Why is the rise of online communities a good thing for customers and businesses? Is social networking and marketing an essential or accidental component of this shift? And what are the actionable principles behind the emergence of communities, that we may evaluate the quality of our online communities and understand what causal factors we should adjust to improve them? Here are some working thoughts about these questions.

Definition of Community

A community is a System Level 5, or societal, level of human organization. System Levels 1-5 are defined as follows:

• Level 1: Individuals, Personal, or Intrapersonal
• Level 2: Dyadic, or Interpersonal
• Level 3: Small group, or Intragroup
• Level 4: Organizational (Group of groups), or inter-group
• Level 5: Societal (which can be multi-level), or inter-organization

Communities can contain all other System Levels as members, but are normally made up primarily of Individuals.

The defining characteristics of community are mutually altruistic relationships among members, and the “facilitator” function performed by some designated sub-organization or individual within the community. Without mutual altruism and the facilitator functions, communities break down into masked attempts to control people, private interest groups, or a loose assembly of individuals without much relationship or common purpose.

The other System Levels exhibit different defining characteristics, listed below:

• From personal (1) to dyadic (2): communication
• From dyadic (2) to small group (3): management
• From small group (3) to organization (4): organizational structure
• From organization (4) to societal (5): altruism & facilitation

How Businesses Can Function as Communities

When a business forms a community, it does this by shifting over from the Service Provider-orientation, which is traditional to business, to performing the community facilitator (or “community organizer”) function within its market:

• Formulates, expresses, communicates, and upholds the common goals of the community
• Organizes the community (an ongoing process)
• Facilitates a good fit among members
• Contributes its expertise to the community
• It is also a member of the community
• Somewhat like a combination of matchmaker & marriage counselor

Members of the community include:

• Customers
• Suppliers
• Employees
• Traditional Competitors

Benefits of Businesses Becoming Online Communities

• Switch from an adversarial relationship among stakeholders to a cooperative relationship. Literally, a coming together as one body.
• Shift of command-and-control style of running a business, where R&D, Marketing, Sales, and Support are managed as line departments with the aim of conquering the company’s market, to a network of members performing a wide variety of roles: a member may be a customer in the morning, market your services to other potential members in the afternoon, offer tech support in the evening, and offer product-improvement recommendations and beta testing at night, all for free.
• The community model is a much more developed form of organization than even traditional business models, capable of generating more wealth, more benefits, faster, cheaper, more scalably, more durably, reliably, and much higher levels of stakeholder satisfaction
• The community orientation is able to support much more variety, because it is based on much more specific purposes (compare recruiting purposes with communication purposes)
• Communities foster interactions that deepen and broaden over time, whose mutual benefits increase over time, creating a positive feedback-loop, creating more and more incentives for its members to stay related and contribute to each other.
• Their optimal size may be much larger than that of other forms
• Community forms are capable of organizing more members with more variety
• This means that it is also more capable at scaling than other forms
• Communities may get more valuable as they increase in size, up to a sweet spot

Challenges Companies Face In Becoming Communities

• Lack of a strategic vision that is capable of reconciling the unmet desires of all potential types of members of the community into a common purpose. A community common-purpose is a prerequisite for being a functioning organization at all. Many companies will find that they are out to get one or more group of stakeholders who would otherwise have to be included in the community.
• Fundamental shift in developmental stage of their organization
• Turns many departmental functions and established relationships inside-out
• Looks like a radical loss of control
• Requires really trusting your customers and your staff
• Less developed managers will always be tempted to rig the game by offering one-sided incentives to some members at the expense of others, such as by paying people to advocate the company’s products. Except for the exchange of actual products and services, no money should change hands.

Some Conclusions

One of the things I wanted to be clear from this is how woefully inadequate social-networking functionality is to forming and maintaining communities. A “network” is just one piece of the puzzle. Social networks provide (or should provide) infrastructure for the community to communicate and collaborate as a whole, and be an enabling platform for the services offered by its members.

Another thing that should be clear is that the shift from a traditional command-and-control, broadcast-oriented business to a community is not principally a marketing issue. It has everything to do with the fundamentals of your business model, your company culture, management style, and organizational structure.

These are just some early thoughts that I will expand on and revise over time. I’m compiling numerous case studies to illustrate the special properties of communities, how to evaluate them, improve them, and set them up.

Note on the Concept of Altruism for Communities

Pure altruism is probably self-contradictory because a minima of agency is always required to effect voluntary action which means a minima of self-interest is always present. However, there are degrees of self-interest, from purpose at the expense of others (selfishness), to purpose for others’ benefit where the benefits for the agent are indirect, or accrue towards something that both agent and beneficiary commonly strive toward, such as the flourishing of the community as a whole. That is not purely altruism, nor is it purely selfish.

To the degree that companies are capable of facilitating this in their own environments, they can be said to evolve into communities, with many evolutionary advantages. This does not contradict the profit motive, although it transforms the what the profit is for the sake of and who it is for.