Clay Shirky at SCS11

Some say social media is a fad, and like all fads, will inevitably go out of style. While specific social tools like Facebook or Twitter could go the way of Friendster, social networks have permanently changed the culture of media. Customers have a powerful voice now; they can talk directly and publically to businesses, and more importantly, to each other. While the tools we use to be social online may change, the old media model – businesses pushing messages in one direction, to a captive audience – won’t come back, says writer and new media expert Clay Shirky.

In his keynote at Social Commerce Summit 2011, Clay explained how companies that quickly go from fear of conversation to an appreciation of what amounts to free R&D can benefit from the newly social environment. Here are three takeaways from his presentation.

Online conversation is a powerful resource

Online conversation isn’t just idle chatter. Clay discussed “cognitive surplus” – the extra time and brainpower left over after our responsibilities (jobs, relationships, survival) are met. In the past, we collectively spent most of our cognitive surplus as passive consumers – watching TV, reading books and newspapers, etc. But with digital media, and especially social media, more people are spending larger shares of their cognitive surplus as producers – updating Facebook or Twitter statuses; posting pictures or videos; writing blogs or product reviews; or engaging in a vast range of other activities.

How big is this resource? With coordinated voluntary participation, it can be huge, Clay says. Wikipedia has taken about 100 million volunteer hours to create, and it’s now reportedly as accurate as traditional encyclopedias. Americans spend 200 billion hours watching television every year – imagine how many powerful resources could be built from that cognitive surplus, thanks to the social web.

Customer conversations are free R&D

Customers will think of products and features your teams have not yet imagined. They’ll find new ways to use your products, and with social media, can educate others on these new uses too. Clay noted a photo taken with a photographic technique called high dynamic range (HDR) and posted to Flickr before the technique was widely used. Discussion ensued in the comments, and numerous posters began educating each other on the technique, pulling from each other’s experiences to essentially create a how-to guide. In the past, it would’ve taken years for the technique to spread through professional circles and industry journals. Today, users don’t need traditional publishers to spread a message – they can educate each other online.

Mining these conversations for insights is free R&D for companies, Clay says. Our research shows that over half of four-star reviews explain how to make the product five-stars. Companies like Clorox and Rubbermaid (Bazaarvoice clients) actively encourage customer conversation around their products through social media, customer reviews, and Q&A. They use these conversations like 24-hour focus groups, pulling insights to improve their products based on real customer use.

Design products for actual, not desired, use

As opposed to: “Get customers to use products the way you designed them to be used.” How should companies respond if customers start using their products in ways they hadn’t intended?

Clay recalled a disposable video camera that was sold at a major retail chain. Users could record a short amount of video, and then return the camera to the store for a DVD. Soon, hackers uncovered how to rip video straight from the camera to a PC, bypassing the retailer. Instructions for hacking the camera were widely distributed online. In a panic, the brand set out to “educate the users” on what they felt was the proper way to use the camera. “Whenever you hear someone say ‘educate the users,’ it means they’re out of ideas,” Clay says.

The lesson: Look at what customers want to do with a product, and design it to meet those actual needs. The hackers’ “misuse” revealed demand for a high-quality point-and-shoot video camera with simple PC uploading. Pure Digital Technologies, the manufacturer behind the camera, recognized this demand and launched their own product in 2006 – the Flip Video. Three years later, the company was acquired for $590 million. Of course, the Flip line has recently been retired. But we can’t forget that it was a massive success early on, having met a clearly-articulated customer need.

Your customers are talking about your products online, and aren’t going to stop. Companies that embrace this conversation as free R&D will uncover insights to fuel innovation and outpace competitors.