Did you “Elf Yourself” last holiday season? OfficeMax’s seasonal marketing campaign featured a viral Web component which allowed customers to superimpose an image of their own face on an animated dancing elf. According to Internet tracking service comScore, more than 17 million people visited the Elf Yourself Web site during the 2007 holiday season. But did all of those unique visitors translate into increased sales? The answer is not really: the company’s reported total sales in Q4 2007 were down 2.6%. The economy’s slide hasn’t helped either; in 2008, OfficeMax reported that its 2008 Q4 earnings were down more than 14%.

Ava Seave, an adjunct associate professor in Finance and Economics, recently blogged about the correlation between viral marketing success and sales totals. Seave suggests that marketers examine traditional metrics to gauge the success of their campaigns. She writes:

Viral marketing can decrease acquisition costs for new customers because your current customers essentially endorse your product when they send along a game or video they think is funny or interesting, and, of course, is associated with your product.

However, the acquisition cost calculation needs to be done over time, since a viral marketing campaign almost never leads to direct sales from that game or video viewing. The right goals for a viral campaign should be a lot more old school: Does this campaign generate leads and does it help with brand recognition?

Judging a viral campaign’s success for lead generation is straight forward — count the number of the leads that close and judge the quality — i.e. total revenue — of the new customers. To count, how many leads land on the registration form and actually fill in the information, and how many abandon? What percentage of leads make a transaction? What is the cost of the lead and the cost of the order?

Compare these statistics to all your other sources, naturally. Does this campaign help with brand recognition is a harder question to pull out a quantitative answer. You can point to the number of downloads or pass-alongs as new exposures to your brand, and we assume exposure will lead to recognition. You also could look at what terms are put into search engines that lead to your site and determine if this indicates the effectiveness of the campaign.

Photo credit: Judy Baxter

In a similar spirit, Capon’s Customer-Centric CEO Index (C4I) is a simple measure of your firm’s degree of customer orientation.

There is scarcely a senior executive today who doesn’t recognize the importance of customers to the firm’s financial health. Relationships with customers drive the firm’s top-line performance; hence the role of NPS in trying to understand the customer-firm relationship.

My concern is broader; I want to understand the degree to which the organization as a whole puts customers at the center of its activities and is committed to using its entire set of resources to deliver customer value. What could be a better basis for determining your firm’s degree of customer orientation than the behavior of your CEO?

So, the C4I is very simple: C4I = the percentage of time your CEO spends with customers. Consider some polar opposites: for example, C4I = 0 and C4I = 30.

We could label the C4I = 0 CEO as the bureaucratic manager, internally focused and presiding over the entire organizational apparatus. Far from being central to the CEO’s concerns, relationships with customers are something to be delegated to the marketing or sales departments. Organizational layers shield this CEO from the realities of the marketplace — from competitors, customers and customers’ customers. Lack of firsthand customer interaction means that the firm likely makes all critical customer-oriented decisions at lower organizational levels. Alternatively, if the CEO does make these decisions, they are based on information filtered through the organization.

By contrast, a C4I = 30 CEO is highly engaged with customers. In B2C, some CEOs spend time on customer-complaint phone lines; former Southwest Airlines CEO Herb Kelleher was famous for interacting with passengers; and Terry Leahy, CEO of British retailing giant Tesco, and Mickey Drexler, CEO of J. Crew (formerly CEO of Gap), frequently walk around their stores talking with customers.

C4I = 30 CEOs recognize that the firm’s revenues are probably based on an 80:20 distribution — 80 percent of revenues generated by 20 percent of customers. In B2B, or in B2C where channel entities are increasingly important, powerful customers play an ever more critical role in deciding the firm’s future. C4I = 30 CEOs use direct customer input to help plot the firm’s strategy — recall Lou Gerstner’s early days at IBM as he met with customers in the process of developing the strategy that would turn IBM from a lumbering and declining giant into a preeminent industry player. And a few years ago, EMC’s CEO Joe Tucci changed his firm’s direction only after meeting with the CEOs and CFOs of customers’ customers.

Furthermore, as strategic/key/global account management practices become more widely entrenched, the potential roles for customer-driven CEOs become increasingly obvious. Hank Paulson was an obsessively customer-focused on-the-road CEO at Goldman Sachs, and Larry Ellison is Oracle’s point person at major customer General Electric. Other CEOs, like Sam Palmisano at IBM, are ready to directly engage with customers to close a deal or redirect a contract that was headed for a competitor.

The message should be clear. As IBM’s Thomas Watson Sr. famously said, “Nothing happens until a sale is made.” Even if you only half believe this statement, you must ask the question, “What is my CEO doing directly to help make this happen?”

As a starting point, I suggest you figure out your CEO’s C4I score. If it’s in the doldrums, you owe it to your firm and the shareholders to do what you can to inch it upward. CEOs, take note!

Professor Capon is author of Key Account Management and Planning, Managing Global Accounts, and The Marketing Mavens. His new textbook, Managing Marketing in the 21st Century, is a quarter the price of most competitive offerings; see www.mm21c.com.]]> Wed, 12 Mar 2008 16:06:42 EDT ]]> Leadership Marketing Organizations

Choosing wisely for positive long-term outcomes — often at the expense of tempting short-term gains — is a hallmark of mature leadership. At the individual level, these types of decisions signal patience, vision and self control.

New research published in the journal Nature Neuroscience (March 28, 2010) provides significant evidence as to where in the brain these cognitive processes are taking place: the lateral prefrontal cortex. That region of the brain — tap your forehead, it’s right under there — is considered to be the executive lobe and is associated with planning, complex decision making and moderating socially acceptable behavioral responses.

Bernd Figner, a research scientist at the Business School and the University’s Department of Psychology, working with Professor Eric Johnson and Professor Elke Weber, used a brain stimulation technique called rTMS to temporarily disrupt the function of the lateral prefrontal cortex in a group of volunteers. After the brain stimulation, the volunteers were asked to make choices between smaller, more immediate rewards or larger, future rewards.

“When we disrupted the function of the volunteers’ left lateral prefrontal cortex, we found they strongly preferred the smaller, more immediate rewards,” says Figner. The effect of increased impatience was specific in three ways: it only occurred after stimulation of the left, but not the right prefrtontal cortex; when the smaller reward was a tempting immediate reward; and when a choice, not just an evaluative judgment, had to be made.

The results add to the growing body of scientific literature on decision making, which has examined the behavioral, cognitive and neural mechanisms. A recent Ideas at Work article profiled related research by Weber, Johnson and other researchers, on the role of cognitive mechanisms in decision making. Specifically, they examined how people use memory and attention in delaying gratification or taking an immediate reward; they found “people muster the most evidence to support the first choice they consider, drowning out other options.”

The implication of the research findings is important for “choice architecture” or the way in which environments are structured to lead people through a decision-making process.

In Ideas, Weber says out that we live in an era that makes choice architecture easy to implement: “More and more decision making and communication occurs on the Web, where it is easier to structure a choice environment in a way that focuses people on one type of option or query over another,” she says. “So you can provide people first with information about the future when they make health or financial decisions, building decision environments that promote less impulsive choices and encourage more long-term choice.”

	Professor Olivier Toubia, left, and Aliza Freud ’01 collaborated on research.

Key takeaways from the BRITE conference, hosted by the School’s Center for Global Brand Leadership on March 31-April 1, focused on brand strategies for integrating on- and offline communication channels, leveraging communities for problem solving and finding new ways to think about excess capacity. A theme threaded throughout was the growing use of data sets and measurement in the marketing mix. (Read and watch complete audience-generated coverage at the conference’s media hub.)

That theme was explored in a breakout session on April 1, where professors Bernd Schmitt, Oded Netzer, Jonathan Levav and Olivier Toubia along with Aliza Freud ’01 (EMBA) discussed university research collaborations with businesses. The last decade’s boom in data sets — a result of technological innovations — Schmitt said, is one key driver of these collaborations. Toubia and Freud have worked together using data from Freud’s market research firm and online community, SheSpeaks. (Read more about their research in Ideas at Work.)

“Firms have all this data that they don’t necessarily know how to use, and small companies don’t have time to use it,” Levav said. “Our advantage is that we can leverage it into useful information.” He has worked with data from a large German auto manufacturer, for example, to look at decision making in build-to-order transactions.

Yoon Lee, vice president of product innovation at Samsung, presented at the conference and recently collaborated with Schmitt on a forthcoming case study for CaseWorks about the Samsung’s DualView camera and brand leadership. Lee suggested that corporations can have a difficult time getting beyond numbers-led innovation and “don’t know how to express qualitative data.” On the other side, he said, designers are “bad at putting linear arguments on emotional qualities.” Lee suggested that the balance between the technical and emotional qualities is where business school research offers an advantage.

Netzer, who has conducted research on topics as varied as pharmaceutical side effects and alumni giving, added that “cross silo” thinking occurs in the Marketing Division, where computer science, economics, psychology and other disciplines are all in the research mix.  “We are bringing different types of perspectives,” he said, "which helps tremendously with the thinking."

Photo credit: Columbia Business School

How do we make decisions? If you believe classical economic models, decision making is a process of choosing the most rational and self-serving option. But, as Professor Stephan Meier’s research shows, many people’s decisions substantially deviate from this ideal. In fact, some individuals make consistently suboptimal choices, which can have an enormous effect on public policy and corporate strategy.

Meier’s research is focused on behavioral strategy, a subgroup of the growing field of behavioral economics. Behavioral economics marries standard economic theory with research in the field of psychology, often with surprising results.

Fruit or Chocolate?

In a famous experiment from 1998, Daniel Read and Barbara van Leeuwen of Leeds University Business School looked at how well individuals predict hunger and the effect of appetite on making choices. In the study, the researchers asked participants, “Deciding today, would you choose to eat fruit or chocolate next week?” Seventy-four percent of respondents chose fruit for next week. However, when the same respondents were asked about their choice a week later, 70 percent of them now picked chocolate, without regard to what was previously chosen. While this may not seem surprising to any chocolate lover, this effect is called present bias and it reveals an inconsistency in decision making not previously accounted for in economic theory and strategy.

Meier’s current research looks at the effect that present bias has on the financial services industry and the strategies firms can employ to provide benefits to both the nonrational consumer and the firm. In recent papers, he examined the links between present bias and credit card borrowing, showing that the association between higher credit card balances and present-biased individuals is robust — in other words, if you are the type of person who switched from fruit to chocolate, you will be more likely to have more credit card debt.

Capturing Value from Irrational Choices

Traditional for-profit financial services firms have used the irrational tendencies of consumers to their benefit — and even to the consumers’ detriment — which can result in long-term consumer attrition but high short-term profit margins. Meier suggests these firms might instead capitalize on the non-rationality of their consumers by offering products that benefit both parties, both to maintain long-term relationships and attempt to do well by doing good. For example, a firm could create a Christmas club account, which would allow consumers to save money in a non-interest bearing account for a specific purpose, such as the holiday.

Both the banks and the present-biased consumer benefit from this arrangement. Although it may seem like “doing well by doing good” is the social sector’s strength, there is also a lesson here for corporate firms: Think long term when building value for donors and design giving strategies that recognize and allow for nonrational decision making.

Meier encourages firms, both in the public and private sector, to “recognize people may make suboptimal decisions, but they are often systematic about these decisions. Since they are not random, firms can build on these behavioral patterns and predict how consumers may make decisions, designing products that maximize long-term value to the firm, not just squeezing short-term profits.”

This article also appeared in the Social Enterprise Club alumni newsletter. Learn more about the Social Enterprise Club and the Social Enterprise Program.

Photo credit: Flickr/The Consumerist

Google’s rush to push its social media challenger Buzz out the door was an epic public relations fail for the company. With Buzz’s original default settings, e-mail contact lists, Picasa photo uploads and marked Google reader items suddenly became public domain overnight — and users were not happy. In the month since Buzz launched, Google has faced user outrage and has had to update its default settings on the online tool.

Could Google have avoided this? Easily, says Professor Eric Johnson. He says that too often defaults, in this case the privacy settings, are designed and implemented without being considered at the highest level of strategy. What works in engineering lab may not jibe with the marketing strategy.

How Do You Create An Appropriate Default?

Ask your customers.

“If Google had asked their users, they likely would have said ‘Only do that if you ask me first,’” Johnson says. “Google didn’t realize that the defaults they set would be objectionable.”

Johnson suggests that the beta-testing process for a new product should include a survey that asks customers what they prefer. Survey results can help a company design the appropriate default. In the case of Buzz, that might have been what he calls a “forced choice,” which requires customers to make active choices or be denied access to the product. Alternatively, if a firm knows relevant information about a customer’s behavior, interests or profiles, it can create a “smart default,” which generates individualized options that are optimal for both the firm and the customer, says Johnson. The key thing is to design a system that is a win for both parties, not just the firm.

“Create defaults that are appropriate for the customer,” he says.

Read more about Johnson’s research and how to design defaults in “Nudge Your Customers Toward Better Choices” (Harvard Business Review, December 2008).

What Can Online Newspapers Learn from the Airline Industry?
Brett Gordon, Assistant Professor, Marketing

When fuel costs spiked in 2008, none of the large air carriers wanted to be the first to charge for checked baggage. Few had noticed when low-cost carrier Spirit Airlines began charging for the first bag in June 2007. Nearly a year later in May 2008, American Airlines — one of the “majors” — announced that it would charge for the first bag. Before the end of summer, five of the seven largest North American carriers followed suit.

In some ways, the online news industry is facing a similar problem, albeit one without as simple a solution. After months of speculation, the New York Times recently announced that it would implement a new payment system starting in January 2011. Despite a few early chargers (e.g., Wall Street Journal) the vast majority of online news is provided freely to the public. Most newspapers would like to charge, at least partially, for content, but no one wants to be the odd paper out and make the first move. In the academic parlance of game theory this is called a coordination problem, and it occurs repeatedly in countless industries. So how do firms solve this issue?

Members of the airline industry are highly sophisticated at interpreting other airlines strategies. Smaller airlines tend to look to the majors before instituting pricing changes. The large airlines recognize their role and plan accordingly. Online newspapers need to develop a similar ability if the industry is to successfully move to a dual paid/ad-supported revenue model, however, their task is harder in part because the industry is more fragmented.

What Will the Publishing Industry Do Next?
Rita McGrath, Associate Professor, Management

A new development is that the Web itself is starting to splinter. In the early days, you had one way of accessing online content — that was through a computer — and developers could optimize for a certain kind of user experience. Today, people access content in myriad ways that are not always compatible with each other or optimized. A developer or a publisher has to decide whether to hit every platform or optimize for Blackberry, iPad or some other platform. They have to ask, “What is going to be our platform of choice?”

The content business model will be less driven by the need to aggregate the most eyeballs on a common platform, and move towards a model determined by the ecosystem that can draw the most participants. For example, Apple is trying to create a vertically integrated ecosystem with its products and partners. Rival ecosystems will start to compete for business with publishers, and media companies and content providers will watch to see where people are participating.

Publishers will have to come up with ways to monetize their participation in an ecosystem. There is hope that content providers can cut themselves more lucrative deals on these coming platforms.

What Is the Right Price?
Ava Seave, Adjunct Associate Professor, Finance and Economics

It is not unreasonable for companies to charge for information on the Internet. Many try-before-you-buy and sampling schemes are being tested across all types of media. Practically speaking, before companies make decisions about pricing, they should test the proposed pricing models as much as possible before rolling it out.

When the New York Times raised its newsstand and subscription prices in May 2009, they got a good idea of the inelasticity of their consumers’ demand. The move likely emboldened the paper to announce its current scheme. With time before the debut of its pay wall in 2011, the news organization can solicit customer feedback — and handle the blowback.

Every product is different in terms of where the company should put the price. The Times can measure the frequency with which people come back to the site, so it can set the pay wall at the optimal place for maximizing revenue. It is likely that the Times will adjust its online price as needed as its experience with it evolves.

Why did subprime mortgage borrowers make the choices they did, even when in many cases their decisions made them worse off than they were to begin with? To answer this question we need to take a closer look at how people determine what is most in line with their self-interest — and how they fail.

Self-Interest Can Be Led Astray

We continually draw on the process of detecting patterns and making order from chaos when we are trying to figure out which choices are in line with our self-interest. In order to choose effectively, we ask ourselves — consciously or subconsciously — How does it look? We’re usually pretty accurate, but there are some systematic ways in which our ability to determine what’s true might fail us, which can have dire consequences. Our pattern-detection abilities are just as good at finding apparent patterns in purely random events as they are at finding actual patterns. These tendencies can also lead us astray when the true pattern is more complex than we realize.

We also consult our emotions from the very beginning, asking ourselves, How does it feel? We use the information we collected in the former process as a backdrop for assessing our feelings about options confronting us and their potential outcomes, and we make the choice that we feel will have the most positive consequences. But as with pattern detection, there are some systematic ways in which consulting our emotions can lead to error. It’s easier to feel the present consequences of a choice than its future ones, so we give greater weight to the former. However, decisions based on present desires may not be well suited to our modern world, where the ultimate goal is to be as satisfied with the long term as possible.

Buying Into the Illusion

So what kind of patterns and feelings were people detecting when they looked at the costs and benefits of owning a house?

Owning a home had traditionally been seen as a safe investment for the average person, almost guaranteed not to lose value over time. Indeed, the inflation-adjusted average home price had stayed almost constant at $110,000 (in today’s dollars) between the end of World War II and 1997. At that point a new pattern emerged, with prices nearly doubling to about $200,000 between 1997 and 2006 due to a perfect storm of demand-increasing factors: low interest rates, the creation of new financial products based on mortgage income and aggressive lending practices to name just a few. Many local markets grew even faster, especially those in California, New York and Florida.

Seeing this dramatic and consistent growth convinced people that this was a truth about the world — that prices would continue to rise in the future. A nationwide survey conducted by Fannie Mae in 2004 found that 70 percent of Americans considered buying a home to be a safe investment, nearly double the percentage that considered a 401(k) retirement plan to be a safe investment.

Combined with the more immediate and tangible benefits that purchasing a home offers, real estate began to look like an amazing investment. People buying a home to live in for years to come were afraid that if they didn’t act immediately their dream home would become dramatically more expensive, while speculators saw a golden opportunity to get rich quickly. They rushed to enter the market as quickly as possible, driving prices still higher.

But while the upward trend in housing prices could have been consistent with a pattern of constant increases in the future, or moving toward a new and permanently higher plateau, it could have been equally consistent with another pattern that is more variable and difficult to recognize: boom and bust, or a “bubble.” In a bubble situation people feed off one another’s enthusiasm, pushing prices far higher than the true value of the assets in question. Eventually it becomes clear that they’re overvalued, at which point the bubble pops as everyone rushes to sell their assets.

Our pattern-detection abilities and feelings can serve as a powerful source of information about the subtleties and complexities of the world around us, but once we’ve come to see a particular pattern we subconsciously want it to be right. It feels better to think that we’ve unlocked the mysteries of the universe and of the future, and when the pattern promises wealth or other forms of success, as in the case of the subprime market, it’s even more tempting to believe in.

Sheena Iyengar, the S. T. Lee Professor of Business, is the author of The Art of Choosing (Twelve, March 2010), which was published this month. Watch a video interview with Professor Iyengar about the book.

Photo credit: The Truth About Mortgage

Mark Cohen on retail
The luxury bubble will continue to deflate, and only those truly special brands with real brand equity will recover; value players like Walmart, Target, Kohl’s, etc., will see renewed strength. The middle market of poorly differentiated specialty and department stores that lack a clear fashion and value strategy will continue to struggle, and it is unlikely that retail sales will retrace their pre-recession levels until 2011.

Cliff Cramer on the healthcare industry
Consolidation will be a major theme in 2010 as insurers and hospitals seek additional leverage in contract negotiations and pharmaceutical companies explore transformational mergers to broaden product lines, strengthen geographic breadth (emerging markets) and manage earnings in response to major patent expirations in the near term.

Brett Gordon on marketing and technology
Intel will face continued legal pressure from the Federal Trade Commission and the New York attorney general’s office for its alleged anti-competitive practices despite the $1.25B settlement with AMD in November 2009. Online newspapers and other media outlets will test new revenue generation models in a last ditch attempt to stay afloat. Monetization strategies for online video (e.g., Hulu, YouTube) will get serious attention from firms seeking to lure back advertising dollars with more advanced technology.

Paul Ingram on management
Organizational culture will enjoy a renaissance. Firms will increasingly recognize that shared values can attract and retain employees to the company and that the common orientation of a strong culture allows coordinated responses to unforeseen and emerging challenges. In the next year and beyond, organizations with strong cultures will outperform others, and leaders will focus on building those cultures.

Wei Jiang on the economy
As much as we think that we learned from the crisis, new bubbles are already forming thanks to the easy monetary policies around the world. In particular, the weak dollar has fueled a massive rally in 2009 in a wide range of risky assets — equities, commodities and emerging markets — through carry trades. We are facing the danger of a recurring asset bust in the coming years if and when the dollar reverses.

Jonathan Knee on the media industry
The inexorable fragmentation of media will continue in 2010, Comcast’s acquisition of NBCU notwithstanding. This trend will have no impact, however, on the persistent and irrational fears of regulators, politicians and the public that the global markets for media may fall under the control of a handful of malevolent moguls at any moment.

Homepage photo credit: Bart Hiddink

Creative models for buying and selling goods allow consumers to act philanthropically through charity tie-ins with product purchases. But are they profitable?

New research from Professor Ray Fisman, Dan Elfenbein of Olin Business School, Washington University in St. Louis, and Brian McManus of University of North Carolina, Chapel Hill, shows that linking a product with a charity donation is an effective way to boost sales — but not quite enough to make up for the cost in the bottom line.

In the study, Fisman and his academic collaborators worked with Steve Hartman ’07 (EMBA) to assemble data from eBay’s GivingWorks program, where sellers can offer a portion of their auction proceeds to a charity. They found that on average, an item advertised with a 10 percent donation is 20 percent more likely to sell than its non-charity counterpart, and for a price that’s on average 2 percent higher. But these benefits aren’t enough to make up for the cost of the 10 percent donation itself.

The study also showed that inexperienced sellers who lacked a selling track record benefitted from a charity tie-in more than experienced sellers. Fisman suggests that buyers see the charity tie-in as a signal of trustworthiness, which is particularly valuable to a seller that has yet to establish a reputation for reliability. The study also found that following Hurricane Katrina, the impact of charitable giving on sales and price nearly doubled; at a time of national need, benevolence actually became profitable. Fisman also cautions that immediate financial profit is often only part of the overall goal of companies’ giving programs. Good corporate citizens also may bolster their brands over the long-term, and also may contribute to the social good because it’s the right thing to do, whether or not it adds to the bottom line.

This research certainly doesn’t prove that you can’t do well by doing good, or that charity is a “waste” of shareholder dollars. Rather, it highlights the complicated relationship between corporate social responsibility and profits. As business school students and future business practitioners, it’s worth asking how companies can effectively integrate philanthropy and other aspects of CSR into their business models.

Photo courtesy of the Social Enterprise Program

Anticipate the future structure of your industry, Muhtar Kent advised students in a recent lecture at the School. The chairman and CEO of the Coca-Cola Company gave a presentation as part of the Silfen Leadership Series on November 19. More than 400 students and prospective students attended the event.

“In the world you will inherit, turbulence will be the new norm,” he said. “That’s not a bad thing. For every front we face, there’s an equally powerful tailwind.”

Kent shared his views on the future of the global economy and the leadership characteristics that are necessary for success.

He voiced optimism that the United States would recover from the economic crisis “stronger and sooner than most anticipate” and said the United States has an advantage because of its heritage of innovation and entrepreneurial energy. In the future, he said, leaders need to manage the shifting balance of power and cultural influences from a uni-polar to multi-polar world. He emphasized that managers also need to have a worldview, remain flexible and be able to move easily across borders.

Kent discussed the Coke brand in the context of changing attitudes toward “Brand America” as well as the company’s corporate social responsibility policies as a multinational organization. He said that the brand has remained strong, even in parts of the world where the United States is unpopular, because of the company’s franchise system and partnership with local businesses. “It’s regarded as a local brand in many overseas locations,” he said.

Coca-Cola is invested in developing more franchise operations in BRIC countries, he said, and CSR has to be embedded into a firm’s policies. He highlighted the success of Coca-Cola’s innovation in HFC-free refrigeration and transition to water-neutral production.

“Our business is only as healthy as the community we are in,” Kent said.

Photo courtesy of The Coca-Cola Company

New research from Professor Olivier Toubia featured in the current issue of Columbia Ideas at Work demonstrates the power of viral marketing. Working with Aliza Freud ’01 (EMBA), who is the founder and CEO of the social media platform SheSpeaks, Toubia examined how influencer communities can promote and track viral product buzz.

The case study
The research centered on OPI nail products. “They were a very traditional brand and wanted to tap into consumer insights and advocacy,” says Freud. Using the SheSpeaks online community, samples of the new nail product were mailed to 10,000 self-declared beauty enthusiasts. The same women also received coupons for future purchases. Meanwhile, OPI also placed traditional coupons and ads in magazines and newspaper inserts. The result? The viral campaign outperformed the print campaign by 1200%. “It’s not surprising,” says Freud. “There is a much deeper engagement online than flipping through a magazine.”

What does this mean for marketing?
In the past five years, brand marketing has changed dramatically with the emergence of social networking. Current research, such as the data from Toubia and Freud, is backing that up. Freud, who spent 10 years at American Express in marketing and product management, says that marketers are in the rapid evolution phase of brand strategy.

“Brand managers need to change their way of thinking,” she says. “Historically, marketing has been a one-way communication and brands tried to stifle or control conversations about the product. Today, it is very different — it’s a two-way conversation between the brand and the audience.”

“In the future, managers will care much more deeply about these opportunities and make consumer conversations integral to their marketing program,” continues Freud. “They can engage with consumers online and capture a lot more information.”

Photo credit: Will Vanlue

Today, one of TED’s offspring — an independently organized local version called TEDxEast — is taking place in New York City. Professor William Duggan, author of Strategic Intuition and co-author of The Aid Trap, written with Dean Glenn Hubbard, and Naif Al-Mutawa ’03, founder of The 99, are among the speakers at the inaugural event. Other speakers include author Suzy Welch, 10-10-10: A Life-Transforming Idea; Scott Heiferman, CEO of Meetup; and Chris Elam, artistic director of Misnomer Dance Theater. Ed Rashba ’04 and Melek Pulatkonak ’02 helped organize the event.

TEDxEast is streaming live from the City Winery in New York City from 1 to 6:30 p.m. ET on November 6. Check back soon for video clips from the event.

You’ve heard about companies using TweetDeck to tweet on Twitter, updating their Facebook status while feeding into FriendFeed, and building buzz to bolster conversation on their blogs. But if you don’t understand what any of this means, and consider yourself a marketer, then 1) you are not alone and 2) you need to understand what all of this is about.

Social media as a communications channel is the New Big Thing for marketers. So what do you need to do to stay ahead of the curve and make sure your social media initiatives are successful at your company? Let this article be your starting point.

1) Launch, Track, Learn, Evolve, Rebuild

Don’t skimp on reporting. Everything in the online space is trackable — so track it. Launch initiatives quickly and then use the information and results that are gathered to learn and continue to evolve your platforms. Some of my greatest insights and strategic program adjustments have come by really diving into the numbers.

As a student in the Executive MBA program I recently completed a class called Decision Models, which is focused on how to structure information to support managerial decisions. I had little exposure to these areas before, but I was able to use the classroom knowledge immediately in my job. I used the models and applied them to my results to help inform funding allocations. You might consider doing the same thing.

Powerful in its simplicity, yet worth emphasizing — in social media it is critical to launch quickly, track results, continuously learn, iteratively evolve, and periodically rebuild your entire system.

2) Leadership Support and Empowerment

The success of social media programs can be influenced by the degree of leadership support and decentralized decision-making inherent in the process. To me, leadership support means two things: 1) empowering employees and 2) encouraging new ideas by involving social media gurus.

First, empower employees. Senior leaders in most traditional companies are digital immigrants and they are still getting up to speed on these new channels, they need to have trust in the digital natives — the thinkers who have come of age in the digital era. Smart leaders will empower the digital natives to make decisions as they themselves learn the ropes. In time, it is likely that companies which support employees to deliver on new social media initiatives will be the clear winners and innovators. Take, for example, the story of P&G, which is recognized for pioneering sponsored advertising in soap operas when TV was the next big thing.

Secondly, involve social media experts. It is challenging to launch company “firsts” in social media, even if you are working with people who have a can-do attitude and are empowered to drive these initiatives forward. Employee burnout and retention can happen with social media, just as it can with any other creative endeavor. Whether as a leader or peer, continually identifying and retaining people who are skilled in social media will help serve any establishment seeking to make inroads in this space.

3) Form Progressive Partnerships

At its heart, social media is about people and relationships. You can say this applies for anything in marketing, but I believe it is especially true for social media.

In the beginning, the process is about finding and retaining the right employees who are resilient, can work within internal processes, and who are also willing to challenge the ideas when appropriate. However, quickly, this evolves to fostering the right external partnerships. At OPEN Forum, we are fortunate to partner with big brands, small brands, and individuals’ brands. We partner with major online publications like Mashable, experts like Guy Kawasaki, and sponsors like FedEx, along with some of the best and brightest small business owners out there — our customers. (Also, on a personal note about relationships, it’s especially nice to work with another Columbia Business School grad, Julie Hansen ’03 (EMBA) of The Business Insider.)

Through listening and remaining open to opportunities with our partners, we’re able to exchange value organically, in a way that creates efficiencies and opportunities for all. As an example, we frequently meet with small business owners to find what is working for them and what they need (including my own personal experience consulting for SweetRiot, one of our small business retail customers). We help drive their business growth by offering advice, and they come to better understand the value of our products and services so they use them more — it’s a win-win situation. Do this authentically and consistently and you will win. I will leave you with a final thought — whether you are a digital immigrant or digital native, it’s imperative that marketers realize that social media is the business strategy — not just a part of the business strategy. So, keep this in mind as you start to get social and you will be truly successful. If you have any questions, feel free to tweet me at @brianlenhart.

Photo credit: Mike Paradise

“How do we make decisions under uncertainty?” Professor Wei Jiang posed the question to an audience of students last week during orientation. The question not only referred to the lecture’s topic — the financial crisis — but was offered as a framing device for students as they begin core classes in the MBA program this week.

“This will be the most important skill you can develop,” she said.

A new orientation module focused on the financial crisis was created this year to give new students an overview of the causes and issues of the crisis and provide key questions that connect it with upcoming courses in the core. In her lecture, Jiang considered different aspects of the crisis including international policy, behavioral bias, compensation structure, government regulation and risk models.

The module is part of a larger initiative by the School to use the financial crisis as a vehicle to foster integrative thinking in business training. Another element of that initiative is the creation of a new cross-discipline class, which will launch in Spring 2010, on the future of financial services. During the past summer term, former chief legal officer of Lehman Brothers, Thomas Russo, taught a half-term course looking at the crisis.

“Look ahead as well as look around you,” Jiang told students at the end of her lecture. “Think in terms of tradeoffs and equilibrium.”

Photo courtesy of Columbia Business School