Wednesday, January 19, 2011

Facebook Ascendant While MySpace Flounders

Everyone knows what Facebook is. There is a whole generation of individuals that use Facebook as an extension of themselves. Facebook is as ubiquitous for today’s teens as telephones were to teens of my era.

Before Facebook came along there was already a social networking site with a large base of dedicated users. Does anyone even remember MySpace anymore? As Facebook has become dominant, I have often wondered what happened to MySpace.

Writer Adam Hartung answers that question in this Forbes blog. In essence, MySpace suffered from a management style mismatch with its market niche.

MySpace was purchased by the “powerhouse media company” News Corporation, which proceeded to implement a highly professional top-down management approach filled with well educated MBAs. Leaders decided where the business would go, made plans accordingly, showed those plans in big PowerPoint presentations, implemented the plans, and tracked the results.

In the meantime, a group of undergrads managed Facebook using White Space management, “where rules are vague, authority is fuzzy, budgets are nonexistent, and strategy is unclear….” In effect, the less educated group of dedicated Facebook founders followed the market as tightly as possible and learned from mistakes. Instead of boardroom meetings dictating a predictable course, the business was allowed to simply flow along with the unpredictable nature of the market.

It turns out, says Hartung, that when “it comes to applying innovation,” a poorly defined White Space management style beats business plans, number crunching, and “multi-tabbed Excel spreadsheets and Powerpoint matrices.” A passion for getting the team to deliver as rapidly as possible what the users want today beats management teams full of highly educated big wigs with solid plans.

Hartung doesn’t delve into the question of whether this is a permanently sustainable management methodology. After all, Facebook is only seven years old and the whole technological social networking phenomenon is still in its infancy. Will White Space management still serve the company well when the entire market segment is more mature, say ten or 15 years from now?

I also wonder how widely applicable the Facebook style of management is to businesses in general. I suspect that the appropriateness of a given management style depends on a variety of factors such as market maturity, potential customer feedback cycle length, relative demand for innovation, level of competition, etc. How well would Facebook’s style of management work in the dishwashing detergent business or in the airline industry?

One thing is clear: the White Space style of management clearly worked a lot better in the fledgling social networking tech sphere than did the professional management approach. At this point, it would be surprising if MySpace manages to survive.

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