I think it is inevitable that many companies will be investing in building their own online communities. In fact I think a company’s community becomes one of the main criteria for the business entity to be evaluated just like the cash flow, knowledge capital, and technology infrastructure.

You might ask why an organization would want to have its own online community or social network? The answer is, because an online community of end-user and partners would provide a more cost effective and efficient way for the company to develop products or services, market them to the masses, and deliver related help and support with them too.

The Traditional Business School Way

Let’s have a look: a company decides to develop a new product or service. They start with conducting market research. They send out surveys, organize focus groups, look at what the competition is doing. Sometimes that requires traveling around and going to hotels, trade shows, or seminars to gather intelligence data and stalk the competitors.

All of that cost money; lots of money! In fact sometimes only the very large corporations can afford such an elaborate market research.

Then they start making a list of features that this service or product ought to have. Basically they have to make lot of assumptions and often add everything under the sun to that list to make sure that the product appeals to the largest possible demographic out there. Let’s say they come up with a list of 20 features.

Then they go ahead and build it. Once the new product or service is out, and tested on focus groups (more cost), then it gets marketed using traditional methods: prints, media, online advertisement, an army of sales people which go around to stalk and harass potential buyers. ( more and more and more cost )

Now here is the big surprise! they find out that not all of those features are being adopted or liked by the end-users ( let’s say 5 out of 20 ) that means all the time and cost spent on developing the unpopular features was wasted. (more cost) so they have to push even harder to sell more of that product and or stalk more customers to generate enough sales and hopefully compensate the loss and make some profit. Large companies can use their monopoly and dominance over the market and make sure that end-users have no other option but to buy their product, however not all companies can do that.

In addition to that, this feature bloated product needs to be supported. They need call centers, 1-800 numbers, and people who can provide after-sales help and support (more cost). Not many companies can afford that either!

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