Wikinomics and the Small Business

This week I am talking to a group of small business owners and entrepreneurs on small business and the web. When the SCORE called and asked me to speak to the group, my initial reaction was a little less than thrilled. I told them I would consider it and call them back, on Monday.

Over the weekend, I thought about the themes we have been discussing in class, and the reading. The power of media convergence, the shift in communication paradigm, the concept of “Peer Production” [Tapscott] and I changed my mind. Suddenly I had something new to bring this group of interested beginners. I could offer them something more than you need a web site because everyone else has one, and so you need one too. I am genuinely excited to speak to them. Now I just have to figure out where to begin…

Why do you need a web site?

This seems like a great place to start. Bullet point one… oh wait we are not supposed to use these.

I cannot say that all companies today need a web site definitively, but I can say that I cannot think of a company or business that is harmed by having one. Some businesses have been around for years and served a community as best it could up to the level it was capable of and accustomed too. Many small businesses are family owned and controlled by patriarchal or matriarchal habits and norms that they have never thought to question. This is how my father did business, and his father before him, and so on and so on…

Today the small business has an enormous opportunity to expand far beyond their previous reach, the opportunity to communicate, sell, and distribute on a global scale. All of this is available relatively little cost. Here is an example of a client of mine, which could not see beyond their old business ways, until I showed them that the world was only a mouse click away.

I will not use their name [link], but if you have ever eaten pizza in the greater New Haven area, you have more than likely tasted a bottle of their soda. Their product line consists of 14 different flavors and varieties. For almost 80 years, this company has been distributing soda primarily through point of purchase at pizza parlors, and small grocery stores and restaurants. This method has served them well, but they have incurred years of opportunity cost through unrealized revenue.

When I first sat down with them, the patriarch sat in disbelief that anyone outside of New Haven would be interested in their soda. I believe he said, “Why would anyone in New York want our soda?”  I told him not to worry about New York; we had to think of how we were going to ship a case of soda to San Francisco. I convinced them to make the investment, and we built the site.

In example of media convergence at work, I also, unbeknownst to the client submitted via the web and email a profile of the company to several shows on the Food Network. After a couple of months, I got a phone call that the Food Network was interested in doing a spot on them on one of their programs.

To make a long example short, the program aired and the soda hit the fan. My client called me and said that she could not decide if she should kiss me or kill me. The first week after the program aired, I believe the company did close to $80,000.00 in online sales. Orders came in from all over the country from New York to Seattle. It was a huge success, and still is. Since then the company has invested in new bottling equipment so the soda can be sold in much lighter and less breakable plastic bottles, and can compete for shelf a space in the world of the standardized grocery market.

So why did this work so well?

I believe like most successes, timing is the key ingredient. The soda hit the internet at just the right time. E-commerce sites like Amazon, and Ebay had set the stage for consumer comfort in purchasing online. More and more people were turning to the Internet to get those hard to find niche items that they loved. Items that were previously provincial were now accessible to just about anyone, anywhere.

In addition to being available to everyone online, I thought that this client had one extra advantage that not all other retailers might have or recognize. They were able to tap into an affluent audience of people who they could appeal to on a nostalgic and personal level; Yale graduates. It is my premise that at one point in his or her college career, every person at Yale has tasted this soda. It would have been almost impossible not to have come across it, and lived in New Haven.

So in addition to search engine marketing and optimization we took a multi-medium approach and placed print advertising in alumni magazines and publications that would reach out to the thousand of Yale graduates, that at some point would have tasted this soda. Now that you could be anywhere that UPS delivered, you could have this nostalgic taste from your glory days… or some thing like that.

This success story exemplifies many of the “new ideas” put forth in “Wikinomics.”[Tapscott] The authors, Tapscott and Williams, suggest that there is a “fundamental change” that is upon us, and this change is taking place on many fronts. Technology is changing, in particular the Internet, from a display based HTML universe to a Web 2.0 XML world of presentation and computation. In an online interview, Tapscott describes the Web 2.0 Internet as a large computer that is constantly being updated through the collective collaboration of users.

The “fundamental change” has also taken place on the demographic front. The audience that companies can reach today is radically different from the audience of ten years ago. A whole generation is emerging that has grown up as active and interactive participants. Businesses must adapt their methods to reach this emerging audience.

Conclusion

The Wikinomics world is defined by four fundamental and core ideas: openness, peering, sharing, and acting globally. [Tapscott] This new economic model is ideal for the small company because the barriers to entry and engagement are low, and the ability to adapt is much greater in a small business than in a large corporation.  The small business of today finds itself in a unique opportunity to gain on the large corporation if they are willing to participate in this new economic model.

tjb.