Unlocking the Potential of Social Business

In the early ’80s we had groupware, forums, mailing lists and wikis. In 2006 we discovered Enterprise 2.0 as a collaborative extension of the company cutting across silos and departments, in a more open, transparent and spontaneous way. In 2009-2010, we finally entered the phase of social business with the crumbling of barriers separating the internal and the external of the organization and the deployment of collaboration inside processes.

Despite increasing expenditure forecasts in social software ($ 4.6B in 2013 and $ 6.4B in 2016 according to Forrester), except for the success stories, famous commentators such as Sameer PatelCharlene LiLaurie BuczekDion Hinchcliffe and Dennis Howlett have recently noted an unexpected delay and in some cases an explicit skepticism about the  introduction of participative approaches by large companies.

Although according to McKinsey, 72% of organizations have already deployed at least one collaborative tool, the level of actual use is much lower. To get an idea Forrester stated that only 12% of information workers in late 2011 had access to enterprise social networking while only 8% actually did use it weekly.

Looking at projects we have faced at least 6 reasons of resistance during the last few years

  1. IT and management lack of knowledge: the initial reluctance on the part of IT and the still low awareness on the part of top management regarding Social Business both at a strategic level and at a purely operational one. Inertia goes up to 49% for IT managers and up to 64% for the top management
  2. Unclear vision and results: the glaring lack of linkage between business goals, metrics and initiatives launched. Up to 82% of companies do not measure or focuses more on the engagement than on actual business returns. Even those who try to quantify the business outcomes often report modest results
  3. Barriers due to climate and culture: a poor climate and decades of management practices that are anything but encouraging to the dynamics of engagement. About 80% of employees are still not fully engaged
  4. Distance between social and processes: a deep gap between bottom-up participation and business applications / current work flows
  5. The dynamics of change: a poor understanding of the human propensity to change at all levels of aggregation: individual, team, organization causing peaks of 72% in resistance from users.
  6. Need for a carefully designed adoption strategy: the lack of adoption of strategies focused on people, scalable and with the right buy-in. The chances of success will be surely limited if only a little more than 10% of the budget is devoted to work on people rather than technology

Faced with such large barriers, probably impossible to overcome in some companies, it may be the right time to ask ourselves if the battle we are fighting, as well as being long and difficult, will bring a large enough premium to justify the effort. If, in short, the Social Enterprise is the future of business and organizational design or more of an utopia that won’t ever see the light.

Even though I’m afraid I still do not know the answer, some results on the future of business and social business recently published by McKinsey (The Social Economy: Unlocking value and productivity through social technologies) and Deloitte / MIT (Social Business: What Companies Are Really Doing?) give us hope.

At a more operational level, Deloitte and MIT emphasize a:

  • Rapidly growing attention and awareness towards Social Business: If 52% of respondents consider it important for today, this number will reach 86% in 3 years with a predominance in goals connected to customer relations (marketing, sales, support, 80% cases) and to developing a greater competitive ability (74% of responses)
  • Improvement of adoption: the real usage level is increasing with 20% of users who participate at least weekly and 44%, which contributes more or less regularly
  • Persisting lack of leadership,  a clear business case and measuring: once the testing phase is over, management buy-om, a clear strategy and KPIs to measure results are no longer optional. If adoption strategies and associated metrics are far from maturity, the buy-in CEOs has improved (28% of cases) at least if compared to the rest of top management, including CIOs (who stop at 15%). Rather interesting to see how in three years, the level of importance attributed to social business will get over 70% both for CEOs and CIOs
On a more strategic level, McKinsey’s study provides a glimpse of the incredible transformational potential Social Business has:
  • We are still at the beginning: only 3% of the surveyed firms can be considered in an advanced collaborative phase having achieved benefits across whole ecosystem (customers, employees and partners)
  • It is not that difficult to get some results: 90% of companies who have adopted social software has seen some business return
  • The value yet to be generated is, however,  enormous: between $900B  and $1300B per year, focusing only on 4 +1 sectors (financial services, consumer packaged goods, professional services, advanced manufacturing plus the social sector). Extrapolating the value of all industries for USA, Germany, England and France gives a figure in the range between $1600B and $1900B per year
  • The most significant opportunities are concentrated around a few processes: product development, operations and distribution, marketing and sales, customer service, business support, collaboration across the enterprise (see image above). Each field shows specific degrees of potential and more granular processes with room for collaborative improvement.
  • The potential on internal collaboration is 2 times bigger than with the customer-facing activities, including marketing
  • 20-25% of expected improvement in the knowledge workers productivity by reducing the 28 hours a week currently spent in writing emails, search for information and collaborating internally
  • 1/3 of the money spent by consumers in online shopping (a value near $940B billion between the U.S. and Europe) can be influenced by social shopping

Conclusions

Utopia or not, even the managers initially less positive towards Social Business are beginning to carefully look at the phenomenon and their interest is expected to skyrocket over the next three years. The quantification of the possible return in macroeconomic terms will only accelerate this process given the numbers that greatly exceed the thousands of billions of dollars both in efficiency and revenue increases. For the first time I’ve seen clearly stated that internal optimization, even much less under the spot light at this time, can bring results that are two times bigger than customer-facing initiatives.

Part of the value is not going to end up in the pockets of businesses. As happened previously with the Internet, it will be largely individual consumers and their communities to benefit from new ways of communication and involvement in terms of lower prices, higher quality products or products closer to their expectations, improved customer service. As an additional benefit, through the communities they are members, consumers will be able to keep in touch with thousands or millions of other users to get answers and share passions at no cost.

Even going from macro to micro, it is undeniable how most employees won’t resist much longer working in constant chaos, overwhelmed by e-mail, with no room for autonomy, doing and redoing the same things again, among a thousand concurrent priorities. If putting the genie back in the bottle is no longer possible, managing workflows differently and learning how to socially filter information overload become the only viable path. Here again, the individual savings could exceed 50% of the weekly working time.

Of course the numbers presented by McKinsey should be considered a top limit more than a forecast of the value generated in the coming years. The report is very clear to this regard: very deep transformations in the practice of management and organizational behaviors would be necessary to go near those figures. This evolution should be driven by management both at the individual project level and by rethinking the basic constructs of the entire organization. A responsibility that many leaders have yet to recognize and accept.

Judging from all the other points I have summarized above, bringing home that 1 Trillion plus dollars value won’t  be easy nor immediate but given the high stakes at play, it is worth trying!

This post is also available in: Italian

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Emanuele Quintarelli

Social media enthusiast and Social Enterprise Leader in EY. Research, reports and reflections about the introduction of web 2.0 inside the enterprise.