Social media’s untapped potential

That the collaborative and participatory breed of online systems known as social media or Web 2.0 has become, despite its relative youth, a significant and powerful instrument in modern society was proved unequivocally in 2009.

The most striking example of this was perhaps the online reaction to Iran’s presidential elections in June 2009.

Supporters of opposition candidate Mir Hossein Mousavi coordinated demonstrations and rallies using social networking site Facebook and micromessaging service Twitter, and while their efforts eventually failed to derail president Mahmoud Ahmadinejad’s re-election, their cause drew international attention and sympathy thanks, in part at least, to their use of Web 2.0 technology.

The successful campaign in the UK to prevent the winner of The X Factor TV talent show from achieving the ‘Christmas number one’, also launched and coordinated via Facebook and Twitter, is a far more trivial example, but it nevertheless proves social media’s influence on consumer demand.

Of course, consumer and political activism are nothing new. But by providing large groups of people with the means to communicate, collaborate and organise, social technologies make protests easier to initiate and to participate in.

This affects businesses in two ways. Firstly, their customers may share their experiences – positive and negative – with one another, unmediated by the business itself. And secondly, employees too can collaborate and communicate in a horizontal fashion, without the involvement of senior management.

In both cases, this represents a loss of control, at least according to the traditional corporate management mindset. Naturally, for a tangible shift in customer and employee behaviour, however, it also presents a number of opportunities including – to name but a few – the ability to track market sentiment, to promote knowledge sharing within the enterprise, and perhaps most importantly, to build trust among both customers and employees.

Cautious adoption

The Effective IT Survey detected a surge in adoption of Web 2.0 tools during 2009. The strategy of having ‘Formally deployed Web 2.0 technology’ was the tenth most adopted strategy, with 36.9% of respondents having adopted it, up from 17th last year.

This is all the more impressive given the catalogue of oft-cited concerns relating to business adoption of Web 2.0. Online social networking sites, for example, are more likely to be treated as information security threats than sources of customer insight: more than half of UK businesses block access to Web 2.0 sites for fear of the legal consequences of loose-lipped employees divulging company information, according to a report by law firm Fulbright & Jaworski.

But according to Charlene Li, a social media analyst for the Altimeter Group who works with companies to build appropriate social media usage policies, employees are usually far more discreet than their nervous employers give them credit for.

“What’s amazing to me is that there aren’t more embarrassing failures,” says Li. “That says to me that people do exercise judgement.”

She points out that there is nothing stopping employees from setting up their own blogs divulging company secrets in their own time, and yet it rarely happens.

Li also challenges another tranche of received wisdom concerning social media in the workplace, namely that younger employees, who have grown up taking online networking for granted, are more likely to adopt Web 2.0 tools in the workplace, and to share company information liberally. In fact, says Li, “When people come into the workforce, they are very hesitant to share; they don’t know what they can and cannot do at work.

“Executives often give the responsibility for internal social media projects to the younger generation,” she adds, “and nothing happens because they don’t know what they are allowed to say.”

This view is corroborated by a study by Forrester Research, published in October 2009, which found that so-called ‘Generation Y’ employees (those currently aged between 18 and 29) were in fact less likely to use social media for work purposes than their immediate seniors, ‘Generation X’. “Gen Yers’ use of collaboration technology is secondary to the business culture [of the organisation they work for],” the report’s authors concluded.

It seems, then, that the social influences that lead most employees to behave appropriately in the office or at work functions apply equally to their use of social media.

Social returns

Perhaps more troubling than the thought of what employees might get up to if allowed access to social media in the workplace may be the difficulty many organisations have experienced in measuring the return on their social media investments. In the Effective IT Survey, 15.4% of those respondents that had adopted Web 2.0 tools said the strategy had failed to deliver the expected return on investment, making Web 2.0 the ninth most likely strategy to fail on ROI.

The strategy fared a little better in perceived effectiveness, with 58.2% of respondents deeming it ‘effective’ or ‘very effective’. This is an improvement on a survey published in June 2009 by web content management software provider Vignette, which found that only 12% of businesses considered their Web 2.0 investments to have been effective.

A rosier picture was painted by a survey of 1,700 business executives by management and technology advisory firm McKinsey. That report found that 60% of respondents considered their Web 2.0 deployments to be either ‘satisfactory’ or ‘very satisfactory’.

Interestingly, the report found that internal social media deployments, used to promote employee collaboration or knowledge sharing, were more likely to have produced benefits than ‘customer-facing’ Web 2.0 deployments.

The report suggested that this might be a result of the fact that the IT department was more likely to be involved in the former kind of Web 2.0 deployment, and to bring its experience of system design and deployment to bear. It also suggested that internal deployment may be simpler, and have more clearly defined goals, than outward-facing Web 2.0 projects.

Either way, it must be remembered that deployments of social technology in a business context are still in their infancy. Only now, for example, are enterprise software vendors beginning meaningfully to integrate social media functionality into their systems.

On-demand customer relationship management (CRM) provider, for example, announced a raft of social media-related developments in the closing months of 2009, including the ability of customer support agents to monitor social media sources for potential emerging issues, and a Twitter-like tool for internal collaboration called Chatter. In December 2009, application infrastructure provider Tibco announced the forthcoming launch of its own Twitter-like system, which enables employees to subscribe to information feeds regarding particular topic areas, rather than individuals.

But even these only begin to scratch the surface of the business potential of social media. The information contained within an organisation’s existing, informal social networks, which can be mapped by an emerging category of technology called social network analysis or social intelligence, is still largely an untapped resource. It is highly likely that these areas will be the focus of much innovation in 2010 and beyond.

Some commentators believe that the influence of social media on business will stretch far beyond collaboration and marketing. By giving customers a voice and by making organisations more transparent, they argue, social technologies will force businesses to operate in a more socially and environmentally responsible fashion.

Update: Social media in business: 10 years on

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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