Finding the Value in Social Business

T-Mobile USA, a provider of wireless voice, messaging and data services based in Bellevue, Washington, started its social business initiatives in much the same way as many other companies — adding a Facebook presence, monitoring mentions on Twitter and engaging with customers on social media. But today, as T-Mobile is changing its business model and business processes — CEO John Legere has moved the company away from long-term contracts for wireless services — social business tools are increasing in importance.

Melissa French, director of marketing systems for T-Mobile, explained that, without longer-term wireless service contracts, “we had to become relevant to our customers every day. And to be relevant, we have to know what they’re saying and how they’re saying it, and what it could mean to us. So that was just an amazing opportunity to relook, rethink. And it really sparked us to open our minds to a different way of doing business. So that’s when we started investigating how social media could get us closer to the customer.”

French and her team are preparing for an integrated future in which systems analyze social media data not only to understand how marketing messages are resonating (both from T-Mobile and its competitors), but also to improve both operations and customer service.

“We believe that we can not only learn valuable information from the sentiment coming in, but we can also use that channel to proactively communicate back out to our customers,” French explained. She envisions a future that includes a different way of engaging with customers and associates as a result of social business tools and the data that are generated by engagement through these tools.

Similar stories echo across our latest research. Companies are starting to derive real value from social business, but this value is concentrated most strongly in companies that have reached a certain level of sophistication in relation to their social business initiatives, which we refer to as social business maturity. We define “social business” broadly to include activities that use social media, social software and technology-based social networks to enable connections between people, information and assets. These activities may be internally focused within the enterprise or externally focused toward customers, suppliers and partners.

Some have been highly skeptical of the ability of social business initiatives to deliver business value.1 For example, Gartner estimated that through 2015, nearly 80% of social business initiatives would fail to meet their stated business objectives. Many executives still associate social business with Facebook and Twitter — and time wasting by employees. Our own research shows that one of the most important barriers to the adoption of social business for both employees and managers has been, and continues to be, the lack of a compelling business case for these tools.

MIT Sloan Management Review and Deloitte2 have been exploring the impact of social media on business for the past three years through annual surveys, data analysis and interviews with executives and academics. Our most recent survey, conducted in the fall of 2013, explored the issue of whether companies are deriving value from their social business initiatives. We surveyed more than 4,800 respondents at multiple levels of different types of organizations around the world. (See “About the Research.”)

Our results suggest that negative views on the value of social business for companies may have been premature. Sixty-two percent of managers surveyed now report that their social business initiatives are at least somewhat successful at meeting their stated business objectives. Furthermore, 63% of respondents report that social business has positively affected business outcomes at their company, and 59% of respondents in multinational companies report that social business helps them operate across geographies.

Perhaps equally compelling is the extent to which individual employees indicate the value of social business to their daily work. A surprising 57% of respondents say that it is at least somewhat important for them to work for companies with mature social business practices, while 46% of respondents say that social business is at least somewhat important for decision making in their day-to-day role.

These results lead us to conclude that, at the most basic level, many companies are deriving value from their social business initiatives. Nevertheless, a deeper look at our findings shows that companies are not equal in their ability to derive value from social business.

The Importance of Social Business Maturity

A key factor associated with whether a company was able to derive positive benefits from social business is what we call social business maturity. We asked each respondent to envision a company with ideal social business practices and then rate on a scale of 1-10 how close their company was to that ideal. We associated the closeness to that ideal with a company’s social business maturity. (See “About the Research” for an explanation of how we defined social business maturity and ideal social business practices.)

We found that the higher a respondent rated his or her company on this social business maturity scale, the more likely he or she was to report that the company is deriving business value from its social business initiatives. (See “Outcomes Change With Social Business Maturity.”)

One of the biggest business impacts is found in multinational companies, where 92% of respondents from the most mature social companies report that social business helps them operate across geographies. Hannah Grove, executive vice president and chief marketing officer at State Street Corp., a Boston-based financial services holding company, described the value of social business tools for multinational companies. “The social intranet has a tremendous power to bring together disparate geographies,” she said. “It helps people find the information relevant to them but, more importantly, it helps employees recognize we have a very distinct culture, shared values and a shared vision for the future. And all of that becomes magnified by the power of the social intranet.”

Respondents in more socially mature companies are also more likely to report increasing interest in social business in their organization over the past year. Furthermore, the percentage of respondents who say that it is important or somewhat important for them to work for companies with more mature social business practices also increases at more socially mature companies, until it peaks at 91% of employees. (See “Outcomes Change With Social Business Maturity.”) It seems that once employees have worked for a company with mature social business practices, they don’t want to go back.

It is interesting to note that there is a slight decrease in outcomes at the highest end of the maturity scale across most of our metrics. This result could stem from some difficulties introduced by social business at the highest level of maturity for companies that are pushing the envelope in terms of social business. Alternatively, such businesses may be setting strategic goals that rely on social business initiatives but have yet to achieve those goals.

Most respondents, however, rate their organizations at the lower end of the maturity scale. The good news for these companies is that, in our findings, even a one-point increase in social business maturity was associated with survey respondents being more likely to report improved business outcomes. The takeaway for managers is that even small improvements may pay off in terms of social business outcomes.

What Does Social Business Maturity Look Like?

An analysis of our data showed that there were also strong similarities between the social business practices of companies at similar points of this maturity scale. As a result, we grouped companies into three maturity groups — early (maturity score 1-3, 51% of our sample), developing (maturity score 4-6, 32% of our sample) and maturing (maturity score 7-10, 17% of our sample).

Our data suggest that these different maturity groups have distinctive social business practices. Thus, while incremental improvements to existing social business practices are likely to yield positive business outcomes, the kinds of benefits associated with the highest levels of social business maturity require more substantial change. More mature social businesses look qualitatively different than less mature ones in important ways. (See “How Social Business Practices Evolve.”)

How Social Business Practices Evolve

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Companies at different places on the social business maturity scale often demonstrate similarities in their social business practices. While every company is different, this chart illustrates some typical evolutions in companies with early, developing or maturing social business practices.

•Social business maturity involves business process transformation, not just using social tools and technologies in the enterprise. We asked respondents whether social business initiatives lead them to develop new business processes or fundamentally transform existing ones. Seventy-one percent of respondents in maturing social businesses say that their social business initiatives involve a fundamental transformation in business processes, as opposed to only 28% of respondents from companies in the early stage of social business maturity. This finding suggests that social business entails more than just adopting social tools in an organization. Rather, it involves redesigning business processes in ways made possible by these tools.

B. Bonin Bough, vice president of global media and consumer engagement for Mondelez International, the global snack food spin-off of Kraft Foods Group that is based in Deerfield, Illinois, thinks about this transformation in a bigger way. “The whole world is getting transformed by social tools,” Bough said. “We fool ourselves if we don’t think every aspect of our business is going to be transformed. I think most people understand the transformation in their personal life, but for some reason they forget the moment they enter the walls of organizations.”

•Social business often starts in marketing, then gets applied to other functions and processes. We asked respondents for what purposes their companies used social business tools. Companies in the early phases of social business maturity were more likely to report using social business primarily for externally facing activities, specifically marketing functions. Companies with a greater level of social business maturity, in contrast, were more likely to report social business use balanced between internal and external uses, with both innovation and leadership applications used nearly as much as marketing applications. (See “A Shift in Focus.”) Only maturing social businesses report applying social business tools to business operations to a great or moderate extent (60%), compared with 13% of the companies in an early stage of social business maturity.

A Shift in Focus

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As companies gain more maturity in their social business practices, their social business initiatives are more likely to be balanced between internally and externally facing initiatives.

Several executives we interviewed indicated that their companies had begun their internal social media efforts to become more effective in their external efforts. State Street’s Hannah Grove noted: “To truly understand our clients’ needs and what solutions would truly help them, we needed to listen, collaborate and engage with them in new ways. Learning how to operate as a social business allowed us to hear our clients more clearly than we had in the past.”

More effective external social business functions may also lead to greater demand from employees for internal capabilities. Kelli Carlson-Jagersma, vice president of internal collaboration at Wells Fargo & Co., noted that “as we use social much more heavily to reach our customers, a greater number of employees, particularly younger employees, want to have that social/mobile freedom. It can be daunting to come into a 160-year-old company where many of the employees have been here for 20 years or more. Social helps with that, and it helps keep us competitive in the marketplace for talent.”

•Social business maturity involves increasing sophistication in measurement. Companies have been looking for ways to effectively measure social business results to assess ROI. Our data provide some new insights about this issue. (See “Measurement and Social Business Maturity.”)

Measurement and Social Business Maturity

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As companies mature with respect to social business, they tend to adopt more sophisticated forms of measurement for their social business initiatives.

First, although 52% of the least socially mature companies do not measure their social business initiatives, this number drops substantially as companies move out of this earliest stage of maturity. Second, although anecdotal evidence is only the first step toward measurement, it remains nearly equally important for companies at all stages of social business maturity. Even the companies with the most mature social business practices apparently need to continue telling success stories to drive use of social business tools. Third, once companies begin quantitatively measuring social business results, our data suggest a path of increasingly sophisticated measurement. Early-stage companies rely equally on anecdotal evidence and platform-based measures (such as traffic, “likes,” followers, social reach, number of posts or topics, time spent on site). Platform-based measures become the dominant form of measurement in developing companies, and the use of operating-based measures (such as customer or employee satisfaction, productivity, time to market, time to issue resolution) and bottom-line financial measures grows more common as companies reach the maturing stage of social business. We note that this measurement path is cumulative. The addition of new forms of quantitative measurement does not appear to lessen the importance or use of the earlier forms of measurement.

Chris Andrew, managing director for the U.K. and Europe at Hearsay Social, a company based in San Francisco that provides social media software and training tailored for companies in regulated industries, noted that there has been an evolution in measurement for companies at various phases of social business adoption. He observed that for many executives, “Social has its reputation of being a little bit spammy; they think it’s about how many followers and ‘likes’ can I acquire as quickly as possible — or that it’s another place marketing can sink money into and try to justify it.” In contrast, he noted, now social business measurement for more sophisticated clients is more about bottom-line financial and operational measures. This increasing sophistication in measurement also helps explain another finding in our survey: “Lack of business case” decreases in importance as a barrier to social business adoption as a company’s social business practices mature.

Given that all three types of quantitative measurement (platform-based, operating-based and bottom-line financial measures) continue to increase in prevalence as companies’ social business practices mature, it appears that more sophisticated metrics complement the value of earlier-stage measures, rather than replace them. Bough discussed how social business measurement is evolving at Mondelez. “I think most organizations are looking for a very discrete understanding of what did my Twitter feed deliver to my bottom line of my business,” he said. “And what we’ve done is we flipped it on its head. We look at how social actually amplifies the bigger pieces of the media ecosystem. What does Twitter do to TV consumption habits? And that’s something that’s big enough to be measured.”

The link between measurement and social business maturity suggests companies need to approach measurement thoughtfully. Measuring for the sake of measuring is not enough. Figuring out the key metrics that add to business value is important. As Kelli Carlson-Jagersma of Wells Fargo observed, “It depends on what you’re looking to do. One of our key executives says, ‘Well, I don’t want them spending all their time on social,’ but of course one of our key measurements is whether employees spend time on it. We’ve got to calibrate metrics a little bit.”

The link between measurement and social business maturity suggests companies need to approach measurement thoughtfully. Measuring for the sake of measuring is not enough.

•More mature social businesses increasingly rely on social data. Our research also suggests that companies with more mature social business practices are more likely to rely on social data. Eighty-eight percent of respondents from such companies say social data are important, compared with 38% of those from companies in the early stages of social business maturity. Maturing social businesses are also more likely to use this data in different ways than companies with less mature social business practices. For example, while only 8% of companies in the early stages of social business maturity integrate social data into their operations to a moderate or great extent, 67% of maturing social businesses do so.

This finding is illustrated by Wayne St. Amand, executive vice president of marketing for Crimson Hexagon, a Boston-based social media monitoring and analytics company. He noted the increasing sophistication with which social data are integrated with operations in companies with mature social business practices. “The very best companies have created conduits between the market research organization into brand management or product management so that it influences not only campaign activity once a product has already been developed — it can actually influence what gets developed and what goes into the product,” Amand said. “And that’s probably the most strategic use of this kind of intelligence.” In other words, maturing social business companies use data from social business to inform operational decisions.

Gary Liu, vice president of marketing at Hearsay Social, has observed similar moves toward operational uses of social data in the financial services industry. He said that individual clients of financial advisors are “sharing an incredible amount of detail around what’s happening in their personal lives including life events, which can now inform how and when an advisor can help. For example, these social signals might be related to an individual sharing on Facebook or LinkedIn that he or she is getting engaged, getting married, having a baby, starting a new job or moving. Our software identifies and separates these signals from the noise across what people are posting every day across your network and displays only the key signals in a dashboard. This ensures that the relevant triggers are presented to a financial advisor, who can then take the appropriate actions, whether through online or offline conversations.”

•Social business maturity involves a higher level of responsibility and accountability within the organization. More mature social businesses are more likely to report a single leader or group responsible for social business initiatives. These leaders are also likely to be at a higher level (such as a vice president or member of the C-suite) in more mature social businesses. State Street’s Hannah Grove noted the importance of managerial responsibility for social business. “Ownership is a very important question, particularly when you think about the ramifications for anything not working out well,” she said. “And so there really has to be a sort of singular owner — for lack of a better word, governance and compliance — just to make sure that people don’t go off the reservation.”

Simply designating a C-level executive to be in charge of social business initiatives, however, is not a quick path to social business maturity. Our data suggest problems can still arise in social business initiatives driven by C-level social business leaders. Grove provided further insight on this point. “You can’t just enforce a big change like this on an organization and have it be a top-down mission,” she said. “We recruited ambassadors and champions to help promote it from the bottom up.”

It may be more helpful to think of high-level social business leadership as an outcome of social business maturity, rather than an antecedent to it.

It may be more helpful to think of high-level social business leadership as an outcome of social business maturity, rather than an antecedent to it. Carlson-Jagersma has only been in her current position at Wells Fargo for just over a year, but she has been with the company for years and has been working on internal collaboration issues for more than two decades. Her leadership position has evolved as the organization has placed greater emphasis on social business. She began as a leader of portal development, and then she became the leader for collaboration of a division, which evolved to incorporate social business for the entire enterprise.

When asked about the most important characteristic of a social business leader, Carlson-Jagersma responded: “Lots of patience. I’ve got the Swiss army knife of business knowledge: technology knowledge, communications, marketing — and couple that with patience. Because I think if you come in and only know social media and not the business, it’s hard to marry those two and vice versa. I do think a well-rounded business person can go a lot further and couple that with social than someone who only knows the technology.”

•Maturing social businesses manage new challenges along with successes. Greater social business maturity does not necessarily mean that a company has overcome the challenges associated with social business. In fact, some of our data suggest successful social business initiatives might actually introduce new problems for companies. In multinational companies, although social business maturity was highly correlated with how much social business helped a company operate across geographies, it was also associated with increased operational challenges across geographies. (See “Social Business Maturity Also Introduces Challenges.”) Although cultural issues were the most prominent, multinational companies reported operational, regulatory, language and technological problems associated with social business initiatives, as well — all of which increased with greater maturity in social business practices. Bough echoed this insight, saying, “Global operations with social business is actually a lot harder than we expected, given the cultural and language complexities.”

John Glaser, CEO of the health services unit at Siemens Healthcare, offered an example of the cultural issues that may be introduced with effective social business practices in a multinational company. Glaser uses social media to communicate with his 7,000 employees worldwide on a regular basis. He pointed out that while the increased scope of communication provides considerable benefits, it also raises challenges. Employees in different offices may interpret the message in different, sometimes contradictory, ways. For example, “In America, if you’re presenting or discussing something, I lead with the good news and follow by the bad news,” Glaser explained. “In Germany, it’s the other way around.” He noted that not only have social business tools made him more aware of these differences, but he must enlist the help of key employees to screen messages prior to their release to highlight potential issues. In other words, the very success of social business tools on a global scale also introduces challenges.

Looking Forward

Interest in social business continues to intensify. Seventy percent of all survey respondents report increasing interest in social business initiatives, and 85% of respondents say social business will be important or somewhat important to their business in the coming year. These trends suggest that companies will continue to evolve with respect to social business — discovering new value, transforming in innovative ways and facing new challenges. Indeed, the very notion of a “mature” social business will likely continue to evolve — as companies begin to redefine what is possible.