This is part 4 of 12 from “Social Business: What Are Companies Really Doing?” a report on the findings of the 2012 Social Business Global Executive Study and Research Project.
Almost all of the business leaders we interviewed describe their social business efforts in terms of “infancy” or “just beginning” or “early days.” Those with sophisticated social networks, including IBM and SAP, stressed that these have taken years to develop. Mark Yolton, senior vice president of SAP communities and social media, told us that SAP has taken nearly a decade to refine its developer network, and they are still improving upon it. IBM has been developing its enterprise-wide social network for at least 15 years.
The importance of social business to organizations is expected to grow over the next few years. While just 18% of all survey respondents believe social business is important to their organization today, 63% say it will be important in three years. That’s a jump of 250%. (See Figure 1.)
Charlene Li, author of the New York Times bestseller Open Leadership (Jossey-Bass, 2010) and founder of the research-based advisory firm Altimeter Group, described to us the growing importance of social business:
Over the past few years there’s been an awakening: people have moved on from asking “what is social business?” to “what do I do about it now? How do I integrate this into my business?” The line between real business and social business is diminishing.
The Importance of Social Software
A new generation of workers is building momentum for new modes of collaboration and communication enabled by social business. MIT Sloan School of Management professor Wanda Orlikowski, who researches the interface between technology and organizations and the implications of new digital tools in the workplace, says, “Companies need to get started because this is here and it’s here to stay, especially for the Millennial generation. This is what they are used to.”
Perhaps the most telling anecdotal evidence about the present and future of social business comes from an unlikely source: the utility sector. In our survey, managers from this sector had the lowest appreciation of social business out of all the industries we surveyed. (See Figure 2.) However, even in this heavily regulated sector, which has been traditionally slow to adopt new technologies and new methods, we found a social business proponent. Charles Dickerson, vice president of customer care at Pepco Holdings, an American utility holding company in the mid-Atlantic region with 1.9 million customers, says: “I sincerely believe that social is one of the most important and significant tools that we have in our promotional efforts with customers.”
The Importance of Social Software by Industry
Dickerson, who has earned industry recognition for his work on educating customers about the smart grid, is developing several customer-focused social business initiatives. One of these will use social gaming to entice customers to reduce their electricity consumption. Customers will be awarded points based on their energy reduction, which will go to a school of their choosing. Whichever school has the most points will win prizes, including laptops for students. “Customers will reduce their electricity use, post tips and see how others save,” Dickerson says. “At the end, both the customers and their school systems will be better off.” Pepco itself will benefit as well, as it will achieve a better understanding of the value customers assign to new services and their willingness to use the services.
The Challenge of Social Business
Implementing social business initiatives has been a difficult process for many organizations, however. The research and advisory firm Gartner estimates the failure rate for social business projects at 70%.5
Why such a high failure rate? A number of factors could be responsible, including not using enterprise software to solve a true business problem; failing to integrate social software into an organization’s daily workflow; and a lack of understanding and support from senior management.
Whatever the difficulties organizations have with adopting social business activities, social business appears to be a trend with staying power. Andrew McAfee, a principal research scientist at MIT’s Center for Digital Business and the author of Enterprise 2.0 (Harvard Business School Press, 2009), told us, “I have never spoken to an executive or a manager who says, ‘I just long for the days when we collaborated in the old style and e-mail was all we had and nobody had a voice. Man, that was so fantastic. Let’s please go back there.’”6
In practice, the term social business is used to refer to either activities, a phenomenon or trend, or a type of organization.7 Jeff Schick, IBM’s vice president of social software, describes his company as a social business: “I see IBM as a social business because of how we’ve broken down the barriers of reaching out to the people within the organization, but also how we’re leveraging these same tools externally facing, to interact with our partners and clients.”
Using the term “social” in conjunction with “business” can elicit a mix of reactions. Critics observe that every organization is already social in some way, so it is not clear what the new term adds. Another objection is that “social” activities are seen as unproductive. On the other hand, advocates have embraced the term, asserting that social business fulfills the basic human need to connect with others.8
Why People Participate in Social Media
This need to connect with others is one of three basic psychological needs.9 The other two — the need to feel competent and the need to feel autonomous in one’s actions — may also play a vital role in social business activities. When we asked why respondents use social business at work, for instance, the top three answers were to network with others, to work more effectively and to voice opinions. (See Figure 3.) Motivations to participate in social business activities are thus far from superficial and even go beyond just our social nature. They can help fulfill basic psychological needs.