Social media: coming to a boardroom near you…

You may (or not) agree with me, but social media could be reaching the tipping point in becoming the major influencer in the way decisions are made in corporate boardrooms.  What I mean by tipping point is similar to reaching critical mass in technology adoption: the point at which adoption becomes self-reinforcing. I tipped to this point, so to speak, after I read The Importance of Compensation post on The Baseline Scenario.  The post and its responses are brilliant in dissecting what went wrong with the way boards handled compensation, resulting in excessive risk-taking by company executives.  And when it comes to compensation, the spotlight is on boards, because that’s where compensation is set.

Many surveys confirm that businesses, especially in non-tech sectors, have been slow to engage in social media.  It’s hard to give up the old broadcast media paradigm, which was tailor-made for the command-and-control style of management.  As Anthony Goodman writes in Financial Times, “Every chief executive and board member will say that ‘tone at the top’ is critical to a business, particularly in turbulent times.” The stentorian approach does not lend itself well to the new media.  The voice at the bottom, multiplied by social media, counts in times of crisis too.

I have a theory why social media had such a hard time in the executive office and it has something to do with names.  “Social media” is unlikely to fire up executive testosterone the way that “deadly force media” would make them pay attention.  Just think of how many corporations have “war rooms,” where the deadliest weapon is a whiteboard with markers. Twitter, one of the most powerful tools in the social media arsenal, comes with a bird on its home page.  Viral networks sound a lot more serious than social networks, especially considering the recent attention on the swine flu virus.  I’m absolutely excited about Google’s Wave possibilities.  Again, “Wave” is not something that the war-room crowd can envision without taking a tranquilizer or two.

Despite the initial resistance, social media have already changed the way businesses communicate.  Some may even argue that new media will impact corporate structures, because social media are changing relationships with customers, shareholders and communities where businesses operate.  Just think for a moment of shareholders as a special interest group.  Now imagine the special interest group forming an online community capable of interacting with senior executives and board members in a way it never did before.  Instead of waiting for an annual meeting, they will engage the head of compensation committee in a conversation that doesn’t allow the chairperson to shut it down as easily as he or she could during a once-a-year meeting.  So this begs a question: does your board have a social media strategy?  Because if it doesn’t, the one elected after the next annual meeting will…