CEOs, Social is not a Fad. It has economic value too, possibly $1.3 Trillion

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Earlier this year we heard from Gartner’s survey that Social Media is not a high priority item for the CIOs in 2012 though it did seem that their high priorities were all affected by Social to a large extent. Top most priority was Collaboration / Workflow.

Late last month we heard via HBR that most organizations still fear Social Media. This was immediately followed by a post in HBR about results from a survey on why CEOs must use Social Media:

“Corporate leaders — and especially large company CEOs — are finally realizing what their employees and customers already know: That using social technologies to engage with customers, suppliers, and even with their own employees enables their companies to be more adaptive and agile.”

And now McKinsey tells us that there is in fact economic value in using social technologies in the organization and there is a number too: up to $1.3 Trillion.



Source: McKinsey Global Institute Report

No, they are not talking about the valuation of the various companies in the social technology industry, which is quite impressive in itself given the spate of acquisitions here (and smells of a bubble). Rather it is about the economic potential that lies in the productivity increase across the value chain.

Two-thirds of this potential value lies in improving collaboration and communication within and across enterprises. The average interaction worker spends an estimated 28 percent of the workweek managing e-mail and nearly 20 percent looking for internal information or tracking down colleagues who can help with specific tasks. But when companies use social media internally, messages become content; a searchable record of knowledge can reduce, by as much as 35 percent, the time employees spend searching for company information. Additional value can be realized through faster, more efficient, more effective collaboration, both within and between enterprises.

Hotlinked from Brian Vellmure

But it is not something you achieve by merely deploying a social media platform, a Facebook for the intranet. While there are variations in the values realised by industry as well as sources of value, it is clear from the survey that to achieve the full potential there are other aspects the businesses must not forget.

To reap the full benefit of social technologies, organizations must transform their structures, processes, and cultures: they will need to become more open and nonhierarchical and to create a culture of trust. Ultimately, the power of social technologies hinges on the full and enthusiastic participation of employees who are not afraid to share their thoughts and trust that their contributions will be respected. Creating these conditions will be far more challenging than implementing the technologies themselves.

I said last year, when my focus was on predicting spread of innovation, adoption of social tools for collaboration requires sharing. And now we see sharing is required to unleash the economic value too.

Also, it seems creating a Culture of Sharing is not the only change required in an organization:



Unfortunately, the social technologies themselves are at such an early stage that it is not possible to share across the platforms in a manner that facilitates conversations, like email does. Of course emails were pretty incompatible too when they started out. As I said in a post last year about the privacy of the social customer, there are a lot of technological advances that are yet to be made. Interoperability, data portability, personal information stores, open standards|protocols|formats, a lot is yet to be done in the social technology industry. And I don’t see any vendor sweating about these yet.

The key change required to unleash this economic value of social technologies is Sharing. Wonder where will we see the next iteration? In the culture or in the technology? Whose turn is it now? What do you think?

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