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Few people today doubt the reach of social media. The growth over the last few years of networks such as Facebook, Twitter, Bebo and others has been unprecedented. Yet, for many senior managers, company directors and senior partners of service firms, social media is still unchartered territory. Defined as a means by which people discover, read and share news, information and content, there remains a general mistrust of these social networks in the business setting.

The main stumbling block appears to be simply one of ignorance. Whilst the majority of today’s management over the age of forty have embraced many aspects of the new technologies, they did not grow up in the digital era and Web 2.0 as their younger subordinates have done.

The terms, Digital Immigrant and Digital Native first appeared more than ten years ago. The majority of senior management today fall into the category of Digital Immigrant, those who learned about the new technologies, not learned with these technologies as the young Digital Natives have done. The resulting differences between the two groups have changed the employment landscape so emphatically that traditional forms of management are no longer applicable.

With the advent of social media, communities are being built differently and are designed with individual relationships rather than a formal structure, providing the glue which holds them together. According to David Dumeresque, a partner with London-based search consultants Tyzack Partners, social media fora, whereby communities of interest are paramount and where there is a real sense of freedom with few boundaries, are attractive to this new generation of employee whereas much of the traditional structure associated with work has managed to disengage them. Tyzack’s research involving senior management and captains of industry has indicated that Digital Natives see the world in a very different way to even those who are less than 10 years older than them. They also share information in a completely different manner.

The generation which has grown up with Facebook is used to receiving information really fast, it shares information horizontally and finds it difficult to see the value in the imposition of hierarchy. As they enter the workplace now and over the coming three to five years, their expectations of the working environment and their reaction to it will force managers to re-evaluate the traditional hierarchical management systems and find new, collaborative methods of working. It may pose significant strain on middle managers whose historic role as a conduit of information, both downwards and upwards, since management methods will have to be completely re-evaluated given the speed at which information can now be disseminated throughout an organisation, and people’s expectations.

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Hardly a newspaper in the UK has not covered, to some extent, the ongoing saga of the News of the World (NOTW) phone hacking scandal. In the media world, when it comes to selling a good story there is little camaraderie amongst journalists; it’s dog eat dog.

Irrespective of what one thought of the newspaper that started life back in 1843, News of the World was the world’s biggest selling English language paper, by far! The key to its success as the most widely read Sunday paper lay in the editorial policy. The newspaper concentrated on stories covering sex scandals, drug abuse, criminal activity and any other issue that could be blown out of all proportion. The targets were largely celebrities, politicians, sports people and the clergy, but would include anyone where a good story could be made, often from scant evidence.

Although NOTW had to repeatedly defend itself from libel charges and complaints to the Press Complaints Commission (formerly the Press Council) regarding its news gathering techniques, it was in 2007 with the conviction of Clive Goodman, the paper's royal correspondent, that the downward spiral began. It took a further two years for further revelations to emerge as to the extent of the phone hacking, and how these illegal activities were common knowledge within the newspaper and its parent company News International. The tipping point came in July 2011 when it was disclosed that potential evidence had been deleted in the spring of 2002 from the hacked voicemail account of murdered school girl Milly Dowler.

For News of the World, “Live by the sword, die by the sword” was never more appropriate. The most outspoken critics were the newspaper’s own readers, the very people who lined the coffers of NOTW. Damage limitation was out of the question; the paper was mortally wounded.

On July 7, just three days after the Milly Dowler revelation, Rupert Murdoch surprised almost everyone by announcing that the 168 year old paper would close with immediate effect and end the jobs of some 200 staff. The final edition was printed on July 10.

Why did Mr Murdoch act so quickly and so decisively? Could he not have simply fired the senior management, which possibly would have satisfied the public’s lust for blood, and kept the paper alive?

Rupert Murdoch understands the importance of maintaining a strong corporate reputation so the simple answer is NO!

Closing NOTW was widely interpreted as a drastic attempt to protect the News Corp's $US12 billion bid to buy the 61% of shares in British Sky Broadcasting it did not already own. But I don’t believe that was Murdoch’s principal objective. News Corp's income from its publishing businesses, including newspapers, contributed less than 30% of the corporation's total revenues. Closing NOTW, although a profitable venture, was not going to have a substantial impact on its profitability.

More importantly, with a number of advertisers openly stating their distaste of the current situation with NOTW, the paper was at grave risk of becoming unprofitable. NOTW's reputation was in tatters and Mr Murdoch was left with little choice but to close it down. He could not simply change the way the paper had been operating for more than a century and still maintain the same level of advertising required to make NOTW profitable. Additionally, the scandal in the UK was threatening to have a major impact in the USA, his biggest market. It may yet still have with the FBI commencing preliminary investigations into whether News Corp reporters hacked into the phones of 9/11 victims in search of a scoop, but at least Rupert Murdoch was being seen to take decisive action.

The biggest issue of all for the Murdoch media empire is the investors. Had Mr Murdoch procrastinated over NOTW, Wall Street might have taken a very dim view of proceedings. A week after the closing of NOTW, some US analysts had placed a “buy” rating on News Corp stock. However, it’s not all a rosy picture because Standard and Poors’ have suggested they may lower the company's corporate debt rating because of risks created by the UK scandal.

So what more can Rupert Murdoch do to appease his all-important investors? One theory is the elevation of Chase Carey, currently Chief Operating Officer, to CEO. It has been suggested that the stock market may react favourably to such a move given that board members and executives at News Corp are concerned about Murdoch's ability to contain the fallout from the hacking scandal. Mr Murdoch Snr is 80 years of age, Mr Carey is just 57.

Rupert Murdoch is, if nothing else, an astute and wily old fox. It’s possible that he would accede to the promotion of Mr Carey whilst taking over the role of Chairman. After all, it’s hardly a retrograde step for Murdoch Snr. Through his family trust he owns almost 40% of News Corp’s voting stock, so no matter what happens at the top, he still retains control of his company. Don't be surprised, either, if he launches a clone of NOTW in the near future!


Lloyd Mullenger