Facebook: A Case Study of Strategic Leadership

Abstract

This paper is a case study validating that strategic leadership which results in a value proposition implemented on behalf of the customer has a tremendous effect on the success of business operations, perhaps even more so for online services. By managing the value propositions of its users and customers to ensure they had positive online experiences, Facebook was able to begin from humble origins and run competitor MySpace into the ground, replacing it as today’s most relevant social networking alternative. This paper also contrasts Facebook’s current position against Google as the later tries to enter the social networking market place and take market share away from Facebook.

From 2005 until early 2008, MySpace was the most visited social networking site in the world, and in June 2006 surpassed Google as the most visited website in the U.S. But MySpace failed to manage the quality of user experiences on their network, and began losing customers to Facebook. Facebook founder and CEO, Mark Zuckerberg, had a vision and offered a social network with a clean design and a better user experience. Facebook’s unique focus on relationship management also enticed users to visit more often, and stay longer when they did visit, which drew advertisers willing to invest aggressively. Facebook quickly caught MySpace and dominated it by providing quality online services that resulted in positive user experiences.

Despite all the focus today’s business world puts on information, and how to search for, use, and manage it, Facebook became a $100 billion enterprise in just 8 years because its leader defined a strategy that leveraged our desire to connect with people and maintain relationships. Facebook validates that people have a keen interest in a developing and maintaining human relationships and, when given the choice, would rather spend their time building networks of relationships, rather than networks of information. As a result, Facebook fundamentally changed how people use the web and find and access information.

Keywords: Facebook, MySpace, Google, Google, strategic leadership, Zuckerberg, social networking, targeted advertising, relationship networks, substitute products

JEL Classification: D83, L14, L15, M13, M14, O31