John Naughton: All a Twitter for a quick buck

Photo / Kenny Rodger

Louis Gerstner's riveting memoir, Who Says Elephants Can't Dance?, tells how he turned IBM from a mainframe manufacturer heading for the knacker's yard into a world-class services organisation.

In corporate terms, it was the greatest comeback since Lazarus, but Gerstner's title was misleading; the sad truth is that elephants don't tango.

Evidence of this is provided daily by the attempts of large corporations to engage with social networking. Their CEOs see all this activity going on and are disturbed by it.

They read reports in the Financial Times or Wall Street Journal about Facebook having 250 million users, Twitter growing exponentially or the YouTube search engine becoming the prime source of information for teenagers, and think "hey, we're missing out on this". So instructions go out to minions to create a corporate presence in this whirlpool of online activity.

The other day a perceptive blogger, Michael Foley, put his finger on the problem: "There are a lot of big brands dedicating resources to social media lately, because it is the new 'bright shiny thing'. I'm worried that these big brands may feel the need to shut down these social media business experiments if they don't see results - meaning big revenue - in time for the next quarterly earnings report.

"It takes time to build relationships and develop trust, especially if you've been neglecting your customers for a long time - and most brands have. They're already suspicious of you because you're selling something.

"Real relationships aren't built on the salesman's need to move product on deadline. They are built on a mutual exchange of value over time. Don't think of your social media presence as an experiment, but as an investment so that you can obtain social capital in the long term."

That seems spot on to me. Patience really is a virtue in this context, but it's the one thing large corporations don't seem to have. In part, this is a structural problem: public companies are driven by stockmarket expectations - which effectively means short-term exigencies.

But corporate impatience to extract revenue juice from the online world in the short term is also a psychological problem. It's the product of a mindset that has failed to take on board the scale of the changes now under way.

What's happening is that one of Joseph Schumpeter's waves of "creative destruction" is sweeping through our economies, laying waste to established businesses and industries, and enabling the rise of hitherto unprecedented ones.

And it's doing so on a timescale of maybe 25 years, which means that the broad outlines of the new economic system won't be clearly visible for at least a decade. But everywhere one looks, we find corporate moguls wanting answers Right Now.

The most spectacular example is Rupert Murdoch, who is on his third demand for an immediate answer to the online question, but virtually every large organisation in the world is driven by the same panicky impatience.

The writer Steven Johnson has suggested an insightful way of thinking about this. Imagine, he says, the effect of a hurricane on an ancient forest. There's massive destruction, lots of venerable trees are felled, where there was dense foliage there are now clearings and lots of sunlight.

And in those clearings lots of interesting things are sprouting. These are the foundations of the new forest which one day will replace what the hurricane destroyed. But, for the time being, they are immature seedlings.

In those terms, big corporations are like exploitative loggers stomping round the clearings, pulling up seedlings and disgustedly discarding them as pathetic, or at least useless for their purposes.

And so they are - at the moment. But that doesn't mean that one day seedlings like Twitter, FaceBook, Flickr, YouTube et al and the blogosphere might not provide the makings of an impressive - and fantastically profitable - new industrial ecosystem.

We just need patience - the one thing stockmarkets don't have.

So the future will belong to corporations that don't have to march to Wall St's drum.

Step forward Google and Microsoft - and maybe even Gerstner's IBM.

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