Social Business: What Are Companies Really Doing?

by: David Kiron, Doug Palmer, Anh Nguyen Phillips and Nina Kruschwitz
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The rapid adoption of technology-based social networking has been transforming politics and social norms on a global scale for the past decade. Will social networking and social software have a similarly transformative effect on business? Are they already doing so? What kinds of enterprises are benefiting the most? And how are they benefiting?

To answer these questions, MIT Sloan Management Review and Deloitte1 conducted a survey of managers from companies in 115 countries and 24 industries. We had 3,478 respondents to our questionnaire. They represented a wide range of management roles (from coordinators to board directors), functional areas and business sizes.

We supplemented the analysis of our survey results with interviews with thought leaders and business executives, as well as a review of recent research on social business. Our in-depth interviews included conversations with senior managers from companies at the cutting edge of social business practice, including McDonald’s, IBM, Salesforce.com, SAP and Yammer.

Although enterprises have only just begun to embrace social business, many leaders — especially in the media and technology industries — are enthusiastic about its value. Others are more cautious but recognize its potential a few years out. Our survey points to marketing and innovation as key areas for capturing value, while our interviews suggest that operations and leadership stand to benefit as well. To capture this value, companies should consider taking steps to ensure that their leaders and culture are aligned with the new opportunities.

We conclude with considerations for how to put social business to work in your enterprise. Leaders need to recognize that social business:

  • Adds value far beyond marketing;
  • Needs leadership support to gain traction in the organization;
  • Can deliver benefits to leadership via strategic insight and strategic execution.

We hope that this report provides executives food for thought as they consider how to incorporate social business activities into their organization. For more about our work in social business, including exclusive in-depth interviews and additional feature articles, please see the online exploration in the Social Business area of MIT Sloan Management Review’s website and at Deloitte’s website.

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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.

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