Dion Hinchcliffe is a recognized expert in implementing enterprise systems, and will be speaking at the Dachis Group Social Business Summit 2010 on what works and what doesn’t inside the enterprise. He gave us a preview of his talk at the Summit.
What are the stakes here? What is the cost of not embracing and enabling social business approaches?
The rate of change in the business world has increased dramatically in recent years, while overall technological change has moved ahead even faster. Such is the pace that it’s been imposing a disruptive forward drag on enterprises for some years now. Combined with the dramatic adoption rate of social tools by consumers (most of the developed world now uses them), the emerging discipline of social business is starting to become ground zero in many discussions around the future of the enterprise.
What we’re seeing is that today’s work environment is moving towards an online one where the dominant communication model is social in nature, and therefore a different set of skills, techniques, and processes are required. As a result, it’s starting to become apparent that social business is a strategic new approach for organizations that are adopting or otherwise being impacted by social adoption of social tools and methods in the workplace, which is most of them at the moment. In particular, this includes Enterprise 2.0 and social media as applied to operating a business, which we are starting to collectively refer to as ‘social business.’
I’ve discussed the many emerging new digital business models in the past and it’s now apparent that the cost of not effectively adopting them can be significant. Not only can they reduce costs and significantly increase the quality of business outcomes, but there is a significant competitive factor as well. Companies that build closed, sustained, and engaging relationships with their customers and partners in a way that creates the most value for their participants will end up winning. And the lesson from today’s Internet is also clear: Those that have an early lead in social business market share have an inordinate advantage (also known as a network effect.). Finally, there’s also a transformational aspect to social business, in that it intrinsically changes the way that companies work from a overtly hierarchical one to a socially networked one that operates more efficiently and taps much more powerfully into the most important resources that exist on the network: people.
Leading organizations are beginning to explore this area. How long before the bulk of the Global 2000 begins to really focus on this?
One of the better data points on adoption is McKinsey’s global study of Web 2.0 adoption last year, which found that about “69 percent of respondents report[ed] that their companies have gained measurable business benefits, including more innovative products and services, more effective marketing, better access to knowledge, lower cost of doing business, and higher revenues.” This number seems high to me however, and I think most of this represents tactical value add right now. I think that most Global 2000 firms are still in the initial stages of incorporating next-generation approaches like social business for running their organizations. Therefore, I currently estimate it will take 5 years for most of the Global 2000 to accomplish significant transition to social business models, though the pace of adoption will continue to accelerate throughout this time period.
In terms of real business results (increased profits, decreased costs, higher customer retention) what have you seen?
There are starting to emerge some fascinating new data about the use of social business to drive better bottom line business results, both qualitatively and quantitatively. LG recently used online communities to design one of their new phone models at a cost of only $20K, compared to traditional design costs, which are usually a great many times this. Innocentive has been conducting community-based design of very complex business and technical problems for years, and of course open source software has been a social process from the beginning and has essentially disrupted an entire industry in the process. There are now hundreds of examples of social business models in use in product development, marketing, sales, line of business, customer service, and more that have driven good results. The major barrier to access these results however is in being able to change our thinking. Most businesses are not technology firms nor do they deeply understand the social business transformation that is taking place more broadly in society and culture. The firms that make a conscious effort to change themselves meaningfully, and not just in the silos of their Internet divisions, will be the organizations that are most likely to access real business results.
