than None, lower than Low.
• Strategy focuses on identifying the optimal social venues in which to engage, determining the client’s highest impact assets and designing pilots to execute the strategy. Firms conduct granular analysis of social venues, stakeholders’ social actions and client assets and business processes. A valuable social business strategy requires strong knowledge of social business practice, and Pureplay firms exhibit relatively high levels of social business practice. They have a Medium capability because their focus is organizational change and they claim to address the life cycle.
• Pilot involves guiding clients’ execution of social business strategy, and Pureplay firms have a considerable experience in social business practice. Dachis, Sidera and SocialxDesign partners were all interacting publicly in meaningful ways, and firms used social platforms seamlessly. Their lack of specificity when describing their services prevents them from scoring higher than a Medium capability.
• Scale focuses on forging mature social business programs by expanding Pilot; however, its requirements for expertise are even higher since the effort is more mature and the investment higher. Scale requires a higher order management consulting expertise and was not addressed by any Pureplay firm, but since they are strong in social business practice, they rank Low, not None.
• Integrate evaluates mature business processes in light of social business and integrates them or replaces the mature process with a social business process. The competency required is shared between social business and legacy, and Pureplay firms show little higher order consulting expertise, so they rate None.

Overall Score Distribution

Social business Pureplay firms have high scores in Practice as a group, coupled with low Leadership scores. Since Leadership results from thought leadership, marketing, public relations and overall reputation, it is difficult to imagine a Pureplay firm with high Leadership scores because they lack the infrastructure. This, along with high Practice scores, is one of Pureplays’ key defining patterns.

Dachis, Sidera and SocialxDesign have Practice scores within three points of each other. StrawberryFrog does not fit the model in several ways: it was founded in 1999, but it positions itself as a firm that “creates cultural movements,” which lies at the heart of social business and transformation. The firm also has an explicit service offering that I expect to go mainstream in a big way, “Cultural Anthropology & Research.” Another Frog difference is that it presents itself as an agency. I include it in Pureplays because it is focused on deep understanding of stakeholders, whom it seeks to motivate and support in collective action. Its social context is brand, but its skills could be applied to enterprise social movements, too.

Dachis Group was one of the first social business Pureplay firms and has seen several social business thought leaders pass through its doors. Unlike the others, it is venture-backed, which undoubtedly affects its business strategy and focus on applications, not services. Dachis has innovated a “Social Performance Monitor,” which purports to use numerous quantitative metrics to assess the effectiveness and maturity of social business investments. It also offers “Brand Performance Reports,” an analytics service, and “Social Brand Strategy & Execution.” However, its site would be more compelling if it offered more specifics about its services. It has a strong blog.

SideraWorks is laser-focused on social business and as organization transformation enabler. Its Overall score edged Dachis by a point due to its relatively detailed description of social business services that addressed many parts of the Social Business Life Cycle. Although founded in 2012, the firm has a relevant blog with good interaction. Based on my analysis of its site, firm principals understand the social-business-as-transformation proposition, but its services seem to be mostly training and seminars, which may indicate a lack of depth in its management consulting services.

SocialxDesign was also founded in 2012 as a spinoff of PR firm Eastwick. It presents itself somewhat more like an agency, but its focus is clearly on designing organizations to unlock the sociality that’s enabled by digital social technologies. As with other advisory firms, its services have scant descriptions, but they address strategy and execution. SxD explicitly states that the firm will execute the (social business) plan. Like other Pureplays, this holds some weight since the firm shows it can use social technologies well and founders have significant experience.

StrawberryFrog might be termed a “social agency” because its website and services are designed in the agency mold. However, its raison d’être is creating social movements, not producing, delivering and managing content as most MAP firms do. Frog lost points relative to other Pureplays due to the use case, which is social business transformation. As an agency, it isn’t explicitly focused on organization, but brand. It features a playful engagement model: “Ready, Set, Leap.” Notably, it lost important Practice points due to a weak blog for this use case. Frog uses Tumblr, which lacks categories, tags and comments. It presents numerous examples of its work that include some specifics. Finally, Frog had very low Leadership scores, even though it has existed since Web 1.0; its messaging and positioning clearly is not transformation.

Recommendations for Pureplay Clients

?As reflected by analysis under Capabilities and Score Distribution, Pureplay firms have uneven capability in social business. Dachis has some interesting intellectual property around metrics, Sidera has excellent focus but limited services, SxD appears to address the middle part of the Social Business Life Cycle fairly well. Here is my guidance for considering a Pureplay partner for social business initiatives that emphasize organization transformation.

Engaging a Pureplay Firm for Social Business

• When considering a Pureplay firm, it is critical to be specific about your goals and requirements since capabilities of Pureplay firms tend to be unusual and uneven. Practice scores, for example, show that Pureplays’ Top3 outscored the Top3 scores of all other advisory firm categories. Pureplays walk the walk, which is sorely lacking at other firm categories.
• Pureplays understand social business as transformation, but they may lack the depth to guide organizations’ transformation across the Social Business life Cycle. When considering a Pureplay firm, you will need to mitigate that risk with rigorous due diligence. As with all professional services firms, your strongest determinant of success is the team you have, not the firm. With Pureplays, the team may not be much bigger than the firm, depending on the size of your engagement.
• Pureplays are most likely to practice leading edge social business techniques. Due to their small size, they adjust their approaches and services quickly as a category. Be ready for this, and use it to your advantage.
• While Pureplays’ messaging was on-point, their descriptions of social business transformation services were only incrementally more compelling than top ranked Strategy, Enterprise I.T., Big Four, Strategy and MAP firms. The reader could interpret this as the firms’ lack depth, or their “services” are changing too quickly to make descriptions practical.
• Firms’ published Point of view, Practice definition and thought leadership are important signals of firm organizational commitment. As the Capabilities section indicates, Dachis, Sidera and SxD can address the Strategy and Pilot phases of the life cycle, although you should assess their depth in these areas.
• Pureplays excel precisely at the weakest point of most other firms, humanness and sociality. Each advisory firm category had at least one or two firms with strong Practice scores, but Pureplays as a category are strongest.
• There is more awareness of sociality in Pureplays than at any other firm category. Humanness is something people “practice” largely unconsciously, so it represents implicit knowledge and skills. To leverage its power, organizations and individuals must make it explicit to speed their learning process, so Pureplays have an edge here.
• Early adopters that practice social business and have explicit knowledge of humanness are your best leaders. Look at Pureplays’ principals’ blog posts: does a healthy portion deal with humanness, relationships, trust and sociality? My analysis indicated that all Pureplays had relatively strong native abilities.
• This research survey’s Practice score is much more valuable than its Leadership score because it’s a better determinant of the best advisors; it houses the lion’s share of differentiation.
• Keep in mind that one of the biggest risks of social business is companies thinking they are taking advantage of social technologies when they are not. The Pureplays studied would be less likely to lead clients astray on this point, based on my analysis of their messaging and services. Many of the social media early adopters who emblazon the covers of publications and conference podiums have succumbed to this pitfall. Social media is relatively empty calories when compared to building relationships.
• Most important, own your organization’s journey, don’t abdicate to any advisor. Pureplay firms have narrow capability in social business transformation, so they could be valuable partners if the team were right for your needs and you plan for their weaknesses. As Score Distribution indicates, think to use Pureplay firms during Strategy and Pilot, where their capabilities resonate strongest with the Social Business Life Cycle.

Beware These Risks

• Since Pureplays are strong in sociality, the rarest competency, their principals are very mobile, and their depth of services and client organizational knowledge is questionable. You can mitigate the risk that a large part of your team walks before the end of your engagement by addressing in your consulting services agreement.
• Pureplays are likely to be oriented to marketing and PR and can be limited in their knowledge of accounting, finance, I.T., H.R. and other enterprise functions.
• Pureplays’ services delivery methodologies may not be formalized, so you may find variance when hiring them for similar engagements several months apart. This may not be a bad thing, but be aware of it. Pureplays as a category have weak controls when compared to established firms.
• Principals can lack objectivity and assume that everyone should “get social” (because they understand it so well). Mitigate this risk by selecting principals with experience at Strategy or Big Four firms.
• Few organizations appreciate the necessity of practice. Look for individual strategy consultants who put themselves out there, usually via blogs, but also in Google+, Twitter, on YouTube and on social networks.

Learning more

• Visit the Advisor and Service Firm Social Business Adoption 2012 home page to keep apprised of additional inquiries and insights
• The CSRA blog is long form; subscribe to the whole thing, a category or even a tag via RSS or email. See: http://rollyson.net/social-business-resources/#subscriberonly
• Get a more “stream of consciousness by following my Google+ profile: ?http://google.com/profiles/csrollyson

SWOT Analysis

SWOT analysis can be a useful tool to understand advisory and services firm strengths and weaknesses, especially to executives and professionals who have used it, so I have prepared Big Four firms’ SWOT analysis in the table.

Strengths of Pureplay firms address the middle of the Social Business Life Cycle, namely Strategy and Pilot, where their strengths with social business Practice distinguish them. They have native skills with using social technologies to develop relationships, although no Pureplay was observed focusing on trust and relationship development as a critical part of its practice. Unlike MAP firms, Pureplays emphasize transformation. More than any other category, they are likely to be innovating and practicing leading edge techniques and strategies.

Weaknesses stem from Pureplays’ immaturity and small size. Their Leadership scores were universally low, even StrawberryFrog, which was founded suring Web 1.0 and isn’t focused on enterprise transformation. In most cases, you are hiring their partners because firms are not substantial. As assessed, none of the Pureplays are focused on the full enterprise life cycle, which includes Integration on its back end.

Opportunities are virtually unlimited for Pureplays because they are in the forefront of a massive shift in society and economy, and they have the best understanding of the tools in the Social Channel. This can work to clients’ advantage when they benefit from using leading edge practices. It can be a disadvantage when Pureplays make abrupt changes in their structures or services.

Threats have to do with Pureplays’ fast growth. Their founders deliver most of their work, manage client relationships and necessarily manage firms’ growth. This can lead to a lack of consistent focus when founders are pulled in several directions. Since they are defining the market in important ways, they do not face threats from disruptors in other advisory firm categories, but rather from the growth in their category. In addition, as adoption of social business moves from Visionaries to the Early Majority, the latter will often prefer to work with established advisory firms to mitigate risk. However, the market will growth considerably, so Pureplays will face few market threats is founders manage firms well.

Recommendations for Pureplay Firm Leadership

?Social business is transforming society and business because it changes the economics of relationships, what people do and how they do it. Pureplay firms are more likely to understand this shift and are prominent in a market that will see limitless expansion for the foreseeable future.

Using Social Business to Strengthen Pureplay Firms

• Obviously these are general recommendations, and each firm is different.
• Most Pureplays are limited in size and the services they can offer. The market is still focused on social media, which is where the budgets are. One of Pureplays’ biggest threats is not appreciating that social media, although it will continue to grow, will steadily shrink as a portion of the social business market.
• If principals do not plan for the market shift away from social media, their firms will face declining margins. Many aspects of social media services are already commoditizing.
• It is difficult to overstate the profound change that is upon individuals and organizations. We primates are profoundly social; sociality is arguably our defining trait. Making sociality digital will change most human structures, organizations, patterns and habits.
• Therefore, focus your firm on helping clients to lower their costs across the relationship life cycle. The bar is far higher for using social technologies to develop trust and relationships, but firms that develop these competencies will see better margins and more visible work over time.
• Most firms say they focus on relationship, but their observable actions do not reflect it.
• Lead clients in this direction. Even B2C firms whose marketing has been long on legacy strategies and tactics, will benefit from showing people they care, really, because they can only tap social technologies’ potential by earning access to stakeholders’ networks.
• Make the churn at your firm your advantage. Pureplays’ consultants are “knowledge workers” in the extreme, and most team members have individual reputations. You will be better able to engage them long-term if your firm redefines itself as a platform for individuals to develop their careers. Optimize your roles to empower individuals. Most will return your commitment to them when they leave by being advocates for the firm and/or principals.
• Careful management will be critical in Pureplays’ success; their biggest challenge is managing growth. Hire an operations heavy as soon as you can.
• The market for social business services grounded in relationship will see steady growth for years to come, and you can exploit the vacuum of social-focused expertise. MAP agencies understand people much better than any other legacy firm category, but they are unaccustomed to relating to people. They sell to them.
• Strategy and Big Four lag significantly and have cultural barriers to adoption. Enterprise I.T. firms are coming on strong but may not be truly committed to “relationship over selling.”

Beware These Risks

• Beware the social media red herring, and manage your social media services as short-lived cash cows. Social media, because it emphasizes content creation and distribution over relationship, requires lower skills and has fewer barriers to entry. Your social media services can be profitable if carefully managed, but you will likely see shrinking margins as services commoditize.
• Most Pureplays will take the easy social media path to money, but their profits will be ephemeral. Obviously, individual firm results will vary, but as a category, this will hold.
• Don’t allow yourself to be led by clients. The market overall validates social media because it hasn’t discovered social business yet. Sociality, relating to people, is far more complex and nuanced than promoting things to people. Make sure your firm appreciates the difference. Position yourself purposefully.
• Client expectations are rising quickly. Pureplays that do not develop depth in organizational transformation risk losing relevance. Once clients see that relationship-based social business makes them money, they will want to expand and reevaluate their organizations. Most Pureplays do not have the ability to help them. Opportunistically develop strong competencies in business functions outside of marketing and PR.

Learning More

• Visit the Advisor and Service Firm Social Business Adoption 2012 home page to keep apprised of additional inquiries and insights
• The CSRA blog is long form; subscribe to the whole thing, a category or even a tag via RSS or email. See: http://rollyson.net/social-business-resources/#subscriberonly
• Get a more “stream of consciousness by following my Google+ profile: ?http://google.com/profiles/csrollyson