The Business of Social Business


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The Business of Social Business

  1. 1. IBM Global Business Services Social BusinessExecutive ReportIBM Institute for Business ValueThe business of social businessWhat works and how it’s done
  2. 2. IBM Institute for Business ValueIBM Global Business Services, through the IBM Institute for Business Value, developsfact-based strategic insights for senior executives around critical public and privatesector issues. This executive report is based on an in-depth study by the Institute’sresearch team. It is part of an ongoing commitment by IBM Global Business Services toprovide analysis and viewpoints that help companies realize business value. You maycontact the authors or send an e-mail to for more information.
  3. 3. IntroductionBy James W. Cortada, Eric Lesser and Peter J. KorstenSocial business represents a significant transformational opportunityfor organizations. Many companies, after initial forays into external social media, arenow realizing the value of applying social approaches, internally as well as externally.Social business can create valued customer experiences, increase workforce productivityand effectiveness and accelerate innovation. But many companies still wrestle with theorganizational and cultural challenges posed by these new ways of work. A new IBMInstitute for Business Value study, based on responses from more than 1,100 individualsand interviews with more than two dozen executives from leading organizations, revealshow organizations can use social approaches to create meaningful business value.The question surrounding social media today is not whether people Tweet regularly.1 Both companies and public sectoryou are doing it, but whether you are doing enough. Getting organizations are seeing the value of participating in the socialyour 100,000th “Like” on Facebook, or having your latest pearl world. According to public relations firm Burson-Marsteller,of wisdom retweeted 200 times an hour is all well and good, almost three-quarters of the Fortune Global 100 firms have abut are these activities driving revenue, attracting talent and presence on either Facebook or Twitter.2 Social has becomebridging the collaboration gaps in your organization? Is your mainstream and ubiquitous. It is no longer simply a “sandbox”use of social media allowing your organization to engage with for the under-30 generation.the right customers, improve their online experience and tapinto their latest insights and ideas? Does your social approach However, companies at the forefront are doing more thanprovide your customer-facing representatives with the ability developing a presence on major platforms. They are takingto search the globe for expertise or apply learnings? their external social tools and embedding them into core business processes and capabilities. They are using socialThe answers to these questions are essential as social approaches not only to communicate better with theirapproaches become the new norm. Today, roughly half the customers, but also to share knowledge with their suppliers,world’s population is online. Almost all of these Internet users business partners and, perhaps most important, theirare mobile. And their use of social media tools to shop, spend, employees. In short, they are rapidly progressing to a larger,and share insights is increasing. Facebook, for example, has more substantive transformation in how they work called socialreached more than 1 billion active accounts; LinkedIn is used almost every country in the world; more than 100 million
  4. 4. 2 The business of social businessWe define social business as embedding social tools, media, and Two-thirds were not sure they sufficiently understood thepractices into the ongoing activities of the organization. Social impact social business would have on their organizations overbusiness enables individuals to connect and share information the next three years. Executives are concerned because socialand insights more effectively with others, both inside and business represents a different way of thinking aboutoutside the organization. Social business tools facilitate employees, customers and how work is accomplished, as well asengagement in extensive discussions with employees, the potential risks of increased organizational openness andcustomers, business partners and other stakeholders and allow transparency.sharing of resources, skills and knowledge to drive businessoutcomes. Our survey and interviews reveal three major areas where organizations apply social business investments:Significant opportunities can await those who effectively applysocial business. Top-line growth for social business users can • Create valued customer experiencesimprove between 3 and 11 percent, according to a recent study • Drive workforce productivity and effectivenessfrom the McKinsey Global Institute, and productivity can be • Accelerate innovation.enhanced by between 2 and 12 percent.3To better understand how organizations are taking advantage Social businessof social business, the IBM Institute for Business Valuesurveyed more than 1,100 businesses around the world andconducted extensive interviews with more than two dozen Create valued Drive workforce Acceleratewidely recognized leaders in social business (see appendix, customer productivity and innovation“About the methodology,” page 14). These executives told us experiences effectivenesssocial business is gaining notable traction in their organiza-tions; 46 percent of the companies surveyed increased theirinvestments in social business in 2012, and 62 percent • Engage and listen • Increase • Capture new ideas • Build the knowledge from anyoneindicated they were going to increase their expenditures in the community transparency • Use internalnext three years. These increases will come across a wide range • Shift toward sales and velocity communities toof functions. Today, a majority of companies are applying social and service • Find and build innovate expertise • Enable structuredbusiness within their marketing (67 percent) and public • Leverage innovation effortsrelations (54 percent) functions. Areas expected to grow most capabilities beyondrapidly in social business adoption include customer service organizational boundaries(from 38 percent of companies today to 54 percent in the nexttwo years) and sales (from 46 percent to 60 percent). Enable the social organizationHowever, despite the intention to rapidly ramp up their social • Measure results • Address risk • Manage the changebusiness efforts, many companies recognize the potentialchallenges of such a transformation. Nearly three-quarters of Source: IBM Institute for Business Value.survey respondents reported they were underprepared for the Figure 1: Applying social business across the organization.required cultural changes.
  5. 5. IBM Global Business Services 3Creating valued customer experiences TD Bank, for example, one of North America’s largest retailAs today’s consumers become ever more technology enabled, banks with some 86,000 employees, wanted to find ways tofailure to communicate with them through the media they extend convenience and comfortable experience to social.6prefer can create an engagement gap difficult to overcome. Increasingly, customers were also trying to do more of theirC-level executives recognize this, which is why, in two recent banking by using social media tools. TD Bank decided to takeIBM C-Suite studies, the 2012 Global Chief Executive Officer customer service social by using Twitter and other socialStudy and the 2011 Global Chief Marketing Officer Study, platforms to listen, reach out and respond to customers insenior executives expressed a strong desire to use social media real-time. A team of 25 dedicated specialists across Northtools to understand customers and create experiences that America now monitor and engage in real-time 7 days a week,attract and retain them.4 Leading organizations are acting on 18 hours a day (6am to 11pm ET).these desires by focusing social resources and attention onthree areas: listening and engaging, building communities and TD further integrated this capability within its contact centersshifting toward sales and support. and its overall customer support strategy. The interactions range from inquiries and questions about products andListening and engaging services, to day-to-day banking and problem resolution. WhileCompanies recognize the value of interacting with customers many questions can be addressed directly on social, the team isin social spaces. From a sub-sample of individuals in our survey also empowered to transition conversations that require inwith experience in applying social business to customer issues, depth review or customer information to traditional channels60 percent are using social environments to answer customer like email or phone. This ensures a seamless experience for theinquiries and 78 percent are planning to do so in the next two customer. Incoming volumes continue to grow each quarteryears.5 More than half – 55 percent – are taking this even with the increase in awareness and engagement.further, soliciting customer reviews and opinions, and 79percent plan to follow suit within the next two years. Examplesof how organizations are applying social practices to effectivelyengage their customers are highlighted in Figure 2. Method of engagement Social capabilities Benefits Providing answers Provide self-service and agent-based support via social Improved response time; greater data capture; higher platforms when and how customers want to be con- customer satisfaction nected Mining conversations Capture and analyze conversations to determine cus- More effective marketing resource allocation; tomer sentiment, purchasing preferences and overall increased revenue opportunities market trends Crowdsourcing insights Customize products and services using online social Identify new offerings and trends with market potential tools and allow other customers to rank and review new designs Influencing influencers Work with individuals with significant followers to obtain Unearth emerging trends and increase word of mouth unique insights and gain mindshare promotion/salesSource: IBM Institute for Business Value.Figure 2: Social business provides multiple paths to your constituents.
  6. 6. 4 The business of social businessBuilding communities Shifting toward sales and serviceBringing like-minded individuals together to share thoughts, Social business is moving beyond basic promotional activitiesideas and experiences about a company’s products or services to encompass the entire customer lifecycle, including leadcan create valued customer experiences. To this end, many generation, sales and post-sales service. From our subsample,enterprises are using platform-based communities, such as our data reveals that, while the percentage of companiesthose found on Facebook and LinkedIn – as well as hosting expecting to use social business for promotional activities willprivate communities on their websites – to foster dialogue rise slightly, from 71 percent today to 83 percent in the nextamong customers and between customers and the organization. two years, the number of companies expecting to use socialWe have seen these in organizations that deal directly with approaches to generate sales leads and revenue will increaseconsumers, such as automobile companies and banks, as well as dramatically. Today, 51 percent use social approaches for leadsbusiness-to-business companies such as commercial insurance. and revenue, while 74 percent plan to get on board in the nextFor many, customer communities are becoming an integral two years. Post-sales support is also expected to increase, frompart of their service strategy. These communities address 46 today to 69 percent over the next two years.questions that would normally take time and resources within atraditional call center environment and also come up withunique solutions that the organization might not otherwise Uses of social business*have considered. Promote events/marketing campaigns 71%But, simply establishing spaces does not guarantee an active, 83%vibrant community. Four critical new work activities and Generate sales leads and revenuecapabilities are required to make customer communities 51%successful: 74% Provide product and services support1. A governance process to oversee the community’s operation 46%2. Recruitment, training and ongoing development of 69% community moderators Sell products directly to customers3. The development of a critical mass of external participants 35% 61% to influence the influencers and to promote the community4. The ability to quickly react to opportunities and challenges Today presented by customers, while seizing upon new business Next two years opportunities. Source: Institute for Business Value; Business of Social Business Study. *Based on responses from individuals having personal experience with customer-related social business activities Global (n = 599). Figure 3: Uses of social business.
  7. 7. IBM Global Business Services 5As the scope of activity broadens, so too does the number of Driving workforce productivity andtouch points with the organization, necessitating a consistent effectivenessset of customer experiences. Social business practices will need While customers are the primary focus of many companies,to be more closely embedded into traditional marketing and more are starting to incorporate social approaches into thesales processes, with loosely coupled marketing and advertising day-to-day activities of their workforces. As organizationscampaigns giving way to tightly linked lead generation and either expand globally or participate in global supply chains,sales efforts. Further, providing customer support through information and insights become scattered around the channels will become a more prominent focus, with Such knowledge as how to solve problems, handle exceptionsorganizations incorporating social platforms into their larger to normal processes and address local market conditions oftencustomer relationship management strategies. resides in widely separated, often unconnected repositories. Also, customers expect suppliers to understand past businessThe key capabilities companies will need to build to create transactions and tap into the collective expertise of thevalued customer experiences are summarized in Figure 4. organization to solve problems. These issues become magnified as companies continue to embed value-added services within their traditional products. Basics Leading edge Future state Engage with Develop organization-wide, Integrate insights from customer Design customized “storefronts” that are individuals and cross-functional approach conversations with purchase and usage aggregated from different retailers using social groups to listening and responding data to innovate and personalize information to customers offerings Build communities Pay attention to existing Initiate, host and nurture customer Incorporate communities into core customer communities communities to build engagement and organizational processes, e.g., sales, support, sponsored by outsiders learn from customers product innovation Shift toward sales Identify the areas of the Develop a social media strategy that Fuse the external company brand with the and service value chain where integrates relevant components of internal corporate culture to create a customers are looking to marketing, sales and service consistent customer experience at all touch interact via social channels pointsSource: IBM Institute for Business Value.Figure 4: Stages of creating valued customer experiences.
  8. 8. 6 The business of social business Finding and building expertiseApplying social business strategies and tactics within the As markets and technologies change rapidly, organizationsorganization and its surrounding value chain can play an recognize the need for individuals to continually update theirimportant role in: skills. As Lynda Gratton, professor at the London Business School notes, “You can’t expect that what you’ve become a• Increasing the transparency and visibility of knowledge master in will keep you valuable throughout the whole of your• Finding and building expertise career.”8 Lifetime learning has increasingly become a necessity• Collaborating outside the organization. – both for employees and their employers. To support this,Increasing transparency and visibility of knowledge organizations are building social practices into their formal andFrom our study sub-sample of those that have used social informal learning efforts as this can help reduce the time itapproaches to address workforce issues, almost two-thirds are takes to develop needed skills. Our research shows thatapplying social capabilities to find information and collaborate organizations are applying social capabilities to enhancemore effectively, with more than 80 percent expecting to do so learning through:in the next two years.7 Figure 5 shows a range of socialactivities organizations are taking to facilitate information • Sharing comments and insights on learning materialssharing and collaboration. Although specific industries are • Building teaming dynamics into learning situationscited, these activities are applicable across a broad range of • Using gaming techniques, such as rating and scoringenterprises. Industry Work process Social capabilities Benefits Chain restaurant Product development Provide front line managers with the Reduce product development cycle time and opportunity to comment on how customers are increased customer satisfaction responding to new offerings IT services Software development Provide collaborative spaces where Faster project delivery time with fewer software communities supporting common applications defects can post questions, respond to inquires, and locate experts Petroleum Engineering project Provide access to internal social tools and sites Improved functional excellence, lowered costs of management to collaborate with partners outside the firm operationsSource: IBM Institute for Business Value.Figure 5: Examples of work the social business way.
  9. 9. IBM Global Business Services 7 Collaborating outside the organization• Incorporating modern simulations methods to provide A critical trend identified by those firms we interviewed that practice and testing apply social business to workforce issues is the application over• Providing access to subject matter experts relevant to a topic the next two years of social approaches beyond organizational• Involving increasing numbers of experienced employees in boundaries. They are looking to improve coordination with teaching each other customers, vendors and partners, as well as leverage external• Using tools such as video and multimedia to capture attention talent, such as crowdsourcing (see Figure 6). Examples of this and improve retention include insurance companies working with independent agents• Tracking learning progress and effectiveness. and consumer products companies working with suppliers to coordinate on topics as diverse as generating sales leads andCollectively, these actions contribute to increasing organiza- improving production processes. Despite the fact that sometional knowledge and allowing learnings to be shared more companies we talked to were primarily focused on making surerapidly (see Case Study, “Boston Children’s Hospital”). that they got “collaboration right internally” before going outside the firewall, going beyond organizational boundaries will be an essential next step in the evolution of social business.Case Study: Boston Children’s HospitalThe Boston Children’s Hospital, a leading center for pediatriccritical care, recognized the need to build capability among, as Uses of social business*well as capture learnings from, physicians located in hospitals Enable customer interactionaround the world. Recognizing the need to go beyond 39%traditional physician education and conferences, the hospital 63%turned to social business practices to reinvent in part how Enable vendor/partner interactiontraining occurs. 28%The hospital developed a network of pediatric critical care 58%specialists to share their knowledge about leading practices Leverage external talent (e.g., crowdsourcing)and to educate medical students, residents and practitioners 24%from around the world. The hospital created a series of 54%learning modules, simulations and best practices guides to Todayprovide timely guidance, simulate hands-on experiences and Next two yearsimprove skills of its staff and students. It also embedded Source: Institute for Business Value; Business of Social Business Study.videoconferencing and information capture capabilities into its *Based on responses from individuals having personal experience withprocess to bring individuals together for face-to-face workforce-related social business activities (n = 362).connections. The network is regularly monitored by thecommunity of experts to provide insights to others and to Figure 6: Using social to collaborate beyond organizationalidentify leading practices from specialists around the world, boundaries.keeping the local staff current in pediatric practices.9
  10. 10. 8 The business of social businessUsing social approaches to improve how work gets accom- Accelerating innovationplished – increasing the visibility and transparency of Incorporating social capabilities into the innovation process isknowledge, finding and building expertise, collaborating another highly important factor. Companies report that socialoutside organizational boundaries – is clearly taking root in tools are making it easier to acquire new ideas from almostmany companies. The social business capabilities organizations anyone who touches their organization. Management andneed to apply to important work activities are highlighted in employees must be prepared to take advantage of new ideas,Figure 7. At the most basic level, management must provide an regardless of their source of origin. Additionally, we found thatinfrastructure to enable employees to set up collaborative internal communities are using social tools to fuel organicspaces. These systems need to be easy to access and use, innovations. They are also using social approaches to executeexecutives told us. Many individuals will only adopt new more structured innovation efforts that require senior manage-approaches if they don’t have to spend significant time and ment commitment to dedicate resources and follow up oneffort mastering these tools. insights gained from those events.Once in place, collaborative tools should be integrated in Sourcing new ideas from anyoneday-to-day work activities, projects, and processes. These Social tools have made it significantly easier to raise theapproaches make it possible for the rapid formation of ad-hoc visibility of new ideas, regardless of their source. Those whocommunities to work on specific problems and opportunities. have the most experience with a product or service – aThe organization must also create the capability to understand customer, a business partner or even an employee – now havewhere and how data generation could benefit the enterprise. the opportunity to share insights and obtain feedback fromFinally, management must teach its employees how to collabo- others. Our sub-sample of individuals with experience inrate effectively with individuals outside of the organization’s working with social approaches to innovation shows companiesboundaries, using policies, practices, social business methods are looking to increase their capability to monitor customerand tools. Basics Leading edge Future state Increase Create an infrastructure that Integrate collaborative tools in day-to- Mine social interactions to identify influence transparency and allows employees to set up day work activities, projects and leaders and understand future trends velocity collaborative spaces and processes individual profiles Find and build Apply social tools to Incorporate gaming capabilities and Deliver insights derived from social data to expertise important learning initiatives simulations into relevant work and individuals at the point of need learning streams Coordinate beyond Use social techniques to Apply crowdsourcing techniques to Incorporate social data to augment cross boundaries identify areas of augment the organization’s processes organizational processes and activities improvement from suppliers and skills and intermediariesSource: IBM Institute for Business Value.Figure 7: Stages of using social to drive workforce productivity and effectiveness.
  11. 11. IBM Global Business Services 9comments for new ideas, obtain customers’ feedback, enable Similarly, Beiersdorf, a personal-care products company, hascustomers to submit plans/solutions and foster more effective developed “Pearlfinder,” a website that allows potential vendorscollaboration with partners/suppliers (see Figure 8).10 Some to submit ideas for new products and services. The website alsoorganizations, such as toy company LEGO Group, have facilitates contracting and intellectual property transfer (seedeveloped innovation platforms that enable customers to Case Study, “Beiersdorf”). In both situations, the organizationsubmit ideas for new products and even share in the potential found ways of expanding its reach to develop valued newrevenue derived from these ideas.11 products, services and capabilities.Uses of social business* Case Study: BeiersdorfEnable more effective internal collaboration 57% Beiersdorf is a global manufacturer of skin care products. The 78% company wanted to better leverage the ideas of its businessMonitor customer comments for new ideas partners to enhance its ability to innovate. Besides other open 58% innovation tools and in addition to its standard innovation 78% networks with external partners, it created the PearlfinderObtain feedback from customers platform. Suppliers, universities, institutes, consultants and 46% inventors can submit ideas on this platform and work in 73% collaboration with Beiersdorf staff to refine the ideas andEnable customers to submit plans/solutions process, if both sides are interested in pursuing the idea. As a 40% prerequisite to enter the Pearlfinder community, the external 68% partner goes through a simplified contracting process, allowingEnable more effective collaboration between partners/suppliers an open exchange of ideas and requirements. 38% Beiersdorf has enjoyed successes in jointly developing new 72% products. Examples include development of a new shaving system with Phillips, as well as a number of ingredients Today manufactured in the hair and body-care space. The number of Next two years previously unknown partners interested in working with theSource: Institute for Business Value; Business of Social Business Study. company has increased, as well as the variety of external*Based on responses from individuals having personal experience with social partners who have approached the company with ideas.innovation activities (n = 446). Additionally, Beiersdorf has won a number of awards for this social business approach to innovation, increasing theFigure 8: Social business represents a wealth of opportunity for new company’s perception as a willing and desired collaborator inideas. the marketplace, while actually developing new products.12
  12. 12. 10 The business of social businessUsing internal communities to innovate online discussions, with polling and voting, to develop insightsInternal communities of practice have been recognized for around specific themes or challenges. Findings are posted,several years as hotbeds of innovation, bringing people shared with participants and selected for further development.together with similar interests and passions.13 Social tools are Hack Days, a newer way of using social tools, are short-termfurther amplifying the ability of these communities to develop efforts narrowly focused on developing a workable solution ornew and innovative ideas, refine them with the assistance of prototype within a defined window of time. Cross-functionalothers with detailed knowledge and publicize them around the teams work on an assignment with the intent of producing aworld. Much as we have seen with customer communities, usable, if not perfect, outcome.internal communities also benefit from community manage-ment that promotes the value of community, educates An example of a structured innovation effort was conducted bymembers on tools and community assets, facilitates interac- Citibank’s Global Transaction Services division, which wastions among community members and captures community looking to tap into the knowledge of individuals in the field tobenefits. validate its future strategy and identify growth opportunities. Citibank created a collaborative event, or Jam, that was open toCemex, a global building materials company based in Mexico, 25,000 people in 88 countries. More than 6,000 employeesis an example of an organization that uses communities to registered for the 55-hour event. The average participantjumpstart the innovation process. The company wanted to engaged in the dialogue for four hours. Following the event,expand its ready-mix concrete products into new marketplaces organizers used analytics to link different sections of thearound the world. Using an internal collaborative platform, discussion and mine comments for additional insight. Theemployees now can share ideas, suggestions and recommenda- power of the Jam included not only the ability to tap intotions. Communities of interest are formed to tackle challenges insights of front-line employees to validate future directionscommon to locations, marketplaces and skill sets. By using its and strategies, but also provided an outlet in which employeesin-house expertise, Cemex is able to achieve lower cycle times, felt their ideas were being heard and considered.15improve processes in real-time and reduce time to market bytwo-thirds.14 A critical practice for engaging participants in structured innovation efforts is understanding the potential audience.Enabling structured innovation efforts To get the most benefit, organizations will need to:Organizations are increasingly using social tools to enablemore structured innovation, ranging from social suggestion 1. Determine the number of participants needed to developboxes, to Jams, to Hack Days. With social suggestion boxes, new ideas and insightsindividuals contribute ideas on an ongoing basis. These ideas 2. Create enough diversity of experiences and perspectives toare routed to others able to evaluate their merits and take avoid groupthink and encourage innovationaction. Those involved in evaluating and developing ideas can 3. Bring relevant knowledge of context and expertise in therange from just a few employees to many thousands. problems and issues that need to be solved 4. Invite individuals willing to challenge the status quo andIn the case of Jams, sometimes tens of thousands of people assumptions to reach a deeper, more complete solutionaccess a social media tool, usually over the course of several 5. Provide motivation to participate, including internal/externaldays, to discuss a problem or issue and to develop solutions or recognition and requirements. These events are generally moderated
  13. 13. IBM Global Business Services 11Besides bringing groups together for organized conversations, Embedding social into your organizationsuccessful idea-generation efforts involve significant communi- Our survey and interviews have made one thing clear: thosecation before, during and after the process. Leaders in social organizations experiencing the most success in social businessbusiness clearly and broadly communicate the “big picture,” approaches know they have to make fundamental changes insuch as why idea generation is important and what is expected the way their employees worked across the entire enterprise.from participants. The enterprise must build trust by estab- To weave social business into the fabric of the organization,lishing ground rules and expectations, such as fully stating the three key issues must be addressed on an organizational level:scope, strategic importance and tactical challenges of theproblem, opportunity or issue. For management, this also • First, companies need to consider how to incorporate socialmeans being careful not to overcommit or to set unrealistic metrics into their traditional enterprises and processes.expectations. Showing respect for the time and ideas of • Second, they need to understand and manage the risksparticipants by providing clear, timely feedback about associated with social business.outcomes is fundamental to any social business culture. Finally, • Third, change management remains a critical requirement inone must act on the insights and promising ideas, overcoming embedding successful social business practices in aninternal cultural inertias (such as “it’s too radical”), publicly organization. But, the implication is also quite clear: socialrecognize contributors and report what was done as a result of business requires a unique application of traditional changethe event. management principles to influence corporate culture and performance.For those companies looking to use social approaches tojumpstart their innovation efforts, Figure 9 highlights anumber of practices that organizations should considerimplementing. Basics Leading edge Future state Captures new Identify specific opportunities Develop processes for collecting internal Mine social interactions to identify future ideas from anyone where new ideas could add and external innovations on an ongoing innovation needs and trends value to the business basis Use internal Build platform where internal Provide resources to moderate Identify potential community involvement communities to communities can come communities with the greatest strategic based on social contributions innovate together to share insights value Enable more Conduct ideation events Extend innovation events to the larger Embed innovation events and social data structured involving employees from stakeholder population into the ongoing product development innovation across the business processSource: IBM Institute for Business Value.Figure 9: Applying social approaches to accelerating innovation.
  14. 14. 12 The business of social business1. Using social data to make business decisions Successful companies identify potential exposures, proactivelyOur research uncovered that only about 20 percent of organi- involve the right experts and develop risk management plans.zations are able to define key performance indicators (KPIs) They think through their problems, understand regulatoryand track the return on investment (ROI) of social business drivers and their impact on the organization and ask questionsefforts. Those firms that could not do so found it difficult to about why a behavior is a risk and how to mitigate it. But, mostgain momentum with their social business initiatives, as important, they engage the key functional experts beforeuncertainty of results made many stakeholders reluctant to problems occur, from areas such as HR, Legal, IT, Communi-invest. Many of the companies that we interviewed did, at some cations, Finance and Risk. They find individuals who are notlevel, try to quantify their results, but also recognized that only willing to identify risk, but who also understand thetrying to justify social approaches based solely on cost savings opportunities that can be created based on what risks they findwas not sufficient. Rather, they either undertook pilot projects to be demonstrate the hard and soft benefits of social projectsand/or ran trials that compared the performance of individuals 3. Leveraging change management practicesor groups using social tools against those that did not. A dichotomy exists in many organizations between the senior executives who see the value in applying social capabilities andWe also heard from respondents that justifying the ROI of the managers who must embrace these capabilities as part ofsocial effort is only one potential use of social data. Analytics their day-to-day work. Our survey shows that while 48 percentcan make it possible for organizations to integrate social and of organizations indicated they have support from the C-Suite,traditional data sources to make more effective decisions about only 22 percent believed that managers are prepared tocustomers (such as who is likely to respond to what particular incorporate social business into their daily practices. Otheroffers) and the workforce (who are the individuals most likely researchers in this field have also identified the challenge ofto produce a valuable answer to a particular query). By getting the management layer to embrace social business. Asexamining the residual data from social activities, organizations Andrew McAfee, a Principal Research Scientist from the MITcan develop valuable insights not previously available. Center for Digital Business, stated in a Sloan Management Review interview:2. Managing social business risksThe use of social business tools, while promising a consider- When I talk to CEOs, they desperately want to hear the voices ofable upside, is not without risks. Respondents to our survey their customers, the voices of their employees…But I get the impres-and executives we interviewed cited a number of concerns, sion that there is a middle layer that traditionally has been the signalincluding attacks on their brands, legal issues, data security and processor, both up and down, and some of them don’t want to see thatprivacy, and unintended disclosure of company information. role go away.16While about half the companies do not yet have effectiveprocesses in place to deal with these, nearly a quarter say they Similar to previous transformations, such as process re-engineering,do, and another third have efforts underway. However, many of development of global supply chains and even the early uses ofour interviewees highlighted the importance of clear gover- e-commerce, social business requires a focus on assisting peoplenance in managing the wide range of social initiatives within in understanding the value of social initiatives, involving thetheir organizations. They also established policies for right stakeholders and providing the appropriate support andemployees to follow when engaging in social business and a motivation. Figure 10 explains some of these important conceptsgovernance structure for managing and monitoring enterprise- and discusses how they should be applied in the context of awide social business behavior. social business transformation. The list is long, but essential to implement.
  15. 15. IBM Global Business Services 13 Actions Activities Get people involved in using • Create hands-on opportunities to use new social business tools the tools • Provide one-on-one coaching and reverse mentoring and encourage leaders to model desired behaviors to signal social “permission”. • Capture success stories through use of social tools (e.g., wikis, blogs, video) Apply traditional change • Appoint a number of social business champions/subject experts to encourage and accelerate adoption management concepts to • Provide education about why this important and what the guidelines are for using social tools inside support transitions and outside the organization • Recognize desired usage and behaviors Incorporate social approaches to • Develop user narratives and scenarios of possibilities provided by using social approaches supporting the change • Use social networking approaches to identify and engage with influence leaders • Provide support to employees, partners, and customersSource: IBM Institute for Business Value.Figure 10: Managing social business transformations.Actions going forward Third, use social approaches to accelerate innovation.Whether your organization is advanced or just starting out, the Consider, “How can improved generation of ideas have theuse of social business practices is a transformation that can best most impact across our organization?” Ask: “How could webe thought of as a journey that leads toward new ways of better involve individuals outside the organization in ourworking. Our research and findings reveal three essential innovation efforts?”actions to be taken across the enterprise, from the CEO’s officeto the farthest corner of the organization. The case for why ever more organizations are implementing social business practices comes down to sustaining theirFirst, develop social methods and tools to create consistent and competitiveness and profitability in economies in which rivals,valued customer experiences. Ask yourself, “What approaches partners and customers are adopting new ways of conductingis my organization using to listen to and engage with business. More than simply using social media tools, we havecustomers?” Another question to ask: “How do my marketing, entered a new period of fundamental transformation in the waysales and customer service functions coordinate around social work is done at all levels of the enterprise and across all organi-initiatives?” zational boundaries.Second, embed social capabilities to drive workforce produc- For more information about social business, visittivity and effectiveness. To help stimulate your thinking,, “What areas of opportunity exist within our organiza-tion to improve collaboration through social initiatives?” Also: Be among the first to receive the latest insights from the IBM“How could we use social approaches to better connect with Institute for Business Value. Subscribe to IdeaWatch, ourkey stakeholders outside the organization?” monthly e-newsletter featuring executive reports that offer strategic insights and recommendations based on IBV research: Access IBM Institute for Business Value executive reports on your tablet by downloading the free “IBM IBV” app for iPad or Android from your app store.
  16. 16. 14 The business of social businessThe right partner for a changing world RegionAt IBM, we collaborate with our clients, bringing togetherbusiness insight, advanced research and technology to givethem a distinct advantage in today’s rapidly changing environ- 38% North Americament. Through our integrated approach to business design and 33% Europeexecution, we help turn strategies into action. And with 24% Asia Pacificexpertise in 17 industries and global capabilities that span 170 5% Latin Americacountries, we can help clients anticipate change and profit fromnew opportunities.About the methodology Company revenueThe IBM Institute for Business Value (IBV), in conjunctionwith Economist Intelligence Unit, conducted an online survey 46% $500 million or lessaround the world and across a dozen industries resulting in 10% More than $500 million to $1 billion1,161 responses to a detailed questionnaire. The surveys 15% More that $1 billion to $5 billionexplored how organizations viewed social business and 8% More than $5 billion to $10 billionharvested insights on customer, innovation, and workforce uses 21% More than $10 billionof social business methods and tools from individuals withpersonal knowledge in these areas. The IBV also drew uponfindings from IBM’s face-to-face interviews of several thousandsenior executives from around the world conducted in the past Titletwo years. 21% CEO, President, Business Unit LeaderIn addition, our researchers also interviewed 21 executives who 10% Exec Vice President, Senior VPare recognized leaders in implementing successfully social 12% Vice Presidentbusiness practices in North America, Europe, India and South 22% DirectorKorea as well as five who are just starting on their social 8% Managerjourney. We leveraged additional research and interviews that 27% Otherwe had conducted for earlier studies of social businessconducted in 2011. The IBV also teamed up with ProfessorJohn R. Wells of the Harvard Business School, an internation- Source: IBM Institute for Business Value, Business of Social Business Study, Region, Company revenue, Title; Global (n=1161).ally recognized expert on social business practices, to shape andconduct the research. Additionally, the IBV tapped into the Figure 11: Study demographics.large community of social business experts across IBM whoare implementing social business practices, developing tools,or conducting scientific and technological research related tothe topic.
  17. 17. IBM Global Business Services 15Authors AcknowledgementsJames W. Cortada is a member of the IBM Institute for We would like to thank the nearly four dozen executives weBusiness Value, where he has overseen or conducted dozens of interviewed around the world who generously shared theirstudies concerning government, health industries, economic time and insights with us. We also want to salute the nearly 100development and process reengineering. Jim has over 35 years IBM colleagues who also provided insight and support for thisexperience working with over a dozen industries in trans- project, and extend thanks to the Economist Intelligence Unitforming their organizations and practices. He is the author of (EIU) that also participated in the implementation of thisover two dozen books on managerial issues and about the project. We are deeply grateful to a few colleagues who spentbusiness uses of information technology. He can be reached at days, weeks and months supporting us as IBM project team: Stephen E. Ballou, Thibault Dauphin, NickEric Lesser is the Research Director and North American DeFilippis, Suchika Jain, Kathleen Martin, Jennifer A.Leader of the IBM Institute for Business Value, where he Okimoto and Shailesh K. Sinha. We would also like to thankoversees the fact-based research IBM undertakes to develop its Professor John Wells from the Harvard Business School for histhought leadership. Previously, he led IBM Global Business insights throughout the course of the project.Services’ human capital management research and thoughtleadership. His research and consulting has focused on a We would also like to thank the following individuals for theirvariety of issues, including workforce and talent management, comments and contributions: Saul Berman, Denis Brousseau,knowledge management, collaboration and social networking Matt Collins, Kevin Custis, Irene Greif, Douglas Heintzman,and the changing role of the HR organization. He can be Tushar Khosla, Catherine Lord, Scott Neuman, David Ransomcontacted at and Rawn Shah.Peter J. Korsten is the Global Leader of the IBM Institute forBusiness Value and is responsible for its widely acclaimed CxOStudy Series in which more than 15,000 CEOs, CFOs, CIOs,CMOs, CSCOs and CHROs were interviewed over the pasteight years in face-to-face settings in their own offices. He is amuch requested speaker on contemporary strategic topics andleading trends and can be reached at
  18. 18. 16 The business of social businessReferences 8 Dewan, Shaila. “To Stay Relevant in a Career, Workers1 Data based on various press releases from each social Train Nonstop.” The New York Times, September 22, 2012. media outlet in 2011 and 2012. 9 IBM Institute for Business Value interview.2 Burson-Marsteller, “Global Social Media Checkup 2012,” 10 Note: 38 percent of the total sample responded to having released August 15, 2012. http://www.burson-marsteller. had personal experience using social business to address com/innovation_and_insights/throught_leadership/ innovation issues. defeault_view 11 Yun Mi Antorini, Albert M. Muñiz, Jr., and Tormod3 “The Social Economy: Unlocking Value and Productivity Askildsen. “Collaborating with Customer Communities: Through Social Technologies.” McKinsey Global Institute, Lessons from the LEGO Group.” MIT Sloan Management July 2012. Review, 65, no. 3. Spring 2012.4 “Leading Through Connections: Insights from the Global 12 IBM Institute for Business Value interview. Chief Executive Officer Study.” IBM Institute for Business Value. May 2012.; “From Stretched to Strengthened: 13 Lesser, Eric and John Storck. “Communities of Practice Insights from the Global Chief Marketing Officer Study. ” and Performance.” IBM Systems Journal. Winter 2001. IBM Institute for Business Value. October 2011. 14 Sandy Carter. GET Bold: Using Social Media to Create a New5 Note: 52% of the total sample responded to having had Type of Social Business. Upper Saddle River. N.J.: IBM Press, personal experience using social business to address 2012: p.143. customer issues. 15 Lesser, Eric, David Ranson, Rawn Shah and Bob Pulver.6 IBM Institute for Business Value interview; Adams, John. “Collective Intelligence: Capitalizing on the crowd.” IBM “New Tool Helps TD Bank Speed Social Media Queries to Institute for Business Value. January 2012. Reps.” American Banker. September 9, 2011. http://www. 16 Kiron, David. “What Sells CEOs on Social Networking.” twitter-1042021-1.html Sloan Management Review. February 2012.7 Note: 31% of the total sample responded to having had personal experience using social business to address workforce issues.
  19. 19. © Copyright IBM Corporation 2012IBM Global ServicesRoute 100Somers, NY 10589U.S.A.Produced in the United States of AmericaNovember 2012All Rights ReservedIBM, the IBM logo and are trademarks or registered trademarksof International Business Machines Corporation in the United States, othercountries, or both. If these and other IBM trademarked terms are markedon their first occurrence in this information with a trademark symbol (® or™), these symbols indicate U.S. registered or common law trademarksowned by IBM at the time this information was published. Such trademarksmay also be registered or common law trademarks in other countries. Acurrent list of IBM trademarks is available on the Web at “Copyright andtrademark information” at company, product and service names may be trademarks or servicemarks of others.References in this publication to IBM products and services do notimply that IBM intends to make them available in all countries in whichIBM operates. Please Recycle GBE03525-USEN-00