Social Media: Hubs and Spokes

Is this scenario familiar to you? An organization decides that it needs a social media presence. It polls its constituents and identifies their preferred platforms. Then it begins to post press releases, and a few employee photographs, on those platforms.

But the limitations of the platforms make them ill-suited to showcase the organization’s strengths, and thus the content looks shabby … or, even worse, downright awkward. The constituents ignore the postings, and the entire initiative collapses as a complete failure.

So what went wrong? The key mistake, ironically, was the organization’s decision to follow the preferences of their own constituents. That strategy cannot make any sense if — as is usually the case — the factors that drive the constituents to prefer certain platforms are different than the needs of the organization to communicate with them.

Web surfers, for instance, might prefer Facebook or Twitter because of their desire to share colorful photos of their children and grandchildren. Those same web surfers might also be readers of the New York Times’ online articles. But that doesn’t mean that the New York Times would be well advised to publish its entire online newspaper on Facebook or Twitter.

Instead, the Times maintains its own web site as its online hub, and establishes company pages on Facebook and Twitter. Most of its postings and tweets contain links that carry readers back to the online hub. In other words, the Facebook and Twitter accounts act as spokes that distribute the content to the preferred platforms of the readers, while bridging the distance between those platforms and the hub platform.

With this example in mind, what advice shall we provide to our beleaguered organization? Well, that depends on the nature of the organization and the preferences of its constituents. If the organization is a photography studio and its constituents are photographers, the organizational hub might reside on Instagram. There would be no need for spokes if all of the photographers also maintain accounts on Instagram.

However, if the organization is a literary club, it might make more sense to establish a hub on a blog platform. After all, blogs are explicitly designed to host essays of hundreds, or even thousands, of words. Then, if many of its members happen to be on Instagram, Facebook, Twitter, and other platforms, it can establish spokes between its hub blog and those other services.

The key insight, counter-intuitive as it may seem, is that organizations should not necessarily post their primary content on platforms that are heavily utilized by their stakeholders. Instead, they should establish hubs on platforms that are optimally suited to showcase their content, regardless of the preferences of their constituents. Then, and only then, should those organization establish spokes to convey their content to the preferred platforms of their readers.

Does that sound complicated? Perhaps it does. But hey … the online world is a complex milieu. Organizations should expect to require complex strategies to navigate it.

An Enron Nightmare: Andersen Returns!

Do you remember Arthur Andersen? Once one of the largest and most respected public accounting firms in the world, it collapsed under the weight of a federal conviction for obstruction of justice in regards to its activities during the Enron scandal. Although the conviction was later overturned, Andersen’s reputation was destroyed, and its employees assumed that the reputational stain would last forever.

It now appears, though, that “forever” barely lasts a decade. Earlier this month, WTAS LLC — a firm that was founded by former Arthur Andersen partners — bought the rights to the name and rechristened their firm AndersenTax. CEO Mark Vorsatz reminisced, “Our issues with Enron were the mistake of a few. Irrespective of Enron, we thought we were the benchmark in the industry.”

Vorsatz continued, “This was a fairly thoughtful, deliberative decision. I had colleagues who worked there for 30 years and retired, and they are walking around with a big stain on their chest. We’re going to change that.”

But can they really succeed? Is it possible that the Andersen brand will still generate some value for WTAS? According to certain brand valuation methodologies, Mr. Vorsatz may have a reason for optimism.

Interbrand, for instance, is a global consultancy that defines brand value as the product of: (a) the economic profit of a firm, (b) the role of the brand in its industry, and (c) the strength of its own brand.

Imagine a firm with economic profits of $100 million in an industry where the role of the brand determines 80% of those profits. Even a weak brand that scores a mere 10 on Interbrand’s 0-to-100 scale would be worth $100 million x 80% x 10% = $8 million.

Although $8 million might not sound like a significant valuation for a tainted asset, it is important to note that such a lowly regarded brand might be available for purchase at very little cost. Thus, a firm that purchases the brand might be investing very little in exchange for the acquisition of an $8 million asset.

You may not necessarily agree with the Interbrand valuation methodology, or with WTAS’s decision to acquire the Andersen name. According to theories of brand valuation, though, its transaction may yet prove to be a profitable one.