Emily Tan
Nov 26, 2012

Social business, what works and what doesn’t: IBM

GLOBAL – Companies want to use social approaches to create meaningful business value, yet nearly three-quarters of survey respondents said they were underprepared for the required cultural changes, according to IBM’s latest study.

Corporations are increasingly working social into business
Corporations are increasingly working social into business

The report by IBM’s Institute for Business Value is based on responses from more than 1100 individuals and interviews with more than two dozen executives from leading organizations around the world.

Despite the long journey ahead, corporations are keen as they recognise that top-line growth for successful social business users can improve between 3 and 11 per cent, while productivity can be increased by between 2 and 12 per cent, according to a study by the McKinsey Global Institute.

As a result, many have taken steps toward implementing social practices, with 46 per cent of companies surveyed having made investments in social business in 2012, while 62 per cent indicated they were going to increase their expenditures in the next three years. This potential for growth has agencies, consultancies and large tech firms like IBM and Salesforce jockeying for a piece of the business.

Most of these businesses are applying social within their marketing (67 per cent) and public relations (54 per cent) functions. Areas expected to grow most rapidly in social business adoption include customer service (from 38 per cent of companies today to 54 per cent in the next two years) and sales (from 46 per cent to 60 per cent).

According to IBM, organisations are deploying social business investments in order to create valued customer experiences, drive workforce productivity and accelerate innovation.

Create valued customer experiences

Of those in the survey who have applied social business to customer issues, 60 per cent are using social environments to answer customer inquiries and 78 per cent are planning to do so in the next two years. More than half (55 per cent) are taking this even further by soliciting customer reviews and opinions, and 79 per cent plan to follow suit within the next two years.

For example, North American retail bank TD Bank wanted to find ways to extend convenience and comfortable experience to social. Also, its customers were increasingly trying to do more of their banking by using social-media tools. TD Bank decided to take its customer service social by using Twitter and other social platforms to listen, reach out and respond to customers in real-time. A team of 25 dedicated specialists across North America now monitors and engages in real-time 18 hours a day seven days a week. TD also integrated this capability within its contact centres and overall customer-support strategy.

Social business is also moving beyond basic promotional activities to encompass the entire customer lifecycle, including lead generation, sales and post-sales service. The report found that while the percentage of companies expecting to use social business for promotional activities will rise slightly, from 71 per cent today to 83 per cent in the next two years, the number of companies expecting to use social approaches to generate sales leads and revenue will increase dramatically. Today, 51 per cent use social approaches for leads and revenue, while 74 per cent plan to get on board in the next two years. Post-sales support is also expected to increase, from 46 today to 69 per cent over the next two years.

Driving workforce productivity

While customers are the primary focus of many companies, more are starting to incorporate social approaches into the day-to-day activities of their workforces, IBM found. Of the respondents that have used social approaches to address workforce issues, almost two-thirds are applying social capabilities to find information and collaborate more effectively, with more than 80 per cent expecting to do so in the next two years.

One approach has been the implementation of social practices within corporate formal and informal learning efforts, as this can help reduce the time it takes to develop needed skills. By and large, organizations are applying social capabilities to enhance learning through sharing comments and insights on learning materials, building team dynamics into learning situations and using gaming techniques, such as rating and scoring. Corporations are also using social to incorporate modern simulations methods, provide access to subject matter experts, and using tools such as video to capture attention and improve retention.

The Boston Children’s Hospital, for example, recognised the need to build capability among, as well as capture learnings from, physicians located in hospitals around the world. The hospital developed a network of pediatric critical-care specialists to share their knowledge about leading practices. It also created a series of learning modules, simulations and best-practices guides to provide timely guidance, simulate hands-on experiences and improve the skills of its staff and students. The network has videoconferencing and information-capture capabilities to bring individuals together for face-to-face connections, and is regularly monitored by the community of experts.

Firms are also looking to use social beyond organisation boundaries, to improve coordination with customers (39 per cent), vendors and partners (58 per cent), as well as leverage external talent, such as crowdsourcing (24 per cent). Even those focused on “getting things right internally” view this as a critical next step.

Accelerating innovation

Companies report that social tools are making it easier to acquire new ideas from almost anyone who touches their organization. However, management and employees must be prepared to take advantage of new ideas, regardless of their source of origin, IBM advised.

Social tools have made it significantly easier to raise the visibility of new ideas, regardless of their source. Those who have the most experience with a product or service, such as a customer, a business partner or even an employee, now have the opportunity to share insights and obtain feedback from others.

Among the survey’s respondents with experience in using social to innovate, their organisations are focused on enabling more effective internal collaboration (57 per cent), monitoring customer comments for new ideas (58 per cent), obtaining feedback from customers (46 per cent), enabling customers to submit plans and solutions (40 per cent) and generating effective collaboration between partners (38 per cent).

One company that has collaborated with business powers to innovate is German skincare product manufacturer Beiersdorf. In addition to its standard innovation networks with external partners, it created the Pearlfinder platform, which allows suppliers, universities, institutes, consultants and inventors to submit ideas and work in collaboration with Beiersdorf staff to refine the ideas and process. Thanks to Pearlfinder, Beiersdorf has enjoyed successes in jointly developing new  products. Examples include development of a new shaving system with Phillips, as well as a number of ingredients manufactured in the hair and body-care space. The number of previously unknown partners interested in working with the company has increased, and a variety of external partners have approached the company with ideas.

Besides bringing groups together for organized conversations, successful idea-generation efforts involve significant communication before, during and after the process. Leaders in social business clearly and broadly communicate the “big picture,” such as why idea generation is important and what is expected from participants.

Embedding social into your organization

While rapidly ramping up their social maturity levels, executives recognise challenges in their path. Two-thirds said they were not sure they sufficiently understood the impact social business would have on their organizations over the next three years.

Executives are concerned because they realise that social business represents a different way of thinking about employees, customers and how work is accomplished, as well as the potential risks of increased organizational openness and transparency.

For organisations prepared to take these steps however, IBM identified three key issues to be addressed on an organizational level:

  1. Companies need to consider how to incorporate social metrics into their traditional enterprises and processes.
  2. They need to understand and manage the risks associated with social business.
  3. Change management remains a critical requirement in embedding successful social business practices in an organization.

Using social metrics to make business decisions

Only about 20 per cent of organisations surveyed were able to define key performance indicators (KPIs) and track the return on investment (ROI) of social business efforts. The remaining 80 per cent found it difficult to gain momentum with their social business initiatives, as uncertainty of results made many stakeholders reluctant to invest.

For those that did try to quantify their results, they found that justifying social approaches based solely on cost savings was insufficient. Rather, they either undertook pilot projects to demonstrate the hard and soft benefits of social projects and/or ran trials that compared the performance of individuals or groups using social tools against those that did not.

IBM also learnt that justifying the ROI of social effort is only one potential use of social data. Analytics can make it possible for organizations to integrate social and traditional data sources to make more effective decisions about customers and the workforce.

Managing social business risks

Respondents to IBM’s survey and executives interviewed cited a number of concerns, including attacks on their brands, legal issues, data security and privacy, and unintended disclosure of company information. While half the companies do not yet have effective processes in place to deal with these, nearly a quarter say they do, and another third have efforts underway.

However, many of the interviewees highlighted the importance of clear governance in managing the wide range of social initiatives within their organizations. They also established policies for employees to follow when engaging in social business and a governance structure for managing and monitoring enterprise-wide social business behaviour.

Leveraging change-management practices

A dichotomy exists in many organizations between the senior executives who see the value in applying social capabilities and the managers who must embrace these capabilities as part of their day-to-day work. IBM’s survey showed that while 48 per cent of organizations indicated they have support from the C-suite, only 22 per cent believed that managers are prepared to incorporate social business into their daily practices.

Similar to previous transformations, social business requires a focus on assisting people in understanding the value of social initiatives, involving the right stakeholders and providing the appropriate support and motivation, advised the report. 

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