Facebook has an innovation problem for which it compensates by “over-innovation” of existing products. That strategy backfires, hurting the company’s reputation, making it hard to expand into business software with its recently announced Facebook@Work, a tool for messaging and collaboration,
The company is successful because of its first mover advantage, networking effects and the backing of Silicon Valley’s venture capital community. Somebody had to create a global digital community after the novelty of the internet wore of. It turned out to be Mark Zuckerberg, but what qualifies Facebook to make the same inroads in other areas? It is just one of many companies trying to influence and predict what the future will look like, but changes often come from a direction nobody expects. That is why established companies buy start-ups when they miss a trend. Unfortunately it is often done without a clear sense of direction or good fit with the overall strategy.
We have to do something. Anything!
Facebook’s problem is over-innovation. Just take Whatsapp. It is huge in Europe. Nobody texts any more. Facebook paid 19 billion for it. Other than a pre-emptive strike to keep Whatsapp out of the hands of its competitors at any price that is a lot of money Mr Zuckerberg spent without a clear idea of how to recoup it.
When management is cornered there is always that burning desire to do something, anything, it does not matter what (other than think harder). For Mark Zuckerberg being so succesful at a young age that pressure is many times of what other CEO’s experience. He has to prove he is not a one hit wonder. His legacy is already at stake.
Often doing something means tweaking an existing product. That feels good. At least you have done something. Unfortunately “doing something” often means a step back from the user’s perspective. Extra bells and whistles, just for the extra bells and whistles, may make management feel like they tried but what they really did is annoy users by complicating and cluttering a product with unwanted or even outright annoying features. The original Whatsapp is a point in case. It is a good product, not to complicated, people love it and it works well. A few days ago in true Facebook style, its engineers pushed the blue ticks, probably to see what happened. People did not like it so they partially reversed it. At least management did something but at a cost. Those annoying minor “upgrades” do not add value nor do they help Facebook make money of its investment. The real risk is people switching apps in a heartbeat. Especially young people are not exactly known to be a captive audience.
Perhaps their experience in pushing the boundaries of of privacy – try first ask later – let them to believe this strategy might work. Changing the small print does not change the user experience but bells and whistles do.
Now move on to that CEO in the market for some new communication system. While reading an ugly letter from some vulture capitalist complaining about his companies’ under performing share price, his daughter sends him a picture using Whatsapp. A cute kitten, can she adopt her? “Please daddy, please.” He reads the message and the ticks turn blue so his daughter knows he read it. Nine year olds are not known for their patience. Daddy read my message 10 minutes ago but he doesn’t answer, nor does he in 30 minutes. After an hour the bomb bursts. “You do not love me daddy, you do not answer me. Why can I not have that kitten, she is so sweet. I’ll name her after grandma.”
She uses all the tricks in the book and finally daddy types back “OK”, just to have some peace and quiet. The next day he reads how Whatsapp partially reverses those blue ticks and he gets cross. Not much of a cat lover, a bit allergic to those fury hairballs, he regrets his decision for a long time to come, all because of Facebook had a hit and miss.
Out of its league
IT software in a corporate environment is very different from a free app or Facebook account. Software implementation in large companies run often over budget, are high risk and they are complicated projects, whole graveyards are filled with managers who fell on their sword promising to deliver the impossible. Switching costs are high so basically you buy yourself a ball and chain. Facebook’s reputation for “see what happens, we can always roll it back” will make it a hard sell to convince businesses to use their product. Facebook needs to start focussing on customer needs rather than its own. The company misses a proven track record to convince corporations to use its messaging tool.
In the post Edward Snowden era corporate security has become a major factor in decision making. For non-US companies buying IT systems from an American company bound by numerous known and unknown laws to hand over information is a risk. not only for Facebook, but all American companies. That will add to the challenge as well.
Perhaps taking a clue from the Google play book, Facebook should bring in an external CEO to guide Facebook through its next growth phase, redesigning its reputation while Mark Zuckerberg redesigns his wardrobe, starting with shedding his hoodie.