The most effective social businesses may start to look more like organizations that long predate modern corporations — so-called “loosely coupled” organizations such as military, education and religious institutions.

Social media represents an enormous opportunity for most organizations, particularly knowledge-intensive ones. While marketing applications of social media are getting the most attention today, the greater impact may come from applications internal to the organization. The McKinsey Global Institute, for instance, estimates that social media is poised to unlock $1.3 trillion of economic value, mostly through the improved efficiency of knowledge workers.

Despite this considerable potential, I suspect that most organizations will have significant difficulties leveraging social media for internal collaboration. This suspicion is borne out by Gartner research, which touts a very high failure percentage for internal initiatives.

The reason: strategy is too often stuck at the executive level.

After reading my recent post, “Procedural vs. Strategic Approaches to Social Media,” one reader, Susan Deisenroth, pointed out that part of the reason that digital teams do not act strategically is that they are not permitted to do so by their companies. She noted that many organizations’ strategy is locked up in the Board Room and the C-suite, with the average employee unaware of — or unable to act on — the bigger strategic vision.

She is right, of course. Traditional bureaucratic mechanisms are too slow to handle the pace of collaboration in social business. A recent Harvard Business Review article noted that one Fortune 200 company took a week to generate and approve an 140-character tweet in response to a critic online — far too long to possibly be effective in the fast moving world of social media. Even if employees can collaborate more efficiently and effectively using social media tools, any impact will be minimal if they still need to navigate the old bureaucratic processes to leverage the results.

Similarly, managers who use traditional mechanisms to oversee their newly efficient employees will drown in the information and activity generated by these subordinates unless they also embrace social media themselves. Tools such as blogs and online video can allow top executives to communicate with managers globally as well as solicit feedback from those managers. The vast amounts of data generated by social media tools can provide unprecedented transparency regarding organizational processes through sophisticated analysis and visualization. Successful innovations in one part of the organization can quickly be identified, highlighted and disseminated to educate managers in other parts.

But technological tools will not be enough to obtain the predicted benefits of social business. MIT Sloan Management Review’s new 2013 Report on Social Business revealed that approximately 70% of C-level executives think social media has the potential to transform the way their company works. This sentiment needs to go one step further: Companies must change the way they work in order to realize the promised benefits of social business.

Consider the groundbreaking Super Bowl Tweet from Oreo during the football game’s unexpected blackout. As the Associated Press noted, “It took Oreo’s marketers roughly 10 minutes after the power went out to tweet a picture of an Oreo cookie in the half-dark with the words: ‘You can still dunk in the dark.’” (Read more at Wired.com.) What was most impressive were the organizational mechanisms in place — 18 months in the making — that allowed Oreo to create and post an on-message ad within minutes.

A fixation on “real time marketing” has followed this success, but this trend will likely continue as organizations transform toward “real time business.”

What might such a transformation look like?

It will likely look quite different than the co-called flat organizations that were heralded at the dawn of the Internet era. It will also likely look very different than the flashy techniques peddled by many so-called “social media strategists.”

Rather, social businesses may start to look more like organizations that long predate modern corporations — so-called “loosely coupled” organizations such as military, education and religious institutions.

Loosely coupled institutions push decision-making capabilities down through their hierarchy to better deal with conditions on the ground. Executive leaders communicate the strategic objectives of the organization, and the front line leaders are partially responsible for figuring out how to achieve those objectives. These organizations remain deeply hierarchical, but these hierarchies operate differently than modern corporations.

Today’s companies might look to these older forms of organizing for guidance on how to manage in this fast-changing, social media-driven business environment. Managing in this environment will require allowing, enabling and empowering employees to act strategically and with less direct oversight. It will require educating these employees on the organization’s strategic objectives and developing “rules of engagement” that guide employee action. It will require that executives learn new ways of managing and leading. Companies and executives may look to structures of the past for lessons on how to lead in the future.

The most pressing questions facing organizations are whether executives have the courage to let social media transform the way those companies work, and whether they have the confidence to adapt their own leadership styles in response.

3 Comments On: Social Business: Flat or Hierarchical? A Surprising Answer

  • Jamie Notter | August 22, 2013

    Amen! In Humanize we talk about decentralization–not just in the raw, flattening sense, but in the ability to experiment and learn, in providing enough clarity on how the enterprise works to actually enable real ownership behavior. And yes, the military can be a great role model. It’s one reason why they invest so much in their version of “new employee orientation” (bootcamp). They need their “employees” to deeply understand the organization, because when the bullets fly, you don’t have an opportunity to check the manual, or even ask your boss (or your colleagues). You have to act. The military may have invented “command and control,” but they’re more decentralized than most people think.

  • See Beldner | August 28, 2013

    Social business isn’t just about leaders being able to effectively execute their vision and strategy. It’s also about employees being able to influence that vision and strategy.

    When I think of institutions that enable bottom-up change, military, education and religious institutions generally don’t make the list. Advocating for substantive change – challenging the dogma – in these environments often requires breaking-off and going your own way.

    Encouraging organizations to be more dogmatic – to have more of the stuff that enables people to work in a deeply hierarchical yet decentralized institution – would tie an organization’s hands when real change is needed.

  • Michael Cata | August 30, 2013

    The article alluded to this practice, but spelling it out: pairing social media analytics with a workforce optimization component could help organizations create teams in a dynamic environment. Another neat extension of this logic would be organizing teams around value creation centers rather than purely functional units as seen in today’s institutions. To give an example – the US Special Forces deploys small teams – a medic, a gunner, a sniper, an air capabilities expert, etc. – to respond to issues/crises in real time. Applying this example to industry, you could imagine a team, with members from marketing, logistics, finance and IT working together to solve a problem. On a macro level this decentralizes tactical AND strategic decisions to the field. Decisions are made with a broad range of perspectives – holistic strategy creation and implementation – rather than a single, large, and slow functional unit creating policy and then passing it onto the next.

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