Social Business: What Are Companies Really Doing?

by: David Kiron, Doug Palmer, Anh Nguyen Phillips and Nina Kruschwitz



The rapid adoption of technology-based social networking has been transforming politics and social norms on a global scale for the past decade. Will social networking and social software have a similarly transformative effect on business? Are they already doing so? What kinds of enterprises are benefiting the most? And how are they benefiting?

To answer these questions, MIT Sloan Management Review and Deloitte1 conducted a survey of managers from companies in 115 countries and 24 industries. We had 3,478 respondents to our questionnaire. They represented a wide range of management roles (from coordinators to board directors), functional areas and business sizes.

We supplemented the analysis of our survey results with interviews with thought leaders and business executives, as well as a review of recent research on social business. Our in-depth interviews included conversations with senior managers from companies at the cutting edge of social business practice, including McDonald’s, IBM, Salesforce.com, SAP and Yammer.

Although enterprises have only just begun to embrace social business, many leaders — especially in the media and technology industries — are enthusiastic about its value. Others are more cautious but recognize its potential a few years out. Our survey points to marketing and innovation as key areas for capturing value, while our interviews suggest that operations and leadership stand to benefit as well. To capture this value, companies should consider taking steps to ensure that their leaders and culture are aligned with the new opportunities.

We conclude with considerations for how to put social business to work in your enterprise. Leaders need to recognize that social business:

  • Adds value far beyond marketing;
  • Needs leadership support to gain traction in the organization;
  • Can deliver benefits to leadership via strategic insight and strategic execution.

We hope that this report provides executives food for thought as they consider how to incorporate social business activities into their organization. For more about our work in social business, including exclusive in-depth interviews and additional feature articles, please see the online exploration in the Social Business area of MIT Sloan Management Review’s website and at Deloitte’s website.

About the Authors

David Kiron is the executive editor of Innovation Hubs at MIT Sloan Management Review, which brings ideas from the world of thinkers to the executives and managers who use them. He can be reached at dkiron@mit.edu.

Doug Palmer is a principal at Deloitte Consulting LLP and leader of Deloitte’s Social Business practice. He can be reached at dpalmer@deloitte.com.

Anh Nguyen Phillips is a senior manager within Deloitte’s U.S. Strategy, Brand & Innovation group, where she leads strategic thought leadership initiatives. She can be reached at anhphillips@deloitte.com.

Nina Kruschwitz is an editor and the special projects manager at MIT Sloan Management Review, where she coordinates the publication’s Innovation Hub activities. She can be reached at ninakru@mit.edu.

Contributors

Natasha Buckley, Senior Manager, Deloitte Services LP

Jonathan Copulsky, Principal, Deloitte Consulting LLP

Alex Dea, Business Technology Analyst, Deloitte Consulting LLP

Deb Gallagher, Director, Marketing & Operations, MIT Sloan Management Review

Martha E. Mangelsdorf, Editorial Director, MIT Sloan Management Review

Mark White, Principal and CTO, Deloitte Consulting LLP

Laura Winig, writer

Acknowledgments

Michael Barrette, MIT Sloan Management Review; Patricia Favreau-McKinley, MIT Sloan Communications; Chris Heuer, Deloitte Consulting LLP; Prasad Kantamneni, Deloitte Services LP; Laura Pinsky, MIT Sloan Communications; Joseph Press, Deloitte Consulting LLP; Venkat Reddy, Deloitte Services LP; Giovanni Rodriguez, Deloitte Consulting LLP; Prathima Shetty, Deloitte Services LP

Interviewees

Anthony Bradley, Group Vice President, Gartner; Charles Dickerson, Vice President of Customer Care, Pepco Holdings; Vince Golla, Director of Digital Media and Syndication, Kaiser Permanente; Fergus Griffin, Senior Vice President for Solutions Marketing, Salesforce.com; John Hagel III, Co-Chairman, Deloitte Center for the Edge; Catherine Havasi, Director, Digital Intuition Group, MIT Media Lab; Donna Hoffman, Professor, University of California, Riverside; Gerald Kane, Assistant Professor, Boston College; Charlene Li, Founder, The Altimeter Group; Andrew McAfee, Principal Research Scientist, MIT; Mark McDonald, Group Vice President, Gartner; Matt Moller, Director of Digital Engagement, Samsung; Natasha Nelson, Vice President of Business Intelligence, Cara Operations; Wanda Orlikowski, Professor, MIT Sloan School of Management; Keri Pearlson, Adjunct Professor, Babson College; Tom Poole, Managing Vice President for Mobile and Social Media, Capital One; Randal Robison, CIO, Georgia-Pacific; David Sacks, CEO, Yammer; Jeff Schick, Vice President of Social Software, IBM; Derek I. Smith, Senior Vice President of Operations Strategy, 20th Century Fox; Edwin J. Tucker, Vice President of Global Medical Safety, Johnson & Johnson Pharmaceutical Research; Marshall Van Alstyne, Associate Professor, Boston University; Richard Waycott, CEO, The Almond Board of California; Rick Wion, Director of Social Media, McDonald’s; Mark Yolton, Senior Vice President of SAP Communities and Social Media, SAP

MIT Sloan Management Review

MIT Sloan Management Review leads the discourse among academic researchers, business executives and other influential thought leaders about advances in management practice that are transforming how people lead and innovate. MIT SMR disseminates new management research and innovative ideas so that thoughtful executives can capitalize on the opportunities generated by rapid organizational, technological and societal change.

You may contact the authors or find additional reporting from MIT Sloan Management Review at sloanreview.mit.edu

Deloitte

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

As used in this document, “Deloitte” means Deloitte Consulting LLP and Deloitte Services LP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2012 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

You may contact the authors or send an e-mail to techtrends@deloitte.com for more information.

Additional information from Deloitte on the topic of social business can be found at www.deloitte.com/us/socialbusinessstudy

References

1. As used in this document, “Deloitte” means Deloitte Consulting LLP and Deloitte Services LP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

2. Source: MIT Sloan Management Review interview with David Sacks, CEO of Yammer, February 24, 2012.

3. Social media is how people get together virtually to accomplish outcomes. Social software is the set of tools that gives people in a social network the means for automation, virtualization, scale and abstraction. Social networks are formal descriptions of groups of people who congregate in a social medium.

4. Not all social business activities will produce mutually useful connections between individuals. In some cases, it may be beneficial to diminish certain connections between staff or with some customers. Further, the use of emergent communication and collaboration tools like Yammer may one day become part of the baseline. When that happens, using these tools may cease to qualify as a social business activity as we’re defining it, not because they are any less social but because they no longer “amplify” connections.

5. D.M. Smith et al., “Predicts 2010: Social Software Is an Enterprise Reality,” Gartner, December 3, 2009.

6. A. McAfee, “What Sells CEOs on Social Networking,” MIT Sloan Management Review, Spring, 2012, http://tablet.mitsmr.com/feature/what-sells-ceos-on-social-networking.

7. Other uses of “social business” might refer to organizations or to economic systems that promote some notion of social welfare. For an example of the latter, see M. Yunus, “Building Social Business: The New Kind of Capitalism That Serves Humanity’s Most Pressing Needs” (New York: Public Affairs, 2010).

8. See F. Gossieaux and E. Moran, “The Hyper-Social Organization: Eclipse Your Competition by Leveraging Social Media” (New York: McGraw Hill, 2010); and A.J. Bradley and M. McDonald, “The Social Organization: How to Use Social Media to Tap the Collective Genius of Your Customers and Employees” (Cambridge: Harvard Business Review Press, 2011).

9. E. Deci and R. Ryan, “Intrinsic Motivation and Self-Determination in Human Behavior” (New York: Plenum, 1985).

10. This example comes from an interview with Fergus Griffin, senior vice president for solutions marketing at Salesforce.com. Additional detail was sourced from: http://www.youtube.com/watch?v=kTOL6gUgoJQ.

11. G. Tay, “Ask Five Questions to Determine Whether to Deploy Social Software Bottom-Up or Top-Down,” Gartner Research, January 20, 2011, http://www.gartner.com.

12. P.F. Drucker, “The Practice of Management” (New York: Harper & Brothers, 1954), 37.

13. Of course, social business activities can be valuable in many ways. It is our belief that social business activities in these four areas have the potential to generate substantial value.

14. E. von Hippel, S. Ogawa and J.P.J. de Jong, “The Age of the Consumer-Innovator,” MIT Sloan Management Review 53, no. 1 (fall 2011): 27-35.

15. S. Nambisan and P. Nambisan, “How to Profit from a Better ‘Virtual Customer Environment’,” MIT Sloan Management Review (spring 2008): 53-59. For an analysis of Threadless and social media, see D. Hinchcliffe and P. Kim, “Social Business by Design: Transformative Social Media Strategies” (San Francisco: John Wiley and Sons, 2012).

16. This example is based on Y.M. Antorini, A.M. Muñiz, Jr. and T. Askildsen, “Collaborating With Customer Communities: Lessons From the Lego Group,” MIT Sloan Management Review 53, no. 3 (spring 2012): 73-79.

17. J. Hagel, “Pull Platforms for Performance,” February 20, 2012, http://edgeperspectives.typepad.com.

18. T. Levitt, “Marketing Myopia,” Harvard Business Review, September/October 1975.

19. Providing clear guidance about communications external to a business can be tricky, especially in regulated industries like health care and financial services. Too much guidance can put a damper on social business activities. “If I ask an organization for their social media policy, and I get back a 50-page document,” says MIT’s Andrew McAfee, “that might as well just say, we’d prefer it if you don’t use social media.” Even in unregulated industries, too much oversight can cast a shadow on innocent interactions. Babson College’s Keri Pearlson describes a recent meeting with a colleague and two representatives from a large technology firm. Her colleague tweeted that she and Pearlson were at a lunch meeting, naming the firm but not the individuals. When the representatives returned to work, the office was buzzing about who was speaking without authorization about the company. Staff had been monitoring information flows from Twitter about the company and had seen the tweet from Pearlson’s colleague.

20. M. Miller, A. Marks and M. DeCoulode, “Social Software for Business Performance: The Missing Link in Social Software — Measurable Business Performance Improvements,” Deloitte Center for the Edge, 2011.

21. M. White and B. Briggs, “Tech Trends 2012: Elevate IT for Digital Business,” Deloitte, 2012: 5.

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