How Facebook Beat MySpace – Adam Hartung at Forbes

MySpace / Facebook comparison screenshotsphoto © 2009 kevin | more info (via: Wylio)The following Forbes article is a interesting take on what happened to MySpace and contributed to it’s downfall and why Facebook is succeeding where MySpace failed. I found this even more interesting because the MySpace world outlined below is very similar to the environment of my last company.

“MySpace demonstrates a big fallacy of modern management.  The belief that smart MBAs, with industry knowledge, will perform better.  That “good management” means you predict, you forecast, you plan, and then you go execute the plan.  Instead of reacting to market shifts, fast, allowing mistakes to happen while learning what works, professional managers should be able to predict and perform without making mistakes.  That once the bright folks who create the strategy set a direction, its all about executing the plan.  That execution will lead to success.  If you stumble, you need to focus harder on execution. “

That is a pretty accurate description of how my last company operated, and the results were not that stellar. Executives predicting the future, over meeting, over planning, no review of mistakes, executing the plan and no focus on the marketplace.

Read the following and think about how you are executing. Don’t get caught up in over planning and make sure you are listening to the marketplace and your customers.

How Facebook Beat MySpace

By ADAM HARTUNG

Before there was Facebook, the social media juggernaut which is changing how we communicate – and might change the face of media – there was MySpace.  MySpace was targeted at the same audience, had robust capability, and was to market long before Facebook.  It generated enormous interest, received a lot of early press, created huge valuation when investors jumped in, and was undoubtedly not only an early internet success – but a seminal web site for the movement we now call social media.  On top of that, MySpace was purchased by News Corporation, a powerhouse media company, and was given professional managers to help guide its future as well as all the resources it ever wanted to support its growth.  By almost all ways we look at modern start-ups, MySpace was the early winner and should have gone on to great glory.

But things didn’t turn out that way.  Facebook was hatched by some college undergrads, and started to grow.  Meanwhile MySpace stagnated as Facebook exploded to 600 million active users.  During early 2010, according to The Telegraph in “Facebook Dominance Forces Rival Networks to Go Niche,” MySpace gave up on its social media leadership dreams and narrowed its focus to the niche of being a “social entertainment destination.” As the number of users fell, MySpace was forced to cut costs, laying off half its staff this week according to MediaPost.com in “MySpace Confirms Massive Layoffs.” After losing a reported $350million last year, it appears that MySpace may disappear – “MySpace Versus Facebook – There Can Be Only One” reported Gigaom.com. The early winner now appears a loser, most likely to be unplugged, and a very expensive investment with no payoff for NewsCorp investors.

What went wrong? A lot of foks will be relaying the tactics of things done and not done at MySpace.  As well as tactics done and not done at Facebook.  But underlying all those tactics was a very simple management mistake News Corp. made.  News Corp tried to guide MySpace, to add planning, and to use “professional management” to determine the business’s future.  That was fatally flawed when competing with Facebook which was managed in White Space, lettting the marketplace decide where the business should go.

If the movie about Facebook’s founding has any veracity, we can accept that none of the founders ever imagined the number of people and applications that Facebook would quickly attract. From parties to social games to product reviews and user networks – the uses that have brought 600 million users onto Facebook are far, far beyond anything the founders envisioned.  According to the movie, the first effort to sell ads to anyone were completely unsuccessful, as uses behond college kids sharing items on each other were not on the table.  It appeared like a business bust at the beginning.

But, the brilliance of Mark Zuckerberg was his willingness to allow Facebook to go wherever the market wanted it.  Farmville and other social games – why not?  Different ways to find potential friends – go for it.  The founders kept pushing the technology to do anything users wanted.  If you have an idea for networking on something, Facebook pushed its tech folks to make it happen.  And they kept listening.  And looking within the comments for what would be the next application – the next promotion – the next revision that would lead to more uses, more users and more growth.

And that’s the nature of White Space management.  No rules.  Not really any plans.  No forecasting markets.  Or foretelling uses.  No trying to be smarter than the users to determine what they shouldn’t do.  Not prejudging ideas so as to limit capability and focus the business toward a projected conclusion.  To the contrary, it was about adding, adding, adding and doing whatever would allow the marketplace to flourish.  Permission to do whatever it takes to keep growing.  And resource it as best you can – without prejudice as to what might work well, or even best.  Keep after all of it.  What doesn’t work stop resourcing, what does work do more.

Contrarily, at NewsCorp the leaders of MySpace had a plan.  NewsCorp isn’t run by college kids lacking business sense.  Leaders create Powerpoint decks describing where the business will head, where they will invest, how they will earn a positive ROI with projections of what will work – and why – and then plans to make it happen.  They developed the plan, and then worked the plan.  Plan and execute.  The professional managers at News Corp looked into the future, decided what to do, and did it.  They didn’t leave direction up to market feedback and crafty techies – they ran MySpace like a professional business.

And how’d that work out for them?

Unfortunately, MySpace demonstrates a big fallacy of modern management.  The belief that smart MBAs, with industry knowledge, will perform better.  That “good management” means you predict, you forecast, you plan, and then you go execute the plan.  Instead of reacting to market shifts, fast, allowing mistakes to happen while learning what works, professional managers should be able to predict and perform without making mistakes.  That once the bright folks who create the strategy set a direction, its all about executing the plan.  That execution will lead to success.  If you stumble, you need to focus harder on execution.  Probably get a new President who understands execution – in a more brutal way.

When managing innovation, including operating in high growth markets, nothing works better than White Space.  Giving dedicated people permission to do whatever it takes, and resources, then holding their feet to the fire to demonstrate performance.  Letting dedicated people learn from their successes, and failures, and move fast to keep the business in the fast moving water.  There is no manager, leader or management team that can predict, plan and execute as well as a team that has its ears close to the market, and the flexibility to react quickly, willing to make mistakes (and learn from them even faster) without bias for a predetermined plan.

The penchant for planning has hurt a lot of businesses.  Rarely does a failed business lack a plan.  Big failures – like Circuit City, AIG, Lehman Brothers, GM – are full of extremely bright, well educated (Harvard, Stanford, University of Chicago, Wharton) MBAs who are prepared to study, analyze, predict, plan and execute.  But it turns out their crystal ball is no better than – well – college undergraduates.

When it comes to applying innovation, use White Space teams.  Drop all the business plan preparation, endless crunching of historical numbers, multi-tabbed Excel spreadsheets and Powerpoint matrices.  Instead, dedicate some people to the project, push them into the market, make them beg for resources because they are sure they know where to put them (without ROI calculations) and tell them to get it done – or you’ll fire them.  You’ll be amazed how fast they (and your company) will learn – and grow.

via How Facebook Beat MySpace – Adam Hartung – Growth – Dealing with Market Shifts – Forbes.

5 Responses to “How Facebook Beat MySpace – Adam Hartung at Forbes”

  1. Hunter Goatley
    January 17, 2011 at 8:47 am #

    All true, I’m sure, but the biggest reason for the downfall of MySpace, IMO, was that they let everybody customize their MySpace page in ways impossible on Facebook. With people cluttering their MySpace pages with dozens of images and videos and slideshows and whatever, going to a MySpace page became something to dread because of how long it would take and what it would do to your browser….

    Reply
  2. Jeff Schmitt
    January 17, 2011 at 9:46 am #

    Add to that the fact that a LOT of people (at the time, and probably still now) had to settle for dial-up….dial-up + graphic-intense = never mind.

    Reply
  3. Peter Vassallo
    January 17, 2011 at 11:46 am #

    FB was one of those right-place/right time things, and also proof that appealing to the lowest common denominator will always bring success.

    Reply

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