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How Ceos Can Leverage Twitter How CEOs Can Leverage Twitter WINTER 2016 Rather than waiting for impressions about a company to be driven by others in social media, CEOs can help shape the conversation. Claudia Kubowicz Malhotra Arvind Malhotra Vol. 57, No. 2 Reprint #57203 http://mitsmr.com/1QiMXWJ COMMUNICATIONS THE LEADING QUESTION How CEOs Can How can CEOs use Twitter to Leverage Twitter help their companies? FINDINGS Rather than waiting for impressions about a company Relatively few CEOs of large to be driven by others in social media, CEOs can help companies are shape the conversation. active on Twitter. Savvy CEOs can BY CLAUDIA KUBOWICZ MALHOTRA AND ARVIND MALHOTRA use Twitter to make direct, personal connections with a network of followers. Certain types of CEO tweets are MANY COMPANIES HAVE embraced Twitter as one of the best ways to communicate with more likely to customers and other types of stakeholders. However, many CEOs don’t leverage the power of Twitter be “liked” and retweeted than to the fullest extent. The number of CEOs of large companies who are active on Twitter continues to others. be low. As of September 2014, only 42 Fortune 500 CEOs had Twitter accounts. Of those, only about 70% were truly active and tweeting in a meaningful way.1 One high-profile Twitter user is Elon Musk, CEO of Tesla Motors Inc. and SpaceX. Musk typically tweets numerous times a month, and his tweets sometimes contain new and exciting information. On March 30, 2015, for example, he tweeted that a new, major Tesla product line would be unveiled the following month and that it was “not a car”: (Elon Musk, CEO of Tesla) Major new Tesla product line — not a car — will be unveiled at our Hawthorne Design Studio on Thurs 8pm, April 30 Musk’s tweet generated a lot of attention; the news wasn’t announced through any other communication outlets. And there was intense speculation about what the new product would be. (It turned out to be a battery for powering homes that charges using electricity generated from solar panels.) Many media outlets joined in the discussion. PLEASE NOTE THAT GRAY AREAS REFLECT ARTWORK THAT HAS BEEN INTENTIONALLY REMOVED. WINTER 2016 MIT SLOAN MANAGEMENT REVIEW 73 THE SUBSTANTIVE CONTENT OF THE ARTICLE APPEARS AS ORIGINALLY PUBLISHED. COMMUNICATIONS Twitter, one of the world’s leading social media Potential Benefit #1: Increasing Your Influence platforms,2 has more than 300 million active users. and Creating Positive Sentiment Twitter en- In contrast to Facebook, which skews heavily ables a CEO to make a direct, personal connection toward personal communication, Twitter is used with a network of followers. By following a CEO on more actively for business. As a result, brand Twitter, stakeholders express their affinity for both managers, customer service agents, and other busi- the CEO and the company. The number of one’s nesspeople became early adopters so that they Twitter followers reflects the level of interest. As the could stay abreast of the streams of information size of the CEO’s network increases, so does his or they cared about and communicate with current her potential to reach and influence others. and potential customers. Twitter users check their Twitter also enables followers to “like” a tweet newsfeeds for real-time information on everything with a single click.3 Through use of the like feature from business news events to sales at their favorite on Twitter, followers can express positive sentiment retailers. At a number of companies, “C-level” for tweets. A large number of likes reflects not only executives in addition to the CEO have begun appreciation but also popularity within the Twitter tweeting. However, CEOs generally have the most community. A CEO’s tweets can raise a company’s social cachet and are considered the ultimate com- profile and engender positive sentiment in the pany spokespeople. Twitter community, which includes investors who are active on Twitter.4 Leveraging the Power of Twitter By tweeting, CEOs have an opportunity to initiate Potential Benefit #2: Spreading Your Message and influence online conversations. Rather than When CEOs send their followers interesting, impor- waiting for impressions to be driven by the media tant, and relevant tweets, a subset of the people who or individuals with ulterior motives, CEOs can use receive them retweet them to their followers. Retweet- tweeting to help shape their public image and that ing quickly multiplies the reach of the initial tweet. of their companies. We studied the Twitter activity There are two important implications of retweet- of 25 CEOs of publicly traded companies who were ing. First, the original followers are implicitly active on Twitter, and identified common patterns endorsing the message by considering it important and themes. (See “About the Research.”) This arti- enough to pass on to their own personal network. cle describes the opportunities for CEOs. In effect, they are signaling that this is a message they think people should pay attention to. Often, the retweeter adds a few words to the original tweet, ABOUT THE RESEARCH such as “check this out” or “so true.” This can add We searched Twitter and the Internet to find lists of and references to CEOs actively using Twitter. We pared down the list to 25 CEOs of publicly traded companies in the attention-grabbing cues to the original content, United States. A database was compiled of all original tweets generated by the CEOs making it even more salient.5 between July 1, 2013, and October 31, 2013. (Retweets and private messages were Second, the retweeted messages reach a larger and not included in our sample.) Our sample consisted of 2,858 tweets. more diverse audience than just the original recipients To ensure inter-rater reliability, the two authors categorized 50 tweets indepen- (CEO followers). If the retweet is indeed of interest, dently. The categorizations were then compared, with differences discussed and definitions updated. We then coded the rest of the tweets independently. In order to those receiving it may choose to follow the CEO explore how CEO tweeting behavior was clustered, we used cluster analysis. Based directly, which will expand the reach of the CEO’s net- on the robustness of the four-cluster solution across two stages of analyses, we pres- work over time. So the retweet is a very powerful ent the results based on the four-cluster solution obtained from the hierarchical validation and propagation feature of Twitter. procedure. Only the content types that could significantly differentiate the clusters are included. Other content types were low in frequency and did not show significant differences across the clusters. How Have CEOs Used We also used event-study methodology to explore the relationship between Twitter Thus Far? CEOs’ tweets and the market value of their companies. (Event-study methodology is CEOs’ tweets cover a range of topics, both business- commonly used to study market effects of announcements.) Specifically, we sought to confirm whether CEOs’ tweets with business-related content were associated related and non-business-related. Based on the with positive and significant cumulative abnormal returns for their companies in a type of content tweeted most often, we have classi- 7-day event window (1 day before and 5 days after the tweet). fied the CEOs we studied into four different groups: 74 MIT SLOAN MANAGEMENT REVIEW WINTER 2016 SLOANREVIEW.MIT.EDU HOW FOUR DIFFERENT TYPES OF CEOS USE TWITTER CEOs are using Twitter in a variety of ways and tweeting about different topics, both business-related and non-business-related. Based on the type of content tweeted most often, we have classified the CEOs we studied into four different groups: Generalists, Expressionists, Information Mavens, and Business Mavens. GeneralistGeneralistGeneralistGeneralistExpressionistGeneralistExpressionistExpressionistExpressionistInformationExpressionistInformationInformationInformationBusinessInformationBusinessBusinessBusinessBusiness CEOsCEOs CEOs CEOs CEOsCEOsCEOsCEOs CEOsMavenCEOs CEOsMavenMavenMaven CEOs MavenCEOs CEOsMaven CEOs MavenCEOs Maven CEOsMaven CEOsMaven CEOs 4% 4% 4%4% 4%4% 4% 4% 5% 5% 5% 5% 23% 23% 23%31% 23%31% 31% 31%4% 4% 22% 22% 22% 22% 5% 7% 7% 7% 7% 23% 31% 2022% % 20 % 20 % 20 % 7% Generalist Expressionist Information Business 20 % CEOs CEOs Maven CEOs Maven CEOs 8% 8% 8% 8% 4% 4% 14% 14% 14% 6%5%14% 6% 6% 6% 23% 31% 22% 7% 4% 4% 4% 4% 11% 11% 11% 11% 8% 3% 3% 3% 93%3% 93% 93% 80%93% 80% 80% 80% 20 % 25% 25% 25% 25% 15% 4%15% 14%15%4% 4%15% 4% 6% InformationInformation & LinksInformation & LinksInformation & LinksReferring & Links Referringto CustomersReferring to Customers toReferring CustomersStrategy to Customers &Strategy PerformanceStrategy & Performance &Strategy Performance & Performance 4% 8% 11% 3%Personal OpinionsPersonalPersonal Opinions OpinionsPersonal93% ManagementOpinions Management InitiativesManagement InitiativesManagement80% InitiativesExternal Initiatives14% ValidationExternalExternal Validation ValidationExternal6% Validation 25% 15% 4% New ProductsNew4% &Products ServicesNew Products & ServicesNew &Products ServicesDescribing & ServicesDescribing CurrentDescribing Products CurrentDescribing CurrentProducts OtherProducts Current OtherProductsOther Other11% 3% 93% 80% 25% 15% 4% Information & Links Referring toNote: Customers UnlabeledNote: segments UnlabeledNote: Unlabeledare segments lessNote: than segments areUnlabeled Strategy3% less than are segments less3% & than Performance are 3% less than 3% Information & Links Referring
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