Should Strategic Planning Include a Social Media Element?

The recent Ethiopian Airlines crash involving a Boeing 737 MAX aircraft killed 157 passengers.  Aviation experts believe that Twitter played a major role in the grounding of Boeing’s 737 MAX airplanes, pending further investigation.  Even President Trump pre-empted his own administration’s FAA announcement by tweeting a comment.  This points to social media playing a major and positive role in arguably saving lives as Boeing seeks to determine what exactly led to the crash.  If social media can move the needle to influence corporate decision makers to change their mind on multi-billion dollar decisions, should social media have a more significant role in the execution of a company’s strategic plan?

Social media, specifically, Twitter, is more often than not, an instrument of retribution.  Don’t like what a politician or a company does? Tweet your disapproval and often it becomes more than disapproval—it is considered down-right shaming of the person or company. On March 8^th, Boeing’s stock was trading at around $420 per share.  The crash occurred on March 10^th.  As of this writing, Boeing’s stock is trading around $373 per share– that’s a decline of about 12% or about $40 billion in market value from its peak in March.  Additionally, federal prosecutors and the Transportation Department are now scrutinizing everything possible on the 737 MAX.  Boeing has since paused deliveries of the model, which accounts for 40% of company profits. How big of a role did social media play in this incident?

Sprout Social—a social media software firm—estimates that approximately 870,000 tweets were posted about Boeing’s 737 MAX, most of which were negative.  Millennials that self-proclaim themselves “digital consultants” are leveraging Twitter’s reach to pound monolithic American companies into submission when they perceive corporate injustice being perpetrated.  Apparently, a lot of these “digital consultants” perceived a corporate injustice being done, and then ultimately played a significant role in grounding 737 MAX aircrafts.

In other words, that’s power – the power to influence decisions, guide the capital flow in a $20 trillion American economy, and drastically affect the future of Boeing, an approximately $100 billion a year publicly traded company. Question is: how can a company incorporate this type of power into their strategic planning cycle and ultimate execution of its business plan?

First, incorporating social media into a strategic planning cycle assumes the company has a strategic planning cycle.  I advise and work with middle market companies throughout Florida, and candidly, strategic planning is essentially non-existent.  I am always amazed how entrepreneurs can create $50 or $100 million of company value without utilizing important disciplines, like thinking long term.  Florida is the poster child of small to middle market companies, and frankly, many do very well, and return millions of dollars in annual cash flow to their owners. But social media is simply an afterthought that isn’t thoughtful. Many—if not most—realize there is latent power in social media, but really don’t think about it enough to influence strategy, if in fact, these companies have a self-identified strategy.

The role social media plays in these companies (if it exists at all) is an add-on function, not an integrated function. By add-on function, I mean a planning mentality that evaluates key planning decisions such as revenue, costs, and EBITDA, then addresses social media. It’s an afterthought that gets added-on.  As an integrated function, the mentality is different.  That mentality integrates and assigns social media a place in the value chain of the company’s product or service offering to the marketplace in order to take advantage of the social media power exhibited in the Boeing crash.

The fact is, profitable, privately owned middle market companies are slow to make the necessary investments that will pay off in 5-10 years.  The reasons are manifold, but one that is obvious is that there isn’t external pressure from institutional and activist board members.  There isn’t any pressure to innovate and operate like an IT company, which is the new planning mentality needed today.  A second reason is that many successful middle market company owners are looking to sell within the next 12 months, trying to take advance of a strong market before the next downturn.  Problem is this: many of these companies that get put on the market will not end up closing, and company owners will ultimately find themselves holding onto to their companies longer than expected, watching technology savvier companies pass them by.

Now someone might object and say the social media power displayed in the Boeing crash was the result of stemming injustice and another catastrophic airline disaster.  Was the response organic, and not orchestrated? Yes. However, that doesn’t mean the power displayed in the Boeing situation cannot be developed and incorporated into a systematic planning cycle. Isn’t that the fundamental point of the digital economy? Taking advantage of new economic realities through technology platforms that facilitate decisions between buyers and sellers in the market place? That is precisely the point, and the reason why you’re seeing companies like Lyft, get ready for an IPO with a valuation of $21-23 billion. By the way, Lyft lost $911.3 million in 2018.

The digital economy is better described as networks, rather than markets.[1] A typical strategic analysis focuses on using analytical tools without fully incorporating how customers are networks and can be influenced.  I think a big reason for that shortcoming is demographic.  Many owners of middle market business are generationally separated (think: older) and are therefore unaware of variables in the digital economy.  I believe it’s time, and the Boeing tragedy might provide the impetus, for CEOs and senior managers to consider how strategy needs to contemplate the reality of customer networks.  One thing is for sure– Boeing gets it via the school of hard knocks and the tragic loss of life.  Perhaps others can learn without the human tragedy component.

[1] The Digital Transformation Playbook, Rethink Your Business For the Digital Age, David L. Rogers, Chapter 2, Columbia Business School Press, 2016.