For ages, we in customer management have discussed a very strong marketing tool called "word of mouth." On certain occasions, you might even call it gossiping. But whether you call it word of mouth or gossip, it has found a fast vehicle to ride on: the Internet.

Social networking is nothing more than finding new ways to distribute and share what you think about companies, their products, people and anything else using the Internet as the medium. Blogs, chats, social networking sites are replacing parties and get-togethers to create a forum where the number of people participating grows exponentially.

According to the (Brazil-based) Update or Die, as of late October 2007, the top three sites were MySpace, with 110 million users; Google's Orkut ranked second with 67 million users; and Facebook was third, with 48 million users. It is scary and exciting. Social networking has been here all along and is here to stay.

One of the decisions CIOs and marketers have had to make is whether to recommend that their organizations use social networks, and if they answered in the affirmative, how to use them. But those have not been easy decisions. Executives understandably worry that allowing their employees to spend time on sites like YouTube and FaceBook or simply blogging can impact their productivity. On the other hand, there's the recognition that the networking sites are part of our lives and we cannot hide them.

Moreover, competitors are using them proactively to position their brands and their companies and, even, to attack our own companies' reputations. CNN is a great example with its I-Report, where anyone can help report the news. Companies such as ABC, Coca-Cola and HSBC are now part of Second Life. The growth rate of networking sites is astronomical. In late October 2007, Facebook Vice President, Media Sales, Mike Murphy announced that his site had surpassed 50 million worldwide community members and that its size doubles every six months (Six Pixels of Separation). Murphy said Facebook is adding about 350,000 new users every day. With that many people involved, the big question should not be whether to used social networking. It should be how to get the most out of these new ways of communicating and collaborating.

I recently met with a group of chief information officers at a summit in Seattle, and naturally, the topic of social networking came up. We all laughed at the story of a very well-known North American communications company that supposedly had confessed publicly the following. It had, for security purposes, two cables. When employees wanted to use the corporate network, where social networks were banned, they used one cable. But when they wanted to use any of the social sites, they changed it over to the other. BIG SINS for security people. Just think what you can get inside your network: the viruses, the vulnerabilities of having a workstation or a PC connected at certain hours to the well-protected cable because it was exposed to the open line. That's the type of tale that keeps IT people awake at night.

Rewards
Yet there are companies using social networking and blogs to do many proactive things. They are using them as means to communicate with customers, to listen to them and give messages to them. They are using them to do advertising. Just think how much response your firm gets from advertising on Google or Facebook. And sophisticated companies have found new ways to innovate and create by collaborating between employees and customers. Coca-Cola on Second Life is a great example. The beverage giant held a contest in April 2007, where contestants were asked to design a Coke machine that would work in the virtual community.

The nature of innovation is changing at a pace unheard. It is now more open, collaborative, multidisciplinary and global. IBM has renewed its innovation process, Global Innovation Outlook, using collaboration as the pillar. In 2005 and 2006 the company gathered 248 thought leaders from nearly three dozen countries and regions, representing 178 organizations across four continents for 15 "deep dive" sessions to discuss three focus areas and the emerging trends, challenges and opportunities that affect business and society. IBM is taking advantage of the sheer number of people it can get together thinking about something and using the collective intelligence to get the most out of them.

Sure, employees want to try social networking. It is not only entertaining but also a way to learn and network with peers in other companies, industries and places around the world. Customers also love it. Word of mouth has always existed. We all know the real-world statistics that every dissatisfied customer on average tells 12 people about his or her experience. Those 12 each tell another 10 about their opinions and claims. Just think what happens when a customer uses a social site, and the unhappy customer posts the experience in a place where it's not just 12 people—or 132—but millions who read about it. That could destroy a company.

The Internet and its blogs and social sites are just new tools to communicate and to collaborate. And as any communication medium, they can be use to do good or they can be used to do bad. And we probably all need to focus on using it for good. There are lots of good things a person or a company can do with social networking.

Should CIOs and marketers recommend the use of social networks, blogs and the like? Off course we should. There are issues involved and concerns that companies need to address. And as with any new communication medium, companies should think of the why, how, what and when to be involved in using blogs, chat rooms and social networks. Consider the risks involved, security threats, reputation and brand management. You need to target and define your segments. You need to establish divisions. Internal use is different than external use.

The way we communicate in any of these new tools is different from the way we do it in television and on printed materials. Companies need to gain expertise in the social media. But in the meantime, do not let your competition and your enemies do the talking for you on the Internet. Use the social web appropriately, and your company will be able to reach millions.