With all the hype around Social Media and a number of running research projects on the issue of online communities and social networking it is not strange that I am interested in educated views on the subject. One of my regular sources is Umair Haque who posted an interesting article in his HBR blog of 16 April. It is titled "The Efficient Community Hypothesis" and for sure worth reading (mainly from managers who wonder what the Social Media really mean to them) . According to Umair:
"Markets need communities. Yesterday's institutions are collapsing around us. In their remnants and rubble lies a lesson. Perhaps the biggest reason 20th century institutions failed so badly is that they replaced communities with markets. Yesterday, the primacy of the EMH (Efficient Market Hypothesis) said: communities were historical anomalies, sources of friction and waste, unethical barriers to "free" trade and exchange. Today, the ECH says exactly the opposite: it is only when markets are held together by communities that markets can move past the boundaries of mere informational efficiency; that they can do more than just suck in "all known information," only to misprice everything from tech to houses to people to the future itself." (Umair Haque, http://blogs.hbr.org/ 16 April 2010)
Businesses that do not realize the power of communities and social networking will have a big problem coming to terms with the 21st century markets. This is also a fact requiring attention from all of us who instruct the marketers of the future. The issue comes tenaciously to my mind for some years now every September when the new season of teaching the essentials of Marketing starts for me.
To be continued.
