The Amplified Enterprise: Using Social Media To Expand Organizational Capabilities

Mark McDonald (top) and Anthony Bradley, of Gartner, Inc., an IT research and advisory company.

In their new book, The Social Organization: How to Use Social Media to Tap the Collective Genius of Your Customers and Employees (Harvard Business Review Press, 2011), co-authors Anthony Bradley and Mark McDonald argue that the promise of social media is to “tap into the full talent, creativity experience, and passion of all the people it touches,” from employees to customers to partners throughout the value chain.

But there’s a lot blocking that potential. Executive fear. Misplaced focus on using social media solely for marketing. A lack of “purposeful reasons” for building communities.

“We really started seriously pursuing social business about four years ago when we started to see how organizations were applying social media in areas outside of marketing to drive significant business value,” says McDonald, group vice president with Gartner Executive Programs, a division of Gartner, Inc., an information technology research and advisory company based in Stamford, Connecticut, with 4,600 associates and clients in 80 countries. “Seeing what leading edge companies were doing with social media really convinced us that the potential is huge.” Bradley also works at Gartner, as a group vice president in Gartner Research.

In a conversation with MIT Sloan Management Review’s executive editor David Kiron, McDonald and Bradley detail how a $2.4 billion semiconductor design company got a 25% boost in engineering productivity through social media, how a health care company is using social business tools to create collaborative communities for the care of the elderly and why having a million Likes on Facebook is less of a big deal than it seems.

Was there a watershed moment that made you realize that social media is really a significant phenomenon?

McDonald: About a year and a half ago, maybe a little bit more, we started getting questions from CIOs and executive teams along these lines: “We see what’s going on in the consumer peer-to-peer Web 2.0 environment, and we need to understand how we can bring that kind of energy and interest and ability to mobilize masses into our organization. How do we do that in our relationships with customers and suppliers and other parties?”

What organizations were struggling with was something that Anthony calls provide and pray. Implementing things and then not getting results. As organizations struggled with the initial implementations of social media technology, with trying to seek the associated promise of greater collaboration, innovation, agility, they started to realize that they have to look at this as more than just a technology that gets added on.

Bradley: At the same time, it’s worth pointing out that there was a pretty rapid scaling of fear in senior executives. Fear of ‘what if my customers revolt?’ Fear of ‘what if one of my employees behaves poorly in social media environments?’ You’d see people saying, “I need a policy on social media,” but it was very much bent around fear. One of our struggles has continuously been to get them out of that fear mode and start seeing the potential value. That’s improved significantly over the past two years, but many companies absolutely go through a fear period.

Let’s talk about the hype around social business. What’s true about the hype and what’s a myth?

Bradley: What’s true about the hype is its power when you do it correctly. The ability to marshal large communities of your employees, your suppliers, your customers, your prospects. Being able to create communities and engage them in a way that you can effectively delegate work to them, work that they want to do and that they can do better and that delivers business value to the organization. The hype of its power is absolutely true.

One of the things that absolutely is not true is that it can happen on its own. As in, you put the environment out there, the technology, and the grass roots will just take over and create all this wonderfulness spontaneously with little effort, little cost. That is absolutely not true.

McDonald: I think one of the other things that’s not true is that idea about fear we were talking about, which is the fear that employees and customers and participants in these environments are, for lack of a better term, idiots. These people understand the value of privacy and appropriate behavior. There will always be organizations and instances that get media attention about violations, but most people are a lot more responsible than many people give them credit for.

Bradley: The biggest area of hype that is most detrimental is actually around social media marketing, especially social media marketing communications. It’s dangerous because its very popularity can stunt the value of social media overall and distract from how it can provide value to all of your business functions.

There’s so much focus on things like “how many Likes do you have?” That’s the big thing now. A hundred thousand, a million Likes on Facebook — that’s not a measure of engagement. I’m not saying Likes are bad, but at best they’re a measure of attention. They represent a potential target audience for actual community-based collaboration. You still have to reach out to all those people with a purpose around which they will rally and actually do something to engage and participate in a manner that delivers value to your enterprise.

That is your big message, right? That the greater promise of social media is for the entire enterprise, as opposed to just the marketing department?

Bradley: Absolutely. The potential for social media far exceeds marketing when you look across all of the business functions, from supply chain to internal product development and product utilization. There’s a wealth of opportunity for social media that dwarfs the value of marketing.

McDonald: We’re already seeing, for example, a transformation of the way people handle health and safety issues. Companies are using social media as a means to raise employee- and worker- health and safety performance and eliminate accidents. They’re using social media to share best practices and to discuss across an entire organization the best way to handle situations.

We’ve also seen social media become a significant tool in capturing the next wave of organizational challenges that can’t be handled by a simple organization or process change. For example, we discuss in the book how CEMEX, a cement and building materials company, is raising its use of alternative fuels and lowering its emissions not by a series of edicts and corporate process changes, but by using mass collaboration to involve a community. Social media is helping the company not only identify what those changes are, but then to swiftly adopt those changes across the enterprise.

In CEMEX’s case they got a 5% lift in their use of alternative fuels in less than five weeks by creating a collaborative community enabled by social media. That’s not using social media for marketing. That’s using social media as part of the tool kit to make fundamental changes and to achieve really complex things that require a coordinated response. Without social media, there just is no easy way to get a coordinated response at both the individual level and then across the breadth of an organization.

Bradley: We draw a sharp distinction between communications and collaboration. Social media the technology enables the capability of mass collaboration. It enables hundreds, thousands, hundreds of thousands, even millions of people to collaborate like never before, and to achieve results that are otherwise unachievable. Social media is the enabler to amplifying the capabilities of your organization.

You mentioned earlier that companies often approach social media with a sense of fear. How do they evolve away from that?

McDonald: We have what we call the Six F model of attitudes towards social media — fear, folly and flippant are ones where you don’t want to be, and formulating, forging and fusing are where you do want to be. A few years ago we saw a large percentage of our clients’ organizations in that fear and folly modes.

Folly mode is, you know, “this stuff is for my kids, it’s all about entertainment, there’s no business value.” We’ve seen that almost go away entirely. Flippant mode is when you’re not ignoring social media, and you don’t fear it, but you don’t take it seriously, either.

Give us an example of a company that started in fear mode and moved into formulating and forging — where it really got into the value and the opportunities of social business.

McDonald: We worked with a chip company out of California and Dublin by the name of Xilinx back in 2006. We were working with the CIO there, a guy by the name of Kevin Cooney, who recognized that there was a lot of value inherent in the work they were doing but that it was kind of locked up. He knew there was all this unstructured data and knowledge that existed between people’s ears.

Kevin and his team felt they could tap into that knowledge and expertise in something other than a traditional knowledge management approach where people dump their information in a giant database that nobody reads. They created an environment where they did peer-to-peer collaboration.

Kevin and the team at Xilinx initially built very small collaborative tools that enabled their design engineers to start the collaboration process and to get experience in understanding what it means. They had successes build upon other successes in terms of how engineers worked with each other as well as with their customers. And they’ve been able to progressively expand their collaborative capability to the point that they’ve raised engineer productivity by about 25%. It’s a great example of how we define the social organization, which is the repeated ability to use mass collaboration to tackle strategic issues and opportunities — as opposed to it just being a one-shot deal.

Bradley: One additional example I’d give is Gartner. We ate our own dog food. Just four years ago we had a no-blogging policy period for analysts. And a group of analysts felt that that was very detrimental to Gartner moving forward, to not be participating in the social Web.

So we put together a proposal, took it to our operating committee, which is the CEO and his direct reports, and we made several arguments about mitigating risks, about what competitors are doing, about what potentially new competitors are doing emerging through the social Web.

And sure enough, we convinced them that it was worth the risk, that we could manage the risks with a purpose. By explaining this purpose to the analysts blogging, we overcame that fear. And we have a very, very successful Gartner blogger network today. We have our Gartner Peer Connect effort, which is an answer marketplace for our clients. We’re pursuing some internal social media collaboration efforts around executing on research better and getting more participation through social media. [See Bradley’s blog.]

In 2007 and 2008, our research indicated that the mix of how companies were using social media was about 80/20, with 80% toward marketing, and 20% toward internal. We started seeing a pretty significant shift in 2009 to today where it’s close to 50/50. And this is, again, collaboration, not communications. Just about all organizations out there will put a Facebook page out or have a Twitter account. This is not what we consider to be mass collaboration. Very few organizations are using Facebook to get greater engagements. There are some, like Nike and Coke, but the vast majority are still in the pure communications phase.

A small percentage of social business, about 5%, 6%, is going toward supplier-facing implementation. We do see that shift occurring.

Who tends to lead the strategic approach to social media? The CEO? CIO? Someone else?

McDonald: We’re seeing it being led really by just about anybody in the organization. At CEMEX it was initiated by a group that’s responsible for innovation, and then really championed by the CEO who recognized that there was no other way to get the changes that they needed.

At Xilinx, as we mentioned before, it came from the CIO saying how can we take better advantage of the unstructured data that’s there. In other cases it comes out of business units who are looking for better ways to get at customer value and organizational value.

One of the examples in our book, The Social Organization, is from Univita, a health care company that is using social media tools to create collaborative communities around the care of elderly loved ones who live at home. Think of all the information that needs to come together: medical information, details that are both qualitative and quantitative across so many different people who are concerned about the care of an individual. That whole process was unaddressable in an effective way before social media existed.

Bradley: It’s an evolution. Eventually, organizations will get to the stage that we call the fusing, the last of the Six Fs. This is where you don’t even need to think about social media and mass collaboration uniquely because it’s now been incorporated into your culture. Right now organizations think in terms of people and teams and organizational structures, but they don’t think in terms of forming a community of customers, of suppliers, of employees. Like any change effort, you’ve got to specifically focus on it for a while to get the organization behaving a different way.

Participation, anchored by a well-defined purpose, delivers value to the business.

Image courtesy of Flickr user wili_hyrid.

Now, a critical point: it needs to be based on purpose. You have to have purposeful reasons around which you can form and sustain these communities. One of the things just about everybody knows is that the three most important criteria for success in real estate are location, location, location. With social media, the three most important criteria for success are purpose, purpose and purpose.

I get this question all the time: “How do I evolve my organization to be more highly collaborative?” And I say, “How do you eat an elephant? One bite at a time.” How do you move your organization forward? One purpose at a time. We talk about purpose roadmaps and having a portfolio of communities around good, solid purposes that drive business value. You cannot start with grand, lofty goals. You can get there, but you can only get there by creating communities around very well defined challenges of having these employees, or these customers, or these customers and employees collaborating around this specific thing, this engineering challenge, this go-to-market challenge.

Can you speak to the value of participation? How important is it to folks like staff and managers to be able to participate, give voice to their ideas and to be heard?

Bradley: Actually, not very. Everybody is busy. Everybody has a job to do and people generally don’t like to change, especially when they are already at full capacity.

This is why we say you can’t focus on the technologies — because nobody cares. You’ve got to tap into a purpose that they do care about. You’ve got to go after a problem that they have. You don’t want them to think, “Oh, I’ve got to go do this social media.” You’ve got to find out what’s meaningful to your workforce so that it resonates with them.

McDonald: But the other thing to point out is there’s been tons of research about the criticality of associate engagement, customer engagement, and the intense value that individuals get from being part of the process and able to express themselves and get feedback from their peers. Those are big drivers.

And so for the individual participating in a mass collaborative community, the value is extreme because it’s personal, it’s a way to connect beyond just the role responsibility and cash payment nexus that is the foundation for modern organizations. As you can see from how people use social media in their personal lives, they’re searching for collaborative communities.

You know, the formal organization structure only demands a certain amount of engagement from you. It’s a relatively minor level of engagement. What these collaborative communities have been doing is activating a portion of that remaining potential in a positive and constructive way, and in a way that actually makes people want to be more engaged. With social media they know they’ve gotten a fair hearing and they’ve been able to see what others think of them and what they think of each other. The personal benefits associated with this are really tremendous.