by Matt English, IBM Global Business Services (Melbourne) and Mike Handes, IBM Software Group (Sydney).
Observing organisations take up the use of social media is like watching a whirlwind rapidly unleashing. More and more organisations, especially in the business to consumer space, are engaging with Facebook, Twitter and many other social networking tools. But many organisations which have embraced social media recognise that they have a significant way to go to extract business benefits. They recognise that the warm feeling and levels of excitement from involvement in social media are only one part of the story.
More and more organisations are now asking the hard questions. How do they turn social media into real commercial advantage and translate aspirations into real benefits, and in particular, how can they do it successfully?
To address these questions, organisations are rapidly turning their attention to three key issues that will turn social media into social business.
The first area is around customer engagement. In particular, social businesses are moving from customer dialogue to customer advocacy. This represents a major change in capability required. Historically, many organisations have been successful at providing information to customers across various channels. But the capability required now is to move beyond a dialogue and convert customers to be true advocates of the product or service. Further, it is about identifying the advocates with the most influence and targeting them. For example, Universal Studios prior to the launch of Harry Potter World brought 7 bloggers into the fold with an insiders tour (before mainstream media) with the result that these 7 bloggers reached 350 million Harry Potter fans world wide. Also, Airlines and Telcos are embracing the use of social media to shape conversations and broader discussions around their offerings. They then seek to apply sophisticated analytics to understand the meaning behind those conversations, and how the ongoing conversations and interactions with customers need to change. This is about using analytics to shape strategic thinking regarding customers, and using advocacy to drive changes in customer engagement.
The second area relates to products and services, both how they are designed and shaped, and how they are delivered. Social businesses are rapidly moving from product and service information to product and service innovation. Organisations have traditionally provided various amounts of information about their products and services, but social businesses are now actively seeing how products and services can be shaped and innovated by harnessing the two way flow of information from social media. This interaction has profound implications for the way organisations compete because it is real time, transparent, and is global. Retailers such as global giant Wal-Mart have started to use the insights from social media tools to shape their product development, and involve customers interactively in testing various product formats and concepts. The focus here is about applying technology to find the insights from customers in real time and injecting those into product and service innovation.
The third area that is gaining the strong focus of social businesses is around people and stakeholders. The shift occurring here is in moving from people and stakeholder connection to people and stakeholder collaboration. This is about breaking down the "four walls" of the organisation and interacting with its people and its key stakeholders in truly collaborative way. This is occurring in broader community activity especially in emergency situations. For example, in the Brisbane floods in Australia in January 2011, social media played a key role in real time collaboration between emergency services and the broader community to deliver real time information as well as the relief and rescue activities. This highlights the use of technology to deliver positive outcomes in real time, and across multiple dimensions.
But the above areas do not act in isolation, and are highly interrelated and dependent on people and behaviours. For example, a poor approach to collaboration will stifle the effectiveness of innovation. The issue of behaviour is called out in the recent paper "Analytics - the widening divide" by IBM and the MIT Sloan Management Review. This highlights that changing the way people behave poses a more difficult challenge than changing the tools and technologies. Indeed, changing behaviour is rated as having 1.8X greater difficulty.
So traditional organisations and their business models have focussed around customer dialogue, provision of product and service information and people connection. But new technology and the associated analytics now mean that emerging social business is shaping a new agenda. This is driving organisations more towards stronger customer advocacy, product and service innovation and people collaboration, all of which have profound implications for future business models and how they operate.
