think: act Special - Cloud Economy - Roland Berger

think: act – Special Volume Two – Cloud Economy 

think: act – Special Volume Two 

Cloud Economy 

The path to new 

business models 

Tapping the extensive amount of data 

generated by social networks and other Web 

2.0 applications can provide businesses 

with a wealth of ideas

Understanding the 

Cloud economy? 

Value 

added 

Cloud 

Commerce 

Virtualization 

of the consumer 

experience 

The cloud economy uses Web 2.0 technology, social media, and cloud 

computing to virtualize social and economic activities 

What it comprises: 

Building blocks of the Cloud Economy 


collaboration 


computing 

Virtualization of computer 

resources and systems 


commun ICation 


community 

Virtualization 

of relationships 

(i.e., new forms of 

social interaction 

on the Internet) 

Web 2.0 Advanced Internet technologies (Ajax, RSS) that facilitate interaction, interoperability, and user-oriented design 

Social Media Internet-based applications and platforms that enable the creation and exchange of (user-generated) content 

Cloud Computing Web-based resources, software, and information that are available on demand and in real time 

• Manual labor 

and agricultural 

production 

• Social stratification 

and low levels of 

population 

• Mercantilism and 

feudal economies 

Virtualization of the 

interaction between 

people and organizations 

Today's global economy is developing into a cloud economy 

that is focused on social networking and shared resources 

Evolution TOWARD the Cloud Economy 

• Rapid technological 

advances 

• Wide range of goods 

and services 

• Marketing and 

PR: one-way 

communication 

• Prior to the Internet era 

Virtualization of 

information sharing 

Digital 

Economy 



Editorial 

Dear reader, 

Is there any real substance behind the much-hyped business 

models of Facebook, LinkedIn and other social networks? Can 

“normal” companies profit from these models, or are we seeing 

another bubble in the making? 

I believe there is no clear answer to this question. Goldman 

Sachs’ investment in Facebook, worth a reputed USD 1 bn, has raised 

very high expectations and so has LinkedIn, worth USD 8.9 bn at the 

close of its first day’s trading, with sales of USD 243 m and profits of 

USD 15 m. These figures strongly suggest a bubble; sky-high hopes 

which are unlikely to be fulfilled. 

However, I’m convinced that Facebook, LinkedIn et al aren’t just 

starry-eyed optimism. Social networks are simply the most obvious 

manifestation of a trend in which ever-larger parts of our personal lives 

are shifting online, which gives us 24/7 access to our friends. Business 

networking is also gradually making the transition to virtual reality. 

This transformation has a huge 

amount of business potential. We call it 

the cloud economy; an environment in 

which companies can use new technology 

to harvest huge quantities of online user 

data and integrate it into their business 

models. 

In this think:act SPECIAL, we review the 

status quo and highlight the opportunities 

and difficulties that face businesses 

migrating toward the cloud economy. We 

hope you enjoy this issue of our magazine. 

With best wishes, 

Martin Wittig 

CEO Roland Berger Strategy Consultants 

Traditional 


manufacturing 


• Knowledge creates wealth 

• Content is king: 

communication becomes 

a two-way process 

• Dominance of online social networks 

• Social components in most business models 

• Democratization of raw computing resources 

• Just-in-time IT 

• Easy and widespread access to tools that 

enable collaboration and connection 

• Multiple-level conversations 

UP TO 1800 UP TO 1950 up to 2010 2010 ONWARD 

THINK:Act Cloud Economy Special 3

Page 26 

Content 

Rubrik hier 

Food for thought 

6 The Cloud: It´s not just a heap of servers 

Cloud computing, interactive Web 2.0 ap plications, 

and social networking mean that the cloud economy is 

fast becoming a reality 

42 Moroccans like this 

Moroccan mobile communications provider Méditel is 

strategically using social networking sites to connect 

with customers and increase sales 

Page 14 

Page 42 

9 The mechanics of the social network 

Businesses must find their way in an ever-increasing 

number of online communities. 

An overview 

14 Carrying your customers in your pocket 

It is not always easy to decipher who uses 

social media or what they use it for, but this lack of 

clarity can be turned into an advantage 

Strategy 

18 The way into the cloud economy 

Strategically representing themselves on 

Facebook and Twitter is a contentious issue for many 

businesses. We find out more 

44 Hive intelligence 

Increasing numbers of companies are acting on consumer 

suggestions when it comes to developing new 

products and services 

48 Reading the runes 

Some companies already know what products their 

customers will be buying tomorrow – even before 

many of the customers do 

52 A friend in need 

It’s quicker, cheaper, and more efficient – and those 

are just some of the advantages of offering customer 

service via social media 

Services 

Page 38 

Page 54 

Page 62 

24 Understanding the customer, bit by bit 

It’s as true today as ever: success is all a 

matter of knowing your market’s needs. Today, the 

cloud economy is making it easier to find out exactly 

what these are 

26 “If you have a sound strategy, 

you have nothing to fear” 

How important is the cloud economy for businesses? 

A conversation between Martin Wittig (CEO RBSC) 

and Sascha Lobo (Internet strategy consultant). 

Industry Report 

36 China: coining it in silence 

China has some very enterprising Internet companies, 

but it is hardly a powerhouse of innovation. Some 

Western firms have managed to break into the Chinese 

market. 

38 How the everywhere-Internet 

is making real life better 

Young U.S. entrepreneurs are looking for ways to 

make money from smartphones and the mobile Internet 

with apps designed to make users’ lives easier 

54 Learning to listen 

Social media platforms and changing lifestyles are 

making a new culture of business communication 

necessary. 

58 Seller’s market 

With specialist skills in increasingly short supply, 

human resources managers must turn to Web 2.0 if 

they want to beat their competition in attracting the 

most gifted minds 

60 “It’s important to form your own picture” 

Information scientist Angelika Ruppel is well aware 

of the security concerns regarding cloud computing, 

and recommends a few precautions 

Essay 

62 The rain dancers 

Over the years, the Internet has lurched from 

one over-hyped “next big thing” to another. 

Is the cloud economy anything more than a 

nebulous catchphrase? 

66 Imprint 



Low barriers to entry: 

Even companies in 

developing countries 

can profit from the 

cloud economy. 

The Cloud: 

It’s not just a heap 

of servers 

Cloud computing – processing, storage capacity and software 

distributed on the Internet – is the basis of the very interactive 

Web 2.0. As these tools become more powerful they are playing 

an increasingly important role in our everyday lives. The cloud 

economy is fast becoming a reality 

W 

hen Oracle boss Larry Ellison makes a public appearance, 

it’s show time. The eccentric billionaire has been 

cultivating his maverick, rabble-rousing image for decades. 

Back in 1995, Ellison and Bill Gates held a public 

debate in Paris, France on the future of the P.C. While 

Gates proclaimed the proven, universal, virtues of the 

standalone machine that essentially did whatever you told it to, Ellison insisted 

that the future lay with cheap, dumb terminals. Software, applications and services 

would reside on the network, available whenever a user needed them. 

For a long time, Ellison’s idea looked like pie in the sky. These were the days 

of the 1.44MB diskette, when distributing data online sounded impossible and 

ludicrous. When Apple shipped the first iMac computer in 1998, observers seemed 

more interested in its distinctive looks than in the fact that, unlike other home 

and office machines, it had no floppy drive. 

Today, as Ellison’s vision starts to take shape, he could be excused for saying 

I told you so. Without Internet access, today’s PCs are essentially glorified 

typewriters. TVs, mobile phones, cars, and even banal domestic appliances like 

refrigerators, are going online. 

Companies like Facebook and Google base their entire multi-billion-dollar 

business models on putting information on the net. Cloud computing offers 




New markets and products spring up almost 

overnight, existing markets are transformed 

in an instant 

worldwide access to virtually unlimited 

processing power and storage capacity, 

which are being used to create virtual 

Web 2.0 platforms where we live out 

large parts of our everyday lives, working, 

shopping, and talking to private networks 

of friends and relatives. 

This cultural shift is also affecting 

large areas of industry. New technology 

allows new forms of communication and 

cooperation. Ideas, opinions and experiences 

can be shared quickly and easily in 

these new forms of communication, and 

new products and markets spring up almost 

overnight. 

The cloud economy is rooted in patterns 

of interaction borrowed from social 

networks and cloud computing, where 

the real and virtual business worlds mix 

and complement each other. It is also an 

opportunity for established businesses to 

expand at relatively low cost. 

Brazil and India 

The cloud is also good news for startups 

and small businesses, particularly 

businesses in developing countries. The 

barriers to market-entry are low; all 

you need to create a convincing business 

model is a low-end P.C. and a fast 

Internet connection. In Brazil, for example, 

one of the most popular websites 

is BuscaPé, a price comparison site. Its 

founder, Romero Rodriguez, said on a 

BBC television program, “A lot of people 

spend their weekends in shopping malls. 

On Monday, which is the day when we 

get the most transactions, these people 

go to work and shop during their lunch 

breaks. They use online information to 

make offline purchasing decisions, and 

vice versa.” 

Statistics 

Emerging markets 

India: 

Area: 3.3 million square 

kilometers 

Population: 1.19 billion 

Population density: 382 per 

square kilometer 

Per capita GDP: $3,400 

Brazil: 

Area: 8.5 million square 

kilometers 

Population: 203.4 million 

Population density: 21.8 per 

square kilometer 

Per capita GDP: $10,900 

With Brazil being the home to an estimated 

100,000 Internet cafés, getting 

online is easy. The big social networks are 

as popular in Brazil as they are everywhere 

else; more than six million Brazilians 

have Facebook pages, and over one 

million use LinkedIn. Orkut, a network 

similar to Facebook but operated by 

Google, is much more popular. 

The seeds of further growth in Latin 

America’s biggest country have already 

been sown. With 203 million, increasingly 

affluent, inhabitants and over 210 

million mobile phones, it’s only a matter 

of time until the mobile Internet catches 

on in a big way, providing even more opportunities 

for people with ideas, like 

Romero Rodriguez. India is also growing 

in prosperity as it grasps at the opportunities 

afforded by computer technology. 

Bangalore’s rise from relative remote status 

to IT powerhouse is a classical economic 

success story. A large proportion 

of the world’s software companies use Indian 

workers and, even more remarkably, 

India is profiting from the growing proliferation 

of communication channels; it 

has the fifth largest number of Facebook 

users in the world, at over 20 million, and 

almost as many Orkut members. 

Two thirds of the population – 765 

million people – have phones, but India 

has only 35 million landlines. Helping 

Indians to communicate can be a 

profitable business; the country’s ten 

largest companies include two telecommunications 

providers, Bharti Airtel and 

Reliance Communications. As Internet 

access becomes more widespread, an 

increasing number of India’s 1.3 billion 

citizens will recognize and exploit the 

potential of the cloud economy. 

The mechanics of 

the social network 

With new channels and communities springing up online every day, it can 

be hard for businesses to decide which ones matter most to them. In spite of their 

apparent diversity, these forms of communication actually rely on a relatively 

small number of business models 

L 

ike. That one little word, the result of a single 

mouseclick on Facebook, is creeping into other aspects 

of everyday life. Is it a passing fad, a cultural 

transformation, or a blurring of the boundaries between 

the online and real worlds? The most active 

users of Facebook and similar sites are no longer 

just the usual young, hip and urbane suspects, but 

a worldwide mass movement that transcends generational 

differences. Users are just as at home on the Internet as 

they are in real life; they buy things, make dates, and gossip about 

products, projects, and jobs. 

These sites have become an integral part of our work and home 

lives, quickly gaining social acceptance because the underlying technology 

has been around for years and enjoyed proven success. Here 

are some of the most important categories of the social network: 

Instant Messaging 

What is instant messaging? 

Instant messaging (IM) allows users to communicate 

in real time, primarily by text message. To do 

this, users must sign up with a provider. The most 

popular providers in Europe and America are AOL’s 

ICQ, Windows Live Messenger, Yahoo Messenger, 

and Skype. The main provider in Asia is Tecent QQ. 

Many corporate IT solutions include IM applications; 

when users log on, they can see which of their 

friends, colleagues, and customers are online. 

8 THINK:Act Cloud Economy Special THINK:Act Cloud Economy Special 9



What you should know about instant messaging? Four years 

ago, IM was regarded as the communication medium of the future. 

The U.S. market research company Gartner forecast that by 2011 IM 

would be the main tool for speech, video and text messages. By 2013, 

they predicted, 95% of all corporate communication would take place 

in real time, in many cases replacing email and SMS. 

“Instant messaging will sweep the board in companies just as 

emails once did,” the experts wrote in their 2007 study which advised 

businesses to start incorporating instant messaging within 

their systems as quickly as possible. Many companies did, but IM 

usage has remained largely unchanged since 2007 and, according 

to a forecast by UK Online Measurement, IM usage is beginning to 

decline. In 2007, British users spent 14% of their time online using 

IM and by 2010 usage had fallen to 5%. 

Even in 2007, Gartner was well aware of IM’s weaknesses; messages 

are more difficult than emails to archive systematically, and 

the market is still fragmented, with most IM systems being proprietary 

and incompatible with others. If you want to use it both at 

home and at work, you have to set up separate accounts and address 

books with separate providers. IM’s biggest weakness is being tied 

to the computer. For a long time, most services could only be accessed 

in this way. Even with users becoming increasingly mobile, 

thanks first to mobile phones, then to BlackBerrys, and now to 

smartphones, IM is still a deskbound application. British journalist 

and media analyst Chris Green claims, “People have moved on. 

The novelty value has worn off.” 

Real-time communication does still exist. California-based market 

research company The Radicati Group estimates that there are 

around 2.4 billion IM accounts. They also estimate that this number 

will rise to 3.5 billion by 2014. This medium may be of secondary 

importance today, but a similar principle is used on Facebook and 

other social media networks, and in Internet telephony services such 

as Skype. 

Blogs 

Instant 

Messaging 

SOCIAL 

NETWORKS 

Sharing 

& Hosting 

The reputation of blogs improves all the time, 

with more and more companies valuing them as a 

medium that allows them to talk to customers on a 

daily, weekly or more sporadic basis. 

What you should know about blogs Corporate 

blogs are usually embedded in companies’ own websites, 

and often contain posts by multiple employees 

about products, strategies, and other news. European 

companies have been slow to set them up so 

they number only in the hundreds, while their U.S. 

counterparts have published thousands of blogs. A 

very small number of CEOs have their own blogs. 

In the United States, General Motors’ FastLane 

Blog and Southwest Airlines’ Nuts about Southwest 

form an integral part of their communication with 

customers, employees, and other third parties. 

The opportunities Blogs provide companies with 

three main opportunities. First, they provide a way of 

connecting with customers, and that can be used as a 

marketing tool. Second, they can boost the business’ 

reputation, for example, by announcing strategic 

decisions or getting leading figures in the company 

to answer customers’ questions. Finally, they are an 

excellent communication tool in both good times 

and bad. 

Ben Shneiderman, a professor at the University of 

Maryland’s computer science and human-computer 

interaction lab, says blogs have other uses as well. “In 

the health sector, they can bring together experts and 

members of the public to gather information which 

can support and improve research and health policy.” 

Shneiderman says there are other opportunities in 

areas as varied as training, catering, and disaster 

relief. 

What is the blogosphere? 

Jean-Remy von Matt, the owner of Germany’s leading advertising 

agency, once described blogs as, “the toilet walls of the Internet”. 

Since anyone can publish anything they like in a blog, there’s no 

guarantee of quality. Though standards may be extremely high, as 

leading bank analysts have found, amateur bloggers have regularly 

produced more accurate forecasts of Apple’s quarterly numbers than 

specialists at Goldman Sachs, Morgan Stanley and Deutsche Bank. 

Blogs 

Lots of logos, lots of 

communities – but a 

surprisingly small number 

of business models. 

The risks Blogs attract the attention of existing and 

potential customers, but they are also magnets for 

detractors. Companies that communicate in public 

must expect criticism, and should never underestimate 

how well networked Internet users have become. 

Even small adverse reactions can quickly go viral, and 

the more negative exposure you receive the greater the 

likelihood that your reputation could be damaged. 

This can be a serious risk when your company’s inter- 



Rubrik hier 

“A lot of people share their opinions 

with the world, but not everyone does it 

in the same way” 

Mikolaj Jan Piskorski, professor at the Harvard Business School 

WEB 2.0 Social networks 

with more than 20 million registered users, and their geographical spread: 

ests clash with those of your customers over issues that have no direct 

connection with your business. 

One example of the power of blogs occurred at Siemens when 

employees found out from an internal blog that, then chief executive, 

Klaus Kleinfeld wanted to increase directors’ pay. Employees then 

leaked the information to the press. The ensuing media coverage 

and public debate was highly critical of Siemens, and the plans were 

quietly dropped. 

The challenge All companies should have blogging strategies. 

Experts at the U.S. market research company Top Rank Online 

Marketing say that blogs should not focus solely on increasing public 

perception of the business; customers soon see through this and may 

become angry and hostile. If companies want to promote communication 

with consumers, they need to do more than just marketing; 

they must create a high-quality, authentic dialog with users. 

Twitter 

Changing communication habits 

The microblogging site Twitter took mere months to conquer the 

Internet, and it allows bloggers a maximum message length of 140 

characters. Twitter’s main feature is that readers can easily forward 

messages they receive, potentially reaching a huge worldwide community 

in seconds. Krishna Gummadi, of the Max-Planck-Institut 

für Softwaresysteme, in Saarbrücken, is working with a team of 

scientists at the Korean Institute of Science and Technology to investigate 

why information spreads so rapidly, by analyzing around 

1.75 million tweets. 

Soumitra Dutta, academic director of the digital economy research 

center at the INSEAD business school in Fontainebleau, 

believes that Twitter is far from exhausting its potential, “Twitter 

is a great real-time, people-to-people search engine. It means you 

get very quick feedback and answers from people. That’s the power 

of Twitter, and it’s going to stay that way for a long time to come.” 

Social Networks 

What are social networks? 

The Internet is a world of its own in which digital 

natives move around as easily as they do in real life, 

sharing their news, lives, and problems. 

Managers cannot afford to steer clear of the giant 

among social networks. “Facebook now has around 

680 million members,” says Soumitra Dutta. “CEOs 

and companies need to have a presence there.” The 

most successful corporate page on Facebook is Coca- 

Cola’s; the company has 30 million fans, and social 

networking is a key component of its marketing 

strategy. 

The benefits Having lots of Facebook friends does 

more than simply enhance your image. Uptal M. 

Dholakia, an associate professor at Rice University in 

Houston, Texas, has used the example of a local café 

chain, Dessert Gallery, to show the tangible financial 

benefits of a successful corporate page. Customers 

visit its branches an average of 20% more often after 

they friend it on Facebook. They also generate more 

positive word-of-mouth publicity, show greater loyalty 

to the company, and spend more money there 

than in other cafés. 

Other big names Of course Facebook isn’t the only 

important social networking site. Friendster, Orkut 

and MySpace have prominent followings, Facebook’s 

Chinese rival Qzone, launched just a year 

later in 2005, has 480 million users, and is followed 

by the U.S. network Bebo, with around 117 million 

members. 

There are also many sites with strong regional 

roots, such as the Russian Facebook clone VKontakte, 

China’s Mixi, South Korea’s Cyworld and the 

U.S. site Hi5, which is particularly popular among 

Latin American users. 

“Companies should also pay attention to these 

sites if their users are relevant to them,” says IN- 

SEAD’s Soumitra Dutta. Managers can also register 

with business networks such as the U.S.-based 

BEBO / BEBO / 

117 million 117 million 

North America North America 

BEBO / 

ORKUT 117 ORKUT million / / 

100 North million 100 America million 

India, Brazil India, Brazil 

HI 5 ORKUT / HI 5 

/ 

80 million 100 

80 

million 

million 

Latin India, America Latin 

Brazil 

America 

HI 5 / 

80 million 

Latin America 

BEBO / 

117 million 

VKONTAKTE / 

North America 

135 million 

LinkedIn, Germany’s Xing and the French site Viadeo. “These Russia are 

better for specifically business purposes than sites like Facebook, 

because they have a more homogeneous user community,” Dutta Diverse content 

adds. However depending on your business model, this uniformity 

can also be a drawback. 

ORKUT / 

100 million 

VKONTAKTE VKONTAKTE / / 


Russia Russia 

QZONE / 

480 million 

China 

FACEBOOK FACEBOOK / LINKEDIN / LINKEDIN / / MYSPACE/ MYSPACE/ VIADEO VIADEO / / 

680 million 680 million 100 million 100 million60 million 60 million 35 million35 million 

worldwide worldwide worldwide worldwide worldwide worldwide worldwide worldwide 

FACEBOOK / 

680 million 

worldwide 

VKONTAKTE / 

135 million 

Russia 

LINKEDIN / 

100 million 

worldwide 

Regional India, differences Brazil Social networks are used differently from one 

region to another. “A lot of people share their opinions with the world, 

but not everyone does it in the same way,” said Mikolaj Jan Piskorski, 

associate professor of business administration at Harvard Business 

School, in HI a 5 recent / study. Cyworld, for instance, is structured as a huge 

80 million 

game, and more than half of South Korea’s population has an avatar 

Latin America 

there. In Japan, Germany and the United States, the website operator 

SK Telecom introduced this concept, and it failed. 

QZONE QZONE / / 


China China 

MYSPACE/ 

60 million 

worldwide 

MIXI / MIXI CY / CY 

29 million29 million WORLD / WORLD / 

Japan Japan 24 million24 million 

FRIENDSTER FRIENDSTER / / 

South Korea South Korea 


Southeast Southeast Asia Asia 

FRIENDSTER / 

115 million 

Southeast Asia 

VIADEO / 

35 million 

worldwide 

FRIENDSTER / 

115 million 

Southeast Asia 

Sharing-Platforms 

MIXI / 

29 million 

Japan 

MIXI / 

29 million 

Japan 

CY 

WORLD / 

24 million 

South Korea 

In recent years, sites allowing users to share photographs, 

videos and music have acquired an important 

role in the complex social media infrastructure. YouTube, 

founded in California in 2005, is the world’s third most 

QZONE / 

popular website and has spawned many imitators. The 

480 million 

world’s China top 100 most popular sites include large numbers 

of sharing and hosting services such as the Chinese 

video sites Tutou and Youku and the photo portals Flickr 

and ImageShack. However, social media sites such as 

Facebook are increasingly inching out these sites. 

CY 

WORLD / 

24 million 

South Korea 

12 THINK:Act Cloud Economy Special THINK:Act Cloud Economy Special FACEBOOK / LINKEDIN / MYSPACE/ VIADEO / 

13 

680 million 100 million 60 million 35 million 

worldwide worldwide worldwide 

worldwide


Carrying your customers 

in your pocket 

Social media sites are self-contained communities. It is not always 

easy to decipher who their members are or why those members 

participate, so many businesses remain unconvinced of their merit 

as a promotional tool. However, this lack of clarity can still be 

turned into an advantage 

N 

o matter what your age or interests, 

there are millions of like-minded people 

waiting to talk to you. When companies 

try to forge links with communities that 

match their own business objectives, the 

sheer number of potential clients is often 

intimidating. Too often, the result is 

a poorly thought-out and rarely visited 

Facebook page. Another strategy is to buy a ready-made community; 

for example, the German publisher Burda-Verlag acquired 

an already successful fashion blog. 

Taking your existing real-world customers online with you is 

a more elegant solution. Robert Bosch, the German industrial 

giant, best known for its power tools, runs a website for do-it- 

Know your customer: 

Successful businesses use 

social media communities. 

14 THINK:Act Cloud Economy Special



Taking part is not essential 

Social media for CEOs 

People already use mobile 

devices more often than PCs to 

access Facebook and Twitter 

“If you‘re a decision maker, 

your time is precious,“ says 

social media expert Jan-Hinrik 

Schmidt (PhD), of the Hans- 

Bredow-Institut in Hamburg. 

“You can afford to stay away 

from social media sites.” No 

one should feel obligated to 

sign up with Facebook or similar 

sites purely for PR purposes, 

he believes. A profile on a 

business-networking site like 

Xing or LinkedIn is a necessity 

for many industries, and can 

be good for your reputation 

and for your contact list. If 

you‘re a senior employee or 

a well-known figure, you may 

quickly be overwhelmed by 

the response; everyone will 

want your name on his or her 

list of contacts. “If people are 

just friending you for their 

own benefit, don‘t be afraid to 

say no.” Likewise, Jan-Hinrik 

Schmidt advises on friending 

reasonably large numbers of 

people, rather than adding 

everyone just to increase the 

size of your network. “After all, 

when you go to a conference, 

you don’t give your card to 

everyone there.” 

Experts differ over the optimum 

size for an individual‘s 

social network. Sociologist 

Robin Dunbar believes the 

human brain is capable of 

managing no more than 150 

friendships, and claims his 

theory is validated by the web, 

though he has yet to publish 

the results of his research. 

He points to theories developed 

by his colleague Mark 

Granovetter in the 1970s, 

which claim that it is impossible 

to form close relationships 

with large numbers of people. 

Social networks tend to be 

both closed and tight-knit, but 

even the more tenuous connections 

between individuals 

can represent bridges to other 

networks of information and 

contacts. These can be valuable 

even to the most hardpressed 

of senior managers. 

yourself enthusiasts, complete with a wiki and 

a forum for specialist questions such as how do 

you switch off the pendulum stroke of a jigsaw? 

Members seek advice on projects, and post profiles 

detailing the specific skills they can offer to 

others. The community is self-regulating and the 

members invest a great deal of time and passion 

in policing the rules they have put in place. Bosch 

adopts a low-key role while it advertises workshops 

and competitions and holds chat sessions 

with its in-house experts. This hive of unfiltered 

activity makes the site particularly attractive to 

new visitors. It all began with a series of meetings 

in real-world hardware stores, where Bosch 

invited customers and interested parties, already 

active in DIY forums, to help plan the site. This 

proved a great success, and the idea quickly went 

viral thanks to recommendations on Facebook 

and elsewhere on the Internet. Often, virtual 

interaction turns into real-life encounters; for 

example, users might volunteer to help one of 

their members install a garden shed. The site 

is good for Bosch’s image and it has additional 

benefits as well. For instance, the company is able 

to utilize members to test and evaluate new products. 

The “get involved” principle also applies in 

other industries; US pizza-delivery company 

Papa John’s held an online competition inviting 

visitors to suggest recipes for its restaurants. The 

winner earned a 1% slice of the sales Papa John’s 

generated, while the promotion earned the company 

generous levels of online buzz. 

Social media must add value 

It helps to know some basic information about 

the members of your community, such as their 

ages, occupations and geographical locations. 

Social media allows you to create virtual relationships 

with customers down the street or on the 

other side of the world. Experts recommend creating 

different sites for different groups to maximize your 

international profile and use the community to add 

value. One big no-no is starting a blog and losing interest 

a few months later. The benchmark of success 

for any social media platform is the degree of activity 

it generates, and the best sites often demand a lot of 

hard work, persistence, and money. Providing users 

with plenty of links to content, and consistently new 

posts, will result in your site being prominently listed 

on Google and other search engines. In the best-case 

scenario, the community becomes an ambassador for 

the company, which makes it priceless. 

Smartphones bring social media 

into the mainstream 

The investment bank Morgan Stanley predicts that 

by 2015, mobile devices will replace traditional PCs 

as the main means of Internet access. Mobile devices 

have already overtaken PCs for posting to Facebook 

and Twitter. Thanks to the smartphone, individuals 

and businesses can carry their social media communities 

around in their pockets. 

Mobile devices are becoming ever more versatile. 

Today’s smartphones know where they are, and can 

pass this information to other people. At times this 

information is shared without their owners’ knowledge, 

though most users are perfectly happy to give 

their consent. The geo-location community Foursquare, 

for instance, is one of the first location-based 

social networks to exploit mobile phones’ GPS capabilities. 

Members advertise their locations, receive 

status reports from their own social networks and 

can also share club and restaurant recommendations. 

Another way of cultivating a sense of community 

is to offer rewards, such as giving away virtual 

stickers and badges to frequent users. Foursquare 

members share badges with their friends and this 

helps encourage competition and interaction. Users 

with high numbers of “check-ins” at a favorite location 

can earn the title of “mayor” for the location, 

which is a title that must be constantly defended. 

The site’s founder, Dennis Crowley, describes “checkins” 

as “the atomic unit of a location’s measurable 

relevance.” The reward principle has its roots in the 

computer games industry, which long ago recognized 

that people are more motivated to play if they receive 

a virtual pat on the back, such as a mention on the 

top scorers’ list. 

Foursquare was founded in 2009, and already 

has more than seven million users. Growing numbers 

of businesses are being marked as “places” 

and use the network as a new way to advertise and 

generate customer loyalty. Businesses can offer gift 

cards or discounts in return for check-ins. Predictably, 

Facebook copied the idea and launched its own 

version, Places, in the summer of 2010. Users of the 

service can see when friends are nearby and arrange 

spontaneous real-world meetings. Facebook Places 

uses a similar business model; one of the companies 

involved in the US launch was Burger King. 

The restaurant offered free Whoppers to community 

members who checked in using the Facebook app. 

In the UK, Mazda attracted huge media interest by 

offering members of its community a 20% discount 

on the MX-5 sports car in return for checking in 

at one of its dealerships on Facebook. In Germany, 

the H&M fashion retail chain offered its Facebook 

friends 25% off any single item. Geoservices like 

these are particularly attractive to businesses with 

strong local roots or multiple branches. 


Staking a claim: 

Rubrik hier 

Work out how to 

use data from the 

cloud, and you‘ve 

struck gold. 

Strategy 

The way into the 

Cloud Economy 

Many companies are destroyed by turf wars between 

departments with differing approaches toward 

Facebook, Twitter and other social networks. How 

can these dis agreements be reconciled? 

Y 

ou could be excused 

for asking why businesses 

expend so much energy on 

this debate. After all, social 

media offers very few direct, 

quantifiable marginal 

gains to themselves or their 

customers. However, these 

companies have the right idea. They are taking 

their messages to customers who spend a large 

part of their time on cloud-based websites, interacting 

and sharing experiences and opinions. 

Having a presence on these sites is not an end 

in itself; every Internet search, product rating, 

financial transaction and profile update leaves a 

footprint on the web, providing potentially valuable 

information for businesses that monitor and 

use information from social networks. 

The volume of data sent via the Internet is 

growing dramatically. Network provider Cisco 

predicts that by 2014 annual traffic will expand 

to 767 exabytes – one exabyte is equal to 

1,000,000,000,000,000,000 bytes. This is 4.3 

times higher than in 2009. In order to store a 

month’s worth of traffic you’d need around 16 

billion DVDs. 

The corporate cloud 

In addition to the rising tide of web-based data, 

businesses generate vast quantities of information 

on their own IT systems or clouds. It happens 

every time a call center resolves a problem 

for a customer, an e-commerce system stores and 

processes an order, or a sales or marketing department 

updates contact, status or feedback data for 

an existing or potential customer. 

The sheer quantity and complexity of this 

data makes it difficult for businesses to use. Yet 

it’s a goldmine of valuable insights into consumer 

needs and behavior, such as new products they’d 

like to see, criticisms and suggested improvements 

to existing products, and solutions to 

problems. Social media profiles tell us a lot about 

users’ demographics and areas of interest. They 


Strategy 

Strategy 

allow big corporations to share some of the competitive edge 

enjoyed by small local rivals, such as corner stores, by helping 

them to understand their customers’ everyday needs and 

wants and engage in a personal dialog with them. 

That’s the theory. In practice, businesses are having difficulty 

staking their claims in the goldmine because the data 

is unsorted and located in so many different places: Facebook, 

Twitter, ratings sites, blogs, and discussion forums. 

The web is a tangle of unconnected information, and the 

challenge is untangling it and exploiting its full potential. 

This is also true of corporate clouds. Companies’ IT infrastructures 

have grown organically over the years, with 

different departments often using different systems. The 

support and customer service functions may use customer 

relationship management software, while production and 

logistics departments use enterprise resource planning programs, 

and sales areas rely on e-commerce solutions. 

Some of these functions are bundled together into business 

intelligence systems, but many individual business 

areas use highly specialized software that they have written 

in-house – and with good reason. They churn out vast 

quantities of data, sometimes of purely internal interest but 

often containing priceless nuggets of information. 

The big problem is that these systems and modules are 

not linked, and the data is not available in a format that 

can be systematically analyzed. To continue the goldmine 

analogy, everyone knows where the motherlode is, but no 

one knows how to extract it. 

Making decisions 

This has created a paradox. In theory, managers should be 

making well-founded and carefully considered decisions 

based on the available data, but in practice they cannot 

because it is patently too complex to use. The predicament 

is made more difficult by the growing number of success 

stories involving companies who have solved this problem. 

At least we now have the technology required to get a grip 

on the huge quantity of data in the cloud, and that technology 

is itself cloud-based. Cloud computing, using today’s infinite 

computing and data storage capacity, offers powerful 

analytical tools that drill quickly and efficiently into the data 

goldmine. A few years ago this was impossible or not cost 

effective; today you don’t even need to own the hardware. 

In the past, only big retail groups like Walmart could 

afford to analyze customer data and tailor their products 

and services accordingly, but today the necessary tools can 

be bought in at relatively low cost. There are now proven 

ways of integrating corporate cloud data and matching it 

to the latest information from social networks. Data is also 

easier to share, because interfaces are becoming increasingly 

standardized. 

Over recent years, many managers have been deterred by 

the exponentially increasing complexity of traditional business 

processes, but this complexity can now be significantly 

reduced. Complexity is no longer an excuse; data is manageable 

if you have the right resources and strategies. 

New business potential 

More importantly, the cloud offers the potential to create 

new business models. This treasure trove of information 

can significantly reduce a product’s time to market. Until 

recently, product development required significant initial investment 

in market and product research, production technology, 

and sales and marketing; you could spend a fortune 

getting the finished product to the consumer, and there was 

no guarantee that they’d even like it. 

As a rule, companies offer products which they believe 

will benefit their customers, for example by giving their lives 

more meaning, making their jobs easier, or simply entertaining 

them. Customers have the option of either choosing 

products that appeal to them most or continuing to have 

their wishes unfulfilled. 

The cloud economy is changing this. These days, when 

customers want things, they don’t just tell friends or telephone 

support hotlines, they express their needs in online 

forums, blogs, and social networks. The same is true for 

corporate data, which includes information about customers. 

Product development costs are tailing off sharply; 

thanks to the cloud, computing power and production capacity 

have never been cheaper. Furthermore, increasingly 

effective logistics chains mean that distance is no longer a 

major issue. 

The key question managers must ask themselves is how 

the web and corporate clouds will affect their future business 

models. If they can answer this, the goldmine is theirs 

for the taking. 

Information contained 

on social networking 

sites reveals what 

customers need from 

products and services 


Strategy 

Generating data: 

What customers say online 

is the key to their needs. 

Understanding 

the customer, 

bit by bit 

Even in new times, old 

principles apply. For example, 

if you want your business to 

be successful, you must know 

what the market wants. The 

cloud economy is making this 

question easier to answer 

By Prof. Björn Bloching, partner, 

Roland Berger Strategy Consultants 

Traditional methods, like paying market 

research companies to do surveys, are starting 

to look slightly past their “sell-by” date. These 

days, one of the best ways to find exactly what 

your customers want is to sift all the available 

data, both on the web and within your business, 

where, chances are, you have heaps of 

information about consumer needs and purchasing 

behavior. Take Amazon.com, for example. For several 

years, the Seattle-based online retailer has been upgrading its 

systems to ensure that it makes the best possible use of data, 

and the products it stocks are based on detailed evaluation of 

how customers make purchases, from searching for a particular 

product to clicking on the “Buy” button. 

One important component of this strategy is the recommendation 

engine, the software function that suggests other 

products in which the customer might be interested. The recommendation 

engine is therefore both a marketing tool and an 

internal management resource. 

All user ratings are consistently evaluated as well, and as 

Amazon collates this information, it continuously develops its 

business model. Since the bursting of the Internet bubble in 

2000, which left Amazon close to bankruptcy, the company 

has, against all odds, become one of the Internet’s biggest mailorder 

companies. 

Computer and printer manufacturer Hewlett-Packard 

makes painstaking use of customer transaction data. 

Interestingly, much of this data comes not from its distributors, 

online shops and business-to-business retailers 

rather than from its own servers. 

The challenge lies in collecting, evaluating and interpreting 

data from such a multitude of sources, and the resulting 

treasurehouse of information is further enriched by 

analyzing the purchasing habits of large numbers of non- 

HP customers. This allows HP to target specific groups 

with information and marketing campaigns. 

Amazon’s and HP’s success with this technique is 

based on consistently using and evaluating data, and the 

first step for any company seeking to emulate them is to 

network all available customer information. The more opportunities 

your IT infrastructure offers for obtaining it – 

blog posts, online forums, product ratings on your website 

– the richer your in-house data mine will be. 

Using web-based data 

The next step is to extract data not just from inside the 

business, but from the web as well. Potential customers 

and business partners leave all kinds of online traces which 

can be distilled into valuable information. One example is 

retargeting, which provides anonymized usage data that 

complies with data protection laws. If the visitor goes on 

to visit another site, retargeting analyzes the data, displays 

personalized banners and advertising, and collates seemingly 

unconnected information from different sites in real 

time by offering discounts for specific products which may 

be of interest for example. 

All of this occurs behind the scenes, and takes milliseconds. 

According to Internet World Business magazine, retargeting 

can increase the probability of a user responding 

to personalized advertising by 300 to 600% as compared 

to less discriminating forms of marketing. 

Companies like Bluekai go one step further, placing 

cookies on the browsers of users who visit certain specialinterest 

sites and enriching these sites with additional information 

from external sources. As they continue to surf 

the net, the cookie gathers more information about the 

sites they visit; again, without breaching data protection 

rules. If the user ever returns to a site that uses Bluekai 

cookie data, they will be offered products specifically 

matched to their interests. 

The company, which is based in Washington State, offers 

clients the ability to precisely target the people they 

need to while incurring no waste. Today, businesses buy 

people, not advertising space, which gives them a huge 

competitive advantage and illustrates the massive poten- 


Strategy 

The grace of the digital age lies in 

the abundance of information that it 

currently generates. We must regard this 

information as a whole in order to use 

each individual component effectively 

Prof. Dr. Björn Bloching 

tial of combining online and 

offline data. 

Another growing trend is 

the use of publicly available 

data from various social networking 

and other sites, such 

as opinions and product recommendations. 

If it is to be used effectively, 

several different components must 

be in place. In-house and web-based data 

must be available in large quantities, and 

there must be proven algorithms to link 

and evaluate that data. Fortunately, cloud 

computing’s virtual hardware and software 

have made this evaluation technically 

possible and affordable. The results 

give a clear picture of what the market 

wants, transforming a once blurred mosaic 

into a high-definition photograph. 

The next challenge is to use this information 

to draw the correct conclusions for 

your products and services. For example, 

you may find that your offers need to be 

more carefully tailored to people’s individual 

interests. The more personal the 

offering, the more likely the customers are 

to buy it, and the more you appear to know 

about them, the more they trust you. 

One thing is for sure; making vague 

and unsubstantiated claims about the 

merits of your products and services 

doesn’t work any more. In the wake of 

growing demand for personalization, 

business models are starting to change. 

This new technology has far-reaching 

implications for the way businesses are 

organized. The larger a company becomes, 

the greater the number of skills 

it requires, which can, at times, compromise 

simplicity. When a machine has 

many cogs, a lot of energy gets wasted 

due to friction, so it becomes even more 

important to minimize complexity. 

Evaluating data from corporate clouds 

and the web can reveal hitherto unnoticed 

connections between processes, 

such as different forms of communication, 

and create new ways of improving 

the structure of the business. 

The cloud economy also helps companies 

to anticipate consumer behavior. It 

is becoming increasingly apparent that 

dividing people into traditional target 

groups is not as reliable a process as it 

once was. Loyal customers are a dying 

breed and traditional advertising is not 

nearly as effective as it was in the past. 

Traditional advertising no longer inspires 

loyalty, which makes developing and 

maintaining customer relationships difficult. 

Data-based analysis that predicts 

the needs and behavior of existing and 

potential customers in the cloud economy 

may be the solution to this problem. 

Success criteria 

Before you begin exploiting these opportunities, 

you need to do a certain amount 

Key questions 

to ask about… 

customer data in 

the cloud economy 

1/What is the relevant 

information, and how do 

we collect it? 

2/How should we network 

our own organization’s data 

with data in the cloud? 

3/What’s the smartest way 

of evaluating the data? What 

questions should we be 

asking if we aim to reduce 

complexity and monetize 

the data? 

4/How should we change 

our business models and 

structure in such areas as 

R&D, HR, marketing, and 

customer support? 

of homework. The most important thing is to carry out an 

inventory of what information is available, what forms the 

information is in, and from where in the company it originates. 

In most instances, only a newly created business unit 

will have the slim, efficient IT and other infrastructure required 

to make effective use of all the data, and this is rarely 

the case. Typically, data from existing sources will need to 

be merged, which requires a certain amount of work. 

Commonly occurring problems, apart from the fact that 

the data comes from different places and is in different 

formats, include conceptual weaknesses in the early stages, 

opposition from parts of the organization, and ensuring 

that data protection laws are complied with from the outset. 

In addition, the company’s IT infrastructure, whether 

it is a standard solution or developed in-house, is often 

designed for the needs of the traditional economy. Few 

systems allow cloud data to be used effectively to manage 

stock control and marketing. 

Once these technical and political obstacles have been 

overcome, the next step involves requiring all business 

units to provide the relevant data, in real time if possible. 

There’s not much point in evaluating and improving your 

business model based on old information. This is a good 

opportunity to replace the traditional overnight batchrun 

data reconciliation still used by many companies with 

state-of-the-art synchronization procedures. 

Another essential point is choosing the right tools, employees 

and outside companies to evaluate the data based 

on: expertise, timing and budget requirements. While 

there are plenty of technologies and service providers to 

choose from, the market for experienced data mining experts 

in this area is relatively small. 

Finding the right person for the job is essential if you 

plan to fully exploit the data. The aim at this point is to 

tackle the mountain of data by deciding on the right questions 

and hypotheses, getting the right answers and drawing 

conclusions which can be put into practice, rather than 

carrying out a traditional business intelligence analysis. 

Experts in this relatively new field of endeavor are still 

rare. 

Finally – and it probably goes without saying when potentially 

sensitive information is involved – it’s essential 

to take precautions to ensure compliance with all aspects 

of data protection law. 

Once you have all these structures in place, you can 

largely automate the evaluation process to manage such 

things as marketing tools. The company’s accumulated 

know-how can then be used to develop models and applications 

for the strategic development of the information 

you obtain. 

Reestablishing a personal relationship 

The outcome definitely justifies the effort; making intelligent 

use of the available data can reduce the complexity 

of every area of your business, making it slimmer and more 

efficient. A study by the Sloan School of Management at 

MIT found that companies who make decisions based on 

data they have collected are 5 to 6% more productive than 

their competitors. That might not sound like much, but 

experts agree it can make the difference between a winner 

and a loser. 

Finally, making systematic use of information allows 

you to develop a much closer personal relationship with 

your customers, and find out what products and services 

they’re likely to need in the future. Sometimes the response 

will be not just a new product, but a whole new 

business model, a true example of data being used to add 

value. The cloud economy is here, and it is the future. 


Rubrik hier 

Rubrik Strategy hier 

“If you have a 

sound strategy, 

you have 

nothing to fear” 

How important is the cloud economy for 

businesses? A conversation between Martin Wittig, 

CEO of Roland Berger Strategy Consultants, and 

Internet strategy consultant Sascha Lobo 


Strategy 

Lobo: Do you think “cloud economy” 

is the right choice of words? 

Wittig: Yes, I do. It’s about the 

virtualization of business, from 

product development to marketing 

and customer support. The power 

of this new business economy comes 

from networks, and practically all of 

this happens on servers, in the cloud. 

Lobo: That’s true. Apart from 

communication, that’s the aspect 

that most fascinates me: the cloud 

gives you almost unlimited computing 

power via the Internet. The idea of 

using my mobile phone to access the 

power of a supercomputer – I find 

that almost impossible to grasp. 

Wittig: But don’t forget, not everyone 

is as fascinated by the whole idea of 

the cloud as you are. I keep finding 

that businesses understand the 

advantages better if you use practical 

examples, things like: So your company 

wants to run highly complex genome 

evaluations or other computerintensive 

calculation models? No 

problem. These days, all you need is 

a regular store-bought computer and 

an Internet connection. That gets 

people’s attention; they’re fascinated. 

Lobo: It certainly is impressive. 

With cloud computing, you can 

access extremely complex software 

that you’d normally have to maintain 

whole server farms for. You can direct 

computing power and software 

intelligence precisely where you need 

it, and nowhere else. And the prices 

are almost ridiculously cheap. You 

can use some of the most powerful 

computers on the market for a few 

dollars an hour. 

Wittig: The other important point 

apart from computing power and 

software is online storage capacity. 

It’s now available in almost infinite 

quantities, and most importantly it’s 

available worldwide, so all you need 

to access it is an Internet connection. 

This creates huge opportunities for 

businesses. At the most basic level, 

centralized data storage means that 

all employees have access to the most 

up-to-date information, from spreadsheets 

to customer data and draft 

documents. 

Lobo: Oh God, yes! You know, I 

don’t just have great hair, I also write 

books. It used to be hell comparing 

dozens of Word documents because 

no one knew exactly how Word’s 

“Compare Documents” function 

worked, and all the files had names 

like “Text_final”, “Text_final2”, 

“Text_REALLYfinal” and so on. 

Wittig: Unfortunately, that’s also 

been my experience. Without naming 

names, I’ve seen companies in very 

similar situations, with three or four 

secretaries spending all their time 

collating different versions of documents 

from different departments. And that’s 

only a very small example, but it clearly 

shows what huge potential efficiency 

savings there are in the cloud economy. 

Lobo: There is one other thing we 

ought to mention briefly: virtualization 

isn’t just relevant to businesses. 

Wittig: How do you mean? 

Lobo: In my opinion, the cloud 

economy is not just about cloud computing 

and how to make money out 

of it. It has lots of other aspects, like 

relationship networks, Facebook, etc. 

Wittig: So what are you getting at? 

Lobo: I’m talking about radical 

social change. Many people’s lives 

are being altered by what we rather 

blandly call social media. It’s not just 

a few spotty teenage Internet junkies 

– the average age on Facebook is 38. 

Social “ media is changing a lot of 

people’s lives – and they’re not all 

spotty teenage Internet junkies” 

Sascha Lobo 

Furthermore, the figures are massive: 

in Germany, only 23 percent of the 

population is active on Facebook. 

Wittig: Only? I think that’s a surprisingly 

high percentage. That’s almost 

20 million people – and they’re generally 

well-educated, more affluent… 

Lobo: Yes, when I said “only” I meant 

compared to other countries. In Austria 

it’s 31 percent of the population, in 

Switzerland it’s 34 percent, and in 

the United States the figure has just 

passed the 50 percent mark. It’s much 

the same in places like Chile, Norway, 

New Zealand, Hong Kong and the 

United Arab Emirates. In Iceland, 

the figure is over 65 percent, and it’s 

increasing by 2 percent a month. If 

you take out young children and older, 

less-Internet-savvy people, you’re 

moving towards digital saturation. 


Strategy 

Strategy 

Wittig: I don’t suppose you happen to 

know which country has the highest 

percentage of Facebook users? 

Lobo: Funnily enough it’s the Vatican 

state, where it’s 109 percent. 

Wittig: 109 percent? I would have 

thought that was arithmetically 

impossible… 

Lobo: It’s true, or rather it was 

true. It’s because Facebook calculates 

the figures. They look at how 

many users log on in a particular 

country and a particular month, 

and compare it to the official population 

figure. 

Wittig: Well, that’s statistics for 

you… But you’re right, social networks 

and all the various social 

media are a totally integral part 

of many people’s lives, particularly 

younger people. And because they 

devote so much time and energy to 

these platforms and social media 

attracts such an incredible amount 

of attention, it obviously has an 

important marketing role. 

Lobo: Precisely. But I also think 

it’s wrong to believe that if you’re a 

blue-chip company without a Twitter 

account, you’ll go bust the day after 

tomorrow. That’s the impression you 

sometimes get when you talk to 

Internet obsessives. 

Wittig: Sure, there’s a lot of hot air 

being talked at the moment. We’re 

already getting to the stage where 

some people regard “social media 

consultant” almost as an insult. But 

like lots of things in life, there are two 

sides to the coin, and strong arguments 

on both sides. The main thing is that 

when you make decisions, they must 

be based on sound know-how, not 

some vague gut feeling. 

Lobo: Talking of gut feelings, do you 

get the impression, like I do, that a lot 

of company managers have big issues 

with the cloud economy? 

Wittig: Partly. Of course it all depends 

on who you’re talking to. Finance 

directors often have reservations 

because of the potential cost 

implications. But when I tell them 

about the potential dramatic savings, 

using examples from our own 

consultancy projects, they have far 

fewer reservations. Sometimes, the 

finance people can’t spend the money 

quickly enough on getting hold of the 

IT infrastructure they need to get 

into the cloud. 

Lobo: And what do they think of 

social media? 

Wittig: The people who make the 

decisions often work sixty or seventy 

hours a week. They often don’t have 

any time for Facebook or Twitter – all 

they have time for in the evening is 

the business section of the newspaper. 

In my view, social media is about the 

whole culture of work. Of course it’s 

not the same for everyone. 

Lobo: I hope you’re not implying 

I don’t work hard enough… 

Wittig: It’s different for you. Twitter 

is part of your work, you have to 

have a regular presence there, and 

you do. But people often ask me: 

all this social media stuff, is it really 

relevant to us? 

Lobo: And what do you say? 

Wittig: Social media is relevant to 

a very large number of people; you 

mentioned the figures yourself. 

When you’re a business and your 

target market is either already on 

Facebook, or about to be, then of 

course social media is important. 

In fact, in these circumstances, if 

you don’t use social media you’re 

missing out on an opportunity. 

When I talk about target markets, 

I mean it very broadly; for example, 

most companies need a new generation 

of young employees, and they’re a 

part of their target market. 

Lobo: Do you ever meet people who 

are afraid of social media? 

Wittig: No one willingly admits to 

being afraid, but I do sometimes get 

the feeling that people are uneasy 

with it. And I can understand that: 

it’s a whole new world, and a lot of 

people think it’s out of control, and 

there’s a whole new set of rules. 

There are plenty of examples of how 

communication using these new 

media has created crises. 

So it’s quite natural for people 

to display a healthy dose of respect, 

sometimes even fear, but that’s not 

entirely a bad thing. It’s fear that 

stops a lot of companies blundering 

about like a bull in a china shop just 

because they want to get online as soon 

as possible. The right approach is to 

think carefully, research thoroughly, 

and base the whole thing on a sound 

“If you’re looking for someone with 

ten years’ banking experience, you 

won’t have to look too hard. But 

ten years of Facebook experience? 

There’s no such thing” 

Sascha Lobo 

strategy. In my experience, people 

who do that have nothing to fear 

from the digital age. 

Lobo: That’s the strategy consultant 

speaking. Sometimes, when I go to 

evening events and meet company 

directors, they ask me why small 

businesses should be involved in 

social media at all. My answer is 

brief, but it often has an effect. 

I tell them they could have massive 

communication problems, even if 

just one nameless former supplier, 

in southeast Asia let’s say, does 

something they shouldn’t. And before 

you know where you are, it’s all over 

the Internet, and you have to spend 

three weeks frantically trying to 

work out how Twitter works so you 

can limit the damage, and that’s not 

a good thing. 

Wittig: You’re not one to pull your 

punches, are you? 

Lobo: Maybe not. But getting back 

to the cloud: some people are afraid 

of cloud computing… 

Wittig: That’s very understandable 

when you’re putting highly sensitive 

data on the net and you encounter 

resistance from the compliance and 

risk management teams… 

Lobo: Precisely, which brings me 

to my point: security, and data 

security in particular, is becoming 

incredibly important. 

Wittig: Data security isn’t just 

becoming important now, it always 

has been. Computers have been 

networked for a long time, so in that 

respect it’s quite similar to the cloud. 

Networks need to be extremely secure, 

and it doesn’t matter whether the 

data is stored on a cloud server or 

your own company’s standalone PCs, 

which was often the case in the past. 

Lobo: As much as it goes against the 

grain, I completely agree with you. But 

getting back to fear of social media: of 

course this digitally networked world 

plays by completely different rules, 

but there are still rules and strategies. 

Social media is no mystery, it’s just that 

it’s so new that many communication 

processes haven’t been researched and 

set in stone right down to the last detail, 

so people approach it in a different 

way to other media. 

Wittig: How do you mean exactly? 

Lobo: Well, if you’re in human 

resources, you wouldn’t appoint 

someone with only eighteen months’ 

experience of your industry to a 

managerial job. But a lot of the key 

developments in social media have 

taken place in the last year and a 

half. If you’re looking for someone 

with ten years’ banking experience, 

you won’t have to look too hard. But 

someone with ten years of Facebook 

experience? There’s basically no such 


Strategy 

thing – especially since Facebook 

was only created in 2004. 

Wittig: That just makes it all the 

more important not to go with your 

gut feelings, and operate on a sound 

strategic basis. 

Lobo: Absolutely, and interestingly 

this is also affecting the whole 

structure of businesses. There’s a 

whole new profession that’s grown 

up in the United States in the last 

couple of years: the information 

attorney. It sounds funny, but it’s a 

logical consequence of the openness 

and transparency of social media 

and the Internet as a whole. 

An information attorney has carte 

blanche to talk about every aspect 

of the business without having 

to ask other people or get permission. 

In the high-speed world of digitally 

networked communication, you can 

hardly tell someone: Sorry, I need to 

speak to someone in such-and-such 

a department, and there’s no one in 

until Tuesday. 

Wittig: Especially when it’s marketsensitive 

information, where you need 

to respond very quickly – it’s not a job 

for PR specialists any more. 

Lobo: Exactly. 

Wittig: I think it’s important not 

to regard social media and cloud 

computing as two opposite ends 

of the cloud economy. The whole 

way businesses operate, both internally 

and externally, is changing. 

If you’re a university student writing 

essays with other people using chat, 

Facebook and cloud applications, 

you’re not going to want to go and 

work for a company that still uses 

“Data is available in real time 

exactly when we need it: it doesn’t 

have to be recalculated or generated 

from scratch” 

Martin Wittig 

fax machines, yesterday’s technology 

– particularly if you’re so talented 

that you can pick and choose where 

you work. 

Lobo: That’s what I was going to 

say when I was talking earlier about 

being an author. I realized that if you 

have the right technology – we used 

Google Docs, which is like an online 

version of Word – you can cooperate 

in completely new ways. Until then, 

I thought writing was something you 

did on your own, but that’s not true 

at all. Writing with other people works 

very well, provided you use the right 

platform and everyone knows what 

they’re doing. 

Wittig: It always helps to know what 

you’re doing. It’s not just things like 

writing your book cooperatively that 

have been dramatically changed by 

cloud technology. I also think the 

real-time mobile Internet has a lot 

of potential. 

I think this has parallels with a 

management buzzword that was doing 

the rounds in the late seventies and 

early eighties: just-in-time production. 

It had the same big effect as the cloud 

economy, except this time it’s about 

data. Now, we have data available in 

real time exactly when we need it: 

it doesn’t have to be recalculated or 

generated from scratch. 

Lobo: I was just thinking about data, 

and particularly the fact that it’s so 

easily available in terms of security 

and the way it’s used. WikiLeaks 

is an obvious case in point. 

Wittig: Yes, of course that’s one 

downside of the cloud: these days, 

you can fit pretty much all of a 

company’s confidential information 

on a USB stick costing EUR 4.99, 

which means that the data can be 

distributed online extremely quickly. 

In cases like that, the rapid availability 

and transfer of data isn’t entirely a 

good thing. But cloud computing does 

have one security advantage: if the 

data is held on a central server, access 

control is easier. 

Lobo: I’m rather old-fashioned when 

it comes to my own personal data. 

My mantra, which I’m always 

recommending to people, is never 

publish anything on the net that you 

wouldn’t want to see on the front 

page of a newspaper. 

Wittig: Do you actually still read 

newspapers? 

Lobo: Every day. And not just one 

– dozens! Not on paper, though – 

online. 

Wittig: I think that’s a very good 

image of digital change to end on. The 

old values are still relevant in the new 

world, but the structures are changing. 


Industry report 


China: coining it 

in silence 

China has some very successful Internet companies, and 

although it is hardly a powerhouse of innovation, some 

Western companies have gained a foothold there 

By Steven Lin, Beijing 

More similarities than differences: Chinese Internet 

companies have followed much the same path to market 

as their Western counterparts. 



U 

ntil recently, my company used 

Google cloud computing apps. We all 

had Gmail, lifelong email accounts, 

Google Docs for real-time word 

processing, and Google Calendar. 

Ah, what heady days they were. For 

a long time, I didn’t need to bother 

distinguishing between different 

versions of files; in the old days there was the final version, 

the final final version, the final version approved by 

the boss, and the version approved by the boss and the 

legal department. Then this process became history and 

the Google cloud was the state of the art. 

However, since March 2, 2011, we have no longer been 

able to rely on Google apps. Google’s servers are offline 

half the time, and a Chinese blogger called William Long 

reported that when he used Google services via a server in 

Hong Kong, everything worked like clockwork, but when 

he connected via Shanghai, the system kept blacking out 

for fifteen minutes at a time. As a result, our company had 

switched to the Chinese email provider 163.com by the end 

of March. 

Whatever you think of this policy, it favors the big Chinese 

Internet companies. According to 163.com’s website, 

its email service for companies with up to 500 employees 

costs EUR 7,668 a year, and each employee has three gigabytes 

of storage. This means that businesses are paying 

at least EUR 5 per year for each user and each gigabyte. 

By comparison, Google’s email system costs only EUR 1.30 

per user and per gigabyte, and Google has a more elegant 

user interface, integrated instant messaging, push email 

and the full range of Google apps. 

This example is symptomatic of a wider trend. China’s 

leading Internet companies make much more money than 

their international rivals, yet their quality service, infrastructure 

and potential for investment are poor. 163.com 

does not even permit users to sort emails into subject folders, 

similar to the Hotmail system in the 1990s. 

This policy also acts as a barrier to innovation. A large 

number of Chinese Internet companies will debut on NAS- 

DAQ this summer, but the flotations of Youku (China’s 

YouTube) and Renren (the equivalent of Facebook) are a 

pale imitation of the global cloud economy. 

One success story is Xunlei, a very popular peer-to-peer 

software solution. Regardless of the Internet protocol you 

use to download data – HTTP, BitTorrent, ED2K (eDonkey) 

– Xunlei speeds up transfers by bundling together unused 

resources on all computers connected to the network. From 

The 163.com email system 

is similar to the Hotmail 

system in the 1990s 

a Western viewpoint, Xunlei is a bad thing because it is used 

to distribute high-resolution pirate copies of films, TV series 

and music. It places a huge strain on Internet providers’ connections, 

and users have to put up with flashing banners all 

over their screens. In spite of this, it is still a popular service. 

Subscribers are falling over themselves to buy the company’s 

premium cloud service, Xunlei Offline Download, 

which allows them to download everything via a Xunlei 

server and store it there for a EUR 1 monthly fee. Each 

user has 1,048,576 gigabytes of storage, which effectively 

means it’s unlimited. 

Sharing is good. Or is it? 

Xunlei‘s peer-to-peer 

service is a Chinese 

success story – and yet 

to Western eyes, it‘s 

a bad thing. 

The trick behind this service is that all data downloaded 

by users is stored for use by other people. Xunlei’s 

lawyers have spent countless hours making the 

service look legal, but Western companies regard it as 

operating in a gray area. It is undoubtedly a Chinese 

Internet success story, but at what price? 

Two non-Chinese companies have quietly succeeded 

in establishing cloud services in the country: 

SalesForce.com and Amazon Web Services. Both were 

among China’s top ten cloud computing providers 

in 2010 according to the worldwide technology blog 

ReadWriteWeb. 

For the many Chinese companies selling their products 

directly to customers throughout the world, it 

makes sense to use cloud services like SalesForce.com 

and Amazon Web Services as invisible links in their 

global supply chains. These services exist without government 

obstruction and surveillance because they do 

business with other Chinese companies rather than the 

public, thus attracting little attention. 

The Chinese call this strategy Men sheng fa da cai, 

meaning “coin it in silence”. Cloud service providers 

seeking a foothold in the Chinese market would be 

well-advised to follow a similar philosophy. 




“Over the last few years, New York 

has become increasingly important 

on the Internet scene” 

Brad Feld, Investor 

How the everywhere-Internet 

is making real life better 

The technology is already in place. Now, young US entrepreneurs are 

looking for ways to make money from smartphones and the mobile 

Internet with apps designed to make users’ lives easier 

By Viktoria Unterreiner, New York 

Want a free muffin? A slice of pizza 

for half price? If you’re in New York and 

you have a smartphone, it is no sooner 

said than done. At Tenka.com, cafés and 

restaurants use special offers to lure 

customers into their businesses. One business is giving away 

100 free cappuccinos; you don’t even need to print anything 

out, customers simply click on the offer and show the staff 

Starbucks: 

one of a 

multitude of 

choices. 

Free Internet 

access is 

available 

almost 

everywhere 

in New York. 

the virtual coupon on his or her phone. So the reasoning 

goes, if you’ve been to the business once, you’ll be back, and 

ideally you’ll bring someone with you. 

The site also tells your Facebook friends that you’ve taken 

advantage of the deal, and states how many coupons are 

left. This welcomes your friends to pop into the café, and 

word of mouth is still the best form of advertising, even if 

it’s on Facebook. 

The Tenka app was launched in New York a few months 

ago, and shows that online advertising isn’t just about banners 

all over your screen. Most of the city has free Internet 

access, so even if you’re in a park or on a bus you’re only a 

click away from a connection. Potential customers are permanently 

online, and social networks provide companies 

with completely new ways of reaching them. 

It’s no longer enough to have a Facebook presence. According 

to a study by US market researcher ComScore, Facebook 

already carries one third of all the country’s online 

advertising. Experts at BIA/Kelsey estimate that between 

now and 2015, ad spending on social networks could quadruple 

from around USD 2 bn to USD 8 bn (just over EUR 6 bn). 

Talent spotters go hunting in New York 

Silicon Valley is still the location of choice for online startups, 

and is also home to world-leading computer and Internet 

companies like Hewlett-Packard and Google. But investors 

and consultants are now keeping a close eye on the scene in 

New York, which is giving the west coast ample competition. 

For evidence of this, just look at investment guru Brad 

Feld’s iPhone. He has a keen eye for exciting startups, and 

owns a stake in Zynga. Zynga is the company that developed 

popular Facebook games like Farmville and Mafia Wars, and 

according to a Wall Street Journal estimate it made a USD 

400 m profit in 2010. 

Feld uses an app to record the places he’s been to since 

January 1st, 2009. He has visited New York 37 times, and 

San Francisco only 30 times. “Over the last few years, New 

York has become a lot more important on the Internet scene,” 

he says. The city is home to some of the most successful 

startups in recent years, including Foursquare, a way for users 

to pass on their current locations to friends, and Tumblr, 

a simpler and shorter version of blogging. Their choice of 

New York rather than California is significant. 

There is one good reason why the Big Apple (New York 

City) is becoming increasingly important. “Building a startup 

is much cheaper now than it was five or ten years ago,” 

says Frank Rimalovski, who manages New York University’s 

Innovation Venture Fund. In those days, he points out, it 

was mostly about developing technology, but that technology 

is now mature, allowing companies to put their business 

ideas into practice at relatively low cost. 

“What we need now are startups with ideas to make users’ 

lives easier,” Rimalovski says. New York is the perfect testing 

ground for these ideas, because it has millions of citizens 

of all nationalities, ages, incomes and religions crammed 

together in a small space. 

A few years ago, Internet experts decided that Second Life 

was the next big thing. Large numbers of people adopted new 

identities by creating their own avatars; American Apparel 

opened a T-shirt store there, Mercedes had a showroom, and 

Coca-Cola installed drink machines, but the experts were 

wrong, and the idea flopped. The avatars mostly wander 

around like zombies, and the Second Life boom has turned 

to bust. People may be spending half their time in virtual 

space, but they’re using the Internet for their real lives. 

This is changing the way advertising works and making 

it easier for companies to work together. Gigwalk, for 

instance, enables smartphone owners to earn a little extra 

pocket money with minimal effort. Users are asked to take 

photographs at their current locations. These photos can 

then be used for reference; for example, a food critic may 

want to purchase a picture of a restaurant menu, or someone 

may need a photo of a street sign to check the spelling. 

Companies can get information cheaply where they might 

otherwise have to pay handsomely for it. 

These new startups have one thing in common: they 

make it much easier for users to obtain and share information, 

and they save users time and effort in real life. 




Moroccans like this 

Regional differences are huge in Morocco. Western-influenced life dominates 

large cities, while nomadic living can be observed on the edge of the Sahara. 

People in these isolated locations can still access the Internet, thanks to their 

cellular phone networks 

Around 25 million cell phonES are dispersed 

between 32 million Moroccans. There 

are only 3.5 million landlines in the country 

but 13 million Moroccans go online regularly. 

Some use Internet cafés, but Moroccans increasingly 

rely on web-enabled cell phones. A few Moroccan 

companies have recognized the importance of mobile 

Internet for their customers and have started to use social 

media strategically. Méditel is a prime example. 

Méditel, based in Casablanca, is expanding its 3G network 

beyond the cities of Casablanca, Rabat, and Fes and 

out into the middle of the desert. This means that customers 

in almost every Moroccan city will have good access to 

the Internet without the need for an expensive fiber-optic 

cable network. Méditel receives technical support from Chinese 

telecommunications provider Huawei. This allows the 

North-African company to learn from experiences in China 

and other Asian countries where efficient Internet access is 

almost exclusively wireless. The next generation of cellular 

wireless standards and a further increase in performance are 

already on the agenda. 

Méditel is also far ahead of its competition when it comes 

to social media. Although market leader and rival Maroc 

Télécom controls approximately 50% of the mobile communications 

market, the company has only convinced a mere 

3,510 Facebook fans of its presence. Méditel, meanwhile, is 

the second-largest mobile communications provider, with 

around 33% control, but has 67,273 proud Facebook fans. 

These activities promote sales, but above all, they provide 

a way for Méditel to communicate with its customers, to 

understand them better, and to connect with them. “How is 

your day going?” Méditel asked on its Facebook page at 11:02 

am on May 10th, 2011. The first replies came within a few 

minutes. Rahma from Ouezzane said, “Very well!” Hicham 

from Casablanca stated, “Nothing new with MEDITEL, everything 

is normal and calm.” Samir from Tangier announced 

“Good, tooo muuuuch work, it’s my birthday.” Eight minutes 

later, Samir received a reply: “Hello Samir, Méditel would 

like to wish you a happy birthday!” 

Méditel encourages fans to interact with targeted questions: 

How was your day? What is your prediction for the 

UEFA Champions League – Manchester United or Schalke 

04? What kind of cell phone do you have? Who will win El 

Clásico – Barcelona or Real Madrid? Directly adjacent to 

this conversation, fans can view information about Méditel’s 

new offers and promotions. Competitions, free airtime, and 

reduced SMS rates are all particularly well-received. “Merci 

Méditel!” a customer replied for everyone to see. 

Careful Preparation 

Méditel prepared carefully for its inaugural social-media 

campaign. Last June, Méditel launched its “Facebook Zero” 

promotion, a free service that allows customers to log onto 

the social networking site using their cell phones. This feature 

was open to everyone, regardless of whether they had 

a contract or a pay-as-you-go SIM card. This meant that 

customers could find out about the new promotions that 

Méditel had planned in near real-time. The constant stream 

“Hello Samir, Méditel 

would like to wish you a 

happy birthday!” 

of information not only keeps customers engaged, it also 

generates new sales – customers are able to access reduced 

airtime promotions or offers on text messages immediately, 

and that is exactly what cell phone users in Morocco do. 

Marketing and the creation of long-lasting relationships 

with customers are only one side of Méditel’s Facebook activities. 

The other side is the quest for intelligent minds; the 

company constantly challenges customers to demonstrate 

creative flair, the most recent example being a competition 

for developers, who were asked to create original Moroccan 

content for Google’s Android operating system. The 

promotion ended on December 12th, 2010, with first prize 

going to Mohamed el Idrissi for an app called “Khadamat.” 

“Khadamat,” which translates into English as “Informa- 

Online thanks to mobile Internet. Moroccan service provider Méditel 

also uses social networking sites to source intelligent minds. 

tion,” provides smartphone users with up-to-the-minute 

news, television schedules, and train timetables. The app is 

precisely tailored to make everyday life easier for Moroccan 

users and the jury considered this reason enough to send its 

developer, a graduate from the University of Al-Karaouine, 

to Google’s I/O Developer Conference in San Francisco. 

These promotions create links with potentially valuable future 

employees and allow Méditel to strengthen its youthful 

image and establish a sense of community. Whether they 

become permanent employees or work for Méditel on a freelance 

or even voluntary basis, the competitions bring creative 

personnel to the company’s attention and, thanks to the 

Internet, physical distance no longer matters. 

Social media offers companies a platform where they can 

interact with their customers and their customers can interact 

with one another. This facilitates the creation of new 

relationships, whether personal- or business-related. So far, 

it has mainly been young people who use the platform; social 

media is already a prominent part of their lives. In future, 

it will be the same young people who define the rules of 

communication and networking, and probably remain loyal 

Méditel customers. 


Rubrik hier 


Hive intelligence 

This is a bad time to be a market researcher. Increasing numbers of 

companies are cutting out the middleman and going straight to their 

customers for innovative product ideas 

Angling for ideas. 

Many customers have 

ready-made solutions 

for your problems 

– it‘s just a case of 

knowing how and 

where to fish. 

W 

hether companies 

like it or not, customers 

talk to each 

other about products 

and services,” 

says Josh Bernoff, 

an IT market specialist 

at Forrester 

Research. He is the co-author of a book entitled 

Groundswell, which describes the often stormy exchanges 

of comments and opinions on the net. 

Bernoff believes businesses should exploit this 

trend rather than ignoring it, because people who 

complain are often best placed to tell companies how 

to improve. “A lot of people have new solutions in 

mind and want to make a contribution,” he says. “Of 

course, you can’t expect all of their ideas to be feasible 

in practice, because a lot of them come from people 

with no experience in product development.” 

That said, customer suggestions can often include 

some clever answers, unlike traditional focus-group 

research, which identifies problems but rarely offers 

solutions. More and more companies are developing 

their own forums for product ideas and suggestions, 

with prize competitions and votes providing an additional 

incentive for customers to participate. They also 

use the same principle internally, without involving 

outsiders; all it takes is a suitable infrastructure based 

on social networks. 

Bernoff, who is actually a member of the old guard, 

is convinced that the groundswell principle works. 

Companies ignore it at their peril, as they will lose 

ground to rivals if they fail to adapt quickly enough 

to customers’ needs. 



InnoCentive 

research community 

Phylo 

gaming with a serious purpose 

BMW Co-Creation 

fans as designers 

Dell Ideastorm 

an online suggestion box 

MyStarbucksIdea 

coffee network 

Salesforce IdeaExchange 

an active user community 

At the end of the 1990s, American 

pharmaceutical company Eli Lilly 

created an online platform that 

would make use of the general 

public’s knowledge: “InnoCentive.” 

Today, the platform supports 

international businesses and 

organizations by allowing them to 

present research and development 

issues as puzzles. InnoCentive 

calls these puzzles “challenges” 

and publishes them on scientific 

portals such as Nature.com and 

Academia.edu. The InnoCentive 

community has 225,000 members 

from 200 countries and – unless 

otherwise requested – commissioners’ 

identities always remain 

anonymous. InnoCentive ensures 

that challenges are well formulated. 

“To obtain good answers, 

you have to ask clear questions,” 

explains David Ritter, InnoCentive’s 

Chief Technology Officer. 

Experts examine solutions, with 

winning suggestions rewarded 

by prizes of up to USD 1 m. The 

winners are not always researchers 

in a specific field. For instance, a 

retired radio frequency engineer 

once provided N.A.S.A. with a new 

model for forecasting solar activity. 

InnoCentive has published almost 

1,200 challenges, of which half 

have been solved. Since 2008, the 

company has also implemented the 

technology on an internal basis for 

its staff. 

www.innocentive.com 

Let’s play! Visiting the website of 

Montreal’s McGill University, you 

could be forgiven for thinking that 

Phylo is just another online game. 

Phylo players are asked to arrange 

rows of four different colored 

squares in the most congruent way 

possible. By solving these puzzles, 

Internet users are actually participating 

in a much larger task. 

Phylo, which has been “live” since 

November 2010, helps McGill’s geneticists 

to map genetic code; the 

bright blocks that the Internet user 

arranges are intended to represent 

parts of the human genome. The 

scientists want to discover genetic 

sequences that are similar across 

species because, as they report, 

such sections serve an important 

function and, if they mutate, 

can cause metabolic diseases or 

cancer. Of course, the McGill 

researchers could use computers 

to compare the genetic sequences 

but this would take much more 

time; human intuition is far more 

effective when it comes to pattern 

recognition. Between 500 and 

1,000 puzzles are played each day 

and the scientists have already 

obtained more than 200,000 

puzzle solutions. Assistant Professor 

Jerome Waldispuhl will reward 

the best player by mentioning that 

player by name when the results 

are published. 

phylo.cs.mcgill.ca 

Munich-based vehicle manufacturer 

BMW has been holding 

regular online idea-competitions 

since 2004. Last year, it asked 

for suggestions on the theme of 

“future mobility”, and 550 participants 

discussed more than 300 

ideas, including new approaches 

to electric cars, parking and communication. 

The resulting website, which 

BMW calls its Co-Creation Lab, 

is a long-term repository for car 

enthusiasts’ ideas. A team of staff 

from the relevant specialist departments 

is working closely with these 

ambitious amateurs. 

At the end of last year, the lab ran 

a competition on personalized car 

interiors. The entries were evaluated 

by a jury of design experts 

and automotive engineers, and 

the winners got to meet BMW’s 

designers. Most importantly, the 

company has promised to incorporate 

ideas from the lab into its own 

research, so the amateur designers 

aren’t just playing games; they’re 

designing the cars of tomorrow. 

www.bmwgroup-cocreationlab.com 

US computer manufacturer Dell 

has learned a painful lesson from 

the groundswell. In 2005, there 

was a storm of controversy on the 

American blogosphere after blogger 

Jeff Davis loudly complained 

about the company’s customer 

service. The catchphrase “Dell 

Hell” caught on like wildfire, and 

two years later Dell began using 

the groundswell by setting up an 

open forum for customers, employees 

and other interested parties 

to submit and discuss suggested 

improvements to its products. The 

only condition was that users had 

to register, free of charge. 

Dell moderates the discussion very 

little, and members vote on proposals. 

The company evaluates the 

top ideas and specifies those which 

have been reviewed, those which 

are still in progress, and those 

which have been implemented. 

The most popular suggestions 

appear on the site’s homepage. 

In its first three years, Ideastorm 

generated some 10,000 ideas, and 

Dell says it has implemented just 

over 400. 

www.ideastorm.com 

Starbucks launched its MyStarbucksIdea 

platform in 2008. As 

with Dell’s Ideastorm, customers 

can submit and evaluate ideas 

and improvements to Starbucks 

products, though they cannot ask 

specific questions or set challenges. 

The forum, which is structured in 

the same way as a social network, 

allows customers to discuss such 

things as the possibility of introducing 

a 10% student discount. 

Another interesting suggestion 

was distributing a membership 

card on which the customer writes 

their favorite coffee type, so they 

can give the card to the barista 

and say, “The usual, please.” 

Forty “Starbucks idea partners” 

from various departments of the 

company serve as contacts and 

moderators, and observers say 

Starbucks has already implemented 

over a hundred proposals. The 

project is also a way for the company 

to assess views on existing 

ideas, since some of the changes 

proposed by customers are already 

in the development pipeline. 

mystarbucksidea.force.com 

The San Francisco company 

Salesforce supplies web-based 

CRM software, which is aimed 

at businesses. With over 92,000 

customers worldwide, the Salesforce 

community has exceeded the 

critical mass for crowdsourcing 

projects. 

The company’s IdeaExchange 

platform was launched in October 

2006. Users can discuss the 

functionality of new versions and 

suggest improvements, and like 

other “ideation” platforms, others 

can rate the ideas to generate 

automatic rankings. According to 

the company, the site has attracted 

more than 2,500 ideas, 42,000 

ratings and 3,700 comments in its 

first six months. 

Many of the suggestions IdeaExchange 

received were implemented 

in a version of the software released 

in the spring of 2007. In the 

Apex Developer Network, Salesforce 

developers talk directly to 

the community to find out which 

new functions they believe should 

become the main priority. 

success.salesforce.com/ideaHome 

44 THINK:Act Cloud Economy Special 


Rubrik hier 


Average Customer Review 


Reading 

the runes 

Some companies already know what products their 

customers will be buying tomorrow – even before many 

of the customers do. Social networks are a treasure trove of 

valuable information about future purchasing decisions 




U 

ntil now, manufacturers 

and retailers have primarily 

used historic data to plan their 

production and logistics. They 

analyze what customers have 

purchased, use this information 

to estimate future demand 

for their products, and organize 

their freight capacity accordingly. This method 

has considerable weaknesses; at best, looking back 

to the past provides a hazy picture of the future. 

Each day, millions of demand signals appear 

in social networks. Consumers chat about TVs 

and camcorders, blog about films and computer 

games, and tweet about new chocolate bars they’ve 

discovered on supermarket shelves. Predictably, 

this information leaves other customers literally or 

metaphorically salivating. 

“Over the next five years, companies that make 

use of these signals will achieve a significant competitive 

advantage,” predicts Steve Keifer, an expert 

at e-commerce consultant GXS, based in Gaithersburg, 

Maryland. His company specializes in collating 

data, assessing its usability throughout the 

supply chain and identifying potential productivity 

improvements. 

Evaluating customer preorders and wishlists 

on the sites of major online retailers like Amazon 

and Barnes & Noble is one technique that has been 

in use for several years. Store chains maintain upto-the-second 

point-of-sale figures for all their 

products and extrapolate these figures into the 

future, next weekend, Thanksgiving, or Christmas. 

Manufacturers like Procter & Gamble, Kraft Foods 

and Kimberly-Clark adjust production upwards or 

downwards, and book capacity with logistics suppliers 

on the basis of these numbers. 

Unfortunately, the data is imprecise because 

it is based on past experience. Numerous studies 

have shown that a flexible and transparent supply 




Local 

Location-based services 

“Companies that make use of signals 

from social networking sites will achieve a 

significant competitive advantage” 

The specific features of social 

networks can also be exploited at 

the point of sale. Mobile marketing 

specialists have been developing 

location-based services for some time 

and have taken advantage of mobile 

phones’ GPS modules and mobile 

radio location, features that broadcast 

their owner’s exact location. 

Smartphones can be used to display 

tailormade advertising messages and 

special offers when the user is within 

range of a particular store. This could 

boost demand as long as the user 

actively consents to the data being 

passed along, processed and used in 

accordance with data protection laws. 

The New York based IT startup, 

Hunch, produces personalized 

advertising which tailors the Internet 

to consumers’ needs using algorithms 

that predict what customers want 

in specific situations. The next step 

is to combine this technology with 

location-based services. “You could 

be walking along the street, and 

Hunch would know there’s a store 

nearby that’s the kind of place you 

like,” says founder Chris Dixon. 

This would also work beyond the 

street; American retail chains such 

as Macy’s have already equipped 

their store interiors with technology 

that allows them to precisely locate 

customers to within a few centimeters, 

meaning they can use smartphones 

to target specific individuals standing 

in front of specific shelves, provided 

the customer wants this information. 

Dixon believes there is a high 

probability of customers buying the 

products being advertised. 

Internet-compatible phones can 

also be used to plan demand in 

another way. Business owners 

often use Facebook or Twitter 

apps to announce where they are 

at a particular moment. The Dutch 

airline KLM recently launched a 

campaign with the location-based 

service platform Foursquare, another 

ingenious example of what you can 

achieve by combining smartphones, 

geolocation, and the Internet. 

KLM encouraged its customers 

to log in to Foursquare with their 

smartphones while waiting for their 

flights, and Foursquare then reported 

their location to KLM’s server. 

Passengers who added “#klm” to 

their tweets, telling followers that they 

were about to take off on a KLM flight, 

received a personalized gift from 

the airline; personalized because 

KLM had viewed their social media 

profiles. 

One passenger was flying to Mexico 

to help build houses for the homeless. 

He received a care package including 

grape juice and ointment for muscle 

pain. Another passenger was on the 

way to a social media conference, 

and received tickets to The Social 

Network, David Fincher’s multi-Oscarwinning 

film about Facebook founder 

Mark Zuckerberg. 

These aren’t gimmicks, they show the 

kind of things you can accomplish 

by blending social media and 

smartphone location data. The 

outcome is often quite unexpected, 

and in a world that’s blasé about the 

possibilities of new technology, the 

unexpected counts for a lot. 

chain is a key success factor in responding 

quickly to consumers’ whims before 

they change their minds. 

Some of the most useful information 

comes from analyzing website page 

visits. Amazon’s recommendation lists, 

which compare previous purchases and 

downloads with other users’ profiles 

to suggest suitable products, generate 

increased demand. This method exploits 

the impulse-buy factor, like placing 

candy bars beside a grocery store 

checkout. Although this method works 

to a point, it is still not possible to plan 

demand with any great precision. 

Learning from demand signals 

Social networks, with their millions of 

demand signals, may be the solution 

to this dilemma. Google’s Insights for 

Search service provides an idea of the 

priceless information lying untapped on 

the net in the form of detailed statistics 

on search terms. For example, how 

often is a word Googled and in which 

countries and regions do customers 

search for specific products? It shows 

that movies that go on to win Oscars 

receive significantly more searches in 

the months preceding the awards than 

the movies that don’t. 

“You could use Insights for Search 

to do your capacity planning,” explains 

Yossi Matias, the head of Google Labs 

in Tel Aviv. For example, an electronics 

retailer could look up the number and 

Steve Keifer, E-Commerce Expert 

frequency of searches about a new tablet PC to decide how 

many they should stock in specific branches or regions when 

the product is launched. 

Another example is the German sports goods manufacturer 

Adidas. They now carry out most of their marketing 

campaigns online and in social networks. When it launched 

its They Are All In campaign in mid-March of 2011, it uploaded 

a series of expensively produced videos to YouTube, 

and then kept a close eye on the resulting comments. 

The company’s IT manager Jan Brecht records “likes” and 

“shares” on social networks, and measures the buzz his films 

generate by evaluating mentions on Facebook, Twitter, blogs 

and other networks. One of the things Adidas is trying to 

find out is what people think of its products, and thus to 

determine how many of them to make. 

Buzzmetrics, a monitoring service from market research 

company Nielsen, also puts social media under the microscope. 

Its software filters out mentions of specific companies, 

brands and products from the random consumer hubbub 

of blogs, forums and newsgroups. Buzzmetrics then tracks 

this buzz over time, and analyzes its demographics, in effect 

listening to the new, constantly expanding, online audience 

that has flourished alongside the established media. 

Internet users no longer rely solely on recommendations 

in special-interest magazines; they hunt for like-minded 

people’s experiences on the net. Specialist journalists are 

still gatekeepers and repositories for information, but their 

roles are reinforced by social media. In 2010, a Gartner survey 

found that the majority of consumers now rely, at least 

partly, on opinions expressed in social networks when they 

make purchasing decisions. 

No data protection issues are involved because the information 

is statistical and anonymous, published by users 

themselves. However, caution is advised when individual 

profiles are created from multiple data sources and used to 

talk to customers. 

At present, there is no way of incorporating signals from 

social networks directly into the collaborative business intelligence 

systems that control modern supply chains. “In 

theory, it’s technically possible,” confirms Nari Viswanathan, 

a logistics specialist at the Aberdeen Group. However, 

there are practical hurdles to be overcome; social networks 

are not in the proper format. In fact, they have no format 

at all. Unfortunately, they are huge, unstructured piles of 

information that lack basic, necessary classification. 

“You need a new kind of logic to understand this tangle 

of data,” explains Lothar Wieske, who is responsible 

for innovation management at the IT service provider for 

the Deutsche Bahn logistics group. In the logistics sector, 

today’s business intelligence systems use traditional databases. 

Every item of data must be identically structured and 

clearly identifiable, or the system will not work. 

Wieske says that the cloud-based file system used by 

Google and Amazon is an example of the new generation of 

distributed databases similar to Apache’s Cassandra, which 

was originally developed by Facebook and specifically designed 

to handle social media data. 

Meanwhile, e-commerce companies are producing the 

first web-based demand forecasts using data which is already 

structured, such as wedding lists and customer preorders. 

Even online configurators, such as the kinds used for 

cars and fitted kitchens, can be used to extract information 

about purchasing intentions. Potential customers typically 

play around with several different versions, colors, and materials 

before deciding which product to buy, says Robert 

Byrne of Terra Technology. “This is another way in which 

manufacturers determine demand trends.” 

These systems will initially be used for complex, expensive 

products, like the car manufacturers’ online 

configurators. Byrne has already held talks with vehicle 

manufacturers who want to use the software, and this is 

just the beginning. 



A friend 

in need 

Using social media to provide customer service is cheaper, quicker 

and more efficient than traditional methods. If done properly, it can 

create a new dimension in consumer relations – a dimension that 

goes far beyond mere problem-solving 

Customers helping customers: Committed 

social network users are increasingly taking 

over companies‘ own support roles. 

P 

roblems with products are a major 

topic of conversation on blogs, forums 

and other websites. Increasingly, consumers 

are finding that other Internet 

users can offer not just a shoulder to cry 

on, but solutions to these problems. Today, 

resourceful businesses are drawing 

on online communities’ accumulated 

knowledge to provide customer support, sometimes externally 

and sometimes on their own websites. 

One particularly successful instance is the Korean electrical 

and electronics group LG, whose customer service 

department collected a series of frequently asked questions 

from its online forum and published the answers 

in a blog. It took just 47 posts to solve the problems of 

30,000 customers. 

“The cost per user was around USD 12 c,” says customer 

service expert Bernhard Steimel of Mind Business 

Consultants. “If the majority of customers contacted the 

company’s hotline, it would cost a lot more.” Steimel has 

carried out a study of customer service using social media, 

and he can see why LG’s virtual support service has been 

so successful. 

“When people buy electrical goods, they often have 

questions about how they work. Also, there are a lot of en- 

thusiasts who help others just for the kudos. LG states that 

70% of its support queries are now answered by external 

bloggers or community members, with the remaining 30% 

being handled by the customer service department.” 

LG is not the only company to use the “customers helping 

customers” principle. Internet businesses such as Apple 

and Google do the same, providing much of their customer 

service via cloud-community sites. 

Only a small number of users make their knowledge 

available to others on the Internet. In 2006, the Danish web 

design expert Jakob Nielsen formulated the law that now 

bears his name – 90% of people are passive readers, 9% occasionally 

post contributions, and only 1% are truly active. 

These super-users are important sources of knowledge, 

and companies need to get them on their side. Steimel 

recommends providing them with first-hand information 

and keeping them constantly informed about new products. 

LG, for example, sends these users to trade fairs at its 

own expense. Using his or her practical experience of the 

products, these users can provide important input into the 

process of using and improving them. 

Self-help replaces call centers 

Heike Simmet is a professor of business studies at Hochschule 

Bremerhaven, specializing in marketing manage- 

“70% of support queries 

are answered by external 

bloggers or community 

members, with the 

remaining 30% being 

handled by the customer 

services department” 

Bernhard Steimel, Service expert 

ment. She says customer service is shifting away from 

call centers and towards web-based self-help. “Some 

companies have adapted to changing demand by offering 

many different ways of contacting them: moderated 

question/answer sessions, support chat, customer service 

blogs, Twitter accounts for service queries, wikis, 

forums, customer portals and communities operating 

on the mutual help principle.” 

The only loser in all this is the telephone; in the future, 

people will call customer service hotlines only if 

they need to speak to a human being or require a premium 

service. This shift is partly the result of younger 

users’ changing patterns of communication. Today’s 

digital natives make fewer phone calls and talk to one 

another using social networks and smartphones. The 

new generation of hardware can also provide information 

about users’ locations so that customer support can 

be personalized and targeted. 

Offering customer service via social networks is also 

essential because it signals a willingness to engage in 

dialogue. It is important to keep this promise to avoid 

the risk of annoying customers; indeed, if it works, both 

sides benefit. Customers get a warm, fuzzy feeling because 

their problems are resolved quickly, and they then 

tell their online friends. 


Rubrik Industry hier report 


Initially, a successful social media presence has few 

tangible benefits, although it improves the company’s 

image and brand recognition and offers opportunities 

to provide a better quality of service. Further down the 

line, it can save money and result in increased customer 

loyalty and sales, as the LG example shows. 

Knowing what people are saying about you 

People don’t just talk about companies and their products 

on the companies’ website. They do it everywhere 

on the Internet, so businesses must pay close attention 

to what people say about them. This will give companies 

a picture of how they are perceived, and will also 

enable them to be more proactive about identifying and 

sorting out customer problems. 

“Computer programs can do 60–80% of the work, 

but the rest has to be done by humans,” says Bernhard 

Steimel. Not every forum post requires an immediate 

response. The communication systems provider Avaya 

has found that of every 1,000 posts about the company, 

300 are customer-service-related and only 50 require 

action. Well-trained employees can resolve customer 

problems discovered in this way, and this is excellent 

for the company’s image. 

“Companies have created 

pages on Facebook, 

Twitter and the like 

without realizing that 

people regard social 

networks as a customer 

service outlet and want to 

post questions there” 

Bernhard Steimel, Service expert 

Avaya is unusual in adopting this watching brief. Most 

companies’ social media activities – assuming they engage 

in any – are handled by the companies’ sales or public relations 

departments. “Companies treat their customers to a 

monologue on Facebook, Twitter and the like,” says Steimel. 

“They don’t realize people regard social networks as a customer 

service outlet and want to post questions there.” 

Companies that are active on these platforms can expect 

a lot more feedback than they had in the past, and some of 

it will be negative. If you ignore or reject criticism, people 

won’t like you. One recent and painful example was Henkel, 

the Düsseldorf-based consumer goods group, which invited 

Internet users to help design a dish detergent bottle and 

vote for the best entries. The most popular designs, not 

surprisingly, were the most unusual ones, and they simply 

did not suit the brand’s image. 

Instead of taking this possibility into account when 

planning the competition, or quietly hoping everyone 

would forget about the results, Henkel decided on a more 

aggressive strategy. They questioned the results of the vote, 

appointed a jury to choose the winners, and backpedalled 

on their promise to use the winning designs. Members of 

the community were irate, and the competition did the 

company’s image far more harm than good. 

One highly successful example of a Web 2.0 company 

is Zappos, the United States’ leading online shoe retailer. 

Zappos places a very strong emphasis on communication, 

transparency and customer service in every area of 

its business. It offers a 365-day per year product return 

guarantee, live chat, 24/7 customer service, and every employee 

up to and including the CEO is active on Twitter. 

The company creates a sense of authenticity by treating 

its customers as individuals and encouraging them to talk 

to any employee at any time. This kind of openness works 

best when the company has a flat hierarchy. 

The technology has been in place for a long time, although 

the solutions still need some fine-tuning. Marketing 

professor Heike Simmet says the biggest challenge is 

upgrading the current technology to web 3.0 to retain 

control of the rising tide of data and process the results 

more accurately. For example, monitoring software needs 

greater semantic precision. She believes there is also a 

great deal of potential for improving the interfaces between 

the different channels and making information 

about customers more readily accessible while still protecting 

their privacy. Customer service isn’t just about developing 

close relationships with customers; it also needs 

to operate efficiently. 


Rubrik hier 

Rubrik Services hier 

Learning 

to listen 

Many companies have separate marketing, 

public relations and investor relations 

departments, but these boundaries are being 

blurred as social media and changing lifestyles 

demand integrated communication 


Services 

Services 

P 

ublic relations is not my job. I’m 

a marketing person,” an employee of 

an international technology company 

stated anonymously. There is a degree of 

uncertainty behind his confident facade, 

which may be why he preferred to remain 

anonymous. Perhaps it’s better that way. 

With an attitude like that, he may not 

have much of a future in the social media age. At the very 

least, he needs to learn a lot more about new ways of communicating. 

Until now, public relations departments have engaged 

in one-way communication with customers, employees, 

investors and the media. Marketing has used similar oneway 

communication methods, telling people about new 

products, services and offers, while mostly working in a 

vacuum with little hint of people’s interest. There is a lot 

of talk, but little dialog. 

Today, the process is starting to become two-way. Many 

of the people who use social networks, blogs and forums, 

and people who ask for product advice and recommendations, 

are the very individuals that companies want to 

dialog with. They can share information and opinions in 

both directions without requiring much in the way of infrastructure. 

They can discuss things in public, with no one 

telling them what they can and cannot say, apart from a few 

gatekeepers – a role long occupied by journalists. People 

can follow the debate passively, or they can actively steer it 

in a specific direction. 

The challenge facing public relations, investor relations 

and marketing departments is identifying the channels of 

communication most commonly used by each target group, 

monitoring these closely, and, ideally, playing an active 

part. Ultimately, this could affect the whole way in which 

organizations structure themselves. 

Playing by the rules 

The ability to engage in dialog and manage your brand’s 

reputation is a key qualification for this new role. However, 

it is also important to play by the community’s rules. 

Companies that set up Facebook pages and blogs must 

be aware that they are using platforms whose rules are 

determined largely by individuals. They must be direct, 

honest and responsive in their communication. If people 

on these sites ask questions, they expect prompt answers, 

just as they would when conversing face to face. If you’re 

inflexible, or your social media presence is static and boring, 

you won’t meet their expectations and your reputation 

will be tarnished. 

If nothing changes on your site for weeks on end, or it’s 

just a bulletin board for press releases, you’re breaking the 

rules of social media. 

So far, some of the most vibrant dialog has come from 

ICT companies. The U.S. cable network operator Comcast 

uses multiple Twitter channels to keep in touch with customers’ 

needs. Deutsche Telekom uses Twitter and Facebook 

accounts to provide fast, simple answers to questions. 

The easy answers are posted where everyone can see them, 

while complex issues requiring a more detailed or personalized 

response are dealt with by email or passed on to the 

relevant department. 

Twitter has two big advantages, its low cost and user 

friendliness. However, the posts are quite short and Twitter’s 

timeline format is not very organized, a shortcoming 

that can only be partially resolved by setting hashtags. 

Blogs provide a more lasting record, but also require 

greater commitment. Daimler AG uses a corporate blog to 

engage in debate with anyone who’s interested, but more 

importantly, to share information. “Blogging is the most 

authentic form of communication,” says the group’s social 

media manager, Uwe Knaus, adding that his company was 

one of Germany’s early blog-adopters, debuting an online 

forum in 2007. Research has shown that users have a great 

deal of confidence in information when it comes from ordinary 

employees. 

Knaus says the blog also features guest posts, such as a 

post by Greenpeace regarding environmental issues. Some 

300 employees blog about a total of 15 subjects covering the 

entire range of Daimler’s operations. Most of the material 

they post is not the kind you’ll see in traditional media, 

“The key to success in 

the social networking 

era is to encourage 

employees to take personal 

responsibility outside 

of the hierarchy” 

Bill George, professor at the Harvard Business School 

“The blog means we can talk to everyone in the community 

about the specific subjects they’re interested 

in.” 

All of this could backfire, however, if employees 

write about their jobs and their employer and also talk 

about their personal lives. Companies that are heavily 

quoted by the media need to adopt new rules so that 

carefully planned messages from the investor relations 

department do not conflict with comments from employees 

in other areas of the business. 

Many managers fear a loss of control if they allow 

their staff to engage in open online communication 

because they cannot monitor everything that is being 

said. This concern may be unjustified, and censorship 

can bring problems of its own. If you say things on the 

Internet, you automatically become a part of the public 

debate, and sooner or later people will criticize you. 

The online community does not always behave fairly, 

nor is it completely unpredictable when you abide by 

a few ground rules, just as you do offline. Be willing 

to listen, use the right tone, respond appropriately, be 

honest, and don’t make promises you can’t keep. Set 

down clear guidelines about what people can and cannot 

say, particularly on investor-relations issues. 

“The key to success in the social networking era is 

to encourage employees to take personal responsibility 

outside of the hierarchy,” says Bill George, professor of 

management practice at Harvard Business School. Internal 

and external social networks are breaking down 

traditional communication structures, he says. “Classic 

middle management is becoming less important in the 

current economy.” 

What matters more is carefully selecting and training 

employees who tweet, blog and chat in their company’s 

name. They must be well informed, be able to 

respond quickly, and be given reasonably free rein. 

They don’t have to come from the marketing or communications 

department; specialist skills gained in one 

area of the company may be a valuable asset to other 

parts of the business. 


Services 

Seller’s market 

The next generation of workers will grow up with online social networks. With 

specialist skills in increasingly short supply, recruiters will have to be more 

proactive in searching the Internet for employment candidates. A candidate’s 

virtual relationships can reveal a lot about their employability 

tial employees on Facebook and other social networks, and 

even get staff from other departments to help in their quest. 

On the SAP Twitter channel, for example, “Marcelo” 

writes that he’s looking forward to carnival weekend in São 

Paulo, and mentions in passing that there are lots of vacancies 

at SAP Brazil. “If you know any good, talented people, 

send them to us,” he tells his readers. 

On a minute-by-minute basis, other employees from the 

group’s various offices and departments talk about their personal 

achievements, give updates about projects, conferences 

and training sessions, and just happen to mention vacancies 

that they know about. 

Sean MacNiven, head of social media at SAP, has developed 

a Twitter tool for the company’s human resources 

department. “Personal posts by employees arouse people’s 

curiosity,” he says. “Tweets from a company reach them on 

a completely different level to images, videos or brochures, 

because they show the people behind SAP.” 

In the cloud economy, workers become ambassadors 

for their companies. This represents a major business opportunity. 

Drawing on your employees’ personal networks 

is a great way to identify new talent, says Graeme Martin, 

director of Glasgow University’s Centre for Reputation Management 

through People. It also gives you a more authentic 

picture of your business. “If you support enthusiastic bloggers 

and Facebook users in your company, you’re signaling 

your willingness to engage in dialog through the social media.” 

Businesses that ban their staff from using the Internet 

or otherwise exclude them from social networks can lose out. 

Finding the face that fits: Your next new 

recruit could come from Facebook. 

Employees lose their sense of attachment to an organization 

they feel is keeping them on a tight leash. 

That said, human resources managers are increasingly 

being required to gently monitor and guide their employees’ 

activities on social networks. “They could end up with 

a new and strategically important role as community and 

reputation managers, responsible for establishing a positive 

employer brand on social networks and managing communication 

between employees and potential applicants,” says 

Tanya Bondarouk, associate professor of social innovation 

in operations and human resources management at Twente 

University in the Netherlands. She believes most HR departments 

have a long way to go before effectively fulfilling this 

crucial role, “They still have a lot of work to do.” 

“Personal posts by 

employees arouse people’s 

curiosity” 

Sean McNiven, SAP-Head of Social Media 

In the coming years, human resources managers will 

wave goodbye to several traditional recruiting tools. 

Job ads in the newspapers, application forms submitted 

via mail, glossy brochures at university job fairs, 

even online vacancy lists with contact phone numbers 

and email addresses, will all gradually be consigned to the 

garbage can of history. 

Increasingly, the hunt for expertise is being played out in 

social media. “LinkedIn, Facebook, Twitter and blogs are a 

vast pool of talent that human resources managers can take 

their pick from,” says James Durbin, a self-styled social media 

headhunter from Missouri. “Companies looking for staff 

need to actively approach potential applicants and engage in 

ongoing dialog with them.” 

If you want to filter out the right people from millions 

of blogs, Facebook profiles and Twitter accounts, and get 

them interested in what you have to offer, you need to understand 

the principle behind these complex networks of 

social relationships. 

Simply maintaining a presence is not enough. “Recruiters 

must learn to understand the expectations of these sites’ 

users,” Durbin says. In social media, that means finding 

authentic ways of establishing personal contact and willingness 

to engage in two-way interaction. 

Social media headhunters search sources on the net 

where experts engage in debate; sources which may include 

blogs, newsgroups, Twitter, and reviews on Amazon. They 

identify candidates, obtain recommendations, talk to poten- 


Services 

Services 

“Cloud computing: 

It’s important to form your 

own picture” 

Angelika Ruppel is an information scientist at the Fraunhofer Institute for 

Secure Information Technology in Munich. She is well aware of the security 

concerns regarding cloud computing, and recommends a few precautions 

Expert 

Angelika Ruppel 

Information scientist 

Angelika Ruppel works 

in the Secure Services 

and Quality Testing 

Research Division at 

the Fraunhofer Institute 

for Secure Information 

Technology in Munich. 

She is currently designing 

security solutions for cloud 

computing systems in 

the telecommunications 

sector, and is responsible 

for launching the institute’s 

cloud security laboratory. 

Research has shown that one in five 

companies fail to exploit the potential 

of cloud computing because they are 

concerned about the lack of data 

protection. Are they right to worry 

about this? 

I understand their concerns. Businesses 

must be aware that cloud services do 

involve major security risks. As with 

traditional IT applications, businesses 

are concerned about availability, and 

data being deleted or falling into the 

wrong hands. 

Another problem is that cloud 

computing systems reduce user 

transparency as far as security and 

availability risks are concerned, and 

they also create new vulnerabilities. For 

example, hackers can pose as consumers 

to access other consumers’ data. 

So you’re reducing your level of 

security just by using the cloud? 

Not necessarily. Even today, small and 

medium-sized companies often don’t 

have the ability to draw up detailed 

security guidelines. They don’t have 

the know-how or the employees 

they need, and cloud services with 

standardized security levels can 

actually make companies like these 

more secure. Implementing adequate 

security mechanisms is one of the cloud 

provider’s core responsibilities. 

We can also assume that cost savings play 

a part, particularly for large companies 

utilizing cloud services. If providers try to 

offer these services as cheaply as possible, 

there’s a theoretical risk that this will 

come at the expense of security. 

How can the security risks of cloud 

systems be minimized? 

Cloud systems are very complex. They 

consist of many components and services 

working on different levels, so a wide 

range of individual security aspects need 

to be taken into account. A business 

must carry out a detailed analysis 

of their infrastructure, applications, 

platform, management and compliance. 

If you want to use cloud services, you 

need to draw up a checklist of questions 

for potential providers. 

What would such a list look like? 

There are many different factors 

that must be clarified. In terms of 

infrastructure, for example, how will 

you secure the building where the 

computer is located? Will you have video 

surveillance? It is also important to 

know how the data will be stored on the 

virtual machines. 

One of the key questions as far as 

applications are concerned is the method 

for keeping meeting minutes. Are 

messages encrypted? Who has access to 

what data, when and how? A lot of these 

questions don’t become clear until you 

know specifically which cloud services 

you’ll be using. 

You therefore need to look at all the 

relevant areas before drawing up a 

questionnaire and using it as the basis 

for the process. 

If that’s only the basis, what else do you 

need to take into consideration? 

Cloud services usually have to be 

integrated within an existing IT system 

that already has its own security 

strategy. You should also meet with 

the cloud provider first. It’s a highly 

automated business, and you can no 

longer necessarily assume that there’ll 

be any human interaction, but it is still 

important to take a close look at the 

cloud provider and get a clear picture 

of their computer centers, employees 

and procedures. It’s also a good idea to 

agree on a single point of contact for any 

problems or emergencies. 

One very important issue is network 

infrastructure protection. Cloud services 

are often provided via the Internet, 

so you need standardized firewalls, 

encryption and redundant network 

connections. All of this might sound a 

bit banal, but these are very important 

questions to ask if you plan to place 

sufficient trust in the provider. 

You should also find out how long the 

service has been on the market, whether it 

“Using cloud services can sometimes 

actually increase security” 

has many customers and whether there 

have been any problems in the past. 

Are there any industry standards or 

quality marks guaranteeing a high 

level of security? 

Security reports and certificates can 

give you an idea of how secure a cloud 

computing system is, but you need to 

check which processes are monitored 

by an external company and how 

these are implemented by the cloud 

provider. Some providers actually award 

certificates to themselves. One good idea 

is to use the provider’s basic services, 

some of which they charge for. That 

usually allows you to achieve a good 

level of security, but there should always 

be a security certificate showing that 

the provider’s basic services have been 

externally audited. 

As a cloud user, how much influence do 

you have over the industry-standard 

service level agreement? 

Service level agreements (SLAs) set 

down all of the parties’ rights and 

obligations. Very few cloud companies 

draw them up in consultation with 

the client; in most cases they’re simply 

presented as a fait accompli, so they 

need to be subjected to careful scrutiny. 

After all, you’re talking about important 

things like service availability. 

SLAs also lay down compensation for 

security problems and specify who should 

be informed if the worst-case scenario 

occurs. You can also reach special 

agreements for this. For example, most 

providers perform unencrypted backups, 

so if you want a higher level of security, 

this should be stated in the SLAs. 


Essay 

The rain dancers 

Over the years, the Internet has lurched from one over-hyped “next big thing” 

to another. Is the cloud economy anything more than a nebulous catchphrase? 

By Thomas Vašek 

Since the dawn of humanity, people have danced around fires 

muttering incantations to the gods, trying to summon dark 

clouds, soft rain and rich harvests. Today’s data cloud serves a 

similar purpose. Many people expect it to bring pennies cascading 

from heaven, making them and their businesses rich – preferably 

overnight and with minimum effort. They are the rain dancers 

of the cloud economy; people who put their trust in miracles and 

technological mantras rather than in economic common sense 

and sound business models. When everyone else is running in the same direction, it’s 

worth pausing for a moment to ask why. 

The dotcom crash of ten years ago was caused by the herd instinct. The rain 

dancers of the time offered airy-fairy business models with little basis in reality, 

fueling expectations that drove share prices sky-high. The clouds disgorged not 

wealth but disappointment. Similarly, in 2008, blind faith in derivatives based on 

subprime loans sparked a global financial crisis. 

This teaches us a very simple lesson: the more virtual a business is, the more 

searching our questions must be regarding its products, its customers, and how 

much value it adds. 

Anyone who believes that social networks are the future should remember the 

burst bubbles of the recent past. Just a few years ago, the rain dancers said MySpace 

was a license to print money, claimed Second Life represented the marketplace of 

the future, and assured us that blogging was the new media revolution. None of their 

forecasts has come to pass. MySpace ended up as an entertainment site, Second Life 

is suffering from a bad case of waning popularity, and while blogs have their uses, 

they don’t often create millionaires. 

Summoning clouds: But you 

must know how to use the 

rain of data when it arrives. 


essay 

essay 

“There will always be those who put their trust 

in miracles and technological mantras rather 

than in economic common sense and sound 

business models” 

Today, suddenly, we’re told that it’s all going to be different. 

The rain dancers insist that the cloud economy will 

revolutionize business and society. Information technology 

is going virtual, with hard-disk space, computing power 

and software all migrating to the Internet. We have no idea 

where in the world these services are, and we don’t care as 

long as they’re available when we need them. We add new 

droplets to the cloud, telling the world more about ourselves 

every time we save data, do a Google search, or interact on 

Facebook or Twitter. 

It sounds like an attractive prospect. Businesses can suck 

data from the cloud whenever they need it, and if they steer 

it in the right direction, it will rain profits on their heads. 

The trouble is, it’s not going to be like this. 

The rain dancers confuse opportunities with solutions 

and new technology with new business models. We know 

from past experience that bubbles burst when they’re overvalued. 

These services are realistically worthwhile, but many 

people ascribe more value to them than they actually deserve. 

For example, Facebook’s meteoric rise would appear 

to imply that social networks are worth their weight in gold 

– but what if this value is an illusion? 

Facebook, Twitter et al. let you stay in touch with hundreds 

of people, find out what makes them tick, what kind 

of things they’re into, and whether they’re single or spoken 

for. They foster the illusion of real, meaningful friendships, 

but in truth these superficial connections come together and 

drift apart like cumulonimbus on a summer day. Our attention 

is a limited resource, and simultaneously keeping 

up with hundreds of Facebook friends, reading tweets and 

emails and watching videos is a very limited form of interaction 

with the outside world. Endlessly checking others’ updates, 

listening to their unremitting vacillation and turning 

down friend requests from total strangers can be stressful. 

The old web has devalued digital content, which has had 

dramatic consequences for the media sector. The new web 

could erode the value of social relationships. Brand-strategy 

guru Umair Haque has written in his blog on the Harvard 

Business Review website that just as banks traded in subprime 

loans before the recession, so social websites are trading 

in subprime relationships today. 

This is just one person’s opinion; however, if relationships 

on Facebook et al. are as valuable as they’re made out to be, 

users and advertisers should be willing to shell out good 

money for them, and they are not. In theory, social media 

should have made advertising obsolete, because people can 

find out which products are the best by tapping into the 

hive intelligence, but they haven’t. Social media agencies are 

mushrooming, but for all their rapid growth, the networks 

still have difficulty selling advertising – which means their 

entire survival is at stake. 

While Facebook has sold over USD 1 bn worth of advertising 

in the past year, this is still only a fraction of what Google 

earns from its precision-targeted search-based ads. Facebook 

is being forced to develop a steady stream of new tools and 

advertising formats to make more effective use of “social 

graphs”, the networks of relationships between its users. 

However, this is causing a dilemma. On the one hand, 

Facebook needs to earn more money from advertising. On 

the other, it risks being regarded increasingly as a marketing 

platform, rather than a place to forge new relationships. 

Rampant commercialism was one of the reasons for My- 

Space’s decline, and Facebook attracted users’ wrath in 2007 

by introducing its notorious Beacon function. If a user made 

an online purchase, details were automatically sent to their 

Facebook friends without said user’s consent. The community 

saw this as an abuse, and the ensuing storm of protest 

led the company to withdraw the feature days later. 

In the long term, such blunders could damage trust 

among the Facebook community, as well as causing largescale 

data leaks. Social networks bring people together, but 

they are not marketplaces or marketing tools in the traditional 

sense. Of course, they have been used for successful 

marketing campaigns; Starbucks, for example, gave vouchers 

for cups of coffee to its Facebook friends, and many other 

companies schmooze fans with promotional gifts, but if you 

use the site solely as a form of cheap advertising, you are 

really missing the point. 

The author 

Thomas Vašek 

was the founding editor 

of the German edition 

of Technology Review, 

the innovation magazine 

published by the 

Massachusetts Institute of 

Technology, and went on 

to edit P.M. Magazine. He is 

now a Munich-based author 

and journalist, writing for 

such publications as Die Zeit 

and the business magazine 

brand eins. 

Social media provides a new forum for talking to people, identifying 

their needs and getting your message across. This should not 

be a top-down, I-talk-you-listen process as it was with the old web; 

rather, it should be a partnership of equals, with the primary focus 

being genuine dialog rather than simply achieving a return on your 

investment. If you just try to sell things to your Facebook fans, you’re 

doomed to fail and could even damage your brand by devaluing your 

posts and turning your customer relationships into a virtual Tupperware 

party. If there is a social media bubble, and it bursts, the 

fault will lie not with new technology, but with companies that confuse 

Facebook with customer-relationship management software. 

The influential Cluetrain manifesto of 1999 pointed out that 

markets were conversations. To an extent, this has always been true 

and it is just as true today. Social networks are virtual spaces in 

which businesses can conduct conversations – no more, no less. It 

is in these conversations that their lasting value lies, and the bubble 

will burst if companies use questionable methods in an attempt to 

control and monetize these networks. 

To succeed in the cloud economy, you must be able to listen, 

particularly when people are saying things you don’t like. Ironically, 

the value of social networks lies precisely in the fact that they also 

generate negative feedback which companies must respond to. If the 

cloud simply becomes a means to a quick profit, it will unleash not 

gentle showers of money, but a damaging storm. 

Humans are social creatures. We want to share our knowledge 

and interests with others, and companies and brands can and must 

take advantage of this; this must, however, be a substantive debate 

based on a commitment to real relationships. Without these, in spite 

of its technological potential, the cloud economy will remain a misty 

abstraction. 

Having a few thousand Facebook friends or Twitter followers is 

one way of engaging in this debate, but dialog is not a popularity 

contest, and your number of friends is not the sole indicator of how 

much customer loyalty you enjoy or how attractive your brand is. 

A conversation is not just about liking or not liking someone else’s 

Facebook post. A customer relationship is not simply a Facebook 

friendship, a real customer is not just a drop in an ocean of data, 

and doing business successfully in the cloud economy is anything 

but a rain dance. 


Imprint 

Publisher 

Martin Wittig, CEO 

Roland Berger Strategy Consultants GmbH 

High Light Towers, Mies-van-der-Rohe-Str.6 

D-80807 Munich, Germany, Tel.: +49 (0) 89-9230-0 

Directors 

Dr. Katherine Nölling, Matthias Sturm (V.i.S.d.P) 

Editorial Advisory Board 

Roland Berger Strategy Consultants 

Publishing Company 

Axel Springer AG 

Axel-Springer-Str. 65, 10888 Berlin, Germany 

Tel.: +49 (0)30 2591-74718, Fax: +49 (0)30 2591-74710 

newbusiness@axelspringer.de, www.axelspringer.de 

www. 

USD 1 trillion 

Estimated value of intellectual property stolen by hackers each year. 

1 in 10 

Internet users have experienced hiring issues because of social networking content. 

152 million 

The number of blogs on the Internet. 

USD 6 billion 

Amount the Pentagon spent on computer security in 2009. 

.com 

Management (New Business) 

Frank Parlow, Lutz Thalmann 

Chief Editorial and Concept 

ergo Unternehmenskommunikation GmbH & Co. KG 

Sebastian Düring (responsible), Santo Pane 

Authors 

Michael Naumann, Sylvia Schaab, Christian Schreiber, David Selbach, 

Prof. Dr. Björn Bloching (Munich), Steven Lin (Beijing), 

Viktoria Unterreiner (New York), Thomas Vašek (Munich) 

Design 

Rethink GmbH 

Brian O’Connor, Helge Hoffmann, Henrike Noetzold, 

Andrea Schumacher, Jana Hallberg, Jennifer Bressler 

Illustrations 

Jörg Block 

Photography 

Oliver Mark 

Production 

Olaf Hopf 

Image Editing 

Prepress WELT Group 

Printer 

Firmengruppe APPL, aprinta Druck GmbH 

Senefelderstraße 3-11, 86650 Wemding 

76% of users do not have children. 74% have 

a college degree or above. 1% of users are 

responsible for 34% of site’s traffic. 

LinkedIn has over 100 m members. 

YouTube has an estimated 

92 Billion page views each 

month. 

YouTube has 490 m unique users. 

50 million 

The average number of Tweets 

sent per day in 2010. 

182% Increase in number of mobile Twitter users over 2010. 

22.5% of users accounted for about 90% of all activity. 

Twitter has 300 m registered accounts. 

Copyright 

The contents of this magazine are protected by copyright law. 

All rights reserved. 

Notice 

Opinions expressed in the articles of this magazine do not 

necessarily reflect the views of the publisher. 

Do you have any questions for the editor or the editorial team? 

Would you be interested in learning more about studies by Roland Berger Strategy Consultants? 

Just send an email to service@think-act.info 

Page 22-23 Jason Schmidt/trunkarchive.com, Page 25 Courtesy 

Roland Berger, Seite 34 – 35 Ian Teh/VU, Page 36 – 37 Mark 

Leong 2010/Redux/Laif, Page 38 Agentur Focus, Page 41 Getty 

Images, Page 47 PR, Page 52 – 53 George Cogan/Gallery Stock; 

Picture Credits 

Fotex; Manfred Horvath/Anzenberger, Page 58 – 59 Michael 

Constantin/PaloAlto/Corbis; Kurt Krieger/ Fotoagentur Wolfram; 

plainpicuture; F1Online, Zoonar, Page 60 PR, Page 62 Kirk 

Mastin/Aurora/Laif, Page 65 PR 

every 60 Seconds 

users send 230,000 Messages, update 95,000 Statuses, write 80,000 wall posts, 

tag 65,000 photos, share 50,000 links, and affirm or disparage them all 

with half a million comments. 

In 2010, 

7.9 new accounts 

were registered every second. Facebook has approximately 680 million users. 

66 THINK:Act Cloud Economy Special 

Ressources: fastgush.com, onlinemba.com, youtube.com, royal.pingdom.com, sysomos.com, blog.kissmetrics.com, socialbakers.com, 

fastcompany.com, wallblog.co.uk, blog.linkedin.com

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