What happens when PR companies go into social consulting?

SocialxDesign (Social by Design) a high-end social media consulting firm launched this week with Eastwick, a top Silicon Valley PR firm, as investor.

The CEO is Giovanni Rodriguez, who just left Deloitte and used to be a partner at Eastwick, and Chief Strategy Officer Toby Chaudhuri, a top public affairs consultant in Washington, DC.

The two met while working for a White House Hispanic initiative and they realized that large enterprises had a lot to learn from combining Silicon Valley’s tech and social media skills, with Washington’s expertise in creating communities and maintaining conversations.

Here are some key points, and my analysis follows:

• SocialxDesign is an independent consulting firm focused on social business or social enterprise.
• A key goal is to combine Silicon Valley social media and tech expertise with Washington, D.C, abilities to build communities and conversations.
• Bridging online with offline is one of the core principles of the firm.
• Educating enterprises not to see “social” as a technology but as “a broad set of competencies — including offline engagement with people who may be or not be visible on the technology side of the social graph,” said Rodriguez.

SocialxDesign will enable organisations to grow, reduce costs and increase their market value by engaging and empowering people in their ecosystems — customers, employees, industry partners — to take an active part in remaking the enterprise.

“With SocialxDesign, Eastwick is bringing the best lessons of social enterprise to the organizations hungriest to apply them,” said Sam Whitmore, tech media analyst and founder of Sam Whitmore’s Media Survey. “Social engagement is no longer new but huge potential remains untapped. SocialxDesign’s innovative approach — which combines science and psychology — may change that.”

I’ve known Giovanni Rodriguez for many years, and I recently had a chance to catch up with him and his partner Toby Chaudhuri, and with Barbara Bates, their chief funder.

SocialxDesign is a smart move that reflects some of the changes in the PR industry, which has been changing rapidly because of social media and the disruption of the media industry.

PR companies are far different today than they were ten years ago, or five, and even three years ago. Increasingly, they have to provide business consulting advice to their clients, but they also have to execute on very time-intensive social media work, in addition to their regular services. Revenues from monthly retainers haven’t increased by much, while the amount, and the quality of PR work that has to be done, has increased tremendously.

By creating a separate consulting group, Eastwick can separate out its many services and reap the reward of higher income from higher value add services, instead of throwing them into the same package of PR services, for the same fee.

Social media is important but it’s one part of an overall media strategy. As Giovanni and his colleagues concentrate on best practices social media strategies , there’s also a need to help companies become media companies, to become publishers. That’s the area I’ve focused on, helping companies understand best practices in journalism and publishing. It helps support Silicon Valley Watcher.

I wish Giovanni the best of luck in this new venture and I also recognize areas of synergy with my work, and the potential for partnering on future projects.

I can see this becoming a trend among PR firms, the creation of independent strategic business consultancies, because many firms are already doing a lot of that work.

Will that challenge the consulting giants Deloitte, McKinsey, and others? Yes, certainly on the edges, but how disruptive it’ll be is something still to be discovered.

Deloitte has been trying to beef up its social media expertise, I have several friends that are fairly recent hires. But to really develop social media expertise at Deloitte, the core partners have to have direct experience, you have to be in it to get it. Deloitte’s John Hagel is one of the few that stands out.

How companies deal with the complexities of social media across their organization, and how they deal with the challenges of being a media company, will pretty much determine every aspect of their future prosperity.

In terms of strategic business consulting, I can’t think of any other area that has the potential to transform a business faster — yet the traditional business consultancies are nowhere to be seen. This is a big opportunity for firms like SocialxDesign and the timing is perfect.