Connecting Leadership and Culture

This is part 7 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.

In order to create value with social business, some companies must address difficult organizational issues that arise with leadership and culture. According to Charlene Li, “The biggest determinants, by far, of whether you will be successful at social business are leadership and culture.”

Vision and Strong Management Support

Our research suggests that leadership is critical to increasing the use of social tools within an organization. (See Figure 9.) We asked, “What factors do you see facilitating the adoption of social software in your organization?” The top two answers were clear vision for how social media supports business strategy, and senior management support. Lack of management understanding was the top answer to the question, “What internal barriers do you see impeding the adoption of social software in your organization?” (See Figure 10.) (Risk and security concerns are the top external barriers to social software adoption.)

Figure 9
The Factors Leading to Adoption of Social Software

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But do leaders have the tools they need to drive adoption? Our findings suggest that an important resource is missing — measured results for social software. In our survey, the most frequently cited type of measurement of social software use is Do not measure. (See Figure 11.) Lack of business case was the second most-cited internal barrier to adoption. Without measured results, it can be difficult to create effective incentive structures or monitor the progress of pilot initiatives.

Do your leaders have the right mindset for integrating social business into your organization? MIT’s Andrew McAfee notes that someone’s receptivity to social business has a lot to do with his or her qualities as a leader. For those who encourage the free exchange of ideas, there’s no conflict. But for those who prefer to suppress opinions, social business can be seen as a threat:

Social business can undermine people’s power. Especially if you’re a jerk boss who has thrived on being the gatekeeper for information and suppressing your people’s opinions, this could be unpleasant for you. If you’re the boss of a project that’s behind schedule and you try to convince your higher-ups that it’s on schedule, these new social tools will be uncomfortable for you. For what I would call high-quality or more enlightened leaders, there is no conflict here. For command-and-control bureaucrats who are afraid of having a more multivoiced organization, this stuff is scary. But I don’t want a lot of those managers in my organization.

Figure 10
The Obstacles Impeding the Adoption of Social Software

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Having the right leadership mindset — being open to new ideas and encouraging others to share rather than hold onto information — is an important determinant of whether social business will gain traction in your organization.

Sharing Knowledge

As mentioned earlier, companies that are already deriving value from social business have cultures that tend to be more open to new ideas and more collaborative than other companies. For other companies, sharing information may not come easily, especially in corporate cultures where what you know is an important source of your power in the organization. Transitioning to a culture in which sharing knowledge is a source of power can threaten a nonsocial feature of human nature — self-protection. We asked several thought leaders what they believed about the challenge of making this organizational transition.

Marshall Van Alstyne, an associate professor of information systems at Boston University, suggests that one way to promote a cultural shift toward social business is to ensure that people have incentives to share rather than hoard information:

Think of it in terms of information scarcity versus information abundance. If information is scarce, then you, as the control point for access to that information, have a lot of power. If information is abundant and it’s easy to go around you, you can benefit by being the first to provide that information. In a rich social business environment, information is abundant, so you have an incentive to share information you have, or someone else will and you lose out. Even if it’s not quite as good, you can provide it a lot earlier and in such abundance that other folks are still happy to have it.

Consider SAP’s developer ecosystem where developers can answer each others’ questions. Before this system, a value-added reseller on top of SAP’s software had no particular reason to help out another value-added reseller. As a matter of fact, one might not want to answer the question of another reseller because it might actually help them out and make them more competitive. But after the introduction of this question-and-answer marketplace, things shifted completely. Now you earn points in proportion to the value of your answers. Now the value-added resellers are telling their employees to go in and answer the questions of other resellers to prove, “Hey, we’re the ones with the expertise, not those guys.” It’s completely shifted the incentives. Folks are now pushing their information into the marketplace in a way that benefits SAP. It’s a really clever mechanism that completely inverts the incentives from one of hoarding to one of information sharing.

Other Requirements

Figure 11
Measuring the Effectiveness of Social Business Initiatives

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As these observations suggest, social business, considered as a group of activities, can be challenging or even threatening to the status quo. Meeting one organizational requirement like leadership is not sufficient for an effective social business engagement or for an effective execution of an enterprise-level social business strategy. “Social initiatives within an organization need champions to support and grow these initiatives,” says Gerald Kane, an assistant professor at Boston College, “but champions and strategies alone will not push the organization forward.” In addition to leadership and culture, other factors include social tools that are simple to use, properly structured incentive systems, a clear purpose for what problems the social initiative is intended to solve and clear direction about how to communicate with social tools, both inside and outside the organization.19

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. Source: MIT Sloan Management Review interview with David Sacks, CEO of Yammer, February 24, 2012.

3. Social media is how people get together virtually to accomplish outcomes. Social software is the set of tools that gives people in a social network the means for automation, virtualization, scale and abstraction. Social networks are formal descriptions of groups of people who congregate in a social medium.

4. Not all social business activities will produce mutually useful connections between individuals. In some cases, it may be beneficial to diminish certain connections between staff or with some customers. Further, the use of emergent communication and collaboration tools like Yammer may one day become part of the baseline. When that happens, using these tools may cease to qualify as a social business activity as we’re defining it, not because they are any less social but because they no longer “amplify” connections.

5. D.M. Smith et al., “Predicts 2010: Social Software Is an Enterprise Reality,” Gartner, December 3, 2009.

6. A. McAfee, “What Sells CEOs on Social Networking,” MIT Sloan Management Review, Spring, 2012, http://tablet.mitsmr.com/feature/what-sells-ceos-on-social-networking.

7. Other uses of “social business” might refer to organizations or to economic systems that promote some notion of social welfare. For an example of the latter, see M. Yunus, “Building Social Business: The New Kind of Capitalism That Serves Humanity’s Most Pressing Needs” (New York: Public Affairs, 2010).

8. See F. Gossieaux and E. Moran, “The Hyper-Social Organization: Eclipse Your Competition by Leveraging Social Media” (New York: McGraw Hill, 2010); and A.J. Bradley and M. McDonald, “The Social Organization: How to Use Social Media to Tap the Collective Genius of Your Customers and Employees” (Cambridge: Harvard Business Review Press, 2011).

9. E. Deci and R. Ryan, “Intrinsic Motivation and Self-Determination in Human Behavior” (New York: Plenum, 1985).

10. This example comes from an interview with Fergus Griffin, senior vice president for solutions marketing at Salesforce.com. Additional detail was sourced from: http://www.youtube.com/watch?v=kTOL6gUgoJQ.

11. G. Tay, “Ask Five Questions to Determine Whether to Deploy Social Software Bottom-Up or Top-Down,” Gartner Research, January 20, 2011, http://www.gartner.com.

12. P.F. Drucker, “The Practice of Management” (New York: Harper & Brothers, 1954), 37.

13. Of course, social business activities can be valuable in many ways. It is our belief that social business activities in these four areas have the potential to generate substantial value.

14. E. von Hippel, S. Ogawa and J.P.J. de Jong, “The Age of the Consumer-Innovator,” MIT Sloan Management Review 53, no. 1 (fall 2011): 27-35.

15. S. Nambisan and P. Nambisan, “How to Profit from a Better ‘Virtual Customer Environment’,” MIT Sloan Management Review (spring 2008): 53-59. For an analysis of Threadless and social media, see D. Hinchcliffe and P. Kim, “Social Business by Design: Transformative Social Media Strategies” (San Francisco: John Wiley and Sons, 2012).

16. This example is based on Y.M. Antorini, A.M. Muñiz, Jr. and T. Askildsen, “Collaborating With Customer Communities: Lessons From the Lego Group,” MIT Sloan Management Review 53, no. 3 (spring 2012): 73-79.

17. J. Hagel, “Pull Platforms for Performance,” February 20, 2012, http://edgeperspectives.typepad.com.

18. T. Levitt, “Marketing Myopia,” Harvard Business Review, September/October 1975.

19. Providing clear guidance about communications external to a business can be tricky, especially in regulated industries like health care and financial services. Too much guidance can put a damper on social business activities. “If I ask an organization for their social media policy, and I get back a 50-page document,” says MIT’s Andrew McAfee, “that might as well just say, we’d prefer it if you don’t use social media.” Even in unregulated industries, too much oversight can cast a shadow on innocent interactions. Babson College’s Keri Pearlson describes a recent meeting with a colleague and two representatives from a large technology firm. Her colleague tweeted that she and Pearlson were at a lunch meeting, naming the firm but not the individuals. When the representatives returned to work, the office was buzzing about who was speaking without authorization about the company. Staff had been monitoring information flows from Twitter about the company and had seen the tweet from Pearlson’s colleague.

20. M. Miller, A. Marks and M. DeCoulode, “Social Software for Business Performance: The Missing Link in Social Software — Measurable Business Performance Improvements,” Deloitte Center for the Edge, 2011.

21. M. White and B. Briggs, “Tech Trends 2012: Elevate IT for Digital Business,” Deloitte, 2012: 5.