Harvard Business Review

Social media's productivity payoff

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How's this for counter-intuitive? Social technologies — the software and services that make it possible to show off your vacation pictures to all your Facebook friends and follow your favorite team tweet by tweet — are not just giant time sinks that keep your employees from getting their work done. On the contrary, they may become the most powerful tools yet developed to raise the productivity of high-skill knowledge workers — the kind of workers who help drive innovation and growth, and who are going to be in increasingly short supply.

This is one of the surprising takeaways from our recent research on the economic impact of social technologies. The business world knows (or thinks it knows) a lot about how social technologies are changing the world. With consumers spending gobs of time in online communities (more than 1.5 billion consumers around the globe have an account on a social networking site and almost one in five online hours is spent on social networks), marketing departments have increasingly shifted their attention to social media. They're not only advertising and creating their own social sites, they're engaging with consumers, listening in on unfiltered conversations, and soaking up huge amounts of data on consumer behavior — all of which is producing nifty new insights for fine-tuning product requirements and marketing messages.

It's powerful stuff that will continue to evolve and change the way that companies market to consumers and B2B customers. But, it turns out that there's something even more powerful at play: the potential for value creation when social technologies are used to improve collaboration and communication within and across enterprises is twice as big as the value that can be created through all other uses across the value chain. Based on numerous case studies and in-depth research in four sectors (consumer packaged goods, consumer finance, professional services, and advanced manufacturing), McKinsey Global Institute analyzed the potential value that could be obtained through the use of social technologies. The total potential value at stake in these sectors is $900 billion to $1.3 trillion annually. A third of that potential comes from business function-specific applications of social technologies in product development, marketing & sales, operations, and customer support, but two-thirds would arise from using social technologies to improve the collaboration and communications of knowledge workers within these functions and across the enterprise.

Companies are beginning to discover that social technology platforms provide a far more efficient way of communicating and collaborating. And, they give companies a way to dig out the "dark matter" of company knowledge that is buried in email inboxes and on hard drives. Unlike email, messages on social platforms are accessible to the entire team in real time, eliminating all the to-ing and fro-ing to get everybody on the same page. Even better, on social platforms, communications become content — forming a searchable archive that can be continually enriched with comments and additions by members of the online community. So, when the expert in the group answers the question about how to account for depreciation in Turkey, everybody can see it or find it later.

We estimate that "interaction workers," (managers, professionals, sales people, and others whose work requires frequent interpersonal interactions, independent judgment, and access to knowledge) spend 28% of their workdays answering, writing, or responding to email. They also spend another 19% of the time trying to track down information (including searching through their own e-mail files) and 14% collaborating with co-workers. (And these are your most expensive employees, and the ones you count on to do more than routine work; they're supposed to be innovating, figuring out how to improve business processes, and generally building you a better mousetrap — not wading through e-mail.)

These activities could potentially be done much more efficiently and effectively using social technologies — we figure by 20-25%. This assumes, of course, that time saved by communicating and collaborating via social technology is not used for viewing videos of cute kittens, but is dedicated to the most productive uses.

Naturally, there is also a catch: to capture this value, companies will have to do a lot more than buy some enterprise social technology. To get the improvement in knowledge worker productivity, organizations need robust and widespread participation by all sorts of employees (you never know where that dark matter is hiding). Firstly, social technologies will only succeed if they become part of the daily workflow, not an extra item on a to-do list that will never get checked off. Sometimes this means the company's workflows need to change, sometimes the social tools must be adapted to workflows, and in many cases, both workflows and technologies will have to be adjusted. For example, in one computer-generated animation company, social tools did not become commonly used until they allowed people to post and interact on video clips — the preferred medium for discussion.

Participation, in turn, depends on having an environment of openness, information sharing, and trust — the sort of culture that many organizations have not yet established. For this to happen, leaders must take the lead — after all, these are social technologies. Leaders will have to role model the use of these technologies, explain how to use them to drive value, observe success stories and help them to scale up to the rest of the enterprise. At the same time, these technologies are only as effective as the degree to which individuals participate, so lessons from consumer social applications can be applied in the enterprise. How do you create applications that are as compelling to corporate employees as they are to those same people in their personal lives? Techniques such as self-reinforcing behavior loops (e.g. gamification), A/B testing, and mobile deployment can be applied in the enterprise, just as they are used in the consumer space. But overall, changing mindsets, behaviors and a culture that celebrates and expects sharing and openness is a real organizational challenge.

It may take years to establish the conditions of openness and to build trust across the organization, but the companies that accomplish this transformation will not only reap the greatest benefits from social technologies, they will also find that they are faster on their feet, more adaptable, and much more capable of absorbing — and acting on — new ideas. Not a bad investment.

This article originally ran in HBR Blog.