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The Bulletin vol 4 issue 12 - Leveraging Social Business for Results: Moving Beyond Media
The Bulletin vol 4 issue 12 - Leveraging Social Business for Results: Moving Beyond Media
The Bulletin vol 4 issue 12 - Leveraging Social Business for Results: Moving Beyond Media
The Bulletin vol 4 issue 12 - Leveraging Social Business for Results: Moving Beyond Media
The Bulletin vol 4 issue 12 - Leveraging Social Business for Results: Moving Beyond Media
The Bulletin vol 4 issue 12 - Leveraging Social Business for Results: Moving Beyond Media
The Bulletin vol 4 issue 12 - Leveraging Social Business for Results: Moving Beyond Media
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The Bulletin vol 4 issue 12 - Leveraging Social Business for Results: Moving Beyond Media

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The Bulletin is a periodic newsletter from Protiviti offering detailed insights on corporate governance and related risk management issues. This issue of The Bulletin explores the implications of …

The Bulletin is a periodic newsletter from Protiviti offering detailed insights on corporate governance and related risk management issues. This issue of The Bulletin explores the implications of social business and its potentially disruptive shift for businesses, what it can mean in the marketplace from a marketing, corporate communications, reputation and brand image standpoint, and the risks it creates for organizations.

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  • 1. The Bulletin Volume 4, Issue 12Leve ra gi ng S o cia l Busin ess fo r Resul ts: M ovi ng Beyo nd Med iaSocial technologies are the subject of much discussion today. without precedent. Facebook is an example: The socialSome proponents claim they are using them to alter the networking site reached 1 billion active users in Octoberbusiness landscape, offering new ways to acquire, serve and 2012 – essentially doubling its user base in just two years.1retain customers. Others assert they can be used to buildinternal online communities that will facilitate improvement Social business is about leveraging social media to accom-of business processes, promote knowledge-sharing, and plish business objectives. It embeds social tools in manyprovide support for aspects of the culture management business processes, connecting people to people, people todesires to reinforce. Still others are skeptical, either claiming information and data to insight. Communities of employees,the buzz is all hype or resisting the trend altogether. customers, vendors and others dialogue with and through these tools, and the business engages them to share itsHowever one views the topic of social business, one point is expertise, innovate and strengthen stakeholder ties. Theclear: Business to consumer (B2C) and business to business highest-level objective is to move from managing customers(B2B) communications have entered a new era of people to to engaging customers. While tactical goals include increasingpeople (P2P) communications, providing an alternative model revenue, reducing costs and protecting corporate reputation,for connecting and interacting with markets, prospects and the primary focus has been deepening customer relationships.customers in the digital age, a model that places the customerin the driver’s seat in terms of dictating the conversation.Taken forward, this convergence of social technologies is a Ready or not, the social business train has left thepotential game changer that cannot be ignored. This issue of station. Leading firms are investing significantlyThe Bulletin explores the implications of this potentiallydisruptive shift for businesses, what it can mean in the more than their peers, each normally driven by amarketplace from a marketing, corporate communications, member of the leadership team who sees value propo-reputation and brand image standpoint, and the risks it sitions and social business objectives linked to thecreates for organizations. broader corporate strategy.Social Media and Social Business:What’s the Difference? A “social-enabled process” is a business process thatSocial media includes web- and mobile-based technologies becomes engaging and transparent because groups of peoplethat are used to enable interactive dialogue among organi- are able to contribute, impact and improve it continuouslyzations, communities and individuals. “Social” is a compen- over time. For example, a company inserts a communitydium of many highly accessible media – corporate blogs, voice into the product innovation process to enable thosevideo-sharing sites such as YouTube, social networks like with common interests to more quickly brainstorm and refineFacebook, microblogging tools such as Twitter, rating/review new ideas. Or a company deploys a social platform as asites, wikis allowing many authors to simultaneously edit dedicated customer service channel, enabling customersand create a source of knowledge, and crowdsourcing, themselves to take on some of the work answering questionsamong others – that leverage the power of Internet, Web 2.0 normally fielded by call centers.and mobile technologies to facilitate the creation, exchange,use and modification of user-generated content. The speedat which businesses are deploying these technologies is 1 “A Billion Users Raise Stakes at Facebook for Revenue,” by Somini Sengupta and Nick Bilton, The New York Times, October 4, 2012: http://bits.blogs.nytimes.com/2012/10/04/facebook-passes-1-billion-active-users/. 1 | protiviti.com
  • 2. Social Business: Why Bother? promote brands, maximize consumer knowledge of the existence and availability of the organization’s productsReady or not, the social business train has left the station. and services, and leverage customer experience andLeading firms are investing significantly more than their insights. Creating positive brand awareness is one of thepeers, each normally driven by a member of the leadership keys to promoting a product. When approached strategi-team who sees value propositions and social business cally, social media marketing focuses on the consumer toobjectives linked to the broader corporate strategy. These establish relationships and sentiment and, in so doing,leaders, regardless of their functional roles, are usually those inspires online conversations about the brand, which inbest equipped to persuade other executives to embrace turn improves brand recall, recognition and advocacy inchange and see the value propositions as well. Recognizing the marketplace.that social business is not a one-size-fits-all approach acrossbrands, business units and geographies, leaders watch their 2. Market and sell products and services – Expandingcompetitors closely and measure change in consumer behav- the reach of brand messaging through social tools is allior and top-line and bottom-line results to ensure they are about increasing consumer preference for a company’screating real business impact. brand over its competitors’ brands. As an organization builds community by developing relationships based on trust and incorporates social channels into its market- The speed and scale of consumers’ use of social tech- ing strategy, it grows customer loyalty, creating more nologies has exceeded that of previous technologies. Yet consumers likely to serve as advocates. The more trust today only 5 percent of all communications and content its fans and followers have, the more the company can expect consumer advocacy and promotion of its products use in the United States takes place on social networks. and services, spirited defense of its brand in negative exchanges or times of crisis, and dialogue that leads to insights that can drive (co-)creation of new product andThe most important impact of social business is on the service concepts. Social business provides tools to helpcommunity of customers. A survey of more than 3,000 companies build trust faster and more cost-effectivelyconsumers found that customers who engage with companies than ever. This higher-level relationship with customersthrough social media channels (a) spend 20 to 40 percent can generate leads, increase repeat and referral business,more money with those companies than other customers and facilitate forecasting and distribution of products.and (b) demonstrate a deeper emotional commitment to The cult-like following Apple has created for many of itsthe companies’ brands.2 Simply stated, the media of P2P products is a perfect example of this powerful word-of-communications is setting the terms for social business mouth marketing channel.interaction, requiring organizations to contribute timelyand authentic value-added content in an environmentwhere customers and other parties drive the dialogue andinfluence others, in effect forcing companies to talk with their The most important impact of social business iscustomers versus talk to them. on the community of customers. A survey of more than 3,000 consumers found that customers whoIf organizations choose not to harness the power of socialnetworking with customers, they risk becoming laggards as engage with companies over social media (a) spendthey cede to competitors the ability to brand their products 20 to 40 percent more money with those companiesand services distinctively in the public eye. Competitors will than other customers and (b) demonstrate a deeperalso obtain continuous product and process improvement emotional commitment to the companies’ brands.insights the organization might not obtain until it is toolate. A company with an effective social-enabled customerengagement process in place may discover it is an effectivetool for reducing risk in a rapidly changing environment 3. Develop customer collaboration – Used to developbecause it draws the company closer to the customer. personal connections and engage in dynamic dialogue with customers to provide practical “just in time”Social Business: How Can It Be Used? execution, social business forges a unique collaborativeWhile we acknowledge the versatility of social business and partnership with customers that offers a powerful sourceits potential for many applications, we see five primary ways of insight into their behaviors and issues. While socialfor organizations to deploy it: business might apply more directly to product-producing companies, its applicability to service companies should1. Manage brand awareness – Brand awareness is all not be underestimated. As part of a broader customer about leveraging forums provided by communities to engagement strategy, social business can provide an effective and efficient marketing, sales, service and reten-2 “Putting Social Media to Work,” by Chris Barry, Rob Markey, Eric Almquist and Chris tion tool that increases customer satisfaction levels and Brahm, Bain Brief, September 12, 2011: www.bain.com/publications/articles/ putting-social-media-to-work.aspx. 2 | protiviti.com
  • 3. can reduce call center costs. Conversely, the transparency management what needs to be improved. Harnessing provided by social technologies and the superior value as the knowledge and insights dispersed throughout the perceived by consumers will enable them to become more employee base presents an opportunity for employee discriminating in procuring products and services that communities to improve collaboration throughout the best serve their needs. organization, generate and share ideas, coordinate customer interactions and foster more effective4. Develop and enhance products and services – Social client communications. business can provide a rich source of needs, complaints, ideas and suggestions direct from a company’s lifeblood: When effectively implemented, social business is a versa- its customers. As a form of market research, such informa- tile concept. As noted above, there are innumerable tion can provide real-time insights into what customers applications of social business. These applications are need and may detect emerging industry trends. Effectively summarized using the graphic provided in Figure 1. Social harnessed, this market intelligence can lead to improved business can be leveraged to enhance such areas as talent products and services, innovative solutions and reduced acquisition, competitive intelligence, corporate communica- time-to-market through parallel co-creation efforts in tions, public relations, crowdfunding, driving sales leads, product development and market acceptance. The result: generating repeat/referral business, and supporting Operational effectiveness that translates into increased forecasting and monitoring activities. In addition, social- sales and more-focused product development processes. enabled processes can take a company to a higher level of performance and improved standing in the eyes of its5. Improve operational effectiveness – While customer customers, suppliers, competitors, employees and other relationships are the lifeblood of any company, its stakeholders with whom it engages. employees provide the energy and drive to deliver exceptional results. Often, employees know better than Figure 1: Social Business Process Advancement Business Established Business Value Social Business Process Strategy Point Strategy • Image and messaging controlled by • Leverage forum provided by communities Manage the company to promote brands, inspire conversation and Brand Establish leverage customer experience and insights Awareness Client Relationships Market and • Marketing driven through • Develop relationships based on trust – social Sell Products established/familiar channels channels incorporated into overall marketing Develop and Services Client strategy [including (co-)creation of products, Relationships forecasting, distribution and promotion] Develop • Interaction through email and telephone • Develop personal connections Customer • Barriers to sharing intellectual capital and engage in dynamic dialogue with Deepen Partnerships practical “just in time” execution Client • Learn customer behaviors Relationships Develop and • R&D budgeting • Collaboration leads to innovative solutions Enhance • Siloed product development • Reduce time-to-market through parallel Products and • Linear testing process Drive efforts in product development and Services Operational market acceptance Effectiveness Improve • Reactive and ad hoc interactions • Foster employee community to improve Operational • Dispersed availability of and access to collaboration across the organization, generate Effectiveness knowledge, ideas, resources and and share ideas, coordinate customer intellectual capital Optimize interactions and communicate with clients Workforce 3 | protiviti.com
  • 4. Social Business: Making It Real While we don’t know for sure what social technologies and platforms will exist in five years’ time, the focus is not aboutAccording to the McKinsey Global Institute, there are more tools, technology or community engagement. It’s aboutthan 1.5 billion users globally who have an account on a transforming processes to enhance business performance insocial networking site. It is a fair bet that this number will actionable and measurable ways. Therefore, the tools andcontinue to rise in the future. More importantly, 72 percent of technologies may change, but the objectives and focus willcompanies participating in a McKinsey survey report using not. The traditional direct approach to engaging customerssocial technologies in their businesses. Of those, nine in 10 one-to-one is expensive and slow compared to cheaper andcompanies report getting some business benefit from them.3 faster content-based social media engagement. However, social media engagement doesn’t drive trust-based relation- ships that create customer loyalty and advocacy. Relationship-based community engagement is the real goal, a cost-effective and faster way of engaging a Using customer engagement as a context, there community of customers that leads to friendship and are five levels of social business relationship maturity: results-oriented collaboration. Initial, Repeatable, Defined, Managed and Opti- mized. The organization should recognize that everyThe real message is that there is still substantial untapped bit of investment in social should be tagged towardvalue in social business. For example, the productivity of moving relationships along this continuum. If not,highly skilled professionals, managers and salespeople canbe improved by as much as 20 to 25 percent by some the investment is wasted.estimates. These employees have been relatively immunefrom productivity-enhancing technology in the past. Givingthem closer and more timely access to customers and Relationship-based community engagement is the real goal, aemployees can change that.4 cost-effective and faster way of engaging a community of customers that leads to friendship and results-orientedSocial business is not one-size-fits-all. The extent of its collaboration. This transformational process of developingdeployment may be driven by the organization’s business relationship-based communities requires a comprehensivemodel and industry, competitors, the resiliency of its customer engagement strategy, a disciplined approach toculture, the nature of its products and services, and regula- executing the strategy, and a clear view of the roadmap leadingtory and cost constraints. In the end, each company needs to the desired social business maturity of relevant processes.to determine its own best fit in deploying social businessand implement processes for continued evolution in Using customer engagement as a context, there are five levelssocial engagement. of social business relationship maturity: Initial (create brand awareness), Repeatable (increase brand interest), Defined3 (engage communities), Managed (inspire advocacy) and T he social economy: Unlocking value and productivity through social technologies, McKinsey Global Institute (Michael Chui, et al.), July 2012, page 25: Optimized (achieve return on investment [ROI] objectives). www.mckinsey.com/insights/mgi/research/technology_and_innovation/ the_social_economy.4 Ibid., pages 35, 44 and 45. Figure 2: Social Business Relationship Maturity Initial Repeatable Defined Managed Optimized Encounter Recognition Engagement Friendship Collaboration Awareness Awareness Understanding of Contextual Trust Forgiveness Resonance Compatibility Contextual Loyalty Advocacy and Brand Interest Piqued Interest Contextual Advocacy Defense Acknowledgement Universal Trust of Relationship Universal Loyalty 4 | protiviti.com
  • 5. As noted in Figure 2, at the Initial stage, the focus is on Qualitative metrics at this stage might include effort spentencountering customers to broaden brand awareness. At the learning, effectiveness of training and effort building initialRepeatable stage, the organization seeks to create brand properties. In advancing to the Repeatable stage, quantita-recognition and recall by driving awareness, resonance and tive metrics might include number of links visited, numberbrand interest among its customers. At the Defined stage, the of inquiries and responses, number of downloads, andgoal is engaging customers to enhance their understanding of number of issues and problems. Qualitative metrics couldproducts and services that are compatible with their interests include types of content that drive the most interest andand needs, create piqued interest and gain evidence of employee activity and use patterns. The point is that there iscustomers acknowledging their relationship with the company. a progression in the metrics used as the relationship maturityAt the Managed stage, the organization seeks friendship by of processes advances. Importantly, executive leadershipdriving contextual trust, loyalty and advocacy. Finally, at the support must be visible and involved in managing towardOptimized stage, the emphasis is on achieving the deepened expected results, or nothing happens.relationships leading to forgiveness of mistakes, advocacyand defense, as well as universal trust and loyalty. As maturi- To advance their social business maturity, companies need aty improves, ROI from a revenue and cost-savings standpoint tried and trusted framework to undertake an organizedimproves – as relationships are strengthened. approach to building community instead of an ad hoc “trial and error” approach. To roll out successful communities fasterThe organization should recognize that every bit of invest- and sustain them over time, whether they be external outpostsment in social should be tagged toward moving relationships such as Twitter, Google+ or Pinterest, or internal ones such asalong this continuum. If not, the investment is wasted. The Chatter, SharePoint or Connections, eight processes (seecompany should determine its current state of maturity, set Figure 3) underlying an enterprise’s social business compe-realistic goals for advancing it, define measurable objectives tency must be addressed.5 A framework to evaluate systemati-to accomplish those goals over time, and measure perfor- cally the strength and maturity of the processes can be usefulmance using qualitative and quantitative metrics to report on for benchmarking an organization’s capabilities. Such athe progress of process maturity advancement against framework is illustrated below.established targets and milestones. 5 These eight processes are: (1) Develop and Communicate Strategy, (2) SustainTo illustrate, quantitative metrics at the Initial stage might Leadership, (3) Promote Culture, (4) Manage Community, (5) Refresh Content andinclude number of followers, number of friends, number of Programming, (6) Enforce Policies and Governance, (7) Deploy Tools, and (8) Measureposts, number of tweets and number of policy violations. and Report. Figure 3: Community Maturity Model * Community Process Maturity Benchmarks Management INITIAL REPEATABLE DEFINED MANAGED Processes Develop and Familiarize Participate Build Integrate Communicate Strategy and listen Command Sustain Leadership Consensus Collaborative Distributed and control Promote Culture Reactive Contributive Emergent Activist Defined roles and Integrated roles Manage Community None Informal processes and processes Refresh Content Formal Some user- Community-created Integrated, formal and Programming and structured generated content content and user-generated Enforce Policies No guidelines Restrictive Flexible Inclusive and Governance Consumer tools Consumer and Mix of consumer “Social” functionality Deploy Tools and enterprise tools used by individuals self-service tools integrated throughout Measure Activities Behaviors Anecdotal Activity tracking and Report and content and outcomes* Protiviti teamed with The Community Roundtable and adapted the Protiviti Community Maturity Model presented herein by defining processes and maturity levels relevant to establishing and sustaining community. 5 | protiviti.com
  • 6. As organizations advance the maturity of their community • Effect on human resources – Social media presents bothmanagement processes, they move their cultures away from a opportunities and threats as it not only provides a channelpurely defensive posture, become more proactive in setting for recruiting employees, but also for having the compa-corporate goals for social business (e.g., revenue building, ny’s employees recruited by competitors.cost savings, etc.) and align their investments with metrics • Inability to manage the generational divide – Many compa-that matter. The result: More customers are engaged, and nies are challenged in understanding how young peopleonline internal communities are strengthened. are using these new technologies, making it difficult to create effective marketing campaigns that tailor specific content that is effective in reaching targeted customers. Companies should formulate a comprehensive social • Safety loss – Release of information about the activities business strategy ... and measure change in consumer of someone within the company or sharing information behavior and top-line and bottom-line results to en- related to these activities can create the risk of outsiders sure they are creating real business impact through using that information to the detriment of employees’ personal safety. social business. • Competitor risk – Choosing to rely primarily on tradi- tional marketing practices and other forms of customer communications and collaboration may risk loss of marketPay Attention to Emerging Risks share to competitors exploiting the insights social mediaWhile social business developments are presenting signifi- generates. Smaller startups and certain high-tech compa-cant opportunities for companies to connect with their nies have found social media to be indispensable to theircustomers and others, they are creating a whole set of new evolution and are leveraging the technology to reachissues for businesses. Following are examples: customers and markets despite having very few employ- ees. This could present a disruptive threat to larger, more• Loss of IP and sensitive data – Board members and execu- established competitors if they ignore the implications tives have concerns about security-related risks arising of social media in focused market niches that can be from deploying social media in the business and want to exploited by new entrants and more nimble peers. Social understand how their organizations are addressing the technologies extend the disintermediating6 power of the risk of inappropriate release, leakage or theft of informa- Internet to disrupt established business models. tion strategic to the company, and exposure of company networks and systems to viruses and malware.• Compliance violations – In social media, there are risks of Each company will need to assess the risk of social communicating data and information that violate applica- ble laws and regulations – including infringement of trade- business and determine appropriate methods to moni- marks and copyrights, data security issues, employment tor and, if necessary, mitigate the risks. The bigger issues, violations of privacy rights, and mismanagement risk could be not using social business at all. of electronic communications – that may be impacted by retention regulations or e-discovery requirements.• Reputation loss – Because consumer opinions can spread • Brand hijacking – On the Internet, there is always risk that quickly through social media, companies need effective customers and prospects will be revealed to a fraudulent response plans when a crisis occurs. Self-inflicted reputa- third party hijacking the company’s brand without the tion damage may result from inappropriate employee company’s knowledge. Such fraud includes the unauthor- behavior, setting unrealistic product or customer service ized use of company names and logos, as well as product expectations, rogue tweets of inappropriate messages counterfeiting and other misrepresentations. Some intended for internal or personal use, or inability to companies have engaged third parties to report all uses measure up to the openness, straight talk and transpar- of and references to their organization’s names on social ency expected by customers and prospects seeking to media/Internet sites with the intent of using this informa- engage. Customers or other parties can use social media tion to align various aspects of their business to address to say negative things about the company. If the company complaints, as well as customer and employee satisfac- doesn’t engage or is not paying attention, it won’t be able tion issues. to manage the potential fallout – and necessary improve- ments to products and processes may be overlooked.• Financial disclosures – Employees involved in implement- ing social business enhancements must be mindful of 6 avoiding commentary on company performance that could As defined by McKinsey on page 19 of its 2012 study, The social economy: Unlocking value and productivity through social technologies, “disintermediation” is the force impact the stock price or violate insider trading, “quiet that has disrupted bricks-and-mortar stores in music and book sales and travel agents period” and other rules under applicable securities laws. in airline booking to the masses. 6 | protiviti.com
  • 7. • Poor management of social media community forums – Summary What if an organization creates a social media presence The speed and scale of consumers’ use of social technolo- but no one participates? What if the organization is unable gies has exceeded that of previous technologies. Yet today to: sustain momentum in being responsive to or engaging only 5 percent of all communications and content use in the with customers; scale up operations once interest takes United States takes place on social networks. Capturing the hold and traffic increases; or stem the tide of off-topic full potential from the use of social technologies will require conversations or rude, belligerent exchanges? What if transformational change in organizational structures, there are personal remarks made by an employee or processes and practices.7 friends of an employee that could be viewed by others? Companies should formulate a comprehensive socialThe above list of business risks is not intended to be business strategy, including a policy defining acceptableall-inclusive or suggest that companies not use social outlets − and what can and cannot be shared on them. Theybusiness. Each company will need to assess the risk of should consider their own social media network inside theirsocial business and determine appropriate methods to firewall, manage the security issues, and train their peoplemonitor and, if necessary, mitigate the risks. The bigger risk in all things social to both leverage the opportunity andcould be not using social business at all. Other risks may reduce risk to an acceptable level. Most importantly, theyarise due to a company’s specific situation and use of social should measure change in consumer behavior and top-linebusiness, highlighting the need for organizations to include and bottom-line results to ensure they are creating realsocial business capabilities in their risk assessment and business impact through social business.management efforts. 7 Ibid, pages 2 and 4. Want to Know More? Social technologies are creating opportunities to acquire and serve more customers, often at lower cost. Protiviti helps organizations create social business strategies to engage – not manage – their customers. We also help companies build internal communities that improve their business processes. For example, our Customer Engage- ment Model depicts how financial services customers interact with an institution. Evaluating the success of each channel, including social and mobile, against the value each delivers to the customer helps the institution see opportunities to preserve and grow its business. As social media presents real opportunities and risks, it demands a disciplined approach. We help companies benchmark their current state of social business to what others are offering and work with them to build a plan with established goals and metrics to advance their social business capabilities to the next level in accordance with the expectations of community managers, executives and board members. See www.protiviti.com/socialbusiness for more informa- tion on how we can help. Protiviti is not licensed or registered as a public accounting firm and does not issue opinions on financial statements or offer attestation services. 7 | protiviti.com © 2012 Protiviti Inc. An Equal Opportunity Employer PRO-1012

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