Blair Currie is the CEO of Snibble, a next-generation social video platform where content plus conversation rule the entertainment world.

Social media has done many great things. It’s helped people communicate and keep up with family and friends, allowed widespread sharing of pictures, videos and messages, formed meaningful communities, let people find their voice as well as discover others with common interests, secured jobs, and afforded the sale and purchase of goods and services.

The huge popularity of social media has also helped make big digital companies some of the most valuable brands in the world. For example, the market capitalization of Alphabet, which owns YouTube, is now over $1 trillion, making it the third-most valuable company in the United States behind Apple and Microsoft. The market capitalization of Meta—which owns Facebook, Instagram and WhatsApp—is over $300 billion.

Many of these big digital companies have leveraged their market clout to seize most of the opportunities they want and overcome many of the challenges they’ve faced. Ironically, however, the success they’ve enjoyed in becoming digital giants could now be threatened by scale and ego.

Scale Limits Innovation

As companies grow, their organizational structure and complexity also grow commensurately. To manage this increasing complexity, big companies develop layers of policies and procedures that can help them operate smoothly and at scale. While these systems can help enable the management of large teams, they can also make these firms less flexible—lowering their ability to adapt to changing market conditions.

When resources become constrained, political struggles can also start to occur—with the divisions of the business who were most responsible for the firm’s initial success digging in to solidify their positions. The “core” parts of the business might tend to shut out or go to war with any newcomers or advocates of innovation and change.

Ego Limits Innovation

Sometimes, founders and management members of huge companies can fall victim to their egos. These individuals were smart enough to become some of the world’s most successful businesspeople, so there can sometimes be a belief that what made them successful in the past will keep on making them successful in the future despite a continuously changing landscape.

“Confirmation bias” can set in where they look for data that supports their beliefs, and they might resist and even fail to see data that contradicts their views. Rather than innovate, they might resist change and stretch their business models to the point of breaking.

Once new competitors become successful, these pioneers of the original firms might find that their organizations can no longer dance. In turn, they might simply copy competitive features rather than come up with new ones—which is a bad strategy.

To understand this, one just needs to return to the history books and look at the launch of New Coke. Coca-Cola felt threatened by Pepsi’s successful advertising campaign and almost ruined one of the world’s truly great brands in the process. Could history repeat itself?

What Can Be Done?

Some of these big social media companies have five choices to make to reinvigorate growth, including:

1. Establishing a “SkunkWorks” division. TechTarget defines SkunkWorks as “an innovative undertaking, involving a small group of people, that is outside the normal research and development channels within an organization.” This structure can help the separate group avoid the politics and systems of the parent company.

2. Expand brand functionality. These social media companies can look for ways to expand the functionality of their existing platforms. One model that the West-based social media companies can turn to is the “super apps” from Asia. These apps have a much wider range of functionality than we typically see in the United States. For example, WeChat contains text, voice, videoconferencing, photos and videos as well as functions that include banking, online shopping and restaurant booking.

3. New brands. While social media companies can “stretch” their functionality, it sometimes makes more sense to launch a second brand. For example, if older users follow Gen-Z and populate a platform, it might make sense to start a new platform for Gen-Zers who want their own playground and don’t appreciate that their parents can see what they’re doing.

4. Change the management. Social media is entering a different life stage that can be considered “maturity.” Many of the founders who have seen their companies grow are still in place. It may be time to bring in a new type of management team.

5. Continue purchasing startups. Larger firms could also acquire and integrate innovative firms. This has been one of the main ways big digital has grown. Some of these big firms have acquired hundreds of companies and aren’t required to report them if the acquisitions are smaller than $101 million.

Conclusion

Of these five routes for continued growth, acquisitions will probably remain the most popular option. The trick then is to find emerging and innovative tech companies.

There are some clues as to what a big company should look for in these potential acquisitions. These include technology for what is not available in the market, including real-time sharing. It can also involve technology that is gaining popularity such as private social networks. Mainly, however, it’s the people and new thinking that can be most valuable to large social networks.

While the competitors are fierce, new technology companies are always looking to be the next Instagram or TikTok due to the enormous potential benefits of success that can come very quickly.

It’s a most interesting space and a great time to be in social media.

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