Recently at Lotusphere 2011 IBM analyst Carol Gavin turned heads when she underscored the vast size of the still somewhat nascent social collaboration market. It is at least $100 billion, and perhaps more. While Enterprise 2.0, and more recently Social Business, have been the talk of many in the industry the last few years, the perceived importance of better collaboration via social media has never been more acute.
These days you can’t turn around without seeing another statistic on how social media has become a dominant channel for all things consumer. It’s not until very recently however that you’ve had otherwise sober management experts making the same pronouncement for the business world. For example, Bill George, Professor of Management Practice at Harvard University, noted late last year that “social networking is the most significant business development of 2010.”
The problem is that there is still a pretty large impedance between these messages and how most organizations today work and think. A response that I still get too often from senior executives when they hear statements like the one above is that they don’t understand how this could be significant to their business, which has seemingly been getting along fine without social media so far. How then does use of social media, internally and externally, have substantial and positive impact to their business? Where and who should apply it? Where will it likely thrive? These are the questions business leaders want answered first.
Unlike the Web’s relentlessly Darwinian environment, businesses have been — until relatively recently — somewhat isolated from the pressures of social media. That is, until social business becomes a competitive factor, which in my last post I presented mounting evidence that this is now the case.
While the answers to these questions are starting to accumulate en masse today, some of the most convincing research which I’ve explored recently, the fundamental issue seems to boil down to the difference between how healthy and optimally connected organizations function vs. the rigid and traditional hierarchies that make up most companies today. A powerful post last week by well known business visualization thinker Dave Gray sums it up well:
Although we tend to design companies like machines, we instinctively and intuitively understand that companies are not made of cogs, levers and gears. In the end, they are made out of people. For top management, it would be wonderful if we could put our business strategy into the machine, push a button and wait for the results. But it doesn’t work that way. You have to put your strategy into people if you want to get results.
And today, thanks to social technologies, we finally have the tools to manage companies like the complex organisms they are.
So this brings us back to the age-old problem of the Innovator’s Dilemma, which essentially comes down to how do you disrupt yourself before the real world does it for you, often with undesirable results. Dave Gray also pointed to John Hagel’s recent observation that as the pace of technological and other change has increased, the life expectancy of large companies has dropped dramatically. This then, along with the other impending challenges, is just one of the wake-up calls happening in large organizations.
In the face of this growing evidence, it’s generally understood that new methods are required to deal with the pace and scope of modern business. As a key part of the conversation, it’s become increasingly self-evident to a growing number of credible industry observers that social tools, matched with new ways of working together, aka social business, can be a key solution to the problem. After all, social media was the outcome of countless thousands of experiences on how to connect people together at the scale of the Web and make it usable. We are now in the same, though harder to change, boat in the business world.
Collaboration is just part of the story
The good news is that most large organizations are now well along their way in considering how to apply social technologies to their business problems, even if it’s still fairly early days for some adopters. Not surprisingly, when it comes to how they operate internally, early adopters often map social media and Enterprise 2.0 into language that is broadly understood by the business, usually under the aegis of collaboration. And communication and collaboration are indeed key areas where social tools can connect people and knowledge together better and faster, drive productivity and efficiency, and foster innovation and process improvement.
Fortunately, few if any of the organizations I see are throwing away social tools as unworkable or hard to adopt. Rather, they are having more trouble adapting the general purpose activities in enterprise social platforms to their industry and moving beyond general purpose upgrades such as social intranets. This has recently led to the discussion of of industry-led frameworks for social business. While social tools certainly can (and do) have high impact in general purpose business scenarios, the enterprise software industry has long learned that it’s as you bring software solutions closer to specific, high-value business activities, that you achieve the most value.
A great interview that IBM’s Carol Gavin recently gave makes this point in spades when it comes to Enterprise 2.0 and social business:
When you go into a healthcare company [with] a homogeneous value proposition across industry, it doesn’t answer their question: “How do I solve my problem? I don’t care about a problem in insurance or in government, I want you to solve my problem.”
And quite frankly, that’s the legacy of [Lotus] Notes. Notes history started with specific, business-partner, industry solutions. And it’s come back to its roots because that’s really where the collaboration portfolio shines within a context of answering specific industry needs.
So I thought that was kind of interesting about the collaboration agenda. It is the right way to go to market for collaboration. And now collaboration is such a hot topic. Twenty years ago it was a bleeding-edge technology like Software as a Service is today. So you have to frame it in the context of a business problem. You can’t go in with technology speeds and feeds and, you know, I have a better mousetrap than you. You have to go in speaking in the buyers’ language: “Solve my problem today. I need to do more with less, and how is collaboration software going to do that for me?”
This starts to answer the question in the title of this post, thought it elides some of the dimensions which I’ll attempt to expand on below. If social business has become one of the most interesting new avenues to explore in how we manage and operate our organizations, where then can we see that it will thrive? Will certain industries be much more amenable to adoption, or addressed more proactively by software vendors? What other dimensions matter and more importantly, when and where should organizations focus their social business efforts?
Looking at where the benefits of social business are
As usual in a nascent field, hard data on what’s actually happening can be difficult to come by. Fortunately, that’s starting to change. First, some useful data is now available through social business practitioner communities such as The 2.0 Adoption Council, whose members are perhaps the most representative of what’s taking place today globally with social business behind the firewall. Second, in-depth studies have begun to show that organizations that are connected together differently realize different benefits from the various types of social business activities. Finally, there are enough Enterprise 2.0 case studies (Google search) to do meta-surveys of them to mine them for patterns of adoption and usage.
None of this information was available until fairly recently, and it begins to point us to where the value will be for organizations as they begin the transformation to the next-generation of worker communication and collaboration. In other words, it tells us where social collaboration will thrive.
Taking all this into account, these seem to be the areas where social collaboration will find strong adoption:
- Certain industries have adopted social business faster. While virtually all organizations are adding social media to the way they interact within and outside their organizations, certain segments of the economy seem to either be more systematically organizations or earlier in their efforts. Using the latest global membership data in The 2.0 Adoption Council broken down by industry, we find that for large organizations it will be technology firms, financial services, manufacturing, and the healthcare as a whole that seems to be implementing social business most broadly. The first two are no surprise and has been the case since Enterprise 2.0 became a term, while the other two haven’t been on the adoption radar nearly as much. Utilities/energy, retail, and education round out the larger segments that seem to be adopting. While this is not scientific or outcome based, it shows at least where the activity has been happening thus far.
- Organizations that are fully networked and have a high information flow will thrive the most. The discussion around social business is, of course, more than just internal or external. It’s much more about a continuum of collaboration between all parts of a business. The newest McKinsey research on the specific benefits of Web 2.0 technologies in the enterprise breaks its finding down in a way that gives us special insight into where the value happens. Most notably, benefits are highest in organizations that have broken down the artificial wall between internal and external. Also, the leading benefit is clearly information sharing. In work environments where information is the most potent currency, such as knowledge workers (which are the backbone of the modern economy), therefore social business is most likely to provide the highest value.
- Environments that have had (often long-standing) unsolved business needs around information and collaboration. This first became evident in Jakob Nielsen’s meta-study of Enterprise 2.0 projects and has since become clearer in my studies of current case studies. Businesses have found that traditional forms of communication and collaboration such as telephone, e-mail, and in-person meetings have broken down. It is almost fashionable now to declare e-mail bankruptcy for example. As organizations become more global, more distributed, and tackle ever increasingly more complex business problems, the need for improvements in efficiency, productivity, and discovery of vital and timely information has become more urgent.
Of course, when it comes to collaboration, social business is now widely perceived as helping just about any kind of organization improve how it operates. But there are clearly areas where social collaboration especially thrives and this includes:
- Industries high in either knowledge work or critical/time-sensitive coordination.
- Organizations that are already networked across silos or receive outsized benefits from faster and better information sharing, discovery, and connectedness.
- Increasingly urgent, unmet business needs around better communication and collaboration.
It’s also clear that communication and collaboration itself is changing. As Dave Gray intimated above, businesses of the 21st century are becoming more self-organizing, adaptive, and less hierarchical in order to meet changes in their environments more quickly and in scale. Social business brings a mindset and a set of approaches that meshes with the large, global trends that are driving change in IT and business today.