The Facebook dilemma is fundamentally the result of a flawed business model

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Without a doubt, Facebook has taken over the world and one man terrifyingly stands in control of approximately 2 billion people: Mark Zuckerberg. It’s a journey fraught with intrigue, dawning realisation and many critical mistakes, as the world has grappled with the growth of the internet and subsequently, the impact of social media.

Whilst Facebook has experienced unparalleled levels of success and world domination, expanding into other rival social media platforms, it’s ultimately struggled to evolve in a truly meaningful way for its customers (including individual users and brands). This begins from the very inception of the university directory style website with a flawed business model.

Much discussion and analysis is underway about the future of Facebook and how it will diversify by expanding into other technologies (eg. Virtual reality and artificial intelligence), but what can we learn from its journey thus far? There is much to learn and consider, however here are four critical mistakes for business owners to consider:

1.      Not thinking big enough in the beginning

Facebook failed to adequately design a business model that would support and sustain its rapid growth whilst truly considering its impact on the wellbeing and lives of people.

To be fair, the rise of the internet and social media was unprecedented at the time and Facebook is not the only contender who has struggled with this issue (the media industry and other ‘no pay’ user platforms are also bearing war wounds). Much of this journey has been learning from both sides of the fence about what this digital existence means to us all.

Regardless, not thinking big enough from the beginning is one of the biggest mistakes any business can make. It led Facebook to offer its platform for free for users and then businesses and brands, before realising in hindsight that it was nearly impossible to fund the growth and expansion of the venture on sweet nothing.

2.    Offering something for free and then asking people to pay for it

The result has been many ‘band aid’ fixes along the way, including manipulating algorithms to herd businesses into paying, which naturally was met with criticism.

It’s not that the opportunity Facebook offers businesses and brands isn’t valuable, it’s that one of the biggest business mistakes you can make is to offer something for free and then ask people to pay for it. This is because by offering it for free, you set people’s expectations that the value of the thing is free. They will then go to extreme lengths to ensure they don’t pay more than what said thing is worth in their mind.

Where else would we ever expect to advertise for free?

Facebook would have been better off creating a scaled subscription style model for both individuals and businesses (dependent on the business size) and offering a free trial, then supplementing its income through advertising. Yes, user numbers would have grown at a slower pace, however it would have been more sustainable. While Facebook has been pioneering products and services that were new to users, the reality of business is that people will pay when what you offer is designed to solve important problems for them – and you know how to effectively market it.

3.    Becoming reliant on advertising revenue

Facebook has become so reliant on advertising revenue that it has had to continue manipulating algorithms to the dissatisfaction of individuals and brands.

In the face of constantly changing goal posts, brands have resorted to pushing out low quality content in exchange for any kind of organic growth and exposure or revenue through ‘clicks’. Individuals have become increasingly annoyed about ads being forced into their newsfeeds. Again, expectations in the beginning were set that people used Facebook to connect with friends and family, not be sold to every 5 minutes. There’s nothing wrong with selling to people, provided it’s done in a way that adds value to them and it meets their expectations. For Facebook, it moved the platform away from the opportunity to genuinely connect with brands on the customers terms to losing control over what penetrates their newsfeed.

It also seems users were also not aware of how Facebook uses data. A recent example of this that has been met with global outrage is the way user data was harvested during the Cambridge Analytica scandal. It's raised a number of questions about user privacy in the digital age.

The cold hard truth of it is that business exists to make money, however if you are not creating meaningful brands and experiences for your buyers, your audiences will turn off. User sentiment about your brand in the modern world is critical, no matter how big you get. The same is true for Facebook.

4.    Failing to adequately respond to customers

There have been many examples of Facebook’s seemingly inconsistent policies on appropriate user content and like with many other social media platforms, it has struggled to adequately respond to social media trolling and the penetration of fake news.

Users have complained that it’s extremely difficult to get in touch with Facebook to appeal decisions and while managing communication with such a high volume of users is undoubtedly difficult, with all the technologies available to it, a focus on customer experience and being proactive to resolve issues would have created a deeper sense of trust between users and the platform.

From a business perspective, many brands and organisations have felt in a constant state of disarray as they try to keep up with the constant changes in the way the platform operates. Some businesses, including media, have criticized Facebook for not operating in a consultative way for the benefit of all industries.  This demonstrates that it’s one thing to create a global platform, but another entirely to ensure you engage stakeholders in a mutually beneficial way.

Evolution in business is necessary to ensure survival in the face of a rapidly progressing modern world, however its crucial not to lose sight of your end user and your purpose. Many large organisations have disappeared into the abyss by becoming complacent about this. Facebook has become a world superpower and wildly profitable, but at what cost?

Shevonne Joyce is a Mentor, Speaker and Social Commentator who who enables the success of women through working with them to position them as the go-to brand in their industry.

Shevonne Joyce