The dangers of the social media fire house

I will begin with a short story, credit for this tale goes to Nassim Nicholas Taleb who tells it in his book “Fooled by Randomness” (chapter 5) here is a shortened version:

Carlos is a successful emerging market bonds trader on the desk of a New York finance house. He was very good at his job, his strategy seemed solid, he made money and progressing quickly through the ranks and fast becoming the reference point within the organisation for emerging market bonds. He talked to a lot of other emerging markets traders, they took each others advice, understood each other and they had a solid business for several years. Then the markets started to fall, his principal investments in Russian bonds lost a lot of value quickly, Russia was in trouble and the government was not even paying it’s own employees (including armed soldiers!!) so it’s bond’s value depressed quickly. However as values fell Carlos didn’t sell to stop his losses, he continued buying believing the values were now depressed (based on what he was hearing from other traders he associated with), his boss let him continue to buy until eventually after loosing a lot of money he, his boss and his bosses boss were all dismissed!

So how did this happen? How did an intelligent man worth millions of dollars get so blinded that he could not see the holes in his strategy? Namely that buying securities in a government that is not even paying the soldiers looking after it’s nuclear weapons is not a stable bet to repay the loans, hence driving prices down!

Well this is what Nassim labels as the “fire house effect” (based on the fact that firemen, sat in their fire house with little else to do except talk to each other will often develop very similar opinions on a wide variety of subjects). This could also be seen as related to the Not Invented Here Syndrome seen in many corporate and even national cultures, the “fire house effect” took hold of Carlos and the traders he spoke with and socialised with, as they had never seen emerging market bonds fall that far and that fast before they believed that they must be undervalued, each one confirming the others opinion (building social proof) hence creating a situation where many of them made costly mistakes, loosing jobs and wiping out personal fortunes.

But how does this effect us in social media and Word of Mouth?

Well, the basic problem that undid Carlos above is something we all suffer from every day in the social media marketing business… We live in a virtual version of the fire house! Our ability to communicate instantly and easily share ideas via networks like Twitter, Quora, LinkedIn, Facebook and so on as well as meet offline at many “meetups” ranging from pub drinks to one off conferences to week long events mean our propensity to get stuck in the fire house is far greater than any other industry (because, as practioners, we are far more aware of these tools and how to use them!)

A microcosm of this can be seen in individual agencies, some agencies are known for certain types of idea, certain methodologies and tags that they can’t escape, this is often because sitting in the same office with similar people each day discussing the state of the industry and your ideas about it well… The agency’s office becomes, you guessed it, a fire house!

Why is this a problem?

Because as we get caught up in our own little worlds with our own little lexicons and we miss the bigger picture. We create heroes of what we judge to be  successful campaigns and activities, but we forget to look at the bigger picture, either from the perspective of the consumer or the perspective of the businesses we work with / for. The bitter irony is this: Many in our virtual fire house preach integration of social media across the business but forget to integrate their thinking across the business or across the end user touch points.

I was recently chatting to a friend in the industry about an idea they had for a Facebook related activity. I felt the idea was slightly contrived and asked the individual concerned about how they, personally, interacted with brands on Facebook, they then confessed they actually rarely “liked” brands, never mind engage with them. This isn’t a bad thing, don’t gasp and say “well he works in social so he should”, that is part of the problem. We often don’t put ourselves in the shoes of the people we are targeting, that leads to campaigns that end up contrived.

This is counter intuitive!

Yes it is. You would think that by talking to a group of people who work in an industry and are in the know then our knowledge would increase, hence making us better equipped to do our jobs. No, it doesn’t. This assumes that the knowledge of experts in a field allows us to be better equipped to solve problems and execute ideas in that field, it doesn’t.

Take this as an example: Karim R. Lakhani, an assistant professor at Harvard Business School, has conducted research into problems posted to the “crowdsourcing” site InnoCentive, here is what he foundL “Not only did the odds of a solver’s success actually increase in fields outside his expertise,” he says, such as mathematicians taking on chemistry or biologists looking at physics, “but the further a challenge was from his specialty, the greater the likelihood of success. That is very counterintuitive.” In my mind the reason for this is simple, if you are not bound by the constraints of a particular thought process or way of doing things then you are more likely to find a solution to a problem that stumps others. Or put specifically for us: If you learn to think like the other social media people then you just become another chattering head in the echo chamber… The ability to innovate slowly disappears.

How do we avoid this?

Here are a few ideas:

  • Read widely, very widely – books on accountancy, fashion, biology whatever – just don’t spend all your time reading “social media” books and blogs.  I am always shocked how well musicians do this, you talk to Jay-Z and he notes various obscure rock and pop acts among his influences, vice versa it is always true, these guys know how to be truly open to ideas and inspiration from all angles!
  • Ask your friends and relatives about your work, find out what networks they use, if you can run your social media engagement idea past a colleague in a different department do it, treat their advice fairly, even though they don’t know the lingo!
  • Remember how you act as a consumer, not in the idealised “real time” “engagement led” social media world, but in the real one…
  • Talk to your target market, understand how they see you and your competition – not online face to face.

I have a good friend who works in finance, a bit of a techy but not too much who is always happy to talk shop. We regularly discuss (read: argue) about everything from financial measures to regression analysis to customer service on facebook and twitter (he loves the former and hates the idea of the latter), these challenging ideas from someone well outside my usual fire house prove very useful every day.

Getting out of the fire house also helped me shatter a bit of a myth, I used to believe, along with many in our industry: you have to be authentic. Turns out you don’t, not in fashion at least… I listened to two of my female friends looking at a website of paparazzi shots of various models and celebs, the girls commented on many outfits and selected several things they wanted to buy, but both openly confessed they new full well the site was mostly fake and the “shots” were staged, apparently common knowledge. Despite this lack of transparency they don’t care, “because is looks nice”.

To sum up

Beware spending too much time talking shop and getting buried in the ideas of those that do… Talk to others, get your inspiration from the real world, it will do everyone a lot of good!


One response to “The dangers of the social media fire house

  1. Pingback: The bubbles we work in | Tom's Ideas

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