The Social Enterprise: Interesting Concept or Reality?


ERP Analyst, Software Advice

Last week, Dr. Natalie Petouhoff made a bold prediction on SAP’s In the Cloud with Game-Changers (at timestamp 45:48) about where the “social enterprise” will be in five years:

20 percent of businesses that are currently in business [will go] completely out of business, and the businesses that do adopt social business, that become collaborative enterprises, [will increase] their workforce and their revenues and their profits by 100 percent.

That’s a big claim about the value of social business, and one that will be impossible to verify. In five years, how will we know whether a company failed because they didn’t adopt social tools, or because of other reasons (e.g., the economic downturn, poor business practices, etc.)?

The social enterprise — as I define it, a company that uses social and collaborative tools to get work done, supported by a culture of openness — is full of big claims. Depending on who you ask, it’s either the biggest “game-changer” in business or nothing more than a buzzword. Personally, I think the truth (as usual) lies somewhere in between. Here’s where other bloggers are falling on the spectrum:

“Social business is huge, and it’s not going away,” says Peter Kim, Chief Strategy Officer at Dachis Group.

Kim believes that companies today are using the core principles of social business (e.g., improved internal collaboration and customer engagement) to create competitive advantages and drive business results. He points to 101 examples of a social business return on investment (ROI) as evidence.

However, it’s not clear that the ROI of these examples is caused by social business principles. For instance, Blendtec reportedly increased company sales by more than 700 percent with viral videos. To me, this seems more like skillful application of video marketing rather than a new way to do business.

Dennis Howlett, independent software analyst, says the social enterprise is a myth.

In a July 9, 2012 post, Howlett cited LinkedIn poll results (overall stats as of 5:25 PM ET July 17, 2012 below) as proof that most people care more about salary, work life balance and career progression than the ability to get work done with social tools.

LinkedIn Employee Retention Results

Source: LinkedIn, What's the most important factor that keeps you in your current role?

Contrary to what I hear from 'social anything' folk, the vast majority of people go to work to get paid and hopefully advance their careers. They're not sitting around pondering how much better the workplace could be if only they had the latest shiny new social toy.

To be fair, Howlett is drawing a conclusion from a dataset that did not ask specifically about social business and was not directed toward a specific target audience. It also wasn’t about tools employees get to use, or even employee retention.

Howlett changes his mind: the social enterprise could be a reality.

Just one day after declaring the social enterprise a myth, Howlett wrote that the social enterprise is possible but he thinks there is little incentive to use these tools.

The trick is execution [of social business principles] in a world that is driven by quarterly reporting and a dehumainsed view of corporate life.

According to Howlett, most companies don’t adopt social business practices because there is no motivation to do so. Beyond that, many companies are resistant to trying new things simply because it’s just not how they do business.

“Social business forgot about the business part,” says Sameer Patel.

To Howlett’s point, Patel, Global VP of Enterprise Social Software at SAP, thinks that social business tools need to get better at helping people do their jobs. In the same SAP radio panel I cited earlier, Patel explains that we’re starting to see that social tools don’t necessarily translate to the core of what we do.

Patel (at timestamp 20:58) says that we won’t see broader adoption of these tools “until we start to move beyond the general purpose benefits of being more productive and sharing more and collaborating better, to align it with core objectives.”

These discussions of social business illuminate a few salient points:

  1. Social business is too big to make blanket statements about. We struggle to even agree on a definition.
  2. Social doesn’t apply equally (if at all) to every type of business, or every department, or every situation. Its value varies.
  3. Social business tools are still maturing to align with the way things get done.

Of course, on a topic such as this, there’s rarely a last word. I want to hear from you. How relevant is social business to you? Take our poll below.

Thumbail created by David Armano

  • Peter Kim

    Before we forget too quickly, this topic was debated and settled in February 2012 by Dion Hinchcliffe and Howlett.

    Major brands are now on the record reporting hard revenue gains and cost reductions from social business activities. These reports correlate with research findings from McKinsey, Deloitte, and others.

    The companies I work with are now operationalizing social business concepts and constructs, not debating whether it’s real or not.

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