Before there was Facebook, the social media juggernaut which is changing how we communicate – and might change the face of media – there was MySpace. MySpace was targeted at the same audience, had robust capability, and was to market long before Facebook. It generated enormous interest, received a lot of early press, created huge valuation when investors jumped in, and was undoubtedly not only an early internet success – but a seminal web site for the movement we now call social media. On top of that, MySpace was purchased by News Corporation, a powerhouse media company, and was given professional managers to help guide its future as well as all the resources it ever wanted to support its growth. By almost all ways we look at modern start-ups, MySpace was the early winner and should have gone on to great glory.
But things didn’t turn out that way. Facebook was hatched by some college undergrads, and started to grow. Meanwhile MySpace stagnated as Facebook exploded to 600 million active users. During early 2010, according to The Telegraph in “Facebook Dominance Forces Rival Networks to Go Niche,” MySpace gave up on its social media leadership dreams and narrowed its focus to the niche of being a “social entertainment destination.” As the number of users fell, MySpace was forced to cut costs, laying off half its staff this week according to MediaPost.com “MySpace Confirms Massive Layoffs.” After losing a reported $350million last year, it appears that MySpace may disappear – “MySpace Versus Facebook – There Can Be Only One” reported at Gigaom.com. The early winner now appears a loser, most likely to be unplugged, and a very expensive investment with no payoff for NewsCorp investors.
What went wrong? A lot of foks will be relaying the tactics of things done and not done at MySpace. As well as tactics done and not done at Facebook. But underlying all those tactics was a very simple management mistake News Corp. made. News Corp tried to guide MySpace, to add planning, and to use “professional management” to determine the business’s future. That was fatally flawed when competing with Facebook which was managed in White Space, lettting the marketplace decide where the business should go.
If the movie about Facebook’s founding has any veracity, we can accept that none of the founders ever imagined the number of people and applications that Facebook would quickly attract. From parties to social games to product reviews and user networks – the uses that have brought 600 million users onto Facebook are far, far beyond anything the founders envisioned. According to the movie, the first effort to sell ads to anyone were completely unsuccessful, as uses behond college kids sharing items on each other were not on the table. It appeared like a business bust at the beginning.
But, the brilliance of Mark Zuckerberg was his willingness to allow Facebook to go wherever the market wanted it. Farmville and other social games – why not? Different ways to find potential friends – go for it. The founders kept pushing the technology to do anything users wanted. If you have an idea for networking on something, Facebook pushed its tech folks to make it happen. And they kept listening. And looking within the comments for what would be the next application – the next promotion – the next revision that would lead to more uses, more users and more growth.
And that’s the nature of White Space management. No rules. Not really any plans. No forecasting markets. Or foretelling uses. No trying to be smarter than the users to determine what they shouldn’t do. Not prejudging ideas so as to limit capability and focus the business toward a projected conclusion. To the contrary, it was about adding, adding, adding and doing whatever would allow the marketplace to flourish. Permission to do whatever it takes to keep growing. And resource it as best you can – without prejudice as to what might work well, or even best. Keep after all of it. What doesn’t work stop resourcing, what does work do more.
Contrarily, at NewsCorp the leaders of MySpace had a plan. NewsCorp isn’t run by college kids lacking business sense. Leaders create Powerpoint decks describing where the business will head, where they will invest, how they will earn a positive ROI, projections of what will work – and why – and then plans to make it happen. They developed the plan, and then worked the plan. Plan and execute. The professional managers at News Corp looked into the future, decided what to do, and did it. They didn’t leave direction up to market feedback and crafty techies – they ran MySpace like a professional business.
And how’d that work out for them?
Unfortunately, MySpace demonstrates a big fallacy of modern management. The belief that smart MBAs, with industry knowledge, will perform better. That “good management” means you predict, you forecast, you plan, and then you go execute the plan. Instead of reacting to market shifts, fast, allowing mistakes to happen while learning what works, professional managers should be able to predict and perform without making mistakes. That once the bright folks who create the strategy set a direction, its all about executing the plan. That execution will lead to success. If you stumble, you need to focus harder on execution.
When managing innovation, including operating in high growth markets, nothing works better than White Space. Giving dedicated people permission to do whatever it takes, and resources, then holding their feet to the fire to demonstrate performance. Letting dedicated people learn from their successes, and failures, and move fast to keep the business in the fast moving water. There is no manager, leader or management team that can predict, plan and execute as well as a team that has its ears close to the market, and the flexibility to react quickly, willing to make mistakes (and learn from them even faster) without bias for a predetermined plan.
The penchant for planning has hurt a lot of businesses. Rarely does a failed business lack a plan. Big failures – like Circuit City, AIG, Lehman Brothers, GM – are full of extremely bright, well educated (Harvard, Stanford, University of Chicago, Wharton) MBAs who are prepared to study, analyze, predict, plan and execute. But it turns out their crystal ball is no better than – well – college undergraduates.
When it comes to applying innovation, use White Space teams. Drop all the business plan preparation, endless crunching of historical numbers, multi-tabbed Excel spreadsheets and powerpoint matrices. Instead, dedicate some people to the project, push them into the market, make them beg for resources because they are sure they know where to put them (without ROI calculations) and tell them to get it done – or you’ll fire them. You’ll be amazed how fast they (and your company) will learn – and grow.
Adam – some important ideas here. Well put. There’s an application to onboarding as well in that onboarding into a whitespace culture (open to change as you describe) requires enormous flexibility on the part of the person doing the onboarding.
See http://www.primegenesis.com/blog/4731/onboarding-into-whitespace/ for my full comments.
George Bradt
PrimeGenesis Executive Onboarding
Adam: I like the distinction you raise of traditional top down planning and execution vs. trying stuff and doing more of what works and less of what doesn’t. I see an interesting parallel to product innovation in process innovation — companies that build in continuous process improvement, like Toyota, try a lot of process improvement experiments. Using the scientific method, they plan, do, check, and adjust in a number of cycles. It’s the scientific method.
This is quite simply wrong. … Not that what you write about managers vs. “letting the market dictate” is wrong unto itself …. but that’s only a small part of it.
The biggest reason why MySpace lost to Facebook was because MySpace’s UI/design was a bloated, awful mess – allowing people to basically wreak havoc with the pages … thus making the user experience horrendous compared to Facebook. Everything that came from that … all the different ways of interacting on Facebook … were driven by the needs/wants of people using it … but that never would’ve happened had the design/code/interface been good to begin with.
Also … Facebook didn’t just let their API go into the wild and let people do what they wanted with it. The market may have dictated things – by creating things like Farmville, etc… – But the sandbox that developers were allowed to play in, was confined to certain terms by Facebook. This allowed users to know that these apps would fit inside the Facebook design/API … not allow it to blow it up. (subsequent security issues notwithstanding)
Sorry – the above should’ve said “it never would’ve happened had the design/code/interface NOT been good to begin with”
This transition from mySpace to Facebook, for users, was happening before mySpace was bought by NewsCorp. The managers had nothing to do with it.
Facebook is simply a better application, from the get go. The things you state above are well and good and touchy feely, but really had nothing to do with it in a macro sense.
Adam H – consider adding the pre-SBC AT&T to the list of failed companies … another once dominant market leader that not only failed for analysis-paralysis reasons you mention, but at least on some fronts was guided there for a fee with ‘expert advice’ from the likes of McKinsey Consulting (influencing C-levels to unload the wireless business early on before buying back the same wireless business at 10 times the price tag).
Adam W. – fair point about Facebook gaining significant momentum on MySpace before News Corp acquired MySpace.
Adam H. – curious to get your thoughts on two very different tactics by Facebook that generally runs counter to the premise of your post:
1) Over recent years Facebook has introduced design/layout/flow changes that has upset many in the Facebook user community (often spawning Pages &/or Groups “against changes”.
2) Facebook has made several missteps in terms of introducing (sometimes quietly) ways for user data to be harvested, setting off privacy alarm bells and sometimes requiring Facebook to issue apologies and/or quickly deploy patches to flip auto opt-in to auto opt-out.
‘Typically’, about any other company that made even one misstep of the magnitude the above represent would suffer rather significant consequences. However, Facebook has literally ignored outcries from their user base multiple times on both of these fronts (as well as lampooning in the popular culture), yet its growth trajectory continues unaltered.
I am not aware of a box or label for this phenomena other than sometimes there are remarkable exceptions.
Hi John, I admire that Facebook limits its use of customer input on product design. If you follow “best practice” and use focus groups and surveys of existing customers they’ll tell you to make your current product better, faster and cheaper. Not very insightful, puts you into continuous improvement mode with modest enhancements, and leaves you susceptible to competitors who deliver a better solution.
Facebook is in an emerging market. It is destined to change considerably year over year for a fair while. Thus it is important to “get ahead” of customers and start developing what they will really want, at a future time, based upon most likely future technologies and future needs. In other words, it is important to think beyond the customer to give them not only what they want now, but what they’ll went then.
Facebook smartly eschews immediate customer concerns, when necessary, to remain at the forefront of bringing in new customers and driving growth. They risk the existing customer relationship by stretching beyond that customer statement to deliver new capabilities that bring in new users, and drive additional use by current users. Doing so will help Facebook not become the next MySpace.
Reminds me of the famous comment by Henry Ford (” … if I listened to customers I would have focused on inventing faster horses …”)