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McKinsey Global Institute

Article| Financial Times

Reaping the rewards of enterprise social

July 25, 2012 | byJames Manyika, Jacques Bughin, Hugo Sarrazin and Michael Chui

Will your company’s next enterprise IT system look like a combination of features from Facebook, Twitter and Google+? It very well may, as more organisations come to understand the true power of social technologies.

Early adopters of enterprise social technologies are discovering that the same capabilities that make it easy for consumers to organise a social event can be used to tackle some of the most stubborn problems that impede organisational performance.

Indeed, the surprising finding in our new report, ‘The social economy: Unlocking value and productivity through social technologies,’ is that the benefits from using social technologies within and across enterprises - to communicate, share knowledge, and collaborate - are larger than the (also enormous) value in product development, marketing, customer service and so forth.

In just the four sectors that we studied in depth (consumer packaged goods, consumer finance, professional services, and advanced manufacturing), we estimate that the equivalent of $900bn to $1,300bn in total annual value can be unlocked through the use of social technologies. Two thirds of that value would arise from improved collaboration and communication within organisations.

What makes social technologies such a powerful tool within and across enterprises is the how they unlock otherwise hidden opportunities for people from across the organisation to communicate, share information, and collaborate.

A key capability of social technologies is enabling participants in online social groups to create content, share it, comment on the content of others, recommend content from other sources, and instantaneously make it available to everyone in the community (whether it’s a birth announcement sent to everyone in a family or the news about a new RFP (request for proposal) opportunity sent to everyone in the regional sales office).

What is even more important for enterprise users is that communications that take place on social platforms become content. This means that every item posted on an online community site becomes part of a permanent, searchable archive.

The enormity of this advance becomes apparent when you consider the barriers to performance that large organisations face. Typically, large companies employ many interaction workers - managers, professionals, sales consultants and others whose jobs require a great deal of interpersonal interaction, access to information, and independent judgment. These are the knowledge workers who earn high salaries and are expected to deliver innovations, ideas, and solutions to problems that will make the enterprise more competitive and successful.

Unfortunately, the way these workers spend their time turns out to be highly unproductive - through no fault of their own. According to our research, the typical interaction worker spends 13 hours a week - or 28 percent of their time - writing, reading and answering email. Another nine hours a full day is spent tracking down information.

Based on case examples and our research, we estimate that social technologies could enable an interaction worker to boost his or her productivity in performing communication tasks by 25 to 35 per cent.

Similar gains are possible in searching for knowledge and in collaboration. Overall, we estimate that social technologies could, when properly implemented, raise overall knowledge worker productivity by 20 to 25 percent.

Equally important, by using social technologies, enterprises can overcome other obstacles to performance. For example, on social platforms, it becomes clear over time who the experts are in a particular area and where specialised information in the organisation resides. This is a huge step toward unlocking the “dark matter” of knowledge and specialised information that is stored on hard drives or in email boxes and invisible to the rest of the enterprise.

Unlocking this information and uncovering the go-to experts not only makes the individual knowledge worker’s task easier, it enriches the organisation. That online store of knowledge can grow continuously, as members of the community comment, update, and add to information made available through social technologies.

And, since so many people are familiar with the tools and behaviors of online social communities (1.5 bn people worldwide now interact on a social site at least once a month), this is one IT application that employees will master quickly and may even enjoy using.

Indeed, the technical aspects of social technologies are not where the challenge lies (although there are challenges around filtering and delivering relevant information to fit an individual’s current task). Importantly, social technology is not so much a discrete product as a capability that can be added to virtually any IT-enabled interaction. So, for example, a supply chain management system can be made “social,” the way sales management tools have been.

No, the real challenge in implementing social technologies to improve enterprise performance is not technical - and it is more daunting. To capture value from social technologies, enterprises will need to transform their organisational structures, processes, practices and cultures.

The companies that get the most out of social technologies will be those that embed the use of technologies into their day-to-day workflows. They will have a culture of trust, in which employees are not afraid to ask questions or share opinions, where sharing knowledge across divisions or geographies is rewarded and hoarding information is regarded as offensive.

It could take years for some organisations to make the necessary changes to take advantage of the full potential of social technologies. We believe that for most companies, the effort will be worthwhile.

This article originally appeared on FT.com Connected Business.