Introduction: An Opportunity on the Immediate Horizon

This is part 1 of 6 from the 2013 Social Business Global Executive Study and Research Project.

In an interview for this year’s social business report, Gerald Kane, professor at the Carroll School of Management at Boston College, succinctly characterized where social business stands today: “Any new technology experiences a faddish hype cycle where people adopt it because they feel they have to,” he says. “With social, we are passing the peak of faddishness. Companies are starting to crack social’s code and turning to it for business advantage, intelligence and insight.”

In this second annual report from the MIT Sloan Management Review and Deloitte Social Business Study,1 we probed executives’ views of the social business opportunity and how companies are harnessing its value. The study included 2,545 respondents from 25 industries and 99 countries. It also incorporated interviews with nearly three dozen executives and social business thought leaders.

Echoing Kane’s observation, a key finding of the research is the rapid growth in importance of social to business. In 2011’s survey, 18% of respondents said it was “important today.” One year later, the number doubled to 36%. The time horizon of its importance is also shrinking. In last year’s report, 40% of respondents agreed that social would be important one year from now. In 2012, the number jumped to 54% (see Figure 1).

Figure 1

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In the 2011 survey, 18% of respondents said social business was “important,” the highest possible level on a five point scale. In the 2012 survey, that number doubled to 36%.

More Industries Are Getting On Board

The immediacy of the social business opportunity is growing across industries, another indicator of its move from faddish hype to business value. Between last year’s study and this year’s, respondents from all industry sectors increased the value they place on social business. None remained at the same level. None reversed course (see Figure 2).

Figure 2

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Respondents were asked to rank how important social business is to their organization on a five point scale. “Important” was the highest possible ranking. In 2012, most industry sectors had at least 25% of respondents agree that social business is important, reversing the results from 2011 when most industry sectors were below the 25% line.

While Media (entertainment, media and publishing) and Tech (IT and technology) continue to lead all industry sectors in the importance they assign to social business, other sectors demonstrated a marked increase in the value of social business. Of particular note is the Energy and Utilities sector. The number of managers in this sector who feel social is important surged from 7.1% to 29% from last year. Of the multiple factors driving the growth, this sector’s increasing efforts to engage with customers is the most significant. Pike Research estimates 57 million customers worldwide used social media to engage with utilities in 2011. Pike projects that number will jump more than 10-fold to 624 million by the end of 2017.2 While utilities currently use social media to resolve billing issues and provide information on services, they are expanding social media use to include crisis/outage communication, customer education (for example, information on recycling, renewable energy and energy efficiency), customer service, green energy promotion, branding and recruitment. Utilities are beginning to see the value of social listening to keep abreast of consumers’ interests. This is especially the case as new types of competitors enter the market, including solar power and energy management providers.

Market Drivers

Business leaders are keenly aware that social is becoming a primary tool that people use to share information and create knowledge. The consumerization of technology is making everything from tablets to smart phones as popular inside the enterprise as they are outside its walls. In addition, companies want their brands to be where their customers are — and where competitors already might be.

Social business is capturing significant business attention. McKinsey, for example, reported that social can create as much as $1.3 trillion in value in the four business sectors it examined (consumer package goods, consumer financial services, professional services and advanced manufacturing).3 Suppliers are covering all bases from marketing to social enterprise networking. In the social marketing software market, which includes a wide range of vendors from established players like Adobe, Lithium and Salesforce.com to a multitude of startups, Forrester predicts that the landscape “will look dramatically different in two years.” Leading vendors will partner and merge, and stragglers will be “swallowed or trampled by larger players from outside the social space.”4 In the enterprise collaboration software market, Gartner recently announced its revenue projection for team collaboration platforms and enterprise social software — $2 billion by 2016, with a notable five-year compound annual growth rate of 16.1%.5

But perhaps the strongest harbinger of social’s growth is the closing generation gap. “It’s not just young people or Millennials,” says Bill Ingram, vice president of analytics and social at Adobe. “It’s everyone, including grandparents who want to follow how their children and grandchildren are growing up.” Deloitte’s seventh annual State of the Media Democracy survey put hard numbers to the closing gap. The survey found that both Generation X and Baby Boomers see increasing value in social media: 81% of Generation X respondents and 70% of Baby Boomers see it as a powerful tool to interact with friends. And both generations have jumped on the texting bandwagon: nearly 80% of Generation Xers and nearly 60% of Baby Boomers see social networking sites, instant messaging and texting as an effective means to stay in touch.6 As the generation gap closes, businesses will find all age groups prepared to embrace social technologies.

Struggles With Social Business

Although the recognition of social’s importance is mounting, progress towards becoming a social business isn’t. The majority of companies we surveyed appear to be stuck in first gear. Our study found three major culprits holding back progress: lack of an overall strategy (28% of respondents), too many competing priorities (26%), and lack of a proven business case or strong value proposition (21%). Left unaddressed, these barriers can lead to daunting odds. Gartner estimates that 80% of social business projects between now and 2015 will yield disappointing results because of a lack of leadership support and a narrow view of social as a technology rather than a business driver.7

Nonetheless, some companies are poised to beat the odds. But they aren’t likely to beat them with one-size-fits-all enterprise transformations. Instead, businesses that assess themselves as more socially mature are building momentum by applying social tools and technologies to specific business challenges and assessing the impact. “Social is not an app nor a layer,” says J.P. Rangaswami, chief scientist at Salesforce.com. “Social is a philosophy and way of life that empowers customers and users.”

In this report, we delve into how some companies are bringing that philosophy to ground level — and what is holding others back.

References

1. As used in this document, “Deloitte” means Deloitte Consulting LLP and Deloitte Services LP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

2. Pike Research: Social Media in the Utility Industry Consumer Survey, 2011 (Pike Research rebranded as Navigant Research in 2012).

3. McKinsey Global Institute: The Social Economy: Unlocking Value and Productivity through Social Technologies, July 2012

4. Forrester: The Four Social Marketing Tools You Need, February 25, 2013

5. Gartner: Agenda Overview for Social Software and Collaboration, 2013. January 2, 2013

6. Deloitte: U.S. State of the Media Democracy Survey, Seventh Edition, 2013 www.deloitte.com/us/tmttrends

7. Gartner: Predicts 2013 Social and Collaboration Go Deeper and Wider, November 28, 2012

8. Dion Hinchcliffe interview with Robert Berkman, MIT Sloan Management Review, June 3, 2013. See: http://sloanreview.mit.edu/article/how-companies-can-move-past-a-trough-of-disillusionment-in-social-business/

9. In order to assess the impact of multiple variables at once, a regression analysis was used to identify statistically significant and practically meaningful adoption factors, that contributed to social business maturity.

10. LinkedIn’s Social Selling Index assesses a company’s activity on LinkedIn by measuring four areas: brand, reach, activity and contribution. Brand is measured based on the completeness of a company’s sales force profile. Reach is measured by the number of LinkedIn connections. Activity is measured by the number of searches and messages (InMails) sales professionals are executing and sending. Contribution is measured by the amount of content updates sales professionals are posting to LinkedIn.

11. http://www.nielsen.com/us/en/press-room/2012/nielsen-and-twitter-establish-social-tv-rating.html

12. Nielsen: Double Vision — Global Trends in Tablet and Smartphone Use While Watching TV, April 5, 2012

13. Nielsen: State of the Media Spring 2012 Advertising & Audiences, Part 2: By Demographic, April 27, 2012

14. David M. Gilfoil and Charles Jobs: Return on Investment for Social Media: A Proposed Framework for Understanding, Implementing, and Measuring the Return, Journal of Business & Economic Research, Vol. 10 No. 11, 2012. journals.cluteonline.com/index.php/JBER/article/download/7363/7431

15. Jason Miller: New metrics to help agencies determine value of social media, February 20, 2013. http://www.federalnewsradio.com/513/3229214/New-metrics-to-help-agencies-determine-value-of-social-media

16. Gartner: 2013 Social Marketing Survey Finding: Content Creation Fuels Social Marketing, March 25, 2013

17. http://smbp.uwaterloo.ca/2012/10/cocacola/ (Accessed May 3, 2013)

18. Deloitte: Tech Trends 2013: Elements of postdigital, 2013

19. Punit Renjen: Lead or Be Left Behind: A Chairman’s Perspective on Social Media, Directors & Boards, First Quarter 2013.

i. John Hagel: Enterprises Still Honing Their Social Skills, February 1, 2013 http://deloitte.wsj.com/cio/2013/02/01/john-hagel-enterprises-still-honing-their-social-skills/