F-Commerce And Why Facebook Can’t Get It Up

facebook logoLess than a couple of years ago Facebook Commerce seemed to be inevitable. It just seemed one of those things that are just waiting to happen. Yet it didn’t. After a promising start, e-Commerce’s wonder child just stopped being interesting.

How did that happen? After all – so many were jumping the wagon and everyone was just eager to tap into Facebook’s social market. Well … Facebook’s IPO happened. Its market cap dropped. It got dizzy and greedy. All of a sudden Facebook stopped being a revolutionary product. It stopped valuing its users, be them companies interacting with customers or users (sometimes) willing to have a virtual conversation with a company.

Facebook got greedy and careless

Mark ZuckerbergIn may 2012 Facebook introduced “Promoted Posts”, marketed as another way for page owners to advertise their pages. It slowly, but surely, grew into a steady source of income and a few months later the company allowed page owners to promote pages not only to fans but also friends of fans.

It didn’t stop here. Sponsored stories were introduced in august 2012 and suddenly Facebook Walls stopped being ad-free.

Meanwhile, the Big Daddy of all social networks thought … “hey, there’s a lot of spam out there and people kind wanna spam each other on Facebook too. What if … “.

5 minutes and absolutely no second thoughts later, Facebook introduces … get ready … the option to send unsolicited messages to complete strangers. If paid. Wait a minute … isn’t this spam? Oh, yes it is.

While allowing advertisers to post ads on walls of people completely unconnected to their page, send messages to anyone on Facebook, whether they opted in or not, and generally ignoring the concept of privacy, the company still has the nerve to say … “The problem we face with the news feed is that people come to Facebook everyday, but people don’t have enough time to check out absolutely everything that’s going on” (Will Cathcart, Facebook’s News Feed Product Manager).

Really, Will? Really? So basically I, a Facebook user, don’t have the time to check everything. Unless it’s paid for and then I have the time to check it, even if I never subscribed, liked, opted-in or even thought about that particular piece of content.

Facebook has very long term strategy and short term tactics. How about something in between?

Given this approach, where Facebook showed absolutely no consideration for either users or advertisers, it was of no surprise companies were going to pull back a little bit on their Facebook spending. Facebook Commerce, potentially one of the greatest streams of revenue the company could have tapped into, given the rise and rise of online commerce, was badly affected.

Payvement, a company providing retailers with access to F-Commerce features, just announced it will shutdown Payvement and its partner website Lish.com. The market reacted quickly to the news. Media’s backlash focused on Facebook Commerce but the bottom line is not just about commerce. It’s about Facebook’s vision. We know Mark Zuckerberg  wants his company to usher in a connected world, with no communication restraints and no privacy. We also know that those who invested in the company early on are now pushing for financial results. What  we do not know, and probably Facebook’s management doesn’t either is – what is Facebook all about? Now.

In order to address F-Commerce issues the company may need to take into account a different perspective on its product and market. It has to address some issues such as:

1. Pages should reach their full audience. Free.

Right now the usual Facebook page post reaches approximately 7% of all fan base. Let’s say a Social Media Manager has the audacity to wish for its message to reach all of its fans. Remember – these are people that willingly pressed the “Like” button, knowing that means they will receive updates.

In the mean time – Facebook decides reaching the audience is unethical if unpaid for. Yet if you are a brand and you are willing to pay you can reach your audience easily. And their connections. And their inboxes. And soon enough – their mobile phones.

What is wrong about this is that Facebook never mentioned anything about promoted posts or limiting reach when the companies were developing their Facebook pages through ads, Facebook contests, Facebook content and others that were directly beneficial to the social network.

If you were a large retailer you would think twice before moving your ecommerce operations to a company that neither cares for your business nor does it have any clear development strategy.

2. Facebook.com is just a tool.

The social network concept is out there. Facebook is not innovating anymore. At least nothing useful and visible. Soon enough it will be replicated by a company with a better vision and greater care for its users and advertisers. It is not the first social network and it certainly won’t be the last. Judging by current events Twitter and maybe MySpace (the new one is just amazing) might actually stand a chance at Facebook if they keep on this way.

3. How about thinking before rolling in the changes?

Facebook is an engineers company. Trial and error was fun back in the day and it probably worked when there weren’t 1 billion users actively using it. If you think about it, Apple is also an engineers company but it evolved a human approach. They listen to their customers, even when they are not speaking. Unlike Apple’s, Facebook’s customers, the advertisers, are not really glad about their purchase.

How about the company puts a little more effort into improving its user and customer experience and less into imposing new features that usually help no one?

Bottomline

Facebook needs to think a little bit more on its overall strategy. It really has to figure out what the “F” in F-Commerce stands for. Mark, you gathered 1 billion people, you got this far, don’t “F” it up!

Top 5 Largest Online Retailers – Who Are These Companies And How Did They Make It To The Top?

Here are 5 companies whose combined online sales  in 2011 amount to almost $75 Billion, US and Canada only. Let’s also have a look at their background and how did they manage to reach the top 5. The winner is one of the fastest growing companies in the world, a company born and raised online and probably the future of global retail. Let’s first have a look at the runners up:

5. Dell Inc.

Online sales: $4,609,728,000
2011 Growth: – 4%

dell logoDell is the only company in this top to have a negative growth.  The decrease in sales is a direct result of global PC sales contraction in 2011.  If your company is not named Apple and your business has something  to do with PC’s, than 2011 was probably one of the worst years for you. In fact Dell’s PC’s shipments declined 8% throughout the year so that makes dell.com’s sales 200% better than the overall company performance.

Dell was one of the first companies to integrate ecommerce in their sales process. Its e-commerce operation started off as a static page in 1994, integrated online sales features and soon enough they were selling more than $1 million a year, which as you might remember, was $1 million more than most of the companies.

Dell’s innovative approach to online commerce (customize and buy) was a result of:

  1. its business model that allowed companies and individuals to order customized computers via mail orders pre-internet era
  2. an increase in losses due to aggressive competition from its arch-nemesis – Compaq. Dell recorded losses of nearly $100 million in 1994, before launching Dell.com.

Following the launch Dell expanded its online operations in Europe and Asia and by 2000 it was already the market leader in PC sales worldwide. It stayed in the pole-position until 2006, when HP reclaimed the throne. Not bad.

4. Walmart.com

Online sales: $4,900,000,000
2011 Growth: + 19.70%

walmart logoWalmart is big. Really big. It operates more than 10.000 retail units in 27 countries. It’s net sales in 2012 increased 5.9% to 443.9 billion dollars. Big as it might be, Walmart did miss the start and that’s one of the reasons it’s “only” no.4 on our list. But worry not – the company expands its operations online as aggressively as it does with its brick and mortar stores and soon it will be fighting for the top position.

Jeremy King Walmart
Jeremy King – Walmart’s CTO

The company, whose first store opened in 1962, had launched Walmart.com in 2000, after it incorporated it as a separate company, based in Silicon Valley. Accel Ventures had a minority stake in the company at the time but the two agreed to disagree and in 2001 Walmart bought back Accel’s share.

As of that moment Walmart.com worked as a subsidiary of Wal-mart Stores, Inc. and it slowly started its development. CEO Mike Duke, an alumni of Georgia’s Institute of Technology, showed he meant e-business when it turned the company from a rigid, unambitious company to one of the biggest challengers to Amazon’s ecommerce reign.

Walmart started @WalmartLabs, and brought aboard the ship hundreds of talented engineers and business people, all focused on retail, social media and mobile. Yup, they do have all the buzzwords they need and as of 2011 they also have Jeremy King, one of the leading engineers at eBay, back in the day.

In 2011, Walmart agreed to purchase Kosmix, a social media startup founded by Venky Harinarayan and Anand Rajaraman in 2005. It’s worth to mention this just to get a glimpse in the kind of people and technology the company is now bringing aboard:

  • Mr. Harinarayan and Mr. Rajaraman previously founded and sold Junglee to Amazon for a reported $250 million
  • The two were angel investors in Facebook
  • Kosmix was funded by Lightspeed Venture Partners, Accel Partners, Dag Ventures and … wait for it … Jeff Bezos’ personal investment company Bezos Expeditions

Walmart is now acting as a Silicon Valley start-up when it comes to ecommerce – it’s lean, it values technology talent and it has a vision and a strategy.

[Read more about how Walmart and Apple are implementing Omnichannel Retail]

3. Apple Inc.

Online Sales: $6,660,000,000
2011 Growth: 27.40%

apple logoAs I am writing this post Exxon surpassed Apple to become, once again, the largest company in the world. However, Apple is still valued at $413 billion and it is still the coolest thing in technology. The company started its online sales operations in in november 1997, an year after acquiring NeXT Computers and bringing back Steve Jobs.

The whole online store was based at that moment on NeXT’s WebObject’s technology. This allowed fast implementation (1 year was needed to implement the whole online store) and a great online experience. As Steve Jobs declared at the time, $12 million worth of sales were generated using the online store, in the first month.

One of the cornerstones of Apple’s development for both offline and online sales was the Apple Store – the physical, brick and mortar, beautifully designed, concept store. When the first Apple Store was opened in 2001, Jobs wanted an experience rather than a shopping center. The Macs were beautifully designed, they worked better than most PCs but were still compared in terms of specs to PCs, as most consumers were not considering computing an area were design, experience or feeling had anything to do with a purchase decision. That was what the company needed to change.

The Apple Store - the greatest showroom an online store can get.
The Apple Store – the greatest showroom an online store can get.

The Apple Store started as a Store-within-Store experience when Steve Jobs stopped retail contracts with most retailers, except CompUSA. In exchange for being the exclusive Apple Dealer, CompUSA agreed to offer Apple a 15% area of all stores, and the right to have its own sales-person on-site.

People would walk in, experience the Apple ecosystem and even if they didn’t buy right then they would still remember the brand and later purchase online.

The Apple Store was a move that greatly helped Apple sell online. It was the most beautiful showroom, before online retailers even thought about having offline stores to increase market share.

The online shopping experience changed when, following 2001’s launch of the iPod, Apple released the iTunes Store in 2003. 5 years later, the iTunes Store was already the largest music vendor in the US and in 2010 it was the largest music vendor in the world. In Q1 2011 Apple’s iTunes Store revenue alone was $1.4 billion.

Along came the iPhone and, just as the company previously revolutionized the music industry with the iPod, the iPhone changed mobile, software and well…basically anything we humans do.

Apple’s retail concept is not just a store, it’s an ecosystem. It’s growing fast and it’s got a solid lock-in on its customers. Right now Apple’s online sales can only go up.

2. Staples Inc.

Online Sales: $10,600,000,000
2011 Growth: 3.90%

Staple logoThe first company in this list to cross the $10 billion in online sales threshold is Staples, the largest office supply chain in the world. Staples has more than 2000 stores in 26 countries but it plans to slash its brick and mortar space by 15% and focus on online sales.

The first store was opened in 1986, when the company was funded by certain private equity firms, including Bain Capital, co-founded by Mitt Romney (yeah, that Mitt Romney) who stayed on board for the next 15 years to help with the company strategy.

Staples.com was launched in 1998 and had a steady growth ever since, unlike its offline operations. Although often overlooked as a key competitor in the online retail arena, Staples did beat Apple and Walmart in this top so we should give credit where credit is due.

It’s main online sales channels are Staples.com, StaplesAdvantage.com and Quill.com. The infrastructure is based on IBM hardware and software and the company is ready to heavily invest in developing its online operations. It even started its very own innovation hub called E-Commerce Innovation Center.

Ok, long story short – the early bird catches the worm. Staples may not be the coolest brand in this list, but it was on of the pioneers in this field and it’s making lots of money online and unlike OfficeMax, and Office Depot, its main competitors, it has the best chance to make a shift online when its stores will stop being profitable.

1. Amazon.com Inc.

Online Sales: $48,080,000,000
2011 Growth: 40.60%

amazon logoYes, I know it may come as a shock but Amazon is, indeed, the largest online retailer in the world. It leads the online retailers’ top by a very long margin and it will continue to do so for a very long time, if we are to look at its continuous growth, its innovative practices and  its aggressive expansion.

The company was founded in 1994 by Jeff Bezos and Amazon.com went online in 1995, way before any of the other companies in this list were. Amazon was one of the few companies to exit the 1997-2000 dot-com bubble still intact. It would take another year after that for the company to turn a profit – in 2001 Amazon had its first profitable quarter – $5 million in profit on revenues of over $1 billion. Not very much but it proved its model.

kindle dx
The Kindle DX

It got sued by Barnes & Noble and Walmart (you might recognize these companies as some of those most affected by Amazon’s growth), it acquired some great startups (such as Kiva, Zappos, IMDB.com) and in 2007 launched its revolutionary device, the Kindle.

The Kindle was so successful that it changed the way we think of books and overall media. Right now Amazon sells more ebooks than hardcover in the UK. It is the biggest Android app seller in the world and it has access to its customers purchasing intentions through Kindle’s usage stats.

Although there is so much to say about Amazon one thing is clear: it is the top online retailer and it is eating into the large offline retailers’ sales too. Soon enough it might take their place.

I hope you enjoyed this list. Keep in mind that this post is based on Internet Retailer’s top 500 online retailers and features companies in the US and Canada. Figures are based on 2011 sales provided by different sources, usually the companies themselves. I recommend having a look at the full top and, as I will also do, purchase the full guide.

Apple did not invent Planned Obsolescence. It just got great at it.

Apple ObsolescenceI just love this iPhone I bought three years ago”… said no one ever.

Any Apple user knows that there is no way to keep an iPhone or iPad for more than 2 or 3 years and still be happy about it. If you’ve ever bought an iPhone or iPad you know how it goes: you buy the new product, you fell in love with it (it works just great, it looks awesome and everybody wants to see or touch it) and before you know it someone at Apple unveils the new version.

The new version is never something revolutionary. It’s usually just  “innovative”.It does have some small, incremental upgrades, just enough to call it a “new” product, but there is no actual need to switch over, unless you are one of Apple’s executives. However, next thing you know you start loosing your signal, apps crash, and you’re not feeling so good about your once loved device. But nothing changed. It’s the same device, it has the same specs but all of a sudden – it’s not good enough.

So you go and buy the new one (it’s never cheap) and you feel this is the device you are going to pass on to your children. Buuut… Apple decides to launch another next year and it’s back to the Apple Store.

Well – there is a reason for this cycle to happen. The reason is profit. In order to keep the cash coming Apple, and any other large company for that matter, needs to keep its customers coming back to buy more.  There is no stopping the money-making machines. Profits need to keep coming, people need to keep buying. Otherwise we stumble upon recessions.

Actually, that’s how the term “Planned Obsolescence” got coined. Mr. Bernard London wrote “Ending the Depression through Planned Obsolescence” in 1932 as a method to stop the chaos resulted from overproduction and surpluses. He stated that the Government should impose a certain Planned Obsolescence on products, so customers would keep coming back and buy more, therefore restarting the economy.

The Phoebus Cartel

Although the theory was not the smartest and most popular thing written in that period it was one of the ideas floating in the mainstream. Such an idea was pretty good for a bunch of companies to form the Phoebus Cartel in 1924.

Some of the companies that formed the Phoebus Cartel you probably have heard of: Phillips, Tungsram, Osram, General Electric. What did “Team Light Bulb” stood for? You guessed it. Profits. The companies agreed, among others, to impose  an 1000 hrs lifetime threshold on all light bulbs sold. Those that allowed their light bulbs to run for more than 1000 hrs were fined by the corporation controlling the cartel.

You may recognize this as what we now call “Planned Obsolescence”. Yes, the concept has been incorporated 89 years ago.

Good thing  the Government stepped in and saved the world. Oh wait… it didn’t. The Cartel’s operations were only stopped when WWI started.

Planned Obsolescence makes its cross-industry debut in 1954…

… when industrial designer Brooks Stevens used the term to show that people want the “new thing”, whether it is a newly designed car, or the latest TV. He showed that companies can and should integrate, first and foremost, stylistic upgrades to their products in order to keep their clients coming back to the store and buying more.

You should note that planned obsolescence comes in many forms but the most popular and cost effective is style obsolescence. You can see this in the automotive industry (where companies redefine their stylistic approach every 3-5 years), the fashion industry (yearly cycles of stylistic obsolescence) or the IT industry where Apple seems to be the undisputed champion.

Apple is not the only company using planned obsolescence to sell more. It’s just the best at it.

the iphones
The differences are, of course, startling. Source: PC MAG

All companies that look forward to survival and profit need to have some kind of obsolescence built into their products. The alternative, in the present economic system, is the company’s demise.

Apple understood this early on when Steve Jobs came back to the company with a vision for the connected ecosystem. He thought of a network of devices that would serve the customer’s every day needs for information and connectivity.

With the Apple connected home all of the products work seamlessly with one another. Once the customer has bought the iPod, he will buy the iPhone, than the iPad, than the Macbook. And that is just the hardware. There is an army of developers that use the AppStore to offer the newest apps. iTunes brings the world’s library of music and movies closer. As a result, in time, the customer gets locked-in and has little or no option to move his data or purchase options to the competition.

This was the big innovation Apple brought to planned obsolescence. It usually works within monopolies or at least oligopolies. You need to have very little or no competition to make sure the customers don’t just switch sides when you force them to upgrade their products. Apple has managed to bypass this: it’s not a monopoly, it’s just a monopoly for it’s own customers.

One more thing: Can the world handle planned obsolescence?

There are many reasons this practice isn’t helping anyone in the long run. First off –  it leaves customers/people ever dissatisfied and unhappy. There is now settling for a certain product, and there is no lasting pride or meaning in acquiring so much (in time) useless objects.

Secondly – the environment can’t handle so much waste. Even though some countries have started regulating the disposal of old electronics and home appliances we are a long way from a real solution for the waste our consuming habits leave behind. We keep buying, losing interest and throwing away our old products. We are still decades away from product cycles that plan recycling and reusing as part of the product’s life cycle.

Last but not least we cannot afford to buy so much products. Planned obsolescence is a direct cause of consumer habits we cannot afford. Credit has left present and probably future generations in debt yet most companies still think they can thrive on this fake growth. But for how long?

Is Facebook’s Graph search meant to take on Google?

Four days ago Facebook unveiled its new Graph Search, currently available “in a very limited beta program for English (US) audiences”. The event didn’t go unnoticed for tech journalists, bloggers and investors but the market was not overly enthusiastic as the Facebook Search was expected to a. Have some kind of innovative or at least clear monetizing model and b. Take on Google.

Facebook Graph Search

While not much is known about the search business model, if there is any whatsoever, the markets did in fact took notice of Facebook’s bold move but were not really impressed. Facebook’s stock price actually dropped slightly as everybody was expecting something larger – such as an alternative to Google or maybe … say … the Facebook phone.

Following the launch, Google and Yelp’s stock prices also dropped as worries regarding Facebook’s new search could potentially mean a blow to both companies.

Facebook stocks evolution

So – is Facebook really going to be a competitor to Google?

The markets expected Facebook Search to be the Google killer but apparently Facebook is not headed that way. Even though Facebook was the most searched term in 2012 and roughly 1 in every 5 web pages viewed online are on Facebook, it doesn’t mean that it can or at least wants to take on the search giant.

Apparently there is no need to. With almost 20 percent of all traffic in the world and 1 billion users on its servers, Facebook does not want to compete on Google terms or turf. People have what they need inside Facebook and are willing to use it even more. They have their friends references regarding places, people, photos and others, all related to users’ social networks.

Now regarding those social networks: it seems that Facebook’s stand on privacy is close to “what privacy?” as results rely on information from friends, whether those friends want it to be found or not. This leads to the following issue:

How long will it take users to accept the fact that Facebook does not care about the concept of privacy?

Younger generations are used to living socially-open, as most of their data, their habits, their social networks are available freely online. They have no problem with using the Graph Search or letting Facebook browse to their personal info so friends can get better search results but what happens to the older generations?

Facebook is pretty much a monopoly when it comes to social networking and users have their data trapped inside. It’s pretty hard to leave the network as social bonds become stronger and stronger. Because of this, even though some cries for privacy will be heard, not much resistance will come in the way of the mighty Graph Search. But the company will not stop here as graph search seems to be more than just a feature. It’s a step closer towards users’ everyday lives and it will probably usher in the next big thing: the Facebook phone.

Is the Graph Search a step closer to the Facebook Phone?

Maybe the Facebook Phone will not even be a phone. Maybe it will be a tablet, or another kind of everyday usage device that we are not yet familiar with. The point is Facebook is moving closer to our everyday lives. Most of the features showcased in the Graph Search demo page have real day-to-day applications.

People need to have Facebook closer in their lives before the company can even start to think about a hardware foothold in its users existence. Before the iPhone there were the Macs, the evangelists, but most important – there was the iPod. The iPod was the foundation on which Apple built its hardware ecosystem on. The books were Amazon’s foothold in people’s lives when they launched the Kindle. Facebook too will need to build this kind of foundation before launching its device and the Graph Search is a really big step in that direction.

Will Amazon change classic retail?

amazon logoAmazon has already changed the way we think about online retail and its influence and disrupting force of change and inovation has just began to sink in. The company reported a $48.07 billion revenue in  2011, making it by far the largest online retailer, followed by Staples  and Apple ($10.6 billion and $6.6 billion respectively). The company started by selling books and later expanded into CD’s DVD’s, MP3, ebooks but also jewelry, electronics, furniture, apparel and even food. Here are some of the reasons why Amazon is going to be a game changer in offline retail in the following years.

 

Lack of innovative competition.

It was probably Jeff Bezos visionary strategy that led the company but it also had something to do with established industries refusing to change. As you probably know it was Amazon that bet big bucks on eBooks and eBook readers but it was the lack of competition that made it so successful in that department. While the team at Lab 126, Amazon’s Kindle research team, was working hard to launch its first viable product, the competition was ignoring or at most distantly observing the emerging market. It took Barnes&Noble 2 years to launch Nook, after the first Kindle hit the market.

After eBooks proved to be such a successful story Amazon moved on to selling what the market demanded – tablets that run an Android powered, Amazon flavored operating system, allowing the company to research consumer preferences (by analyzing Kindle Fire web traffic), and most important – selling apps. As a direct result of this move Amazon is now the largest Android apps seller, closing in to the iTunes AppStore.

Amazon has a few tricks up its sleeves

Amazon is not just a retailer. It is a brand loved by customers partly because of its previous underdog image (long time gone as it is estimated to overtake Walmart by 2020) and partly because it sells things people love – books, music, apps even jewelry and furniture. But there is more. Here are some of its “to be loved” products:

1. Amazon TV 

Amazon is known for selling media. Books, music, video – it’s all media. Why not join the soon-to-be-trendy market for digital TV? It has already shown it can use it’s market share to launch a digital product that streamlines media consumption (the Kindle) – so why not TV?

The company’s model features low cost (even under production costs) hardware retail as a way to create an infrastructure to deliver content profitable so TV might just be the natural choice in post-Kindle business development.

2. Amazon Offline stores

Amazon Lockers is the first step toward an offline presence. It may sound strange but Amazon will need to create offline stores in order to tackle the offline retailers. Why? Online retail is big and is growing fast but if you look at the bigger picture it is still only 8.9% of total retail revenue, even in the US.

Such a bold move may be a little different than what we expect. Brick and mortar stores have basically stayed the same for the past century so maybe there is a need for a change. Amazon Lockers may be the store of the future, not just an experiment.

3. Amazon’s private label

So far Amazon worked as a rather large market place for all kinds of products and suppliers. It may be time for the company to tackle some of the largest and most profitable companies in the world. There is speculation of an Amazon private label, that could produce everyday items such as personal care, child care or clothing. Such a bold move would really be disruptive as the competitors in this market are P&G, Unilever and others such.

The global economy can’t handle the “classic retail”

The global supply chain puts too much burden on consumers. P&G’s margin was down from 25% (dec 2008) to approximately 7% (dec 2012). To handle the global operations, marketing costs supporting dozens of brands and still turn profit in a recession means that P&G’s products must start with a rather large margin, supported by mass market advertising.

Amazon is a different kind of business. It doesn’t need large margins. It’s flexible and fast. It can adapt and can tackle markets even before incumbents notice it as a threat. My bet is that Amazon’s influence, not only on retail but on global economy as a whole, is just beginning to show.

The perils of Social HR

One might argue that “Social HR” (yes, this term has been recently coined by a Forbes.com contributor) might be just another buzzword but HR has always been about social relationships – inside and outside the company. Keeping talent motivated and attracting new people on board requires a lot of social capital (the network value inside and outside the company).

With people sharing more and more information about themselves, knowingly or not, a quick Google Search has recently become one of the gateways between getting an interview as a potential employee or getting rejected before you even start speaking.

Using Internet and Social media research, HR professionals are now profiling potential candidates but sometimes this can be a little tricky because:

1. The best personal brand is not always the best professional

“On the Internet, nobody knows you’re a dog” says an old Internet joke. That may be true for Social Media also – people too often mistake personal branding with personal development. A high Klout score does not necessarily mean the user  is a good professional also (well, unless you are looking to hire Justin Bieber on account of his popularity with the teens).

Of course there are profiles where reach and social media influence really do matter but unfortunately not all employees are or should be PR representatives of the company. In such a case an indicator such as Klout score could be irrelevant but one might look into the Twitter feed for any “my company sucks” posts.

2. Privacy is still a thing

Social HR seems to be a very friendly and open expression but once you really look into it there is a little bit of stalking in the whole concept of social media information when recruiting.

Of course – anyone can check LinkedIn information – that’s why people post it there but it starts being a little creepy once you get into personal information or photos for someone applying for a job in accounting.

While it would seem that snooping around Facebook profiles and Twitter feeds is really part of a thorough profile check to make sure you get the best talent available –  it is also a gray area in privacy policy. No one really wants to work for Big Brother.

3. It’s not about “I’m great”, it’s about “He/She’s great”

So far the best way of knowing who was an expert in a certain field, as far as social media followers were concerned, was information available online, information usually posted by the one claiming the “expert” status. If you think about it that looks a lot like bragging, which is usually great when applying for a job, as long as it is really backed up by facts and figures.

LinkedIn has taken some steps to address this issue and introduced an endorsement feature that lets peers say what they think about one another. LinkedIn users can now endorse their connections on professional skills listed on profile. Of course – some of them are less informed but the truth lays in the numbers and HR can actually have a better outlook on prospective recruits.

I’ve listed just three potential perils of Social HR but I am sure there is more to it as there is more to HR than recruiting. I’ll let you add them in the comments.

Time Banks – an alternative economy

What is a  TimeBank?

TimeBanks are virtual currency systems where people can trade their time, usually supporting friends, neighbors, relatives, in day to day activities.

Say you want to help someone in your community. You can find a local TimeBank, search for people requiring your help, and get virtual credit for the work done. For example – your neighbor John needs help with painting his fence. It will take you two hours to do that, and that is the amount you will get credited with in your timebank account. Now say you want to learn a little bit of French, in order to be prepared for your upcoming trip to Paris. You can go check the local TimeBank, search for a teacher and get two hours of french lessons.

TimeBanks have a very interesting aspect to it – they value each one’s time equally, which is something our usual economic approach doesn’t. Classic economics value scarcity and demand. A surgeon’s time is much more valuable than a bus driver’s because there are less surgeons compared to bus drivers, there is less demand for bus drivers etc. etc.. There is more demand for cars than for bikes or roller blades. From a somehow limited point of view this would work perfectly but…

Why TimeBanks?

Anyone can take care of the elders with a little bit of training. Unfortunately there is little demand and the financial incentives are not quite motivating in helping the poor or taking care of the elder. Such activities cannot offer the kind of financial benefits our society tells us we need to get in order to offer our services, knowledge or help.

This is where the TimeBanking concept seems to fit very well. The activities involved in TimeBanking can be charity, neighborhood help or such but they can also reap benefits. As an alternative currency TimeBank “dollars” or “credits” can be used to receive as well as give. In this system services are offered voluntarily, cannot be taxed and strengthen social bonds between those in the TimeBank network.

Global TimeBanking

At the moment TimeBanking functions more like a form or charity or local networking platform but if the concept catches on globally, engaging ever more complex tradable skills, it might work as a parallel economy with spectacular results.

Such a global movement will, at some point, need an internet infrastructure able to meet billion of interactions, members and make sure the system generates as little fraud attempts as possible.

Here are some links for further reading:

http://www.timebanking.org/ – Time Banking UK
http://timebanks.org/ – Time Banks USA
http://groups.drupal.org/time-banking – Drupal Based Time-Banking Software