3 Layers of Business Value for Social Business
Douglas Heintzman 060000Q98X firstname.lastname@example.org | | Tags:  social-business
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I have the good fortune of being able to spend a fair amount of time talking to business leaders about the value of Social Business. Increasingly these conversations tend to break down into 3 major groupings of value. I often call these 1st, 2nd and 3rd order value propositions. For the most part you have to go through the first order value proposition to get access to the second 2 and most often the buying decision follows this order. There is a special case where the buying decision moves directly to the 3rd order value proposition which I will discuss later.
The 1st order value proposition is Collaboration/Discovery. This is all about making employees more productive. It builds upon the email and content sharing collaboration models and adds an essential new element of grouping people and content with many much more efficient attributes. This allows expertise and content to be much more readily discoverable. It allows for high amounts of high value reuse and content and expertise leverage across the organization. It allows for the serendipitous connection of people and ideas and accelerates ideation. Its allows people to get more, better quality work done more quickly because of a more efficient leveraging of resources.
The 2nd order value proposition is Insight. One of the very important side effects of a social business platform is that through an “engagement model” lots of information is collected. Not just the explicit information in the form of shared content and ideas, but also the information about the linkage between people and people, content and content and people and content. Who wrote what? Who commented on what? Who approved what? Who thought what was important and relevant? What is related to what? What is derived or inherited from what or who?
All of this semantic information can be extraordinarily valuable. It can help you generate metrics to understand adoption rates of different technologies or policies and allow you to quickly modify adoption strategies. Applying analytics against this data can give you insight about your organizations' sentiment about some initiative and insight about your customer's satisfaction with your products. You can garner data to help you optimize employee development or team formulation. It can give you advanced warning about market shifts or product development or supply chain issues. The application of sentiment, text, social and predictive analytics against this semantic data can also help filter content, make recommendations about related information expertise and communities, thus further improving and encouraging the “engagement” of employees in the social dynamic. By doing so it magnifies the value of the “Collaboration/Discovery” value proposition and the quality and quantity of the semantic data which in turn magnifies the the “Insight” value proposition thus engaging a virtuous mutually value-reinforcing loop.
You only get access to this 2nd order value proposition only if you are are successfully getting value from the 1st. That being said, tapping into the insight value proposition and exploiting metrics and analytics can substantially accelerate the adoption of the collaboration/discovery attributes of social business. You can never loose track of the fact that much of the value of social business comes form wisdom of the crowds and the real secret to success is to develop strategies that get you to critical mass quickly. With critical mass the social dynamic is self-sustaining and value to the organization is greatly magnified.
The 3rd order value proposition is Transformation. A social business behaves differently than a traditional business. Value in the organization does not derive from your ability to be a gatekeeper to information and expertise, instead it stems from your reputation in the organization and how quickly and efficiently others can leverage the work you do and the ideas you have. In a social business employees have a more direct emotional stake in the success of the organization. They have a voice and can make a difference. If they have an idea or opinion they can express it and engage in a dialog to refine its merits. When things are bad they can directly participate in fixing it. When things are good the can take satisfaction that they were part of its success. I am convinced, for example, that one of the biggest reasons that IBM has been so successful in reinventing itself into a company dedicated to solving some of the biggest problems the world is facing and building a “Smarter Planet”, is that so many of the core ideas of our Smarter Planet mission was derived from an series of “Innovation Jams” that engaged our entire employee population as well as many of our partners and customers in group ideation. We all have a stake in making Smarter Planet succeed because we all had a part in coming up with the idea in the first place.
The social business is much more agile and flexible. It generates ideas and intellectual property much more quickly. It identifies and responds to threats more quickly.
The significance of this 3rd order value proposition should not be under estimated. Social technologies will change business culture (I related an anecdote exploring this idea in more detail in another post).
Typically The “transformation” value proposition follows from successfully realizing value from the first 2 orders of value. That being said, I mentioned earlier in this post that there are some examples where some buying decisions move straight to the 3rd order, and from what I am seeing I suspect that will become more common. This buying pattern typically involves the CEO deciding that he/she wants to rebuild or reshape a company's business culture. There may be many different reasons for this decision ranging from a shifting competitive landscape or a technology disruption or a merger, but no matter the motivation, the basic idea is that business culture is becoming a board level strategic imperative for many companies and Social Business is a pragmatic way to achieve it with many examples of successful patterns deployed in many industries.
As social business increasingly gets integrated into the fabric of business processes the value creation potential of Social Business will be magnified. Some of this transformation will be accidental and happenstance. Some will be prescriptive and planned and most will be a bit of both. By breaking the desired value into some parts we may be able to better quantify the investment/return equation. Hopefully by appreciating the size and nature of 2nd and 3rd order value propositions we can find the motivation and discipline of making sure we are successful and realizing the 1st one.
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