MIT Sloan Management Review's David Kiron on C-Suite Executives’ Perceptions on the Value of Social Business

Marshall Van Alstyne, associate professor at Boston University and a visiting professor at MIT, recently relayed the following story about SAP, a software corporation that produces enterprise software, and its developer ecosystem, where developers can ask and answer each others’ questions:

“Previously, a value-added reseller on top of SAP’s software had no particular reason to help out another value-added reseller. As a matter of  fact, one might not want to answer the question of another reseller because it might actually help them out and make them more competitive. But after the introduction of this question-and-answer marketplace, things shifted completely. Now you earn points in proportion to the value of your answers. Now the value-added resellers are telling their employees to go in and answer the questions of other resellers to prove, ‘Hey, we’re the ones with the expertise, not those guys.’ It’s completely shifted the incentives. Folks are now pushing their information into the marketplace in a way that benefits SAP. It’s a really clever mechanism that completely inverts the incentives from one of hoarding to one of information sharing.”

Last year, MIT Sloan Management Review set out to study the sort of impact that social systems like SAP’s info-sharing structure are having on companies around the world. We have been using the term “social business” to refer to collaboration, networking and sharing tools that are transforming the ways companies work and organize themselves.

Our results were published this week in a report titled, “Social Business: What Are Companies Really Doing?” The study, conducted in collaboration with Deloitte, comprises a survey of more than 3,400 corporate leaders representing every major industry and region of the world and a series of in-depth interviews with experts and corporate practitioners from a range of disciplines and organizations.

One of the more surprising findings was the identification of a difference of opinion within the executive suite on the value of social business. In our survey CEOs were nearly twice as likely as CIOs to view social collaboration tools as important to their business today (28 percent versus 15 percent), and only 14 percent of CFOs surveyed identified social tools as important. Interview data suggested that many CIOs struggle with an unarticulated vision for how they want to use social business corporate-wide.

We also found that while a clear vision and leadership are cited most frequently as critical to adoption of social software, the most common answer to the question – how do you measure social software use? – was: ‘not measured.’

This gap between the need for leadership and the lack of metrics is a crucial one. It means that those who wish to step up their leadership in social collaboration are without many of the traditional tools they would normally use to encourage and reward action.
Some of our other findings included:

• Media and Tech are ahead: The report identifies several industry sectors where social business is thriving and divides them into two categories: media (entertainment, media and publishing) and information technology.

• Size matters: The largest organizations, those with over 100,000 employees, and the smallest organizations, those with less than 1,000 employees, tend to appreciate the value of social business today more than mid-sized organizations.

• Business value: Respondents saw the most value in social software in the areas of “managing customer relationships” and “innovating for competitive differentiation.”

For more findings and to download a copy of the report, see Social Business: What Are Companies Really Doing?

David Kiron is executive editor, innovation hubs, for MIT Sloan Management Review

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