Investing in your people and going long on human interaction

Here is a riddle for you: how is social media like cocaine?

Of course, you know the answer. At first you enjoy the sensation it delivers, and you can’t get enough of it. Only later do you realize, once you’re addicted, that the stuff is bad for you.

I’m sure you don’t need another lecture about how much productive time you’re wasting on Candy Crush. That’s not my business. What is my business is advising boards of directors and CEOs on the best ways to navigate new technologies and new business models. In 2006, I pushed Walmart into investing in the first smartphones for shopping. Now the advice I’m giving is to treat social media like cocaine. That is, give it up before it ruins your business.

According to the pharmacologists and historians who have studied the history of cocaine usage in North America, the euphoric effects of the drug had been known for thousands of years, but it wasn’t until the late nineteenth century that the use of cocaine became epidemic in this country. With no laws to restrict its sale or use, American companies began including cocaine in a wide range of consumer products from cigarettes to sodas—Coca-Cola, introduced by druggist John Smith Pemberton in 1886, being only the most famous.

By 1911, however, the federal government was already warning the public about the dangers of addiction posed by “medicated soft drinks,” and in 1914 Congress passed the Harrison Anti-Narcotic Act, banning the commercial use of cocaine. As with much government legislation, the impetus behind the Harrison Act was primarily economic. “It is a well-known fact,” one Kansas newspaper reported in 1911, “that many factory employees, stenographers, typewriters, or others subject to mental or nervous strain spend a part of their earnings for drinks of this character.” Social media is having this same addictive, distractive effect on today’s employees and consumers.

At first, we all reveled, myself included, in the seemingly boundless possibilities of the new digital media. The internet was going to connect the world, and commerce would flow easily and profitably through this new bloodstream. But when was it that you began to suspect the presence of a worm in the Edenic apple? You don’t have to believe, as some do, that social media has spawned a global mental health crisis to recognize that social media needs to be (and perhaps soon will be) subjected to significant government regulation.

But, again, my business isn’t politics. My business is business; and from my vantage point, looking into the future, I see not what we’ve gained but what we’ve lost. I think of it as the human touch; and it’s why I’m telling you that the Next Big Thing will be an old thing.

I begin from the basic premise that all of humanity’s greatest achievements have come by way of civilization—that is, our interactions with each other. Each of us has a brain more powerful than a supercomputer, yet what we are able to accomplish on our own pales before what we are able to achieve together. It’s why the best basketball coaches teach their players to pass first rather than shoot right away, and it’s why the first baseball manager to insist that all his players learn to bunt will win the next World Series. Winning teams win not because players produce individually but because they build productive relationships.

The parallels to business are rather straightforward. The winning businesses over the next ten years will not be those who enlist dozens more twenty-somethings to develop social media strategies that no one else in the organization understands (because they are essentially meaningless). Instead, the winners will be those whose executives and employees put down their smartphones and instead look at one another.

What does this mean specifically? It means getting back to basics and investing in people. Consider hardware. If you are handy and know that you can fix the leak in your sink with a specific Kohler part, then Amazon is a great place to find it. But if, like most people, you don’t know why your sink is leaking, you want a trained salesperson at your local hardware store to listen to your problem, use his expertise to solve it, and help relieve your anxiety by telling you confidently that everything will be all right—and that, if it isn’t, you know where to find him.

Social media is essentially advertising. It makes people aware of you, but what truly drives sales is meaningful personal interaction. Artificial intelligence promises all sorts of things, but does anyone really believe that algorithms can take the place of a conversation between a well-trained, empathetic salesperson and a needy customer? If you do, then you probably haven’t called a customer service line recently.

There is a reason why Apple evaluates its salespeople not, as one might expect, on technical proficiency but rather on customer empathy. It is because Apple’s leadership, awash in algorithms, knows that even the most complicated algorithm can’t replace a simple smile. There is a reason why Whole Foods CEO Jason Buechel leaves the isolation of his corporate office to visit stores on a regular basis so that he can interact directly and actively with employees and customers. He leads by example, paying more attention to his people than to his smartphone.

Stop chasing the social media high. Regardless of your opinion of its ills, what’s undeniable is that the pursuit of  X transcendence and YouTube ubiquity have become unproductive business behaviors. Just measure the effect of human interaction on financial performance. I have, and the conclusion is clear. You can see it right there in the graph. The more emphasis a company places on human interaction, the more money it makes. It’s that simple.

Smart traders sell when a stock has reached its peak and invest instead in growth opportunities. Be a smart trader. Sell social media and go long on human interaction. Invest in your people, not your gadgets.