Four Smart Ways to Run Online Communities

Of the many ideas that have entered the business world by way of the Internet, few have proved more potent than “online community.” America Online owes its success to the creation of community. Amazon.com has become a retail powerhouse thanks largely to the relationships it established with and among its customers. Despite the obvious power of community and the fact that virtual communities are not new, executives in most industries have barely begun to grapple with this new form of interaction, much less understand how it can be used to enhance their business. But before long, the ability to create and manage virtual communities will become a distinguishing feature of nearly every successful business.

Community interactions occur wherever people are connected over computer networks — whether these people are buying, selling, collaborating or merely seeking diversion. Online communities —which we define as groups of people who engage in many-to-many interactions online — form wherever people with common interests are able to interact. These interactions can have a big impact on business strategy and operations. And they pose unforeseen threats as well as opportunities. For example, customer communities eliminate the information gaps that companies traditionally relied upon to maintain profit margins. The Web makes it easy for customers to find alternative suppliers or to create purchasing consortiums to drive prices lower. Independent distributors create communities to gain clout over the companies whose goods they offer to the public. For example, they can compare notes to see whether scarce items are being fairly allocated by manufacturers. Employees form communities to discuss grievances about their managers. But along with such threats come remarkable opportunities. Employee communities can propagate needed change far more effectively than top-down mandates. Community efforts can vastly improve the coordination of channel partners and provide an unparalleled source of customer feedback. By developing new value-adding communities, or better managing those that already exist, companies can greatly enhance their prospects for success in the age of e-business.

This article explores how four organizations — Kaiser Permanente, About.com, Inc., Sun Microsystems, Inc. and Ford Motor Co. — have created online communities to support their business strategies. Together, these “four ways” suggest the many forms of online community used in businesses today and how to make them work.

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References

1. The theme of this article is derived from “Four Ways of Being Human,” the classic anthropology textbook by Genevieve Hellen Lisitzky. Lisitzky’s book illustrated the myriad ways of “being human” through four diverse examples.

2. The 15 communities included Amoco, Awakening Technology, Buckman Laboratories, Fast Company, Ford Motor Company, GrandNet, Hewlett-Packard, Kaiser Permanente, About.com, Monsanto, The Motley Fool, Snap-on Tools, Sun Microsystems, Swiss Re and U.S. West. The research was conducted by a collaborative team led by Arthur Andersen’s Next Generation Research Group and including representatives from the study’s three cosponsors: Shell Oil Company, Anheuser-Busch and the Mutual Group. A representative from each of the 15 communities completed a pre-interview questionnaire that provided such basic information as community origin, purpose, size, composition, support structure and technologies. Hour-long telephone interviews were then conducted with individuals responsible for the day-to-day operations of the community, whom we refer to in this article as the “community coordinator.” These individuals had a wide range of backgrounds and occupied many different levels of authority within their organizations. The interviews delved into such issues as frequency of contribution, personnel requirements to maintain community, the existence of formal roles, the use of online events and how outcomes are measured. This phase resulted in a preliminary list of best practices that contributed to formulation of the lessons presented in this article. Four of the 15 candidates were then selected for more in-depth study. This final phase included interviews with sponsors, managers, members, administrators and technologists to obtain a broader perspective on the workings of the community. For each online community, we conducted up to 8 hour-long interviews. Where possible, we performed an in-depth review of the community site as well as an assessment of the interaction among members and community moderators.

3. Steven Barley writes about the “invisibility” of today’s work in his introduction to Julian Orr’s classic of workplace ethnography, “Talking About Machines: An Ethnography of a Modern Job” (Ithaca, New York: ILR Press, 1994). Orr’s book, which describes the work of copy-machine technicians, vividly describes the community interactions that effective work performance often depends upon.

4. Managing discretionary effort — not just from employees, but business partners and even customers — presents itself as one of the key management challenges of the 21st century. For a look at the customer dimension, see:

C.K. Prahalad and V. Ramaswamy, “Coopting Customer Competence,” Harvard Business Review, 78 (January–February 2000): 79–87.

5. Key texts include: E. Wenger, “Communities of Practice: The Organizational Frontier,” Harvard Business Review, 78 (January–February 2000): 139–145;

E. Wenger, “Communities of Practice: Learning, Meaning, and Identity” (New York: Cambridge University Press, 1998);

J.S. Brown and P. Duguid, “Organizing Knowledge,” California Management Review, 40 (Spring 1998): 90–111; and

J.S. Brown and P. Duguid, “Organizational Learning and Communities-of-Practice: Toward a Unified View of Working, Learning, and Innovation,” Organization Science, 2 (February 1991): 40–57.

6. As John Seely Brown and Paul Duguid point out, “Communities bound together by texts…pre-date not only the Net and the telephone, but even the printing press. Sharing and circulating documents, it seems, have long provided an interesting social glue.”

J.S. Brown and P. Duguid, “The Social Life of Information” (Boston: Harvard Business School Press, 2000), 190.