The tried and true, traditional 80/20 rule has accurately described almost every aspect of our lives – business and personal. We have come to rely on its consistency when calculating our predictions. And, for most areas, we can continue to trust it. But, in regards to Social Media, the 80/20 rule needs to be adjusted to ensure the success of your business in today’s market.
Technology Accelerates Change
Today, technology is changing the way we do business at an exponential rate. The rate is so immediate, in fact, that it seems as if tomorrow’s idea is already yesterday’s history. By the time an idea has been constructed, developed and implemented, you’re behind the curve. With open source models and peer contribution, technology solutions are implemented more efficiently – decreased development times, fewer bugs, more/better upgrades and enhancements. Technology enables project collaboration by involving members all over the world.
Traditional Business Model
Unless you were either a startup or a company large enough to commit resources 100% to the development of a product or service, your business followed the 80/20 rule with 20% of resources designated to research/design and new technologies, while the 80% majority was focused on IPAs (income producing activities). The IPAs are what your company relies on to continue to generate revenue while you implement new ideas. If the idea fails, the IPA will continue to allow your business to operate. The IPA is the company’s safety mechanism.
Rats on Cheese
Some companies commit too much of their resources to conducting their business via Social Media. In a few instances, even, I’ve seen companies focus 100% on Social Media. If the 80/20 rule is too little of a commitment, this is too much of one.
Social Media is extremely volatile. Unless you are a Social Media service, Social Media, itself, changes too often and too rapidly to commit your entire business development and/or marketing strategy to it. I’ve seen too many businesses fall just as quickly as they rose on Social Media. The business’s market moved on to the newest technology leaving the company to evaporate before it even had time to solidify.
For example, the same thing is currently happening with the housing market. Many agents are jumping on the short sale and foreclosure market. I understand this wave may last a while. However, if an agent’s business is based entirely on these two demographics, what happens when the market does, finally, shift? Because the agent has not taken the time to develop good IPAs and solid revenue streams, their business will drastically suffer and they’ll seemingly have to start over. Instead of creating a business model that can adapt, the model will have to be completely reconstructed from the ground up costing the agent (business) time and money.
Many people, whether they are in real estate or another industry, continue to jump on the “next big thing” in Social Media. And, it seems, all they do is jump around. They’re all like rats on cheese – throw something new out there and they all pounce.
The Proper Ratio
The best ratio for a company to prosper in today’s market is 60/40 – 60% of IPAs and 40% investing in new technologies. Because of the volatile state of Social Media, the business needs a good, stable foundation for generating revenue in order to keep the business’s vitals healthy.
The company, then, should designate 40% of its activities to growth through Social Media technology. Reasons for utilizing Social Media are beyond the scope of this post, but I believe some reasons are self-evident. Due to the rapid evolution of Social Media and other Web technologies, 40% is an adequate commitment that should provide large returns. The 40% can be divided among HR, technology investments (hardware, software, etc) and advertising through Social Media venues. Furthermore, the 40% doesn’t always mean dollars, except for instances in, perhaps, compensating employees for commitments in time.
