This is part 5 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.
Our survey data offers several insights into how the value of social business is perceived among small, mid-size and large companies, within the C-suite and across industries.
Opposite Ends of the Spectrum
According to our survey, the largest organizations (those with over 100,000 employees) and the smallest organizations (those with fewer than 1,000 employees) tend to appreciate the value of social business today more than midsized organizations. (See Figure 4.)
Gerald Kane, an assistant professor at Boston College who studies the strategic use of information technology to create business value, says this is not surprising. “I think smaller firms like social business because they don’t have the buying power or the resources to conduct traditional media campaigns. They can use social media to increase their voice and connect with customers to really make themselves seem bigger than they are.”
The Importance of Social Software by Company Size
He notes that very large, resource-rich organizations can afford to experiment with trendy technologies like social media. “It can make them seem smaller, more intimate than they are, less the big corporate monolith than a collection of people who really care about their products and customers.”
As an example, Kane cited Coca-Cola’s official historian, who is charged with supporting nostalgia collectors. “Midsize companies can’t afford to have a position like that on staff. He’s using blogs and Facebook to do a Coca-Cola memorabilia / history focus.” Kane believes that midsize companies, for whom traditional media and traditional technologies are working just fine, may be skeptical of moving into new frontiers.
McDonald’s is one of the most widely recognized brands in the world, with more than 2 million online mentions a month according to Rick Wion, director of social media for McDonald’s. Wion explains how his company is able to engage with customers in a way that makes his company seem small and responsive:
We received a tweet one day from a mom who said, “Hey, McDonald’s, do you know what it does to a little boy to get The Littlest Pet Shop when he wanted a Wolverine toy?” The mom had ordered a Happy Meal for her four-year-old son, but instead of getting the boy’s toy, he got the girl’s toy. The boy was upset, which created a major headache for her. In response to her tweet, we mailed her a boy’s toy, and she was super happy. It turns out that she writes a blog that’s read by about 50,000 people each month, and she wrote a post saying, “Hey, McDonald’s, I’m loving it.” She’s turned into a huge advocate for us. I see her all the time on Twitter, talking about McDonald’s and even defending us against critics. We changed this person from a customer with a complaint to a huge advocate, all by doing this one little thing on Twitter. We understand the power of making one customer happy.
Industry Spotlight: Media and Tech
Based on our survey data, respondents in the entertainment, media and publishing along with the IT and technology industries tend to see the most value from social business. (See Figure 2.)
As might be expected, culture seems to play a role. Managers from these sectors see their companies as both more open to new ideas and innovative at higher rates than respondents in other industries. (See Figure 5.) Fully 88% of managers in what we are calling the Media industries believe their companies are open to new ideas, and 68% consider themselves innovative. For the Tech industries, the numbers were 77% and 69% respectively, both higher than the average in other industries.
The Importance of Social Software by Industry
Media and Tech share other distinctive practices. Managers in these industries are more likely to say their companies are consistently creating or introducing new social business initiatives with customers and suppliers than do managers in other industries. Moreover, they are much more likely to incorporate social data into their ERP systems than other industries (though no industry scores high on this measure). A senior operations executive at a large entertainment company describes how social business is changing the way work is done at his company.
Industries with Open and Innovative Cultures
A Large Media Company10 The company’s staff uses Chatter, a social enterprise platform from Salesforce.com, to help fill 2 million advertising spots per year across 15 television properties. Before they began using Chatter, employees described the coordination between the sales and marketing teams as “disjointed.” Salespeople did not have a clear understanding about the availability of slots they could offer to advertising customers.
As the company’s staff started using the social enterprise platform, coordination between marketing and sales dramatically improved. Account executives from any of the company’s properties could use the Chatter platform to view advertisers and advertising slots at other business units and then interact with their counterparts in these business units to fill gaps in their own advertising portfolios. One manager cited a 300% jump in return on investment just a few weeks after his group started using the internal collaboration platform.
Another value that comes from the media company’s improved coordination emerged in 2011, when a cruise ship sank off the coast of Italy. One of the company’s executives received an e-mail about the disaster the next morning when he was still in bed, and he quickly realized that the company had a lot of ad spots that day from cruise advertisers. Through Chatter, he was able to pull the ads because he believed it wouldn’t benefit anybody to be advertising cruises that day.
Two hours later, the owners of the cruise ship ads requested that the media company pull the advertising. The executive was able to say, “Don’t worry, guys, I already pulled them for you.” The executive said that his team’s level of coordination and speed of response would have been difficult to achieve without using the social platform.
The Importance of Social Business to the C-suite
The View from the C-Level
C-level executives vary considerably in their perceptions about the value of social business to their organizations today. (See Figure 6.) On average, across all industries, CEOs, presidents, managing directors, board members and CMOs are most likely to perceive social business as important today. Indeed, CEOs are twice as likely as CFOs and nearly twice as likely as CIOs to view social tools as important right now.
It is not altogether surprising that CFOs place less value on social business. After all, CFOs tend to focus on investment returns, and our respondents tend not to measure the ROI of social software use. That CIOs perceived so much less value than CEOs, presidents and managing directors did, on the other hand, was more surprising. Gerald Kane explains CIOs’ relative lack of interest in social business:
CIOs can be terrified of social for a number of reasons. In many cases, social wasn’t their idea. In addition, employees are going to use it anyway, because they can use smart phones or laptops offline to circumvent all of the blocking of the sites that happens in most organizations. Another reason is that this is a data security nightmare. In the previous generation of IT, like ERP systems, IT was a very controlled environment. Social is the opposite.
Kane’s assessment has quantitative research support. In 2010, Gartner surveyed 757 non-IT professionals in Germany and the U.S. and found that 15%-30% of this group used unofficial social software for work purposes, “even in enterprises with an official tool in that category. For example, 21% of respondents use mostly unofficial wiki tools in enterprises that have official wiki tools.”11
Social business may occupy a “blind spot” for some CIOs. Keri Pearlson, an entrepreneur, consultant and adjunct professor at Babson College, suggests:
CIOs tend to be either strategists or keep-the-lights on kind of executives. The strategist CIO may be preoccupied with large-scale, enterprisewide kinds of issues, and few companies have articulated a vision for how they want to use social business corporatewide. The keep-the-lights-on CIO may not see a value in social business because it is difficult to immediately see how it will reduce the cost of operations. It’s just not a priority for them. That said, many CIOs do understand that social business is coming and they will have to deal with it.
The Importance of Social Software in 3 Years
Despite their differences regarding its importance today, 70% of CEOs, presidents, managing directors and CIOs in our survey believe that social business will be important to their organization in three years. This suggests that many CIOs regard social business as neither a threat nor a passing fad — they may simply be cautious about jumping in before others demonstrate its value. (See Figure 7.)