Customs Street Advisors is a full service investor relations firm based in Lagos, Nigeria.

You’re so vain, I bet you think this song is about You, don’t you: How social media breaks the corporate ego

This week in Street Talking on NEXT, I touch on social media usage, a subject which has risen in importance over the last two years. It is a truism to state that social media is redefining how many people communicate, both in their professional and personal lives. This has implications for companies because as Clay Shirky, author of Here Comes Everybody: The power of Organizing without Organizations argues, group action just got easier. The ubiquity and facility of social media greatly amplifies the ability of individuals to find, share and publish information to reach a much wider audience effectively in ways that were previously exclusively reserved for only well endowed media organizations. In spite of its unmistakeable influence, public companies in Nigeria are unaware of how it will change the dynamics for corporate and investor communications.

Last week, the CEO of a public company told me that recent revelations in the banking sector have pushed investor trust in management to an all-time low. Shocking, yes, controversial, hardly.

Although there are over 200 companies on the Nigerian Stock Exchange, perceptions of banks, which constitute about a 10th of the big board but whose shares are owned by over 97% of investors, are a bellwether of public trust in corporate Nigeria. However, what he said next sent me to the canvas.

According to him, since investors now distrust management so much, the best thing for boards to do in the prevailing circumstance is to shut up. ‘When this is all over, we will resume talking with the investment community again. Till then, we’ll safely ignore them,’ he said. You can imagine the look of disbelief on my face throughout the discussion.

If only the CEO knew how much the world has changed. Shareholders are no longer waiting for companies to initiate and moderate the conversation.

Social media

In his thesis on what he describes as the collapse of the Gutenberg Principle, Richard Stacy, a leading theorist on social media, posits that humanity has entered a new paradigm of information diffusion. In the old paradigm, the means of production and distribution of information (printing presses, TV stations, newspaper distribution networks, etc.) were too expensive for the single individual to own, so institutions arose to intermediate the process fostering the one-to-many information flow model.

Technological breakthroughs

Then as occasionally happens, technology, that disruptive force, threw a spanner in the smug relationship. In the same way mobile phones made the telephone operators threatened species, the new paradigm bypasses the need for intermediation.

It used to be that by keeping quiet, companies could stifle discussions on their affairs. In that halcyon world, companies with the connivance of the mainstream media and investment banks could impose blanket darkness on news or manipulate it as they saw fit. This convenient censorship had worked for so long that it seemed like it would last forever. Then a few years ago an unprecedented thing called web 2.0 burst on the scene.

First, something called online forums appeared. These cyber-locales, which are almost costless to set up, started to attract committed members with experience in all types of subjects. Before anyone knew it, sites like NigerianVillageSquare.com, NairaLand.com and StockMarketNigeria.com were collectively getting more hits per month from around the world than those of the four biggest Nigerian newspapers’ websites. Not too long after, web journals called blogs reared their heads too. Sites like Wordpress made it all so easy. While most bloggers wrote on entertainment, fashion and sports, not an insignificant few covered financial reporting, performance, governance, social responsibility, employment policies and ethics at corporations.

Shortly after, a college ‘stepout’ called Mark Zuckerberg started a site called Facebook. Instantly, friends were asking friends about what stockbroker to use, what private placement to invest in and what companies gave good returns, in between planning the next old school reunion or Arsenal vs. Man U match meet up. The walls of Jericho came crashing down, and without any input from companies, live and intelligent exchanges were going on about them. Of course, some of the exchanges on these sites were grudge fests and moonlight guerrilla narratives intent solely on venting anger or misinforming, but more often than not, like on Wikipedia, contributors were knowledgeable and eager to retain credibility with peers.

To top it all up, a micro blogging site called Twitter sprung up, and a thousand birds chirped away.

Fortunately for companies, all these conversations were going on elsewhere and not on the companies’ URLs. Social media suffrage did not extend to the company URL. Even when companies knew about these conversations going on, they could bury their heads in the sand. They had the urgency of icebergs melting in the Arctic to a city council sanitation officer in inner-city Aba.

Then oops! They did it again.

Two weeks ago, Google, the 800-pound gorilla of the internet, launched Sidewiki. By installing it on their browsers and opening a Gmail account, users can bring the conversation right into the website of the company. Sidewiki opens a panel on the corporate site where visitors leave their comments on the company, seeding new topics or carrying over existing ones over from third-party sites via links. The Cacophony Orchestra had come to town. The ‘over there’ was no longer ‘there’; it’s now ‘here’.

Implication for companies

What does this mean? For one, it means that a blogger like ‘Dayo Coker’ who launched ferocious attacks on Intercontinental Bank through his blog DayoCoker.Wordpress.com at the height of the de-marketing fever early this year, can spray-paint graffiti on the Happy Bank’s site now.

On a positive note, it means that responsible companies now have several means for listening to the concerns of their various concerned constituencies. They also have many more intelligent ways to monitor and respond.

For companies, keeping quiet is not a choice. It is a death wish. The fact is that whether companies like it or not, investors are talking and listening to the views of their friends and friends of friends about them through social media. Can they afford to ignore all those voices? I think not.

The original article may be read here on the NEXT website.

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