Yesterday I wrote about a new report by Altimeter Group on the risks involved in social media and how you can mitigate against them. One risk they didn’t cover in the report however was the risk of not getting involved in social media at all.
So I did a bit of digging and found some research by McKinsey into the importance of social media and the risk involved if you don’t utilise the opportunities that exist. They suggest that the opportunity cost of not using social media is around $1.3 trillion.
Now McKinsey analysed over 4,000 companies to see how they used social technologies. They found that between them they were using social media to unlock anywhere from $900 to $1.3 trillion in value. Now how does this break down?
Well 2/3 of that value comes from better internal communications and collaboration within and across their business. So in other words they’re using social media to work better internally. It’s a classic social business case (and nothing to do with worrying about followers or likes!).
I think this is worth repeating, because so often social media is touted as being a distraction at work. This McKinsey report however is saying that using social media tools actually makes you more productive. We’re not talking about playing FarmVille here, we’re talking about providing employees with the tools to communicate and collaborate better with one another.
Social technologies have the potential to free up expertise trapped in departmental silos. High-skill workers can now be tapped company-wide. Managers can find out “which employees have the deepest knowledge in certain subjects, or who last contributed to a project and how to get in touch with them quickly”.
Now if you’re not making use of this yet, don’t fret because you’re not alone. McKinsey suggest that just 5% of current content and communications use is taking place via social technologies, so you’re not alone in this. If you stand on the sidelines riddled with fear about what might happen though you soon will be.
I wrote last year about the six stages of social media adoption at any enterprise. If you become beholden to the risks and potential downsides of social media you’ll never get past the ‘fearful stage’. Hopefully this data by McKinsey will help give you the prod needed to fully make the leap and take social to your heart. Here are those six stages by the way.
Phases of social media
- Folly – when people think social media is a waste of time
- Fearful – when people are scared of giving people a voice
- Flippant – neither fear nor fervour. Build and pray approach.
- Formulating – when value is seen and strategies attempted
- Forging – where people integrate social media into their daily lives and it breaks out of a community manager/marketing dept responsibility
- Fusing – the most advanced attitude, when social media philosophies are at the heart of everything we do.
The thing is, how can you say something is valuable when there is such poor understanding of ROI?
Hi Tom, ROI is something that so many get so wrong. Much of those issues however occur when using social media externally. I think when it's used internally the ROI is much more clearly understood.
I don't think the mainstream social media tools are much use at all. It's no coincidence that Facebook's stock is falling like a stone. It's not because investors are idiots, but because the hype is wearing off and smart business people are seeing it for what it is, a social milieu in which there is no acceptance of push advertising, not unlike the telephone and rejection of telemarketing.
Hi Kev, you may be right about the utility of social media for marketing purposes, but there is a much better understanding of the returns of using social media internally, and of using it to engage (rather than to sell to) customers. Social media is much more than Facebook and Twitter.
I think social networks provide a great to to connect us in a more personal way to our business communities, it is less about the network and about how we can adapt using the help of the networks to communicate better with individuals inside our communities.
Great points for selling social to the C-Suite, who will appreciate the new report from McKinsey Global Institute as a supporting, trusted, respected third party perspective. Thanks for sharing..
You're welcome Rick.
Good article! Managing social media is the same as managing everything at work. The secret is focusing on value add and productivity. There are many reporting requirements at work that are out of date & non-productive. There are also some great productivity gains from tools like Twitter. The more I use it, the more I like it! But I filter for quality and relevance to my work, and I see others doing the same. Twitter is fast, makes you get right to the point, and can share real value with a network of interested, and interesting, people! I think I'll retweet this article!
There's a big difference between using social externally and using it internally isn't there? When using it internally, whilst the theory sounds great, I do wonder if it won't go the same way as things like knowledge management, which promised the earth but never really delivered.
I suppose only time will tell Nick. The difference for me is that people are showing every day their willingness to engage via social media. That wasn't really the case when KM first hit the market.
Nick,
Gee, I forgot all about knowledge media. Thanks for reminding me.
This is a fascinating take – especially since most of my clients are B2B and look cynically at social platforms. It's not surprise, when you consider the internal benefits of social, that tools like Rypple are growing in popularity. While agree with some of the comments underscoring the limitations to existing, mainstream platforms, I can still imagine ways to leverage Facebook & LinkedIn Groups, Twitter Chats and even Google+ Hangouts for internal productivity. My first time commenting on your blog – great stuff here!
Thanks Ruth and welcome to the blog 🙂
Working in a close knit office for many years I can see where social media can become a great asset. We really don't know what strengths and assets our fellow employees posses until some unforeseen situation arises and brings them to the fore.
I believe this information to be an accurate representation of reality. Does anyone know of a good case study to review that demonstrates the effectiveness of how social media helps connect internal resources for solving problems/creating solutions. In theory this seems like an easy fix, however, if you are within a company, do you really want to reveal internal problems/deficits within a social network that customers are privy to seeing?
You'll missed half of your life if your not into social media nowadays!