A lot of companies congratulate themselves on having a "social media presence" — by which they mean a Twitter following and Facebook likes and a marketing plan that uses social networks. But some 70% of the extra profit to be made through social technologies has nothing to do with marketing. It's in areas of the company such as knowledge management, innovation, communication, and better integration with the supply chain.
Examples of enterprise social-technology use are cropping up all the time: TD bank relies on a social network for employee communication, and at Unisys, social communities provide specialized expertise to resolve technical problems.
The Dutch telecommunications company KPN implemented social media to strengthen employees' connections to others, but the technologies have taken on a life of their own, creating unexpected benefits in surprising places. One example: A team that was testing a new modem put out a call for help and got 170 volunteers to test the product and give the designers feedback. Another: During high-level internal discussions about worker salaries and pensions, the company's HR director, rather than put out the type of opaque statements that are typical in most companies, blogged about developments as they occurred, generating much positive sentiment among employees.
KPN shows how social technologies within the enterprise can create significant value by shifting communication away from one-to-one channels and toward one-to-many or many-to-many platforms. Because e-mails are private, the knowledge inside them stays under wraps, but when interactions happen on social-media platforms, work-related communications are visible to everyone. The McKinsey Global Institute estimates that this change alone can improve employee productivity by up to 25%.
But the vast majority of companies have failed so far to tap into these sources of extra profit, and even those that are using the technologies have generated only a small fraction of the potential value.
To get the most out of social technologies, known collectively as Enterprise 2.0, companies need to focus on two critical factors: integration and scale.
Integration. Too many companies have kept social platforms separate from their essential businesses. McKinsey estimates that only 6% of companies have truly integrated Enterprise 2.0 into the core. Even some tech-savvy companies have lagged on this. Consider Microsoft's Channel 9 software-community platform, where developers can watch videos and comment on them. This platform, which aims not only to provide information to developers who are Microsoft's customers but also to provide a forum where Microsoft can crowdsource innovative ideas, was built separately from Microsoft's core developer sites and at first wasn't integrated with them. But that separation from the core meant that Channel 9 was cut off from important resources, and as a consequence the site had poor stability and agility; without strong connections to teams running Microsoft's many other sites, the Channel 9 team struggled to scale up. It wasn't until the site was rebuilt using a Microsoft cloud platform that the site was finally able to cope with its increased traffic. The cloud platform allowed the site to be fully integrated into the core, and Channel 9 is now one of the web's most active software-development communities.
In some cases, companies keep social media separate from the core in order to prevent the technology from getting bogged down in corporate policies and procedures. That's a legitimate concern, but don't let a skunkworks social-media project get so far outside the mainstream that it can't make effective use of common platforms and other resources. In other cases, companies worry that social media will threaten the core. And yes, it's true that social technologies typically require companies to redesign core processes. But that's a good thing. For example, if you make crowdsourced innovation a core capability, you have to integrate it with marketing functions that take care of customers.
Scale. A company can generate significant value from social technologies only if they're used at scale. McKinsey has found that the typical ROI of any social technology becomes positive when 15% to 25% of employees are using it extensively. But companies shouldn't assume that "If we build it, they will come." Our surveys have shown that more than 50% of companies fail to achieve this level of penetration. Daily usage must be continuously stimulated and reinforced. That means high-level executives must use social technologies too and give them enthusiastic support. Companies must offer valuable incentives, and in my experience, the best incentives for social-media use are intrinsic, as opposed to financial. Help employees master the technology and encourage them to find their own sense of purpose in it. Like YouTube uploaders, they'll soon see the intrinsic value in contributing.
By integrating social platforms into the core and achieving scale, companies can fulfill the potential of social technologies. The result will be improvements in the "informal" aspects of the organization — the person-to-person connections through which work actually gets done. The improvements in collaboration, communication, and connection will contribute to helping the organization meet its goals.