my reflection on the latest McK Global Institute Report on #socialeconomy #socialbusiness #socbiz #enterprise20 #e20

Preamble: The McKinsey Global Institute has just recently published “The social economy: Unlocking value and productivity through social technologies” [1]. This is my personal interpretation of some of their reported results. All exhibits are taken from the report without changes and with reference to the original source within the report. All other excerpts of the report are marked accordingly with a reference to the original source.

Summary: Enterprise 2.0 has become a pretty serious subject. More and and more substantial reports are published on the subject. The software market is starting to slowly consolidate (sometimes even with a bang) but additional ( not necessarily mind boggling) software solutions are still being launched. Looking at the latest McKinsey Global Institute report there are some interesting tendencies and evolutions in the subject. What still strikes me is the fact that most of the benefit is still expected to happen in more “classic” information work roles (sales, marketing, r&d). Even though the fact that social is a feature, not a product, is recognized (MGI, p.17) I am still missing reports how in particular process and workflow related work was successfully flavoured and boosted with the use of social components. Connecting people with the same (quantitative) goal still seems to me the most promising approach towards applying the social business mechanics. Here’s my interpretation…and I haven’t cut a long story short.

A little dent to the hype.

“What’s in for the business?” is probably the most discussed question in social business initiatives and it’s one of the most frequent question I get asked as well. I believe that the biggest business case will lie in the individual benefit for the users of “socialized” business IT (see also Thesis #1 in http://goo.gl/ExwBH (in German)). That the overall business contribution is important to justify substantial investments that will be able to compete with e.g. ERP budgets is however not disputable.

Looking at the following exhibit of the MGI report there is an interesting interpretation possible…

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(Source: MGI 2012, p. 28, Exhibit 11)

All except one categories show a decline from 2010 to 2011. My personal take on this is that since 2009 companies have been experimenting with social software and over time adapting solutions such as Yammer and Tibbr – rolling out the internal Facebook. In 2010 involvement and activity in social tools as well as the amount of captured knowledge surely counted as “measurable gains”. Simply because no company has measured the baseline on which actual performance contribution could be evaluated. In 2011 there seems to be some kind of realization that just capturing the stuff doesn’t cut it. That’s why the intensity of serious ROI is seriously increasing. We will be seeing much more serious evaluation of business KPI based gains, that’s for sure. For that in particular it would be valuable to look at industry work tasks that could be improved with a better glue between people and process.

If you ask me relevant KPI for measuring social business inspired operational performance could be

● Run time of collaborative work (e.g. project overruns)

● Resource cost (time/people)

● Documentation efforts

● Efficiency of subsequent process steps that are heavily reliant on the preceding steps

With regards to that the MGI report even elaborates on the current state most corporations are at with the use of social technology: "(…) Most companies have begun to use social technologies, but the vast majority use them in limited ways and thus derive limited value. According to a McKinsey survey, almost 80 percent of corporations that use social technologies are still "developing", meaning they are reporting a low level of benefits from their use of social technologies to interact with employees, customers, and business partners. (…)" [2]

That would actually add even more reasoning to the interpretation of Exhibit 11 (above).

Contribution of social features.

I really like the way MGI has set out the areas where ‘social’ can add value in corporations.

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(Source: MGI 2012, p. 8, Exhibit 3)

A lot of it has to do with “surfacing” and “matching” stuff (meant in a positive way). For my taste operations and distribution is the area where most of the quantitatively measurable gains would occur in the short term. This doesn’t mean that the other areas wouldn’t deliver measurable results. I simply believe that a substantial impact in cross-organizational and effectiveness oriented areas requires more time and in some parts even the so often emphasized organizational change. In operations and distribution particularly #3 could be even improved by replacing “distribute” by “connect” and “make transparent/trackable” and “easy to navigate”. I truly believe that a lot of work that is done with the help of ERP in the backend could be substantially improved by providing social glue between the formal elements of process based work and its protagonists.

Based on my experience one of the characteristics of social technologies would definitely be a huge leap forward: "(…) Social technologies enable new forms of content creation, distribution and consumption (…)" [3]. This isn’t just relevant and beneficial in knowledge work. Especially within processes as well as from the perspective of subsequent processes quality, transparency and completeness of documentation (and not just documents) is essential for the joint success.

Just to avoid confusion: I am not saying that in sales, product management, marketing etc. quantitative value wouldn’t be created. From an industrial perspective however, the real impact will lie within extending the concept of Kaizen [4] to the work that is attached to the actual production process (eg. the entire phase from selling to handing over complex industrial product specifications).

All three characteristics would contribute immense value in that context:

GC13EVLmkJZuPxLdoSfi2zi2Zy52rw_dEIn_TFZgXwMliRv4wmiJDZwUBcCQ9WYy2qu7RdtbRaoJXWADLsonmDSyWbodFWFqZzS3qtBhWPUAqbuXNqw

(Source: MGI 2012, p. 16, Box 1)

Therefore I actually believe that the sector of industrial manufacturing should range higher in the following chart:

5Xo-gFa9SiskVr9JTtOd_zoASJq2oTzgITshNA2iQyu4qzVwpDiKC5JkETGbrp_wljzPt9UJvvovXG7yIBBZ3-t-EzxWve1p4k7BwIyd4qKDli7iboA

(Source: MGI 2012, p. 10, Exhibit 4)

A new category: interaction work

It’s the first time that I explicitly read about interaction work categorized as “(…) employees whose work requires complex interactions with other people and independent judgment (…)[5]. With regards to quantitative benefits and measurable results this actually is a real good description of the area of information work in which socialized software could add substantial value.

The following illustration sets out the areas in which social technologies could raise productivity of information workers:

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(Source: MGI 2012, p. 47, Exhibit 20)

At the end of the day the illustration is describing information logistics and communications – probably the most challenging parts of e-mail and network folder based information work. The only thing I dare to doubt is the improvement in role specific tasks that do not qualify as communication, collaboration, information handling or e-mail management. Depending on the level of dependency of others (not collaboration in the sense of “co-creation”) this could be substantially higher.

RETRIEVAL is the magic word

(…) It is so early in the learning cycle about social technologies that there is not
yet a reliable instruction manual to tell large organizations how to use social technologies most effectively. However, we have seen enough evidence to
believe that the long-run potential does exist. Organizations that are moving
along this path have begun to experiment with new organizational processes, forms, and practices. We can point in the direction of some factors that can guide organizations’ experiments as they seek to capture this value over time.

The idea of communicating with colleagues across a company the way employees communicate with friends on Facebook is easily understood, but actually embedding the use of social technologies into day-to-day workflows is
 a considerable challenge. It is also easy to see how turning business messages into content that can be discovered and accessed by many people can make life easier for interaction workers, but making sure that the most relevant information is fed to people when they need it is a problem for which technology solutions will continue to improve. (…)[6].

Creating content and feeds of ideas, actions, comments, questions and other “stuff” is one thing. Making sure that people can be 100% certain that they won’t miss out on essentials is another (ref. to http://goo.gl/i7X4d; a related blog post on the subject). I agree that technological solutions will improve over time. However, I do not believe that we will be ever reaching the “everything on a silver plate” level of automation (ref. to http://goo.gl/H8gJ5; related blog article on pro-activeness and responsiblity). A lot of the – even in the MGI report so often emphasized – required cultural and operational change will have to do with the mind set change of employees. There will be a lot more means to be more effective, efficient and well informed. To achieve this will only partly have to do with technology. Employees have carry more responsibility for themselves as well as for others. Managers will have to support that development and create the formal framework in which performance evaluation has to incorporate collaborative elements as well as the ability to share (not just dump stuff into an activity feed) and retrieve (not just sit at a dashboard waiting for relevant stuff to pop up).

Facit

The social and commercial media inspired workplace and the related organizational, structural as well managerial change is a revolution. Things will never be the same and information work will be transformed into something that wouldn’t have been possible without the inspiration of commercial IT. If one has the chance to get involved with the subject: go for it! Following the evolution of available publications on enterprise 2.0, social business and social technology is mind boggling. It’s already obvious that we’re on off the plateau of the enterprise 2.0 hype – slowly but steadily. We shouldn’t make the mistake to completely suffocate the new potential by ROI, excel sheets and cries for KPIs. However, if the enterprise 2.0 enthusiast (I count myself to those) want to tap into the same budgets as the ERP folks we have to prove the value of the “new way of working”. We have to show how socially inspired business IT can change the day to day work and unleash incredible potential that lies hidden within large corporations.

It couldn’t be more exciting, could it?

One thought on “my reflection on the latest McK Global Institute Report on #socialeconomy #socialbusiness #socbiz #enterprise20 #e20

  1. Pingback: via @appirio: State of Social At Work & my take on it #socbiz #socialbusiness #e20 #enterprise20 « DesireIT

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