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The Business Impacts of Social Networking | Social Networking Service | Web 2.0

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The Business Impacts of Social Networking A White Paper in Cooperation with Early Strategies Consulting1 The Social Networking ground swell is building rapidly. It is time to decide whether your business can take advantage today or whether you’d prefer to stay on the beach and wait until the waters are calmer. This paper is the 1st of a series which help highlight some of the opportunities and threats for those wishing to get afloat today and makes recommendations on how you need to change going
  The Business Impacts ofSocial Networking AWhite Paper in Cooperation with Early Strategies Consulting 1 The Social Networking ground swell is building rapidly. It is time to decide whether your business can take advantage today or whether you’d prefer to stay on thebeach and wait until the waters are calmer. This paper is the 1st of a series whichhelp highlight some of the opportunities and threats for those wishing to get afloat today and makes recommendations on how you need to change going forward.  The Business Impacts of Social Networking  __________________________________________________________________________________________________ 2 The Business Impacts of Social Networking The Web 2.0 2 revolution is changing our lives; it is a ground swell thattouches both our personal and professional environments. SocialNetworking 3 isaconcept that federates all of these changes and is atthe center of this transformation. Tools and behaviors which sprangfrom the consumer area are now making the transition to thecorporate world; with diverse implications for businesses of how it maychange the way they work.Before looking at some predictions and challenges for business, let’sstart with the main notions and principles embraced in the concept ofSocial Networking:ãElectronic tools can increase the number of active connectionseach person can maintain (human limit is around 150 stablerelationships, according to some research; the increased maximumis not known) 4 ãTake any two people at random on the planet and they will beseparated by an average of six degrees of separation 5 ,meaning aperson who knows a person who knows…; virtually anyone can becontacted through 6 stepsãWeak ties 6 (contactsyou rarelysee and barely know) often createmorevalue when you need help than strong ties (contacts you seeeveryday and know well)ãIn every demographic set, for a given incidence (marketingcampaign, application deployment, …), there is as much opportunityin the main target small group as in the numerous nichesconstituting the long tail 7 :applications such as e-commerce andsocial networks are delivering value for and from this ‘long tail’ãThe new generation just starting their working careers, also calledthe Millennials 8 ,is made up of digital natives – born with a mousein their hand, who have mastered the Internet and the PC and havearadically different approach to computing, with profoundimplications for the professional worldSocial Networking takes advantage of all the above notions to producetools that foster collective intelligence, collaborative work and supportcommunities: not only social networks, but also search engines (whereresult order is based on the number of hits from the wide community),blogs, wikis, collaborative tagging (folksonomy 9 )and instant messaging/presence features, at least, are part of the Social Networking movement.It is a constantly changing area where applications integrate with eachother and new features are regularly launched. Predictions: Social Networking’s Impact on the CorporateWorld The big question is how corporations will be impacted and how theywill make the most of the web 2.0 opportunities? 1. Corporations Will Change the Way They Communicate Social Networking is bringing a broad new range of technologyinnovations to communications: multimedia, presence, interactivity,etc… Now, customers are not only looking for the value of theproducts, but for corporate values that make sense. Being visible andpersonalizing communication are the silver bullets, even for B2Bbusinesses, as well as the need to let go of some of their image control. 2. Corporations Will Change Their Vision As businesses become moretransparent thanks tothe increasingvolume of information available online, employees will rely more onthe enterprise culture, and search for it if it is not explicit enough. Inparallel, stakeholders will seek proof of corporate social responsibilityawareness, made inevitable by the growing transparency. Eventually,corporations will define their “unified collaboration and communication”strategy at the highest level – the vision. 3. Corporations Will Change Their Organization Many businesses debate how they can flatten the pyramid, to gainthe benefits of startups with their associated adaptability and fastgrowth models. Most will see very different consequences and rolesand responsibility mutations as a result of Social Networking: managerswill need toadapt and become Social Networking evangelists;knowledgemanagement professionals will become the architects ofthis evolution if it is controlled at all; and the IT group will need towork much more closely with Knowledge Managers and users toenablethe new applications. 4. Collective Intelligence and Customer Experience WillLead Innovation Manydifferent ways to innovate are being piloted in 2008, all of whichinclude collective thinking, most often through contests, but also viaaregular process of gathering together employees, customers andpartners from the value chain. With product lifecycles getting shorter,the enterprise needs to capitalize on those relationships and anticipatecustomer needs. Hence, making the most of collective innovation isstill a fumbling process that has to be formalized. 5. Networking Will Be Key to Employee Excellence People think more globally as their contacts become increasinglyinternational; they pay attention to what their online contacts mention,and use social network features to gain greater depth of knowledgein their areas of interest. In this way, they have access to multipleadvisors and mentors, in addition to the raw information; hence SocialNetworking is a true self development tool that can be used at anytime, including from a mobile terminal like a BlackBerry or iPhone.Figure 1: Stage of a Digital Identity Maturity Source: Early Strategies Consulting  The Business Impacts of Social Networking  __________________________________________________________________________________________________ 3 6.Employee Mobility Will Increase As employees increase their visibility and make their expertise availableto communities, inside or outside their organizations, they will be morefrequently solicited. 10 This will also happen as they grow the number ofonline contacts they maintain, as long as these links are meaningful. 7. Corporations Will Adapt Their Motivation and Career Path Systems To get employees to participate in collaborative work, corporationswill need to adapt their motivation systems; they will also have tofind inside the company or recruit externally the best “animators”,who will value the quintessence of the new tools. Lastly, they needto develop community motivations and rewards, in addition to justtargeting individuals.Regarding career path, becoming an “animator” (a business blogger forexample) will be recognized as a specific complementary experience,and expert paths will become more open as new tools help individualsto become visible and known within the community with minimalbarriers. And excellence will remain the ingredient for success. 8. IT/Telecoms Applications Will Mutate Some outcomes are already easy to predict: corporate directories willbecome rich applications (not necessarilycomparabletosocialnetworks such as LinkedIn or Facebook but probably with a similarlevel of rich capabilities), intranets will be personalizable and presencefeatures and user rating will invade almost every application. 9. Corporate Adoption Will Happen at Different Speeds Some companies will adopt Social Networking tools and benefits fasterthan others – though in the end all that survivewill do. Several adoptiontriggers and accelerators will help predict how each corporation willdo; and different Social Networking corporate models will emerge:knowledge management, business development, integration andbrand consolidation. 10. Social Networking May Allow Increased Revenue As a result of the changes in communication and innovationmentioned above, the enterprise will be more visible and accessible toits market. Adopting a Social Networking strategy may also allow:ãExpanded reachãConversion of direct marketing and ads from static to dynamic tobetter targeting prospectsãFaster launch and better new productsãTransformation of CRM in “personalizing” the contact withcustomers and reconnecting web, call center and online servicecenters for a better customer experience and retentionãFacilitation of external channel management by easily creating andanimating powerful partner extranets other businesses will profit asthey create new products and reach new markets through the useof these tools.Last but not least, Social Networking may allow companies to find andaddress new markets, creating a new branch of their strategy as well asmarketing and sales practices that we could call “niche management”. TenAssociated Challenges 1. Adopt New ROI Concept The change is sociological rather than technological, thus it will bedifficult to justify with traditional ROI methods; if the corporate visionincorporates and builds upon the move to Social Networking and web2.0, then the key performance indicators will easily follow. 2. Security AsIntranets open to business partners and internal users start to usecollaborative applications sitting on the Internet, it will become difficultto define security as a whole, enclosed solution; and as currentsecurity providers hesitate to engage because of the open sourcenature and the growing proliferation of viruses (faster than anti-virussoftware can absorb), new solutions will be needed. 3. Intellectual Property As the corporate frontiers blur, employees will need to be carefulabout the information they share. The risk of information leakage willbe increased by advances in search engines. Training about intellectualproperty shouldbeextended to all employees, not only those inphysical contact with customers. Collective innovation also holdsintellectual property challenges. 4. Adoption Corporations will need to define the right plan to reach critical mass,as it is known that only1% to 20% of users regularly use and createvalue via Social Networking and collaboration. 11 In addition, managersand executives who have the responsibility to make the adoptionhappen may resist the change, putting in jeopardy enhanced corporatevision and strategy. 5. Storage Bandwidth, memory and archiving storage needs will increase tosupport rich media applications whether locallyor ‘On Net’. Richmedia lifecycle policy should be decided, in order to enable onlinecongestion to be avoided. 6. Interoperability As a wider range of applications develop collaborative capabilities,inside and outside the corporation, interoperability will be needed, aswell as shared authentication schemes, without impacting security. 7. Speed: Will the Corporate World Ever Keep Up? Web 2.0 developments are fast: the average time between the ideaand a world-class mature application, with millions users, is two years.The corporate world needs more time than this to specify, justify,develop, pilot and implement business applications. These longprocesses risk being surpassed technically and by the competition;corporations will need to increase their idea-to-readiness processspeed, in addition to catching-up on the technology and mindsetchanges. In addition, the threat of employees using unauthorizedcollaborative tools over the Internet in the interim exists, sinceprofessional users are also consumers who have access to the latestSocial Networking tools and features.  The Business Impacts of Social Networking  __________________________________________________________________________________________________ 4 8.Indirect Benefits of Social Networking Not Appreciated This is the main resistance area today, for two main reasons: thenetworking time is not yet seen by all as a cost efficient activity, andtoallow it needs corporations to give more freedom to employeesto manage their working time. 9. Risk of Loss of Employees, Losing Human and Intellectual Capital The most disruptive impact for corporations will be an increasing easeof mobility for employees who maintain an active professionaldialogue with their counterparts around the world. 10. Capturing the Value Social Networking adoption will need a management system or evena“listening” system to ensure the value is captured; and to resist theBig Brother syndrome, which is too costly and will slow adoption.Management and executives should get involved, allowing projectsto reach their potential, fully embracing the value of these initiatives,and leveraging it. Ensuring the quality of collaboration is anotheraspect of this challenge. Corporations Will Change the Way They Communicate Changing the way you undertake external and internal communication,marketing and advertising will shortly become inevitable, simplybecause the Internet and Web 2.0 have delivered new instruments andthe audience – especially millennials – is expecting corporations touse them. A whole bunch of new tools is on tap, including SocialNetworking, blogs, syndication, folksonomy and wikis, rich media suchas geo-localization, webcasts and Webinars, mashups, reputationsystems (bookmarking and rating), virtual world events, interactive ads,applets and widgets. Now, the simple statement about the inevitableevolution of corporate communication needs much more complex thoughtregarding “how” to implement these new types of communication.Thegoal remains the same – strengthen the brand, engender loyalty andturn stakeholders into advocates, sell more, in a more profitablemanner – companies could simply replace old newsletters, standardads and such, which arelosing impact, with these new tools.Nevertheless, the evolution is also happening on the customer endwith filtering and demand for true participation: customers are notonly looking for the value of the products, but also for corporatevalues that make common sense. They wish to change purchases frombasic consumption to a responsible act, and demand for a clear andmeaningful digital identity, to which corporations can reply withdifferent stages of involvement: web presence, open and interactivedialog with customers on products, client engagement when gainingadhesion to proposed corporate values, and eventually to openparticipation for building a sustainable act together with stakeholders.Doing the math to initiate new marketing and communication planswill become less comfortable: it will not be possible any more to relyon a simple ROI calculation, since intangible values and indirectstrategies will be needed in the equation. Even though the financialresults remain the paramount criteria for success, it is not the solecriteria any more.The experience of Social Networking has engendered a need forsubstance that marketing and communication planning will have totake into account. The trust factor – authenticity and transparency – isadirect consequence of the adoption of Social Networking activities:users want complete and worthwhile information, employees are wellinformed (they do network internally) and want to identify with theexternal corporate image. At the same time, the companies, in parallelto generating demand for their products, will have to ensure there isdemand and interest for their communication: early wins will meansolid market share.Toenableall this, corporations will need to be present where theirstakeholders spend time: social networks such as Facebook, usergenerated content sites such as You Tube or Daily Motion are channelstoconsider, even for B2B businesses; multi-channel communication andmarketing might leverage any campaign. And corporations will need toaccept that in the Social Networking arena, most of what is said aboutthe company will not be said ‘By the company’ and as such, thesecommunications need to be managed differently than in the past. 12 On their own premises, meaning web site, e-commerce site orcustomer portal, corporations will have to ensure that they tailor thecommunication: greet the user with his name and according to hisgender, propose information, services and products in connection withhis profile, previous purchases or browsing habits. Personalization isthe most effectiveway to engage customers: leveraging personalprofiles must be a feature of any current development, both to targetand to exchange meaningfully.An important consequenceof the impact of Social Networking is alsothat companies need to be ready to lose total control of their image: itmight be extraordinarily disturbing for many organizations, neverthelessif communication is done within the aboveroadmap, it will generateasound payback. This also means being ready to monitor the brandimage through educating employees who communicate externally(virtuallyall of them), constant watching, facing issues or attacks andmanaging crisis. Corporations Will Change Their Organization As corporations move to more collaborative activity and collectiveintelligence, the traditional organizational model needs to evolve: SocialNetworkingchallenges the roles and responsibilities in place today. Authenticity Honest, upstanding, consistent with the culture and dailyoperations, not just a varnish; employees must recognizetheir companyTransparency Transparency is a key to success, while fake orincomplete information is detected and not excusedAttentiveness Fostered spontaneous information also responsive andboth ways: companies need tolistenWorth Useful or beneficial for the stakeholder without an immediatecompensation (return) awaited by the corporationEthical Embracing a selfless cause, with loose link to thecompany production, is good Figure2: New Demands for Corporation Communication Source: Early Strategies Consulting Heritage of Social Networking Sets NewDemands for Corporate Communication
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