The Jive Sbs Imperative

The Social Business Imperative

© 2009. Jive Software, Inc.

The Social Business Imperative This manifesto is about the power of a new approach to getting work done. It’s about responding to a bad economy in a proactive way. It is about harnessing a different way to produce positive business outcomes in an age of unprecedented uncertainty. It’s about giving your people, customers and business partners new ways to succeed. Web 2.0 technologies shaped by consumer sensibilities and applications have revolutionized the way tens of millions of individuals communicate, relate and socialize. Now, that same Web 2.0 momentum is coming to the enterprise, driving the biggest change in the way businesses work in more than a decade.

Welcome to the Social Business revolution. The Social Business allows and rewards open conversation

between

colleagues,

partners

and

customers. It relies on the power of social connections to shape new products and services, and to propel new revenue and earnings growth. It embraces Web 2.0 technology in the form of Social Business Software to enable this critical change. More than a decade ago, Web 1.0 unleashed countless corporate productivity gains by unlocking our access to information. E-mail accelerated our ability to respond swiftly to problems and opportunities and made our existing communications methods more efficient. Intranet portals automated and centralized paper-intensive internal processes, and represented a major leap forward in knowledge management. Enterprise Resource Planning applications brought new management visibility into the inner- and intraworkings of core business processes and functions— from manufacturing to inventory from order-entry to finance from purchasing to supply chain. Similar silo-busting and centralization benefits were seen with Customer Relationship Management software, which

The Web 2.0 Wave

346,000,000

Number of people worldwide who read blogs (as of March 2008)

175,000,000

Number of people worldwide who use Facebook (as of Feb. 2009)

900,000

Average number of blog posts in a 24-hour period

77%

Number of active Internet users who read blogs

59%

Percent of bloggers who've been blogging for at least 2 years

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pulled enterprises far closer to their customers and ensured that customer knowledge didn’t walk out the door with a departing salesperson. But as more companies have adopted these tools en masse, the performance differentiation they once heralded among early adopters has leveled off. Enterprise applications focused on instrumentation and automation have become table-stakes for the successful organization. Now, forward-leaning businesses are embracing a new way to distinguish themselves, an approach that amplifies and leverages the value of their best people, relationships and intellectual capital. The answer lies in Social Business Software, a class of enterprise technology that supports natural, human, peer-to-peer connections and the group contributions and conversations that are required to drive success in the future. Social Business Software builds on the best principles and applications of Web 2.0. It combines the power of social networks, where individuals share ideas, criticisms and information that benefit the collective, and makes the most of emerging forms of communication, including wikis, video dispatches and blogs. Social Business Software is simple, no user manuals required. It also is inherently social, creating an environment where listening is a virtue and cooperation is understood. It can be applied externally, for purposes of customer outreach and branding, and internally, to support teamwork that reaches across org charts and time zones to produce truly transformative results. For an even more profound impact, Social Business Software can be applied both inside and outside an enterprise, bridging contributions and insights from the entire circle of employees, partners and customers who contribute to the success of a business. Among organizations that have already embraced Social Business Software are Avon Products, Best Buy, CNN, Chordiant Software, ConAgra Products, Dell, Dow Chemical, EMC, Nike and Starbucks. Why? Nike reports that fully 40 percent of the runners that register and participate in its Nike+ social community convert to its products. Dell, meanwhile, has fundamentally changed the way it treats innovation through a customer community called IdeaStorm that it launched in Projected Enterprise Web 2.0 Software Spending, 2009 – 2013

February 2007. In its blog, Dell reports that IdeaStorm has generated close to 10,000

Year

Internal/Enterprise 2.0

External/Social Computing

ideas and more than 80,000 comments.

2009

$621,000,000

$625,000,000

Visitors can promote and demote ideas,

2010

$912,000,000

$993,000,000

and the company reveals that it has used

2011

$1,222,000,000

$1,499,000.000

hundreds of them to change the way it

2012

$1,546,000,000

$2,119,000,000

2013

$1,862,000,000

$2,784,000,000

Source: Forrester Research

handles innovation. It captures similar social brainstorming activities in parallel communities frequented by its employees and channel partners.

Adoption of similar initiatives is building, faster than many enterprises had expected: This is one of the few categories of business technology spending expected to explode over the next four years: Forrester Research, for one, predicts, “Enterprise spending on Web 2.0 technologies will grow strongly

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The Social Business Imperative

over the next five years, reaching $4.6 billion globally by 2013. While the spending by enterprise-class companies — firms with 1,000 or more employees — will touch $764 million in 2008, the collected expenditure on social networking, RSS, wikis, blogs, mashups, podcasting, and widgets will grow at a compound annual rate of 43% over the next five years.”i Gartner, meanwhile, forecasts, “By 2012, more than 30% of large organizations will have deployments of social software suites available to all their employees.”ii

Producing Results In An Era Of Uncertainty Business productivity surged with the first wave of Internet business software, and the efficiency benefits it brought. Today, those productivity gains are less pronounced and no longer a competitive advantage. It’s clear many businesses have squeezed just about all the cost-savings they can out of processes and functions that were automated through these applications. That’s where Social Business Software steps in, layering fresh perspective and ideas on top of legacy enterprise software applications. In a video interview published in October 2008 by the Harvard Business Review, Cisco Chairman and CEO John Chambers predicts that the next wave of corporate innovation and productivity growth will be about amplifying the power of people. “It will be built around something that actually our children, and young people invented in social networking,” he says. “Except we will bring it to business with process, with discipline, common vocabulary, common review cycles, resource allocation, top management focus on it, etc.” Anticipating the change this new technology would bring, Chambers created what he calls working groups that transcend Cisco’s formal organizational chart to encourage social business connections. These teams bridge cross-functional concerns. Rather than being concerned about the day-to-day worries of an individual operating unit (although those concerns are represented), they have as their focus larger strategic agendas. Chambers tells Harvard Business that this transformation took plenty of patience, time and trust, especially from senior executives, most of all him. It took a lot of discipline, he relates, to let teams come to their own conclusions without top-down interference. Yet, the decisions these teams make are often better than those dictated by a single individual. “I think the stumbling block that we all trip on is we’ve been successful in command and control, and therefore we know how to do it very well,” Chambers tells Harvard Business. But Chambers remains firmly committed to the philosophy that new collaborative work styles and applications enabled by Web 2.0 will be powerful tools for the successful enterprise of the future. If anything, the movement is happening more quickly than he expected, Chambers said during an interview published to accompany the company’s earnings report released in February 2009.

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The Brutal Global Economy Forces Change There is a very real, immediate impetus to do things differently: The flagging economy. The economists of IHS Global Insight, the well-respected financial forecasting organization, predict that worldwide economic growth will slip to 0.5 percent during 2009, compared with a rate of 2.7 percent in 2008. Here are its Top 10 predictions for 2009 :iii 1.

The U.S. recession will be one of the deepest, if not the deepest, in six decades.

2.

The downturn will be the worst in Europe over a couple of decades and the worst in Japan since 1998.

3.

Growth in emerging markets will decelerate dramatically.

4.

The Federal Reserve and other central banks will keep cutting rates.

5.

More fiscal stimulus will enter the pipeline.

6.

Commodity prices will remain at depressed levels.

7.

Inflationary fears will be replaced by concerns about deflation.

8.

Global growth and current account deficits will be rebalanced.

9.

The dollar will remain strong as long as the financial crisis continues.

10. The single-biggest risk facing the U.S. and world economies is a timid response to the crisis. These unprecedented conditions require an unprecedented response. Will your response be complacent or courageous? Now, more than ever before, success depends on your ability to realize the transformative value of your people, ideas and relationships. When your best people work on your best ideas in an open, transparent, collaborative way, they create a completely new kind of asset called Social Capital. This manifesto is about how to unleash the power of that asset, one that is directly within your sphere of influence.

Social Capital, The New Strategic Asset Social Capital is created when the connections between employee, partner and customers are combined with business intelligence. Social Capital goes beyond intellectual capital, defined as the value of the knowledge that lives within your organization. Social Capital harnesses the value of the knowledge, relationships and interactions of people in and around your company. Social Capital is what your company gains when its best people with the best ideas can take the right actions, actions that speed all sorts of time-to-business outcomes—from reducing costs to driving new product innovation and increasing sales and marketing effectiveness.

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Social Business Software supports the development of your Social Capital by creating the environment for people to work in a marketplace of ideas, where the best ideas for solving problems or seizing opportunities rise to the top and become the basis for decision-making and action taking. The faster the best ideas are translated into decisions and actions, the more Social Capital you have. This creates the platform for out-executing your competition. The company that executes on the best ideas the fastest wins. Your company’s ability to grow its Social Capital faster than the competition will be key to unlocking what business strategist Umair Haque, Director of the Havas Media Lab, calls “smart growth” through the recession and beyond. The ability of business leaders to adjust their success metrics and management techniques quickly to support this transformation will be critical for survival, he argues. Here are Haque’s four hallmarks of smart growth, as outlined in a Jan. 30, 2009 post to his “Edge Economy” blog for Harvard Business : iv

1. Outcomes, not income. “Smart growth is about people, and how much better or worse off they are, not merely how much junk an economy can churn out.”

2. Connections, not transactions. “Dumb growth looks at what’s flowing through the pipes of the global economy: the volume of trade. Smart growth looks at how pipes are formed, and why some pipes matter more than others: the quality of connections.”

3. People, not product. “Smart growth isn’t driven by pushing product, but by the skill, dedication, and creativity of people.”

4. Creativity, not productivity. “Smart growth focuses on economic creativity, because creativity is what lets us know that competition is creating new value, instead of just shifting old value around.” Haque believes that these principles require business leaders to recalibrate their expectations of corporate performance and focus not just on driving more transactions, but on producing strategic business outcomes made possible only through entirely new approaches to teamwork and innovation. Social Business Software will accelerate a business leader’s ability to propagate these new approaches throughout their organization.

What Social Business Software Is, And Is Not As illustrated by the earlier anecdotes about Nike and Dell, Social Business Software applies the best of Web 2.0 technology to conducting real business and solving real business problems.

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It provides a platform for capturing and sharing conversations and insights around a variety of subjects, and it can become a foundation for creating communities of interest that link companies with their customers and business partners. Yes, Social Business Software facilitates collaboration and teamwork. But it doesn’t get hung up on formalities, such as the functional roles of participants or complex workflow processes that could get in the way of sharing ideas and information quickly. “The biggest untapped source of value in the enterprise now is people,” says Dave Hersh, CEO of Jive, a company that develops Social Business Software being used by more than 2,500 companies. “If you want to dramatically transform efficiency, you must start there. Today, employees are forced to collaborate in e-mail silos where nothing is reusable, and file systems where documents are never seen again. They rarely look outside their own departments to other teams, and very rarely look outside the company. There has never been a system to manage this ‘big conversation’ among customers, partners and employees – learning how to do this will drive massive value back to the transactions and processes.”

Relative amounts of different types of ties for a prototypical knowledge worker

Perhaps the best way to visualize the value of Social Business

None

Software is by picturing all the different connections that it can help

Potential

the typical knowledge worker make, especially those that would not otherwise be possible. Harvard Business School Associate Professor Andrew McAfee

Weak

STRONG

envisions these connections as a sort of bullseye diagram. The strongest connections would lie in the dead center of the concentric circles, ringed by other types of relationships such as “weak,” “potential” or “none.” A typical knowledge worker relates regularly with a small group of close collaborators (the strong set) but also has less frequent contact with past project partners (weak), and coworkers and professional acquaintances (potential).

Source: Andrew McAfee's Blog, "The Business Impact of IT"

It is Social Business Software’s ability to help forge these weaker connections that is one of most valuable attributes. In his blog, “The Business Impact of IT, McAfee suggests that these connections could keep your employees from re-inventing the wheel or lead them to someone in a similar role whose frame of reference could be instrumental in solving a problem. In turn, this person’s knowledge could benefit others, if only they were more widely known through a corporate community. Here are McAfee’s requirements for software applications and platforms aspiring to fit the Social Business Software category:  Freeform, free of preconceived assumptions about defined workflow or contributor roles.

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The Social Business Imperative

 Frictionless, meaning it takes very little time to turn a random thought, idea or comment into a contribution within the environment.  Emergent, suggesting that the value of contributions will increase over time as more contributors share ideas and patterns become evident. “Too many corporate collaboration environments that I’ve observed … come up short on the frictionless and freeform criteria,” McAfee writes in his Jan. 27, 2009 blog entry, entitled “I Know It When I See It.” “They make it far too difficult for prospective users to contribute, and they persist in slotting people into pre-assigned roles based largely on the formal org chart. In many cases they also impede emergence by having many small and mutually inaccessible environments, instead of one big one.” Social Business Software is distinguished by its ability to capture that bigger conversation by letting people have more of the smaller ones, whenever, wherever and however they want.

Business Results In The Marketplace Of Ideas Within your company, as an example, Social Business Software allows for the creation of employee communities and networks where ideas, criticisms and competitive intelligence can be shared with any and all who choose to participate, regardless of their role, geographic location or time zone. “This is a marketplace of ideas. The best ideas should win out, and this new approach makes it easier for that to happen,” says Jive’s Hersh. “When you have the right conversations and the right interactions, those will drive value to the right transactions. You can make smarter decisions.” An example of what’s possible is EMC|ONE (Online Network of EMCers), an employee social community established quietly by the storage technology giant early in 2008. Jamie Pappas, Manager of Social Media Strategy for EMC, said a decision was made to allow participation to grow virally without any sort of internal marketing splash that mandated or forced employees to join. Within just three months of that soft launch, however, more than 2,000 employees had registered in order to post comments and other contributions, and more than 40 sub-communities had emerged. As of early 2009, more than 11,000 employees had registered, which is about one-third of the entire company. What’s more Pappas said more than half of all employees visit EMC|ONE and use it for research purposes, especially for insight about competitors. The result is a better-informed workforce, one that has opted to use these tools voluntarily because it made sense for the business, she says. One of EMC’s most controversial decisions was whether or not to let employees chat about topics that are less business-specific, such as the best restaurants near each local EMC office or local community activities. Although there is ongoing internal debate about whether these conversations are appropriate, they have been allowed to happen. “I am a firm believer that the social interaction aids the business interaction,” Pappas observes. The result has been personal, social connections that engender trust and make for healthier working relationships.

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Social Business Software. The Application for Everyone For the most impact, Social Business Software needs to be layered strategically across an entire organization, from the back office to the line of business divisions to customer service, sales and marketing and product development. Equally as critical, Social Business Software must be extended to all the external partners and connections that matter for these functions. Leaving out a potential connection will diminish the value of your investment. As to where you should start with Social Business Software, there are four strategic business disciplines where the benefits will be most readily apparent: Marketing and Sales, Employee Engagement and Productivity, Product Development and Customer Support. There are myriad other applications and business functions where Social Business Software will have a positive impact, but these areas represent those where Web 2.0 technology could have the broadest scope of influence in the enterprise and offer the best return on investment for your organization. The following list details a few of the agendas that can be served by a Social Business Software initiative:

Marketing and Sales Scenarios 1. Build the pipeline. By making customer community discussions visible within a collaborative employee environment, Social Business Software creates a new level of transparency that informs marketing strategies in real time and ensures sales efforts are focused where they can generate the biggest return. 2. Drive sales growth. With lengthening sales cycles and intense economic pressure, marketers need more advanced strategies to enable success. Social Business Software creates public communities in which prospects get connected to trusted peers—enabling marketers to create a powerful new sphere of influence. Social Business Software can also support social networks where salespeople can pose questions that are answered quickly by experts, where they can share best practices with each other about how to approach certain accounts, and where they can find other people who might know how to approach a particular customers or prospect. 3. Increase loyalty. Customer retention is more critical than ever but tighter travel budgets will undercut efforts to directly engage clients at proprietary conferences. By using Social Business Software to run an ongoing series of virtual events that accompany or build on face-to-face gatherings,

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your business can solicit client feedback and make it immediately actionable by channeling it directly to your employee community. 4. Identify market trends. With the rapid adoption of social media, standard web analytics no longer provide sufficient customer insight. The value of Social Business Software is also directly tied to increases in users, participation and content generation. Social Business Software enables you to perform robust social analyses that arm marketers with clear, real-time visibility of community adoption, engagement and overall community sentiment.

New Employee Engagement Models 1. Connect your global workforce. In a tough economy, companies must rely on scaled-down, dispersed teams who need real-time access to people, information and resources. Social Business Software improves organizational awareness, helping employees overcome geographic barriers to quickly establish trusted relationships, stay aligned with corporate objectives and access data. 2. Improve generational workforce performance. Social Business Software attracts and retains the emergent workforce with an environment that supports and leverages their preferred method of connecting and community with others. Adoption of this new way of working also helps established employees close an important the gap in their business skills. By creating a repository of corporate intelligence, Social Business Software also improves organizational quality by enabling companies to discover and reuse the wisdom of all generations. 3. Empower Individual Productivity. Too often, employees can’t access key resources when they need them, be they people or documents. Social Business Software provides employees with a 360-degree view of conversations and activities across previously isolated information silos. As a result, they can easily access the right people and information to generate better results in less time.

Customer Support Solutions 1. Lower your support costs and incoming call volume. Live support is often the most expensive support activity companies provide. By providing an open environment in which support problems are exposed to other customers of your product or service, Social Business Software can dramatically improve your customer support team’s productivity. Because support requests are directed to a community and not an individual, a partner or another customer can often handle them, plus the resolution will be available to all other customers for reuse. 2. Reuse knowledge. Over 40 percent of organizations fail to provide support agents with effective knowledge management tools. As a result, support agents repeatedly tackle the same issue before the solution is communicated through traditional channels such as email. With Social Business Software, solutions are automatically recorded and indexed, making them highly visible and enabling agents to reduce call times and increase first-call resolutions.

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3. Build customer trust. Self-service support tools do not build trust between a company and its customers, resulting in poor customer satisfaction and decreased retention. Social Business Software helps build that trust, providing transparency into support activities and allowing customers to see whom they’ve engaged with, actions taken and a history of all previous conversations. 4. Provide a consistent customer support experience. Most companies rely on a variety of disjointed customer support channels. Each channel serves a unique purpose but often results in customer confusion and frustration. Social Business Software helps bridge these disjointed support channels by allowing support agents to quickly view all of a customer’s interactions within external support communities. This provides both context into a customer’s issue and a consistent experience for customers.

The Product Development Process 1. Accelerate time to revenue. Time really is money. Great products have a limited window in the marketplace to capture their full revenue potential, and delays in development and launch can have profound financial implications. Social Business Software empowers executives, managers and employees to work across functional silos, eliminate redundant effort, identify process sinkholes, align functional expertise and ultimately greatly accelerate an organization’s ability to deliver winning products to the marketplace. 2. Build an innovation culture. Innovation is the lifeblood of the enterprise. Creating a culture of participation and engagement in driving innovation within your employee base is an enormous competitive advantage. Social Business Software creates a central enterprise innovation marketplace that gathers together ideas from across your organization and engages your entire workforce in the ideation process. 3. Align innovation with the market demands. Informing your ideation activities with customer feedback is the surest way to consistently create great products that establish a strong foothold in the marketplace. Social Business Software helps companies engage both their entire enterprise and surrounding ecosystem of customers, developers and partners in the ideation and product development process. In essence, you can capture on-demand market research in a fraction of the time it took in the past. 4. Drive better results from your R&D investments: Successfully navigating from ideation to commercialization has become an increasingly complex process. Across globally dispersed workforces, siloed functions, and the entire product development lifecycle Social Business Software connects people and their expertise to transform innovative ideas into winning products. Where does Social Business Software count the most? Actually, the better question is where doesn’t it count? These scenarios suggest entry points within your organization; ones that will help you quickly realize a return on your investment. But the value of Social Business Software increases substantially as it spreads to connect all of your Social Capital, inside and outside your formal organization.

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Social Capital, The New Competitive Advantage Across all of the strategic areas of your enterprise, Social Business Software is the most important technology investment you will make moving forward because it is the only software that truly unlocks the value of your Social Capital. Protecting your Social Capital is more important than ever. In January 2009 alone, U.S. companies eliminated almost 600,000 jobs. What’s more, an anticipated 40 percent of the U.S. workforce is set to retire by 2010. Every time any employee walks out the door, years of Social Capital walk out of the door with him or her. And yet, very few companies do anything about it. A recent study by the Institute for Corporate Productivity found 30 percent of responding companies retain knowledge poorly or not at all when workers leave, while another half think they have an “okay” plan in place to preserve institutional know-how. Only 20 percent feel they do well with knowledge retention. The late Lew Platt, former CEO of Hewlett-Packard,

“If HP knew what HP knows, we would be three times as profitable.”

once famously said: “If HP knew what HP knows, we would be three times as profitable.” As more companies move to outsource business processes or functions, the knowledge they seek to protect will increasingly come from business partners and project contributors who live outside the formal organization chart. That knowledge is just as valuable, and you should embrace contributors inside and outside your corporate firewall as part of your Social Capital. How does this work? Dow Chemical Co. has turned to Social Business Software to connect retirees, employees on leave, and current employees through an online mentoring and referral network called Dow Connect. The original motivation: Over the next five years, the company figures about 40 percent of its 46,000 employees will retire, which will require a massive, costly recruitment effort. Dow Connect is short-circuiting the cost of finding replacements for departing workers—and it also is keeping retiring workers engaged with the company’s activities, which means Dow still has access to their valuable knowledge. How does this work? According to a case study Gartner published about Dow Chemical Co., social software proved to be one of the best ways to address these workforce challenges:  Forty percent of Dow’s global workforce will be eligible for retirement through 2013. Dow has approximately 40,000 retirees in the U.S. alone, many of whom still live near Dow’s largest sites.  Many employees who are temporarily not working, because of maternity leave or for other reasons, needed a way to stay connected with the office while they were out. Based on external benchmarks, Dow expected a 10% active participation rate within a year of the launch. This target was exceeded within two months of the launch.

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 In the three months since the launch, the site has more than 4,500 network members.  Ninety-five percent of the users are returning.  25,000 referrals have been posted.  130,000 first- and second-degree connections have been made on the network.  Through the site, users have applied to 24 Dow jobs and 40 Dow contracted jobs.  The job center portion of the network receives the most visits from retirees.v The results are clear: Social Business Software can enable companies to short-circuit the cost of finding replacements for departing workers—and also keep retiring workers engaged with the company’s activities, enabling the enterprise continued access to their valuable knowledge. David Scarborough, Associate Professor of Management at Black Hills University in the College of Business and Technology, and Chief Scientist at Large for Kronos, a leader in workforce management software, said all generations will benefit from Social Business Software that redefines the concept of employee engagement. “We are going to be seeing a significant brain drain over the next 10 years. As the Baby Boomers leave the workforce,

Boomers Consume

a lot of expertise is going to be walking out the door. Both generations,

By the end of 2008, close to two-

old and new, could benefit from social networking sites within their

thirds of all Boomers consume

company,” Scarborough says.

social media including blogs, podcasts, user-generated video, forum commentary or customer ratings. This is up from less than 50 percent in 2007.

and related content.vi Demographically speaking, it won’t shock you to

Not Just Spectators percentage

Forrester Research released a report in late 2008 tracking usage of what it calls social technology, defined to include social networks and blogs

Source: Forrester Research

The

Social Business Software Attracts The Best People

of

Boomers

likely to react to content in social networks or other social media doubled to one-third by the end of 2008. Source: Forrester Research

Join the Crowd By the end of 2009, more than 85 percent of U.S. online participants

hear that adults from the age of 18 to 24 lead the way. In fact, only 10 percent of those Forrester interviewed DO NOT use social networks and other Web 2.0 applications. More than one-third of people this age create content and take part in Web communities, while approximately one-half are active critics who comment and engage in online dialogue. As harsh as it sounds, your company’s strategy and value to this new workforce will be judged by its ability to apply this technology on their behalf—and on the company’s behalf. Younger workers will evaluate what measures are in place to allow for their way of working and they will gravitate to organizations that support these methods.

will read or view social content.

“The younger workers are demanding it, and they are going to find a way

Source: Forrester Research

to use it regardless,” says Jive’s Hersh. “It’s going to be close to impossible

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for companies to recruit younger people if they don’t support the use of Social Business Software tools. This generation barely uses e-mail anymore.” By the way, it isn’t just 20-somethings who are embracing social technology. In the same report, Forrester also found that, “Middle-aged adults have begun to actively adopt social media. In fact, only 28% of US online adults ages 45 to 54 and 38% of those ages 55 and older say they don’t use social technologies.” That means the majority do. It also means your company’s ability to attract and keep the best people will be directly proportionate to your ability to apply the innovation happening in Web 2.0 consumer applications to tools that will make it easier to do their job. Your employees will have little patience for software applications that are any less easy-to-use or intuitive than Web 2.0 applications.

The Customer Conundrum The tough economic climate has made it tougher to close sales. Market research firm IDC suggests businesses can improve sales productivity by supporting

tighter

interaction

among

sales

representatives. Their research indicates that approximately 25 percent of sales’ time is spent on unproductive prospecting, even as 60% to 70% of sales representatives ignore marketing leads. Better teamwork and focus by sales and marketing on enablement, including better preparation of sales for lead follow-up, will improve sales productivity by $260,000 per rep per year (“Coordinating Marketing and Sales Across the Entire Revenue Cycle”, IDC 687, Michael Gerard, 2008).vii Social Business Software supports both of these agendas. What’s more, it appeals to your customers’ radically altered expectations of marketing allowing your business to appeal to existing customers and prospects in ways not previously possible. More than three-quarters of enterprise marketers “agree” or “strongly agree” that Web 2.0 is rewriting the rules for how their company communicates its messages, according to MarketingSherpa, an organization that researches what marketing tactics work in the real world.

viii

Close to half of all

enterprises plan to increase their 2009 marketing spend in places such as social networks and blogs. The intuitive challenge for marketers is that it’s difficult to measure the return on investment.

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“These days all of your customers are online,” notes Dion Hinchcliffe, a consultant in Alexandria, Va., who advises executives on how to harness Web 2.0 technology for real-world business applications. “Are you truly engaging them, supporting them, and creating a rich community of shared interest around what you’re doing? Chances are you’re not. Few large companies have created successful online communities around their products, and customers have largely had to create them on their own until very recently.” ix Athletic products company Nike is one company bucking conventional wisdom, by investing in Social Business Software to create an online community for runners. You don’t have to be a Nike customer to use the Nike+ community site, which lets athletes upload and analyze information about their training runs. But the content available becomes more valuable if you are one. This simple, subtle fact has helped turn more than 40 percent of Nike+ community into converts, according to Trevor Edwards, Vice President of Global Brand Management for the giant athletic products company.

Engaged Customers Buy More and Cost Less Social Business Software can also help your company identify, engage and nurture brand advocates. For example, InterContinental Hotels Group is creating an online social network for members of its travel rewards program Priority Club Rewards to provide a forum for like-minded travelers, recognize and reward brand advocates and encourage a dialogue between Priority Club members and IHG executives. “We know that our customers are having conversations about us. The public online community gives us the opportunity to engage with them in that dialogue,” says Jenni Kolshak, Priority Club Connect Community Manager, Multi-Brand Relationship Marketing for IHG. Certain content within its network will be exclusively accessible only to rewards program members, but the site will be open to the broader travel community. Those who register will be allowed to offer their input. Don’t misunderstand, IHG fully understands that some of its best brand advocates will participate in online travel communities other than its

The Price of Customer Support 7% - Average percentage of corporate revenue dedicated to support $36.14 – Average cost per customer interaction (via email or phone) Source: Association of Support Professionals

own. That’s why the hospitality company will reward active members who contribute feedback and insight to its site with unique promotional offers and incentives. It also has vowed not to remove legitimate negative feedback. “We believe in creating a healthy, candid and robust dialogue with our customers. The site is not a corporate mouth piece but a place for like minded travelers to share their travel experiences,” Kolshak said. IHG’s social marketing team expects to quickly offset the costs of the community through its exclusive online only offers to Priority Club Members. In addition IHG will continue to optimize user generated content in its marketing and communications collateral – something it’s being doing for more than year with content from its private online communities. Further, IHG is exploring partnerships with other travel sites and bloggers to syndicate the community’s content.

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Social Business Software can also serve as the foundation for customer support activities and events, helping keep a lid on costs. According to the Association of Support Professionals, the average company spends an average of 7 percent of its revenue on technical support. Each average customer support interaction costs $36.14. Separate data from Forrester Research underscores the reality that most support methods currently at the disposal of enterprise businesses are woefully ineffective. ”Despite the potential benefits to both the company and the customer, 40% of the companies we surveyed evaluated their ability to pass relevant information to an agent when the customer transitions from self-service to live service as poor/below average.”x VMware’s experience in this area offers an example of the relief possible through Social Business Software. The virtualization software company created the VMworld.com community with an eye to cutting the cost of its in-person user conference and to generating more revenue from the information shared during sessions. Simply put, VMworld.com turns VMware annual conference into a yearround event. In little more than a year, the community has attracted more than 50,000 virtualization professionals, and built out a conference library including more than 1,000 streaming video sessions, 10 partner sections and 100s of valuable support and technical documents. Anyone can purchase access to the event content, even if they weren’t able to attend in person, creating a new source of revenue for the company that also happens to help its customers. In addition, by handling all the registrations related to the live event with VMworld.com, VMware saves at least $250,000 annually in event management fees.

The Innovation Riddle Aside from facilitating ongoing dialogue and collaboration that drive short-term revenue, Social Business Software can play a big role in exposing the conversations and ideas that drive the innovation process necessary for creating future products and services. Business strategy consulting firm McKinsey & Co. reports that innovation is among the Top Three priorities for 65 percent of the respondents to its 2008 annual global survey on strategic priorities.xi

Top Factors Sapping Corporate ROI Lengthy product development times – 36% Risk-averse corporate culture – 36% Difficult choosing the right ideas – 33% Lack of coordination within the company – 33% Source: Boston Consulting Group

The top metric used by respondents to measure the effectiveness of innovation was “revenue growth due to new products and services,” followed by “customer satisfaction with new products and services.” A separate survey conducted last year, however, finds that a majority of executives feel their innovation efforts fall short. The Boston Consulting Group reports that 67 percent of executives feel they should

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The Social Business Imperative

get more out of their innovation efforts. They identified four macro concerns that sapped their return on investment for innovation: Lengthy product development times, risk-averse corporate culture, difficulty choosing the right ideas, and lack of coordination within the company. Interestingly, each of these factors was weighted about the same, according to the survey results.xii Anything on that list sound familiar? Here’s some additional perspective on the innovation process from Judy Estrin, a Silicon Valley entrepreneur who cofounded seven companies and authored the 2008 business title, “Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy.” Estrin described the process of innovation during an interview with McKinsey: “It’s all about nurturing, it’s all about surprises. It’s all about having no goals. It’s all about gaining information and being prepared for the future… Having a vision, having a shared purpose. Those people can’t get isolated from what the corporate mission is because then they’re off in left field. But ... you don’t want to manage them the way you manage your day-to-day business.”xiii Social Business Software accelerates and nurtures the fragile innovation dynamic described by Estrin. It supports interactions that reach across functional silos within companies, it exposes valuable input from customers and business partners, and it encourages contributions that have less to do with role and more to do with social perspective. It leaves room for surprises.

Speed Time to Business Outcome Out in the real business world, Social Business Software has already proven it can dramatically increase the number of products or services a company can introduce on an ongoing basis. In the 24 months prior to creating the Chordiant Mesh Community to support its research and development process, Chordiant introduced just three new products. In the 24 months after the launch, the customer experience management software developer completed 18 releases. The Chordiant Mesh Community, which replaced an existing wiki platform supporting 53 fragmented projects, brings together more than 1,000 Chordiant employees, developers, customers and partners. In all, there are 30 participating companies from 20 different countries. Creating the community required a dramatic rethinking of the product development process. Chordiant has rebelled against the traditional process of gathering feedback and then disappearing for months to create featurebloated software that lags true customer needs. Through the Chordiant Mesh Community, its entire roadmap for each release is available, along with information about content and status, open issues, as well as all code, test results and documentation. The process is transparent: available not just to developers but also to customers and key partners. “When working with geographically dispersed teams, it’s imperative that critical up-to-the-minute project details and deliverables are easily available to team members, stakeholders, and community

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members alike. … Relying on e-mail or other legacy tools leaves far too much room for misinterpretation and mistakes,” says David Sallett, Manager of Solutions Design, Chordiant. According to a case study published about the deployment, there were several factors that influenced Chordiant’s decision to dump its wiki in favor of a Social Business Software platform: The company sought a unified, simple-to-use platform for member profiles, discussion profiles, questions, blogs and other content; and it also sought flexibility to evolve as projects evolved. Its previous software was too rigid, fragmented and roles-based, everything that Social Business Software stands against. The EMC|ONE community offers additional guideposts for how Social Business Software can help facilitate innovation. As one example, a posting about green technology from an employee in the Asia Pacific region attracted attention from community members from around the globe and resulted in a new product idea. The company reports that Social Business Software has cut the amount of time it takes to gather information and feedback on new ideas down to mere days from a matter of weeks before the community was introduced.

Embrace Social Business Software Now Web 2.0 expert Hinchcliffe says while some executives may be reluctant to invest in untried software during an uncertain economy now is exactly the right time to make the leap. “Some business leaders will be looking at paring things back to the basics while a different sort will be looking at entirely new avenues to survive and thrive,” Hinchcliffe writes in his “Enterprise Web 2.0” blog for ZDNet. “While some might look at the social aspects of things like Web 2.0 as marginal subjects when things get tough, nothing could be further from the truth when it comes to the deeper implications of Web 2.0 in the enterprise.”xiv There are five compelling reasons to invest in Social Business Software immediately: 1.

It will unlock the power of formal and informal teams by letting them step over time zones and org charts.

2.

It will help you increase the value of your company’s Social Capital, protecting the valuable knowledge of existing employees and attracting the best and brightest contributors from a new generation of workers.

3.

It will enable your organization to sidestep corporate inefficiencies by reducing irrelevant travel, sales, marketing and development costs.

4.

It will help you identify customer pain points and build loyalty in an increasingly fickle marketplace.

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5.

It will rev up innovation and your ability to release new products and services to market more quickly.

McKinsey reports that 38 percent of enterprises believe their use of Web 2.0 tools that fall into the Social Business Software category already has transformed the way they communicate with customers and suppliers. Another 16 percent say it has created major new roles and functions within their organization, and 14 percent report that it has created a flatter hierarchy. Among the companies that were most satisfied with their Social Business Software investments, only 8 percent said the technology had not inspired a change in the way their company was managed or organized.xv In its February 2009 article, “Six Ways to Make Web 2.0,” The McKinsey Quarterly reports that enterprise Web 2.0 projects are too often left to emerge on their own, without the guidance of senior management. This, they write, is a mistake. “These business leaders are correct in thinking that participatory technologies are founded upon bottom-up involvement from frontline staffers and that this pattern is fundamentally different from the rollout of ERP systems, for example, where compliance with rules is mandatory,” the authors write. “Successful participation [in Web 2.0], however, requires not only grassroots activity but also a different leadership approach: senior executives often become role models and lead through informal channels.”xvi

The Executive’s Role in Adoption: From Management To Leadership That doesn’t mean executives should step in and dictate rules of engagement for Social Business Software. They must trust in the ability of the community to police itself. They should introduce this sort of software through an engaged group of advocates and follow the circle of conversations to their natural conclusion. “There needs to be a fair amount of structure behind the scenes, but you can’t impose a specific working order on people. Much like watching where people walk on a campus lawn before you build the pathways, social business software works best when you let the people drive what’s most important,” says Jive’s Hersh. It is the job of forward-thinking business leaders, therefore, to set a cultural example that supports the outcomes made possible by Social Business Software

If people in the organization understand the values of the company, they should be able to self-organize to work on the most interesting problems.

rather than commanding a certain path. Consider this insight from Google CEO Eric Schmidt, who spoke to McKinsey researchers about the executive’s role in innovation and about the need for business leaders to know when to get out the way. “I understand why people want to build business units, and have their presidents. But by doing that you cut down the informal ties that, in an open culture, drive so much collaboration,” Schmidt told

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the McKinsey interviewers. “If people in the organization understand the values of the company, they should be able to self-organize to work on the most interesting problems. And if they haven’t, or are not able to do that, you haven’t talked to them about what’s important. You haven’t built a shared value culture.”xvii

To Win, Be Social A belief in the power of shared values is the very thing motivating the 175 million people using Facebook to invite family, friends, professional contacts, long-lost friends and brand-new acquaintances into their Web 2.0 social circles. This same belief will prompt enterprises to spend more than $1.24 billion on global enterprise Web 2.0 technologies in 2009 and close to $2 billion in 2010, according to projections from Forrester. xviii Whether or not your organization is prepared, the Social Business Software wave is about to break. “I think every manager should keep an open mind and recognize that these technologies are finding their place in business,” says management expert Scarborough. “It’s clearly early in the game, but we can certainly count on being surprised. For those companies that are forward-thinking enough to recognize the need for better communication, especially among knowledge

workers,

and

for

those managers that recognize that information flow is the true currency of business, these tools are going to prove really Source: The McKinsley Quarterly

important.”

Why resist the cue being given by your employees and customers? Now is exactly the right time for you to leverage the power of Web 2.0 technology that builds on the new social connections that are surrounding and shaping your company. It’s time to invest in Social Business Software that turns your Social Capital into an asset, unleashing new styles of enterprise collaboration, innovation and customer interaction. It’s time to lead your organization proactively into the age of the Social Business.

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i

“Global Enterprise Web 2.0 Market Forecast: 2007 to 2013,” Forrester Research (April 21, 2008)

ii

“The Gartner Collaboration and Social Software Vendor Guide, 2009,” Gartner (Feb. 19, 2009)

iii

“Top 10 Economic Predictions for 2009,” IHS Global Insight, January 2009

iv

“The Smart Growth Manifesto,” Umair Haque, http://blogs.harvardbusiness.org/haque (Jan. 30, 2009)

v

“Case Study: Dow’s Formula for Social Software,” Gartner (March 27, 2008)

vi

“The Growth of Social Technology Adoption,” Forrester Research (Oct. 20, 2008)

vii

“Coordinating Marketing and Sales Across the Entire Revenue Cycle,” IDC (August 2008)

vii

“2009 Social Media Marketing and PR Benchmark Guide,” MarketingSherpa (February 2009)

viii

“Using Web 2.0 to Reinvent Your Business for the Economic Downturn,” Enterprise Web 2.0 Blog, ZDNet

(Jan. 29, 2009) ix

“Why Talking to Customers is Ruining Your Business,” Forrester Research (August 29, 2008)

x

McKinsey Global Survey (October 2008)

xi

“Innovation 2007,” Boston Consulting Group “How to Fix the Innovation Gap: A Conversation With Judy Estrin,” The McKinsey Quarterly, (January

xii

2009) xiii

“Using Web 2.0 to Reinvent Your Business for the Economic Downturn,” Enterprise Web 2.0 Blog, ZDNet

(Jan. 29, 2009) xiii

“Building the Web 2.0 Enterprise,” The McKinsey Quarterly (July 2008)

xiv

“Six Ways to Make Web 2.0 Work,” The McKinsey Quarterly (February 2009)

xv

“Google’s View on the Future of Business: An Interview with CEO Eric Schmidt,” The McKinsey Quarterly

(September 2008) xvi

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“Global Enterprise Web 2.0 Market Forecast: 2007 to 2013,” Forrester Research (April 21, 2008)

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