In “Beware the angry birds,” the regular Schumpeter blog that came out in the October 11, 2014 issue of
The Economist, today’s chief executives are portrayed as a threatened species in the social-media age, perpetually at risk of bring doomed by what could begin simply as an exasperated consumer complaint posted on Twitter or Facebook.
BRETT RYDER FOR THE ECONOMIST
“The digital revolution has dramatically shifted the balance of power from companies to their critics,” says Schumpeter. “Although big firms deploy armies of PR flacks, anyone with a smartphone and a socialmedia account now has the same power to reach a global audience. Whistleblowers once had to photocopy documents and smuggle them out in their underpants. Now they can be shared with the world in a trice, by e-mail or instant messaging.”
Schumpeter observes that anti-corporate campaigners have taken to the digital world like ducks to water: “NGOs are good at finding bad news about companies and telling the world about it on social media. Opportunists have also joined the ducks in the water: there is money to be made by “shorting” a stock (that is, betting that its price will go down) and then unleashing a value-destroying digital storm.”
The problem, Schumpeter says, is that companies have failed to adapt to this new media environment: “The biggest of businesses with the slickest of publicity operations, from McDonald’s to JPMorgan Chase, British Gas to Qantas, have found that when they tried engaging with tweeters on their home turf, they were drowned in a sea of sarcasm. British Gas’s attempt at an online discussion about its price rises was met with a barrage of tweets mentioning ‘death’ and ‘greed.’” In short, companies have yet to learn to deal with the Internet, “a beast that feeds on scandal and particularly delights in the flesh of the powerful and privileged.”
Read Schumpeter’s “Beware the angry birds” in The Economist now!
