Discover the value in social business
A Q&A with Gerald Kane, Associate Professor of Information Systems, Boston College
Published April 27, 2015
Social media has placed its imprint on the world and has already impacted society in big ways. A new study shows that social platforms are now also poised to fundamentally change the way business is done.
Results from the survey recently conducted by the MIT Sloan Management Review shows that companies have begun to derive real value from social business tools, but according to Gerald “Jerry” Kane, Associate Professor of Information Systems at Boston College, this is just the beginning. Companies are still in the very early stages of figuring out what to do with social data.
Kane, a professor in Boston, Mass., since 2006, is also the guest editor for social business at MIT Sloan Management Review and was one of the leads on the study, “Moving Beyond Marketing, Generating Social Business Value Across the Enterprise.”
In this Q&A, Kane explains how the enterprise has begun to benefit from social business, how businesses should plan their social strategy, and tips on how to derive insights from social data.
Insights Magazine: In what ways do you see social media changing business?
Gerald Kane: Not to get too academic and esoteric on you, but basically economists and business strategy folks have a number of theories about why companies exist. One theory is that companies exist to integrate the knowledge of their employees, so you get a bunch of smart people together, and when they start to communicate and work together, that creates some great output. The other reason a company exists is to help with transaction costs and provide and share resources, etc.
Social media actually in some senses undermines those two ideas, because social media allows us to get crowds of people together who don’t know each other and who can share knowledge and work together. Things like open source software or Wikipedia or all of these examples where freelancers have gotten together to create goods of economic value are pretty remarkable. The other way with transaction costs, now we see companies spring up like Uber and Airbnb, where you can get a hotel room without going to a hotel or a ride without owning a car or getting a taxi. It’s changing those two very fundamental reasons that companies exist. I really think we’re only just scratching the surface of where all this is going to go.
PODCAST: Click here to listen to a podcast to hear more from Kane about social business.
Then, of course, it blurs the boundary between people inside the company and people outside the company. It allows companies to interact with customers at a much more intimate level than ever before and vice versa. Companies don’t have to wait until a customer has a complaint. They can reach out and get insight from customers about product offerings or their experiences, just based on monitoring the social media data. All three of those things I think are just remarkably significant trends that really have potential to change the way companies work.
IM: Where do you feel most companies are today in terms of their sophistication in monitoring social media and interacting with customers?
Kane: I still think we’re at the early stages of that. You certainly have companies doing fairly sophisticated monitoring and mining and neural-net algorithms and the like, but I don’t think we have a lot of experience to know what to do with that data.
For instance, California healthcare company Kaiser Permanente was able to monitor social media and traffic to learn that one of their customers’ biggest complaints was parking. Using geotag devices, the geotag tweets, they could figure out which facilities had the most problematic parking and step in and fix those things. You also have companies like T-Mobile who actually are monitoring social media to learn what customers hate about their competition. They’re not monitoring what their customers think, they’re monitoring what AT&T and Verizon’s customers think about AT&T and Verizon. They then figured out that the thing people hate most about those companies is their contracts. That’s when T-Mobile started their ‘uncarrier strategy.’ They completely reshaped the organization around what they learned about AT&T’s customers from social media.
INFOGRAPHIC: Click here to see our infographic, "Social media in the global market"
That's pretty significant. Companies are actually plotting strategic direction based on the information they find. But I think we're still pretty new. None of these platforms can deliver the type of magical insights that they claim they can. As we become more mature users and as the tools get better—and then as managers understand what information to respond to and what information not to—I think we’re going to become much more sophisticated consumers of that information.
Inside the organization, there’s a lot of potential here as well—and we haven’t really seen much of this yet, but if there’s the option to monitor social traffic within the enterprise, it would give managers a much more transparent picture of how their employees are actually working together.
IM: The potential benefits to monitoring social activity then are pretty significant to the future of the enterprise.
Kane: Absolutely. There’s some argument that not only is it a benefit, but it’s really a requirement—not only from a strategic perspective, but also from a legal perspective. Could you be held liable for things your employees or customers say on social media? If you’re not monitoring it, you should be. I’m not sure we’ve gone far down that path yet, but I think to ignore this data is the wrong decision. One of the big differentiators of companies who are doing social well, and those who are not, is how they take advantage of the social data to do decision-making.
IM: Social technology continues to advance, but as you said, most companies have only scratched the surface of what’s possible. What’s holding these companies back from embracing social business?
Kane: It’s about the business processes that are required to take advantage of this, because as the data moves more quickly it requires the company to move more quickly in response. One of the most famous examples is the Oreo cookie Super Bowl blackout ad from a couple years back. When the Superdome lights went out, the company sent out a tweet that said, ‘You can still dunk in the dark.’ Another example is McDonald’s at the Super Bowl this year, which did a very sophisticated piggybacking on other people’s advertising streams. What people don’t see is the amount of behind-the-scenes work that goes into being able to respond that quickly.
Kane gives his advice to companies on how to increase the success factor of your social endeavor:
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Start small: Start with small pilot projects within particular divisions or project teams. BASF, a German chemical company, banned email within one project team—as an experiment—to see what would happen when they started working on social. They found that the efficiency of the project teams went up by about 25 percent.
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Force them, but don’t: With that BASF example, the employees wouldn’t have done that if they weren’t forced. It’s a combination of you’ve got to force them, but you can’t force them. What a lot of companies do is begin by recruiting volunteers and people who want to help champion the social projects. I’m sure every company has someone who wants to do that. I think at the beginning you could probably give it to them as a pet project, or a volunteer project, but you also need to recognize that this is work. If you’re not going to recognize that this is part of an employee’s job description, as part of their performance review, then any successes are going to be relatively limited. I’m asked, ‘Well what if employees refuse to use social? What if they just don’t want to do it?’ My response is, ‘What if an employee came to you that refused to use email? Or they don’t want to use the telephone? Could you work with this person?’ The answer is no; nobody in their right mind could think of working in this day and time without those tools. I think we’re getting social to that point.
- Social starts from the top: I’m not sure that CEOs and CMOs really need to always be doing it themselves, but they need to be championing these efforts. If these efforts are not coming from the top, it’s not going to get the institutional support the needs because this is going to require people going above and beyond and learning new ways of doing things. If the boss isn’t encouraging it and driving it, it’s just not going to happen. At the same time the boss needs to be very sensitive of listening to the people who are doing it—what's working, what’s not—so the boss can tailor his or her vision based on the results of the ground. It’s an interesting combination between top-down mandates and visions and bottom-up organic evolution. It’s a cycle between those two.
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I read about a company that saw someone had tweeted out something so they went through the normal approval processes, they brainstormed, and one week later they crafted the perfect tweet in response. In social media time, a week is far too long to respond. It’s like a millennia. To get companies to be able to respond quickly—with the right resources in place, at the right time, with the right approvals, and the right legal signoff—actually requires a lot of back end sophisticated work. I think the bigger challenges are not technical, but organizational.
One other roadblock for companies is there still a little bit of ‘this is what the kids do’ mentality. That Facebook is for teenagers, or that it’s social, therefore it is not professional. I think we’ve largely come a long way from that, at least with respect to marketing. But there’s a long way to go before social gets its legitimacy. But if you think of email as social media too, companies are already doing social. The question is, are they doing it as well as they could be doing it? One of the things that managers find particularly attractive as I talk to them about the benefits of social is, ‘What if I could cut your email load by 50 percent?’ We use email all the time, and we use it for some purposes that it's not really well-suited to. If we start using a lot of the social tools we can really cut down our email load and collaborate more efficiently. The barrier there is your deciding whether to do it, yet the bottom line is you’re already doing it.
IM: So it’s more about how to do it better.
Kane: Right. It takes slack time for employees to figure out how to use these tools efficiently because it’s not only about the organizational process from a strategic perspective like operations, it's also business processes, how do employees relate to each other, and we have to figure that stuff out. To figure out long-term advantage and explore how to use these tools sometimes means we struggle a little bit in the short-term because it takes time to learn how to do this. Companies are notoriously not willing to do those types of experiments and therefore sacrificing the long-term growth in favor of short-term outcomes.
INFOGRAPHIC: Click here to see our infographic, "Steps to social maturity"
IM: What should companies think about when planning a strategy around doing social better?
Kane: Some of it is, don’t think too much, just do it. I interviewed a company called Mytel, which is a midsize B2B telecommunications company in the Midwest, and they had launched a brand ambassador program for their employees. They gave their employees training and said, ‘If anybody would like to speak on behalf of the company, here’s how you do it through your own Twitter account and here are pre-crafted Tweets to help talk about this online.’ Then they did a gamification system to see which employee was the biggest influencer, so that it became a friendly competition inside the company.
The project completely changed the relationship between employees and the brand, because now they were brand advocates and not just employees of the company. It helped them understand the strategic direction better, and it turned into a huge organizational change management situation. The chief marketing officer told me he that if he knew what he was getting himself into he probably never would have done it, but he said he also wouldn’t go back.
I think successful social media initiatives within the organization aren’t about developing a grand plan and then executing on that vision like we might have done with ERP systems a generation ago. It’s about trying little experiments, seeing what works what doesn't, and then iterating quickly. Social is a very flexible platform, and there are many choices of platforms to use. Until you experiment and test, and do some pilot initiatives in some very particular divisions or particular project teams, you’re not going to know what the possibilities are for your organization. My thing is, don’t over think it, just start experimenting and see what works, and see if it’s right for your company.
Check here to listen to a podcast with Gerald Kane to learn how multinational companies that use social strategies combat the language barrier issue, and also find out what the recent study conducted by MIT Slone told Kane about the differences between the social practices of B2B and B2C companies. And, find out why Kane feels IBM is the grandfather of social business.