A recent McKinsey Global Institute study, “The social economy: Unlocking value and productivity through social technologies,” concludes that social technologies could contribute $900 billion to $1.3 trillion in annual value to business.
"Two-thirds of this potential value lies in improving collaboration and communication within and across enterprises," with improved consumer focus and better-functioning teams as additional benefits.
The current crop of social media acquisitions, including Microsoft's acquisition of Yammer and Salesforce.com's purchase of Radian6, underscore large companies’ increasingly expensive quest for internalized productivity tools to better help them manage customers.
The most effective social technologies include wikis, instant messaging, content searches and user forums, and apply to several levels of employees from managers to sales representatives to engineers. The largest impediment to overcome, both organizationally and individually, is the embrace of a nonhierarchical ethos where acumen and information are shared rather than hoarded.
“The industries with the highest percentage of interactions workers have the highest spread of profits per employee,” said Michael Chui, an author of the report. “It’s low in mining, but can vary by nine times more in banking. If you can make these people more effective, you can make the biggest difference. These technologies are successful when influential people are role models, using them and explaining them.”
The McKinsey report focused on consumer packaged goods, consumer financial services, professional services, and advanced manufacturing to arrive at the estimated total annual value creation potential of $900 billion to $1.3 trillion, which breaks down to $345 billion from product development and operations; $500 billion from marketing, sales and after-sales support activities; and $230 billion from improvements in business support activities.
Companies with an abundance of knowledge workers, digital distribution platforms for products and services, and experiential or inspirational products or services can benefit the most; but merely reallocating advertising and consumer research budgets to social media is not adequate to leverage the inherent value of social technologies.
That will require "transformational changes in organisational structures, processes, and practices, as well as a culture compatible with sharing and openness… As with earlier waves of IT innovation, it could take years for the benefits to be fully realised, because these management innovations must accompany technological innovations. The greatest benefits will be realised by organizations that have or can develop open, non-hierarchical, knowledge-sharing cultures."
There are currently more than 1.5 billion social networking global users, with 70% of companies using social technologies and 90% of those reporting business benefits. The best news is the potential for jobs-creation well-suited to a millennial workforce for whom social technologies are second-hand nature.
As perceptions of social technology have evolved from a new media platform to an acknowledged and increasingly valued business tool, the overarching challenge is a new lexicon about and strategy for its widespread embrace to attain the trillion dollar pot of gold at the end of this social economy.
Julie LeMoine, CEO of 3D ICC, speaks of the “psychology of engagement” necessary for seeding a new social environment in an existing culture. “We need to think about 'smart harnessing' – ways to bootstrap interaction by creating social and collaborative scaffolding for others to more easily participate in discussions and activities that you’ve partially constructed.”
“When people enjoy their culture and work experience, learning is not viewed as something separate, as a chore that takes them away from getting their job done." Immersive collaborative experiences can help make people “blissfully productive,” LeMoine concludes.
The report underscores that social is a feature, not a product. At the end of the day, a company’s greatest assets and agents for change still ride down the elevator.