The social media Trojan Horse

Social media has the capacity to be the glue that connects your business with the rest of the world.

There has been a huge amount of hype recently around social media and many people around the world are trying to figure out how best to use the technologies to transform their business models. Beyond that current fixation, social media technologies will change the very nature of how large organisations work. The Mckinsey Global Institute released a report last year with the headline number that use of social media technologies in four sectors could add US$1.3 trillion to the world economy. Underlying that headline is the view that social technologies can increase the productivity of knowledge workers by 20-25%, a huge gain for companies that employ significant numbers of knowledge workers.

At a recent presentation to a CEO institute group, I quoted research that people inside large organisations spend 40% of their time trying to find the right person or the right information to solve a problem or meet a customer need. The overall response from the group was “only 40%”. Social media technologies have great promise in connecting the right person with the right information at the right time.

This is the core reason that social media technologies can be viewed as a Trojan Horse inside large organisations. If social technologies are about connecting to the right person or right information at the right time, then the question that has to be posed is whether that information or person is necessarily inside your organisation. The increasing use of social technologies inside large organisations means that people will become more and more comfortable in using them to organise their connections and their workflow. Once that happens they will become far more comfortable in using that process to connect and collaborate with people outside of their organisation as well as inside.

The Nobel Prize-winning economist Ronald Coase wrote a paper in 1937 called ‘The Nature of the Firm’. The essential message in that paper is that we build larger organisations because what that organisation is capable of doing is far more valuable than the associated transaction costs that come from a large bureaucracy. It may seem obvious but if we examine the proposition from the point of view of social technologies then it gives us new insights. What we are about to see is a battle between the increased capacity the technologies give individuals and small organisations to collaborate and get things done, and their capacity to reduce transaction costs inside large organisations. There will be no single winner but the basic value proposition of the large organisation is under threat. We will see far more collaboration across groups and less value in large organisations.

What this means from an IT point of view is that these changes will fundamentally change the nature of work inside organisations and will make them more porous to the outside world. This will fundamentally embed IT more strongly into the business process and forward-thinking implementations will be looking to create a structure which facilitates all of this change.

Image credit ©iStockphoto.com/A.J. Rich