Experience Management Blog

The evolution of business

The social business movement appears to be in full swing. Over the past weeks, I have read time and time again that 2012 will be the year of social business (Business Computing World, SXSW, We are social). In terms of awareness, I totally agree; in terms of achieving our goals, perhaps that is too ambitious in such a short time period.

I believe that the notion of 2012 being the year of social business is rooted in a misunderstanding of what social business actually means. I do not intend to go down the slippery road of trying to create a definition.. Instead, some time ago I presented four concepts that highlighted the differences between traditional businesses using social media and social businesses. Judging by the comments it received it did a decent job at explaining what a social business is. Now, almost a year later though, I realise that it failed to show the evolutionary process required to move from a traditional business into a social business.

a not-so-perfect bell curve representing the evolution of business

Picture credit goes to my colleague Giulio Martinelli

In my view, pure disconnected and social businesses represent the extremes of a continuum. To date they only exist in theory. In between you can plot any business on this planet. As the continuum suggests there is no such thing as ‘THE’ social business. It is not black and white but offers shades of grey. As time goes by we will see more organisations moving closer towards adopting characteristics of a social business and thus changing the way business is done in a connected world.

Traditional businesses with a traditional business mindset

In the past years organisations started to experiment with social tools inside and/or outside their firewall. Many of them created corporate presences on social networks adding these channels to their more traditional communication channels without changing their business attitude. Success? None! The failure was / is devastating and a true shock to the system. Nonetheless, most organisations can still be found in this category – traditional businesses with a traditional business mindset. No matter which channels and tools these organisations use, let them be social or not, these companies haven’t freed themselves from 20th century thinking yet.

Traditional businesses with a social business mindset

Forward-thinking and agile organisations have learned that in a connected world, business-as-usual is no more. They understand they need to listen to, engage and connect with the marketplace. That is why we now see HR departments connecting with potential talent on Facebook, Customer Service departments helping clients on Twitter or Business Development departments putting out thought-leadership pieces on the company blog. I call these organisations traditional businesses with a social business mindset. These are not social businesses.

I assume and would hope that this comes as surprise to many. Let there be no doubt: arriving at this level is for most organisations a huge challenge and already an amazing achievement. The way to here is long and thorny, but the rewards are plenty. However, compared to what could be these rewards might be rather small. The main problem is that at this level corporate functions still own the connections. This simply does not scale.

From disconnected to social business

Picture credit goes to my colleague James Bray

Social Business

A social business is a truly connected business. It connects its employees with each other and them with the marketplace. Corporate functions are now part of the networks rather than owning and controlling the relationships. In my view, a social business creates intimacy at scale by democratising roles and responsibilities and encouraging employees to build their own brand (no, this is not a definition).

Intimacy at scale
How many connections can a HR department have with graduates, experienced hires or alumni? Do you think the HR department can ever have as many or more close relationships with their network than employees have with theirs? How well do social business efforts of a HR department scale compared to the company’s employees?

What can be said for the HR department is also true for other corporate functions like Marketing or Business Development and even R&D. Using your employees’ networks rather than relying on just your corporate functions will have a much greater impact on your business. This has fundamental impact on organisations’ social business strategy and programme!

Democratising role & responsibilities
To achieve intimacy at scale, corporate functions need to forego some of their control. (Did someone say ‘trust is cheaper than control’?) It is inevitable. We have already seen it in some pockets of organisations. For example, some companies have implemented new collaboration and communication tools. Users do not have to go through IT anymore to set up a group or community: they simply create a group and invite others. Open innovation approaches have been adopted by some companies saving the central R&D department considerable amounts of money. Some managers have adopted an open leadership style openly discussing decisions and gathering feedback from employees. Experience shows that this does not end in anarchy. IT, R&D, Management and so on provide the boundaries within employees and others can engage. However, corporate functions that have traditionally been outward-facing have shied away from the idea of democratising their role and responsibilities. In a social business, this will change.

Encouraging employees to build their own brand
This may be true only for certain industries such as professional services. In this industry especially, people are the most significant asset: the industry is about people, their knowledge and relationships. If you want your employees to participate in social media, do not make it about the company, make it about them. People are selfish. Help them understand how they can use social media to build their own brand under the company’s umbrella. If they have the means to build their own networks and enjoy working for you, they will help to show the human face of your company, will be willing to amplify corporate messages and even give it a relevant spin for their connections and networks. After all, your employees should be your greatest advocates. As companies evolve, we are beginning to see organisations not only encouraging their employees to engage on social networks, but expecting them to do so. (see Grant Thornton UK Social Media Policy Video [Disclaimer: Grant Thornton UK is a Dachis Group client. The video was created by Grant Thornton UK, not Dachis Group]).

When we look at the characteristics of a social business, we will need to answer new questions. Do companies need to incentivise or even reward employees for engaging in social channels? If every employee is expected to become a customer service agent, how do companies organise for this scenario? Do job descriptions for roles in a social business need to be altered? Can employees with large networks ask for a higher salary? Do employees indeed identify with their company and are they true brand advocates? These and many other questions will need to be answered, as organisations move to become true social businesses.

Starting to adopt a social business mindset and engaging with the marketplace is a first step in the right direction. However, it’s not the end of the journey! As businesses evolve, we will see true transformation supported by organisational design, change management and process reengineering expertise. If you are heading up a company or corporate function and are seeking to create (social) business strategies, ask yourself or your consultancy, whether they scale. If they don’t, you may be missing a trick.

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  • Paul Thomas

    “Using your employees’ networks rather than relying on just your corporate functions will have a much greater impact on your business.”

    Absolutely.

    In a conversation about alumni yesterday, I asked a question about the value to me of joining a firm alumni programme, when I already have personal networks covering all my previous roles and connections. What else can the firm offer to me? I wonder if in our business (and thanks for the nod by the way) everyone values their networks in the same way.

    If they do, then those networks surely become collateral and as much a part of what an individual brings to the firm as the experience on their cv. That should be tapped into.

    Good post.

  • http://connaxions.wordpress.com Martin Risgaard

    Very nice post – many valid points.

    ….but what are you trying to show with the first figure? Looks like once you move to social business, you have no business…

    • Christoph Schmaltz

      Good question, Martin. I have left out the y-axis, which may have caused the confusion. The y-axis reflects the number of businesses. I believe the majority of businesses are still in the second category of the evolution. Very, very few businesses have reached the social business category and even those that have are just at the very beginning.

      As time goes by businesses will evolve and we will see the curve moving to the right towards social business. The number of businesses in the first and second category will reduce whilst the number of businesses in the third and fourth category will increase.

      • rumana parveen

        i appreciate truly the saying that social business is the future of business. Now as we can recall the definition of social business as given by Nobel Laureate Dr. Md. Yunus, The father of Social business, that is its a kind business which was created to solve or address a social problem. and the most beautiful part of the definition is that a social business owner does not take any profit from the business, he can take salary but not any dividend… why? because he has a philanthropic goal in his mind when he is starting the business.

        So with this definition in our mind we can identify social business a potentially strongest tool to fight against poverty and discrimination throughout the world.

  • http://www.enterprise-advocate.com Alex Matthews

    Excellent post. I will be truly impressed by the courage of the CEOs that move first on this one. :-)

  • http://www.younomy.com sankar

    Christoph,

    Great ideas. Many definitions of social business do not focus on capturing the evolution of business such as the one you have described here. When it comes to social business, we are talking about the evolution of business that is triggered or enabled by social technologies like social computing, social media, social product development.

    For instance, machines helped us produce more. From handmade, cottage industry, businesses have evolved to become mechanized and automated mass-producer. When Internet arrived, it helped us digitize our business. From automated mass producer, businesses have transformed into digitized mass producer or e-business. Similarly, there is a business impact of social media, which I think can be defined with the answers for these two questions: “For whom to produce?” and “How to produce?”.

    Instead of “producing more products for one or two stakeholder groups like customers”, today businesses have to “produce more products or value for many stakeholder groups which could include local community as well”. This happens because social media is an open platform where people representing different stakeholder groups are taking part, interacting and they have different expectations from a business. So, it is not produce more products but produce for more stakeholders.

    Then, there is the question of how to produce? Internet enabled us to digitize our business, social media is helping us to democratise our business, where all business processes – including product conceptualization, management, to marketing – are being made open for the participation of the society. We are already seeing the success of social product development, and open innovation.

    So, the definition should be made on these lines of what Prof C K Prahalad said of the emerging role of economy/industry: a social business “is run by, of, and for people” or something like that which captures the factors: “producing value for more” and “democratization”.