Why Social Media Will Fundamentally Change Business

Social media is here for keeps — and big changes are coming as a result.

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Social Business

Social business research and more recent thought leadership explore the challenges and opportunities presented by social media.
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Social media is still new enough that many executives wonder what, if any, long-lasting impact it will have on how business is conducted. Is it worth jumping on the bandwagon? Or conversely, is it wiser not to jump, but to wait until there’s greater clarity on whether social is here to stay?

Both these questions have a one-word answer.


This is not simply my opinion. It is shared by many executives who have jumped. Our recent social business report suggested that 67% of executives thought that social media had the opportunity to fundamentally change their businesses. The number was higher for companies that were deriving greater business value from these technologies. Compelling reasons, rooted in fundamental concepts of economics and business strategy, support this belief that social media will fundamentally reshape not only individual organizations, but also the business environment as a whole.

It should come as no surprise that social media technologies could have such a transformative impact on business, because information technology has been transforming the shape of modern business for decades. Its impact was first felt in the finance industry with the introduction of ATMs in the 1960s and 1970s and the dawn of high-speed trading algorithms in the 1980s. In the 1990s, enterprise resource planning (ERP) systems began to change the internal operations of companies across multiple industries.

More recently, Internet technologies have allowed companies to integrate their information sharing more tightly with other organizations, creating opportunities for greater specialization, increased outsourcing and globalization. Social media is simply the next step in this trend of technology influencing the shape of business.

Social media technologies may be particularly disruptive for business, because they undermine some of the key reasons why companies survive or thrive. One of the key competitive resources for modern organizations is knowledge, and knowledge integration — the ability to combine, exchange and integrate the diverse knowledge of its employees — is a key function in any firm. Getting people to coordinate knowledge and cooperate on a common task is inherently difficult, and the firm has been the best mechanism for enabling the type of collaboration essential to create, store and apply valuable knowledge.

Yet social media is now replete with examples of companies enabling knowledge integration outside the confines of traditional organizations.


Social Business

Social business research and more recent thought leadership explore the challenges and opportunities presented by social media.
More in this series

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Comments (2)
virtual collaboration and coordination on whatever platforms.  WalMart and many other companies have done such collaboration and coordination and sharing for more than a decade. If you want to term it as social media, it seems to me a bit inappropriate. Feel a bit weird that the ideas are flagged to be disruptive here in sloan review.
martin chilcott
Thanks for this excellent opinion piece. I wanted to added an example of social media changing the rules of business not covered in it. It is less obvious because it is neither B to C nor focused on the IT industry.
Collaboration through social media platforms across supply-bases in retail and FMCG is beginning to be used to change the way companies relate to one another and work together to innovate. Not many companies are yet doing it, but the pioneers include: Asda-Walmart, GSK, RBS, Tesco amongst others. Using the common challenge of operating sustainably to drive the need for greater collaboration, they are linking up  operational managers across different companies within their supply-bases to cut costs, risks and environmental impacts. The investments and operational savings supported run into the many tens of millions of dollars and include thousands of managers working together who would otherwise never meet! You can see a case study on Asda-Walmart here: https://www.2degreesnetwork.com/services/collaboration-programs/ 
I share it as an example of social media affecting the fundamental operations of the business value chain in a way that is equally transformative and surprising. 
Yours sincerely Martin Chilcott CEO 2degrees