Riding on the success of social media giant Twitter’s Initial Public Offering which investment bank JP Morgan (JPM) was involved in underwriting, a question & answer (Q&A) session was, quite aptly, organized via that same social media platform. The general public was encouraged to submit questions through the hashtag #AskJPM prior to the Q&A session, to which JPM Vice Chairman Jimmy Lee would attempt to answer the next day.
A similar exercise was also conducted by JPM’s competitor Goldman Sachs (GS) two weeks before with GS Global Head of Financing, Stephen Scherr. In fact, the GS experience could very well have been more daunting as the entire Q&A session was filmed and broadcasted live with viewers submitting questions in real time online.
Considering the parallels between the two entities (both investment banking industry leaders) and target audience (the curious public), one would expect that both of these experiences would have largely similar outcomes. However, the aftermath of the social engagement exercises by the two investment banking powerhouses could not be any more different.
What was supposed to be an educational and practical exchange on leadership, career and life took an ugly turn as netizens jumped on the opportunity to bombard JPM with a deluge of accusatory and taunting tweets. The exercise became largely unproductive and spiralled so out of control it had to be shut down.
This negative response is in stark contrast with that experienced by Goldman Sachs which ended up hosting a highly productive discussion, lasting more than thirty minutes. Issues discussed included corporate financing and economic trends in Latin America and that discussion is now proudly archived on the GS website for future reference.
It is apparent that JPM was beleaguered by its own initiatives while GS came up victorious. But what is more puzzling is how these two similar exercises could have ended up with such different results?
Social media has stealthily accumulated a ubiquitous presence in our daily lives over the years. With its vast outreach and influence, corporations are flocking to establish their social media presence in an attempt to better engage their stakeholders. These initiatives quickly multiplied over the years as the number and scale of social networking platforms rapidly expanded and gained more users. In this day and age of increasing digitalization, failing to cultivate a strong social media presence would threaten a brand’s relevance and serve as a prelude to its demise.
However, as exemplified by the exercises conducted by Goldman Sachs and JP Morgan, the outcome of social media engagement can be highly polarizing. This begets the question of the bane and boon of social media, and how corporations could effectively leverage on the opportunities presented by social media, while avoiding its pitfalls.
Traditional information dissemination methods operated through a one way street, where organizations had the power to release announcements after carefully curating its content, and the target audience had little or no outlet to public respond to the messages.
However, since the advent of social media, information dissemination has become more interactive, making the communication process a network of many different nodes with content being generated continuously, and flowing in all directions. With each node being an effective source of information, the power and control that was traditionally perched firmly at the tip of the organizational pyramid dissipates downwards to the individual.
Fundamentally, social media acts as a mobilization tool and aids in the spreading of information. It demolishes the traditional hierarchy of top-down information dissemination and shifts the power to the individual. It is also precisely within these basic characteristics where both the bane and boon of social media lie.
Each node effectively acts like a pulse; pumping content through the communication vessels. Information dissemination now operates at much higher efficiencies and faster speeds, which serves to help corporations broadcast their intended messages and announcements more effectively. However, the heightened speed and interactivity of social media not only allow users to examine and scrutinize the information received, it empowers them as they can now effortlessly broadcast their opinions to influence the rest of the network. With this newly gained power, organizations often find themselves at the mercy of social media users, who now have the ability to smear long established brands, shake foundations of age old traditions and coalesce hoards of people to stand behind a cause, all by a few simple clicks or within Twitter’s 140 character limit.
A historical moment often referenced as the pinnacle of social media influence on information dissemination is the successful upheaval of the Mubarak regime during the Egyptian Revolution. While it remains debatable whether social media, in its singularity, led Egypt towards democracy, it is undeniable that social media played an important role in bringing the revolution to life. The Facebook group “We are Khalid Said” was created by activists and was strategic in connecting domestic and international Egyptian activists, eased the co-ordination process for protests and established platforms for discussions.
Although strikingly different in severity, intensity and scope, social media played a similar role in both the #AskJPM saga and the Egyptian Revolution. Ultimately, social media was key in creating a thick density of connections. It compounded the dissatisfaction and grievances experienced by the general populace, boosted collective courage and radicalized a movement to support a cause. Like the Egyptians who felt oppressed and frustrated by the pervasive corruption and nepotism under the Mubarak regime, the 99% were feeling ever more indignant by banksterism – where the economic system of the world becomes increasingly scaled towards reaping benefits for financial institutions at the expense of everyone else. While the disparaging remarks on #AskJPM did not bring the formidable institution to its knees, it served as a clear and powerful signal of the disdain the public had for JP Morgan in particular and the financial industry in general.
One may argue that the backlash received by JP Morgan in its social engagement exercise was just a case of bad timing. At the time of the social media disaster, the institution was still plagued with multiple scandals like the London whale and LIBOR manipulation. It was also held at a time where JPM was considered Wall Street’s worst villain and Main Street’s greatest enemy. And hence, given the general negative sentiments, it seemed perfectly understandable that JPM’s attempt at engaging its stakeholders was faced with hostility.
Or is it?
The financial crisis of 2008 is still etched clearly in the minds of many, and with the world still dealing with the consequences today, it is without a doubt that when it comes to the most loathed bank on Wall Street, Goldman Sachs is a strong contender, if not the clear winner. Therefore, negative sentiments were nothing but an excuse to explain the disaster that was JP Morgan’s social media engagement exercise. Hence, what precisely is the main difference between the two exercises that led to the success of one and failure of the other??
Goldman Sachs, unlike JP Morgan, carried out its social engagement exercise in a carefully curated form. Although social media was still used as the platform for information exchange, the flow of information was mainly tributary. That is, information was collected from various sources and then funnelled and filtered through a main node, which was effectively the website where questions were submitted. From this vast choice of content, conducive questions were selected and moderated before they were posted to Stephen Scherr.
On the contrary, JP Morgan applied a distributary approach. Information flowed away from a main source, established new streams in all directions and anchored its roots all over. As such, the institution had little control and power over what was being discussed and published, and hence was unable to filter and curate the selected information that would have encouraged a productive discussion.
It is important to note that JP Morgan was not alone in this social engagement catastrophe the past year. British Gas, Tesco, McDonalds and British Airways were all guilty of using the same social media gun and shooting themselves in the foot. Like JPM, all these corporations executed their social engagement exercises in the distributary fashion via Twitter and hashtags.
During a time when the public’s trust of large corporations remains at an all-time low, the distributary approach is clearly not the most suitable way through which social engagement exercises should be carried out. Ultimately when organizations participate in social media engagement, they are equipping each user with a magnifying glass. Hence, with the expansion of their social media presence, a heightened level of transparency automatically ensues. However, the fact is that large organizations, especially financial institutions, have safely hidden behind the shroud of secrecy for many years, and would inevitably crumble under such sudden high levels of scrutiny. While social media engagement is a good first step towards increased transparency, it is perhaps still too big a leap forward when carried out in an uncontrolled setting.