social business (r)evolution

Social Business (R)evolution

___________________________________________________________ Copyright 2011 – Martijn Linssen martijnlinssen.com

http://martijnlinssen.com/

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Social

The current world is abuzz about Social. Social networks, social media, Social Business: all things social. People, Twitterati and even a small number of companies embrace the diverse ideas and notions of Social, trying to sell and implement them

That movement is a natural counter reaction to the events that have occurred over the last centuries: industrialisation and automation has allowed industries, companies and societies to grow beyond belief

Where in the 1600’s the Dutch East India company was the largest private company in the world with 50,000 employees1, nowadays a company like Walmart has 2,000,000 employees, and there are hundreds of companies around the world with more than 100,000 employees: the top 50 of the Global 500, sorted by number of employees, ends at 256,000 for Daimler2

Countries have equally super structured themselves: around 1600 China had 120 million inhabitants, and the whole of Europe 78 million3. Today, China counts 1,300 million inhabitants, and Europe 730 million

Countries and continents increased tenfold in terms of population, companies forty-fold: unbelievable edifices of organisation have become required to uphold them. Hierarchy, a seemingly endlessly scalable organisation form with one man and a Board of Directors, or a King or Queen and Parliament at the top, and the final product- or customer-facing employee, or person, at the bottom, many levels down

On the other hand, people have become much smaller organised on their own level: family size has imploded over the last centuries4. Where there used to live 3 generations or more within one household, that now is usually one or two. The average number of children per household has also declined from an estimated 5 in the Middle Ages5 to 2.5 now

1 http://en.wikipedia.org/wiki/Dutch_East_India_Company2 http://money.cnn.com/magazines/fortune/global500/2010/performers/companies/biggest/3 http://www.enotes.com/peoples-chronology/year-1600/population4 http://en.wikipedia.org/wiki/History_of_the_family5 http://www.histoire-pour-tous.fr/en/dossiers/95-moyen-age/2630-croissance-demographique-au-moyen-age.html



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The distance between the two different parts of the equation has thus increased over time. Every-day society and company size grew larger and larger, while the direct and daily circle of close relatives grew smaller and smaller.Like a rubber band this contrast has been stretched and stretched, and now seems to be snapping back. There is a call for Socialisation where the organising form is wirearchy6: horizontal networks over vertical pyramids

There are three kinds of Social: Social media like Twitter and Facebook, social networks that have explosively increased in size due to these media, and Social Business (Design). Whereas Social Business design is coined by Dachis7, the term Social Business is now more generally embraced after Enterprise 2.0 – a highly tool-centric focus- has become less appealing over the years

A big advocate of Social Business is Stowe Boyd:

A social business is an organization designed consciously around sociality and social tools, as a response to a changed world and the emergence of the social web, including social media, social networks, and a long list of other advances. Metaphorically, a social business will seem more like a village than an army, and where a lot of 20th management approaches will be obsolete. We can expect these features:

* ubiquitous use of social tools, and social networks, * greater levels of personal autonomy, * self-organization of groups and projects, * very porous boundaries with the world, * high reliance on non-financial motivation, or personal meaning and purpose, * internal marketplaces for ideas and talent, * and senior management operating more like Hollywood producers or investors than autocrats.8

A new world forming in the old world: evolution or revolution?Evolution is growth, revolution is change. Like the dinosaurs evolved into animals of enormous size, unable to evolve back, certain companies might face their fate as well, or be subject to revolution. However, that seems to more apt for societies and countries, and not companies, looking at

6 http://www.wirearchy.com/what-is-wirearchy/7 http://www.dachisgroup.com/social-business-design/8 http://www.stoweboyd.com/post/910572413/defining-social-business



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Tunis, Egypt, Lybia, and possibly also Yemen and Algeria at this very moment



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Social enough?

The question is: what is not social enough to what extent?Again dividing the world into companies and societies, it is clear that Social benefits in those areas where "size matters"

Villages, small towns, rural neighbourhoods all are of small size and seem to fare well, and intimacy is relatively high. People know their neighbours by name, know what they do, what their daily schedule is, might pay each other frequent visits and exchange greetings or a few words when they meet. There might be exceptions to that rule, but not significant ones.Cities, metropoles and metropolitan areas are on the other side: not hundreds or thousands of inhabitants, but millions, sometimes tens of million. People live in relative anonymity, sometimes not even knowing even a single one of their neighbours by name, passing each other in silence on the streets

Local grocery stores, the well-known corner store, small companies with up to 50 people, SMB – all those are of small size as well. Usually the employees know each other well, there is a low level of formality and they know most customers as well.People get recognised when they enter a store, or do business – it is all rather intimate.Multinationals, large companies, enterprises, Global 500: these are vast organisations where one will never get to know all colleagues, simply because there are so many of them that they come and have gone before you had a chance to meet them.At some point people stop introducing themselves and start wearing name tags or badges for convenience - the same anonymity as in large cities is encountered

The trick with companies is the fact that people can be customers, but also employees – sometimes both. Some parts of social focus on customers, some on employees - but both evolve around intimacy versus anonymityWhen you know each other well, or fairly well, the threshold for interacting is low. Vice versa, when there is a low threshold for interacting, people will get to know one another relatively easy, and well.



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Proximity among others makes for that, but this isn't a mere physical one: cubicles don't really make for good interaction, nor do apartment buildings, nor elevators - you can also be too close to someone.Distance: having colleagues in another building, region or country however doesn't make for good interaction, if you don't have a reason to interact with them: they'll probably join, and, after a few years, leave the company without you even noticing

The proximity - distance balance seems to coincide with the intimacy - anonymity one. If there are 5 people in a room, chances are very high that they'll first ask each other questions, rather than someone else. If 100, there's a different outcome.However, you can't know the unknown. There is a 100% chance that you'll interact more on Twitter and Facebook with people across the globe than people living within a mile radius of you; simply because you happened to get to know the former, and not the latter.Also, the tools are only needed to cross time and space; if you don't need to do so, a face-to-face interaction is preferred, and tools not needed. Do you call your neighbour on the phone, or simply pay him or her a visit? Do you email the person sitting across your desk?



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Social and Social Business

What are the drawbacks of this anonymity and distance in societies and enterprises? Why would we converge from the current world to the new world, be it by evolution (gradually) or revolution (radically)?

Over the past years, social (business) evangelists and devotees have described what social is, how it would work, and how it would evolve - mainly focusing on society or the customer, and not so much on the employee

Today, the world is getting increasingly connected. 500 million users on Facebook, 150 million on Twitter, 100 on Orkut, 100 on LinkedIn: that is three quarters of a billion people. That does include abandoned or scarcely used accounts, and possibly only 10% of all these is actively using social media across social networks - but still, that is an enormous amount of people

All this happens with free tools, and out of free will. It leads to new business via conferences, events, and products such as microblogging that operate via a freemium or even completely free model. However, the distance between this digitised social world and the old-fashioned world is increasing, and people are calling for a revolution - but that is not likely to happen

Social isn't a fix for everything - nothing ever is. But existing business could benefit from the current movement(s) out there, the question being: which business exactly?



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The promises of Social Business

Many promises are made, and they all focus on closing the gap between companies and customers, as well as employers and employees - or vice versa. Social CRM advocates claim the Social Customer is in charge now, rather than the company, and Social Business advocates stress an increasing autonomous role for employees and a decreasing role for management, especially the middle layer

So there are two "battle fields" for Social: inside the company, between employer and employee, and outside the company, between company and customer. Connecting employees to employees across business-, geographical and political borders will be having effect as well, just as connecting people to people is having already



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Employee to employer

Where can Social make a difference? In large companies where employer and employee have become disconnected by the distance in between them - not the local corner stores. Ever heard of Entrepreneur 2.0? Local corner store 2.0? SMB 2.0? No.Enterprise 2.0 was the phrase, implicating that the size of enterprises has caused a disconnect between employees and customers - among others.Professor McAfee made a second attempt to define his Enterprise 2.0 definition back in May 20069 but never answered any of the 65 comments to that post - proving his theory wrong by showing that mere tools will simply not make a difference or change old habits

Social can heal the wounds the enterprise inflicted on people. People who go to work in the morning, and return in the late afternoon or evening, and wonder why they're doing all that, other than keep providing for their families.The question is: if they haven't done that for themselves, how can (Social) tools make them change their ways?

The most plausible answer is: given the lack of human experience by the employee in large companies, the introduction of the notion of Social Business could make them feel better, hence more productive, thence the business could benefit from that.So there is a break-even somewhere, between company size and employee involvement - here is how companies evolve

Everyday a few companies are formed, nowadays one could indeed have an idea in the morning and a company in the afternoon. Many ideas lead to entrepreneurship, and successful entrepreneurs get personnel and grow into a company

A company can grow into a hundred, a few hundreds, a few thousand employees: even if they all stay in one place, their numbers will cause them to spread over different floors, departments, and a 3 hour lunch time span because they simply can't be seated and fed all at the same time

Such a company can become large, or even larger: an enterprise.

9 http://andrewmcafee.org/2006/05/enterprise_20_version_20/



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Fair to say that an enterprise is connoted by some form of anonymity: at least half of all employees won't know the other half, possible one employee will only know up to 25% of all employees by face and / or name. Their sheer number drives not only a vertical separation across different floors, but also a horizontal one across different buildings or even locations. What kinds of enterprises are there?

A multinational is a large company, split across borders in multiple locations: one will definitely know just a small percentage of employees worldwide.Needless to say that getting to know and keeping known your fellow employees will be hard, across all that distance

A bureaucracy is a different institution. Whereas there can be a relatively good form of close personal contact in enterprises and multinationals, a bureaucracy exists by way of anonymity. To be able to treat each other - employees and customers alike - with bureaucracy requires a certain degree of carelessness.Not knowing each other helps to uphold that lack of care and respect. Rapid takeovers in succession, frequent reorganisations, internal relocations, all that helps to keep transparency low, anonymity high, and care out of the window. It's pretty much how good neighbourhoods grow into ghettos: when and where you end up only knowing yourself and your neighbour next door (at best)

A faceless bureaucratic institution is the summum of a bureaucracy. It is an organisation where the walls are so thick and the organisational layers so dense, horizontally as well as vertically, that no one has an incentive to do his or her job anymore. The entire system is so overgrown that anyone can safely blame someone else because the chances of that someone else being reached in order to verify the story are 0% - absolutely nil. Faceless bureaucratic institutions can be easily recognised by an utter lack of reward and punishment.It's an organisation where anonymity and lack of care have grown into or even beyond the extreme



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Customer to company

When it comes to companies and customers, the story is different, but similar - distance or proximity is the major factor once again. This time, it's the distance the customer is willing to "bridge" in order to get the product or service

Are you buying a candy bar? A pack of cigarettes? A car, a house? An insurance policy, a credit, a mortgage? Just a beer, or your favourite brand? A tyre for your car? All different products, with an entirely different lifetime, brand awareness, and customer interest

The shorter the lifespan of a product, the less you'll care where you bought it. The less difference between buying product A from company X or company Z, the less customers will care. Special products, unique products, "feel-good" products, products that make a direct appeal to you, those are different

The shorter a product's lifespan, the higher the chance that the customer will remain unknown to the company

The longer the lifespan, the more time and energy you'll want to invest in it, and the more difference a good relationship will make

The higher the price, compared to other products, the more you'll expect of a great product - in pre-sales, product itself, and after-sales: the complete package

The longer a product's lifespan, the more data and information a company will have on its customer

Somewhere along the lines, products change to services, image: that 20,000 dollar watch is not just a clock, it's an image - a personification. And people play a very large role there in selling it. Social could add value in customer-facing and employee-driven segments



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Employer to employee

There are companies where people see their manager every day, and there are also companies where managers only exist on paper and people get their appraisal at end of year from a project leader, account manager or anyone else who is not their manager

Infinite amounts of greyscale in between these two extremes, but the employer-employee relationship is not fit for benefiting from Social: Social is about connecting unknown people to unknown people, establishing ties that weren't there before. Called weak ties, these ties might become strong, and turn into relationships as we know them.There already is a relationship between employer and employee - they know each other and can easily get in touch. Telephone, email, the tools have been there for decades to cross that distance - Social is not adding anything to that



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Employee to employee

There are plenty of examples where microblogging tools add value to an enterprise. In a way, they are nothing more than a company-wide email from an employee asking a question, followed by a Reply-to-All. While frowned upon in "emailtiquette", microblogging platforms are the place to be for this way of communicating - they are in fact nothing more than the old fashioned bulletin board where questions are asked "to the world"

These tools cross national, regional, departmental and time boundaries the same way telephone and email have or allowed for, but telephone has a single point of entry, and for some reason email groups and distribution lists hasn't caught on as a way to reach hundreds or thousands of like-minded people at once - it is the all-or-nothing approach of enterprise microblogging that seems to be successful - but there's more to it than that

We've had Usenet groups since 198010. In the nineties, bulletin board systems11 were followed up by forums12 - these served the same purpose and allowed for the same interaction.But, back in the 80's, only techy innovators and early adopters had access to the internet. As a consequence, Usenet groups have become associated with flame wars13

where users abuse one another like in ordinary scolding.In the nineties, internet access became a little more widespread but was limited to dial-up - every second counted

Corporations started using forums for sharing knowledge, but these also were via dial-up. Paying the bill for that helped, but didn't make it widespread. Most communications were dealt with on paper, and email wasn't something you'd have to check daily.With the spread of "ease of dialing in", and the current "always on" of Internet access, be it locally to your house or nationally when on the road, tapping into The Stream has become a rule rather than an exception. Going across ISP borders, there are still gains to make: the costs for roaming are exorbitant14, but will change over time, just as

10 http://en.wikipedia.org/wiki/Usenet11 http://en.wikipedia.org/wiki/Bulletin_board_system12 http://en.wikipedia.org/wiki/Internet_forum13 http://en.wikipedia.org/wiki/Flaming_%28Internet%2914 http://en.wikipedia.org/wiki/Roaming#Roaming_in_Europe



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outsourcing and offshoring benefit from differences between countries that exist now will evaporate over time

What is Social? Does Social exist, really? Hasn't it always existed? Some people argue for the latter, but the truth is that many people are getting connected to each other simply because technology and price allows them to.The people's revolution of Tunis and Egypt weren't made possible by Social, but by technology: flat rate Internet access, and mobile to access it, turning each and every one of them into a mobile headquarter and / or journalist. Twitter and Facebook made for convenient platforms, as the first global read-write single source of entry



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The benefits of Social Business

To answer that question, we need to look at another factor: not size / distance or intimacy, but humans and machines

IT basically provides humans with machines. Or more accurately, human tasks are slowly replaced by machine tasks where possible

It takes time to turn human tasks into machine tasks, so basically they shouldn't change while being built. They also shouldn't change much after being built. That's why building houses on sand was considered foolish millennia ago already.It's almost exactly like portrait painting. It's a lot easier doing that when the model sits still, and when done the result looks much more alike if the model doesn't change too much after that

Knowing the how, now the question is: which human tasks can be replaced by machines, or automated?

The closer you come to business, the more humans you'll need. The further you move away from business, the more machines you can use. Basically, business needs people, and machine needs infrastructure

That puts humans on top in the IT food chain, and machines at the bottom. Although arguably both depend on one another and couldn't live without...

Having said that, there are very different properties for humans and machines:

Machines serve automation. They are (and must be) rigid, because what runs directly on top is simple and static: great for storing business rules, they handle data very well. They sit in the infrastructure layerHumans serve people. They are (and must be) flexible, because what they support is complex and dynamic: great for handling business exceptions, they handle information very well. They are part of the business layer



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Rules versus exceptions

The difference between rules and exceptions might seem clear, but there is a fine line in between: known errors. What are rules, what are exceptions, and what are known errors? Understanding this is crucial to determine where Social Business can, and can't, make a difference

In IT, the difference is clear: business rules are the rules needed to follow in order to achieve a desired business outcome of a business process, stepping through its process steps.

Known errors? Functional known errors that can occur during each process step, causing the process to double back because business requirements weren't met.An example would be someone trying to withdraw money from an ATM without having the required funds, Foreseeable, however unfortunate for the person at hand, and thus a rule that is part of the business process, yet not one leading to the expected outcome.

Exceptions? That is quite another story. Not talking programmatic IT exceptions, but business exceptions.If you want to have a perfect product, you will just follow the business rules, and the known errors - but trying to turn exceptions into known errors just doesn't give you a cost-efficient return on investment.Building an earthquake-proof tower in an earthquake-sensitive area makes sense, but will you build it to withstand an atom bomb?No. It would take so much money to do so (let's just assume it's doable) that it will make you a laughing stock among the competition. While an extreme example, still, if that event occurs, you will have to handle it.

Because exceptions can't be predicted, and they relatively seldom occur, they can't be automated, and are thus left to people to handle. But what if the same exception occurs among communication borders? Even if there is no fix present, it might be added to the list of known errors, and automated, vastly saving time and cost of employees having to handle it - and that's where Social Business kicks in



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Social Business definition

Having said that, here is my definition of Social Business:

Social Business deals with business exceptions rather than rules, requiring flexible answers to complex questions in dynamic environments. As such, it isn't about giving predefined answers to predictable questions, it is about giving unpredictable answers to undefined questions.Social Business serves best where an increased distance between people on all sides is negatively affecting business as a whole.Social Business is best for establishing ties between unknown people

Where would Social Business be applied best - inside the company? Which department, which kind of people, where?And where would Social Business be applied best - in between the company and the customer? Which industries, markets, sectors?

We can take the properties of social business as defined above and see where they would make the biggest contrast: after all they should fix an existing problem.Doing so, we will even find out why Social Business is good for some, and not so good for others



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Social Business Magic Quadrant

A Magic Quadrant for Social Business is depicted above. It's a company-customer view, rather than an employer-employee or employee-employee one

Focussing on the fact that Social is all about people handling exceptions, diminishing the distance in between them and connecting people across barriers, there are certain places where Social will do more bad than good, simply put

Assembly lines, industries producing intermediate goods: those are product-driven and product-facing. Any chance of Social playing a positive role there? I doubt it, that will do more wrong than right, from a company-customer point of view.Business rules are the rule here, and business exceptions signs of extreme danger, rather than something unexpected that can occur.Business lines like these can outsource and offshore just about everything, because it is all defined down to the very last bit - not depending on people to fill in the blanks; because there are no blanks

Product-driven yet customer-facing are food brands like Coca Cola and McDonalds, who sell an experience rather than a product. A drink is a drink, a burger is a burger, yet



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these companies sell an image rather than a good: they deliver a product, but distinguish themselves by service. They do that by making sure their product and service is consistent all over the globe, yet diversified by country

Product-facing and employee-driven are brands such as Zappos, that sell shoes yet deliver an extraordinary customer service, including a 365-day return policy, and 24/7 customer service - they took an ordinary product and turned that into an experience. Apple is an example there too: a whole lot of human input is used to determine the final product

Customer-facing and employee-driven are companies that deliver services, rather than products: barbers or hair stylists, system integrators, outsourced service desks

Where could Social attribute most in the company-customer relationship? Where the focus is least on the product, and most on the service - from a company-customer point of view. Yet, there's an extra dimension: Social connects unknowns, not knowns. Social CRM is an oxymoron15 as CRM is about existing, known customers whose full details are on record within a company: Social can in this case at best target unknown future customers among the ranks of millions of fairly anonymous people - and once "customerised", Social channels won't be used to address them: they'll be put on record at the company and addressed through the usual channels

So Coca Cola and McDonalds could benefit from Social Business, by narrowing the gap between unknown customers out there and their products and services - but is that distance negatively affecting their business? And are they willing to handle business exceptions?Not product exceptions, their products are identical all across the globe. Customer exceptions then, or service exceptions? Most likely, but what kind and to what extent?

Zappos could very well benefit from Social Business, if not doing so already, offering an always-on customer support for their online sales, narrowing the distance and putting people in contact with other people, handling their product exceptions. These goods last considerably longer than the ones above, which makes sense. Their price is also considerably higher

15 http://www.martijnlinssen.com/2011/02/social-crm-oxymoron.html



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System integrators and hair stylists? On the one hand they deliver services, on the other they know their customers fairly well.Outsourced service desks may be a good example here, who deal with unknown customers by default, across a large distance, and only handle exceptions.They could greatly improve their service, that's for sure. Make people feel known, not treating them as anonymous one-size-fits-all employees, try to pinpoint their exceptions to known, but service desks usually don't want to see their customers a second time, let alone a third time.Possibly the really best example here would be fashion brands, turning unknown customers into trusted and loyal fans?



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Social Enterprise Magic Quadrant

Within the enterprise, the same picture applies, again replacing business rules by product, and business exceptions by people

The employee value increases per quadrant, and this gets really interesting.To the bottom left are e.g. the people in outsourcing and off-shoring, at least they should be: highly predictable, boringly static work to be done there that anyone else could do without prior knowledge.To the upper right are e.g. the highly skilled people that know and face their business and the customer's. Highly experienced in matters on both sides, they function as interpreters / translators, usually business-wise but sometimes even including IT. They know both worlds inside-out as well as outside-in.To the bottom right, e.g. the marketing and sales department. They operate on top of the product but are specialised in outside-in thinking, trying to find ways to attract more different customers to the same product.To the upper left, e.g. secretaries and staffing. Experienced in inside-out thinking

Looking at companies and system integrators in particular, it is noted that often the upper right is off-



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shored or outsourced because that's where the cost is highest. Think of help desks and customised software development.Is that the right motive? Maybe, but is it the right place?Would that mean Social Business is bad for outsourced and off-shored business? In my example, yes - but not in the current situation where many customer-facing and employee-driven work is outsourced or off-shored

Places less likely to benefit from Social Business are the customer-facing, product-driven departments, reaching out to each other in order to collect experiences gained from previous engagements.Employee collaboration and information exchange via a single platform will function much like the old suggestion box, where this time feedback is enabled, processing speed is maximised, and everyone can contribute. Again, Social Business will help to connect unknowns to unknowns, so this will be beneficial for a global or multi-national company where Enterprise 1.0 frontiers are preventing information or knowledge exchange between employees

Places more likely to benefit from Social Business are the product-facing, employee-driven departments, reaching out to each other in order to collect experiences gained from the internal processes.What is there to optimise? Usually, a lot. Seemingly disparate experiences across frontiers can, once again, move part of exceptions to known errors.Worth automating those? That depends on quantity of their occurrence, and quality: similarity in exceptions can turn them into known errors



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On the money

So where is the money? What tangible business benefits are there to be retrieved by giving parts of your business a Social Business edge?

The simple truth is that collaboration across borders can turn an isolated business exception into a repeated business exception pattern.On a logical level, exceptions can become known errors and sink into the lower layers of automation, or simply stay where they are and be handled via a generic script.Either way, people will have more time for other activities.

On a more human level, frequently asked questions can turn into frequently answered questions, once more moving humans out of that equation so they have more time for more other activities

Yet, Social is about connecting unknowns to unknowns, turning them into knowns: at some point there will be no more unknowns to know, simply because you've reached information saturation.If your business is doing so well handling your customer service across social channels, that simply means your current channels are failing16

What is the business case for Social Business? Doing the same with less, or doing more with the same. As Social business is all about people, that means you can choose to do more with the same amount of people, or the same with less people. Turning exceptions into known errors or even rules means a higher degree of automation, diminishing the need for humans there as well

Do I foresee a Social Business Revolution? No, none at all. I do foresee a slow Social Business Evolution, in some departments of some companies, which are employee-driven and facing unknown customers.I also foresee a small, slow Social Enterprise Evolution for those companies where knowledge sharing and management has failed for decades - then again that encompasses the vast majority of companies...

Sorry, I really tried. Have I maybe overlooked something?

16 http://www.martijnlinssen.com/2011/01/social-customer-service-proving-you.html



social business (r)evolution

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things social

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