The president of the Fortune 400 company where I worked called me into his office to proclaim that “We are now a learning company.” He had just returned from a conference where he sat in on a session about learning companies and he was pumped. So I asked, “What does that mean?”

His face wrinkled up in consternation. “It means we learn. We learn all the time,” he said.

“How?” I asked.

He was getting frustrated. “By learning. The way we learn.”

“But if we’re a learning company, we must have to do something different than we’re doing now. If we’re going to communicate this to employees, they have to know what’s different, what’s expected, what resources are available, how people will be evaluated, what permissions they have to change their behaviors.”

Red-faced and clearly aggravated, he said, “They. Just. Learn. More.”

In fact, according to Peter Senge, director of the Center for Organizational Learning at MIT’s Sloan School of Management, learning organizations provide the means for employees to continually expand their capacity to create the results they’re after, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the big picture.

Getting there is not just a matter of a proclamation; it’s a retooling of the organization at a number of levels. But when leaders get enamored of a label without understanding what’s really required, important concepts transform into cynicism-inspiring buzzwords. It’s happened with quality improvement, employee empowerment and a host of other big business transformation ideas.

It’s about to happen to the idea of social business. So many people are talking and writing about social business that the definition is getting muddled.
Whenever somebody asks me what the law is on any given communication issue, I generally answer, “The law is whatever your organization’s general counsel says it is.” That’s where we’re headed with social business. As former social media consultants modify their shingles to become social business consultants, the definition of social business is shaping up to be what any given consultant says it is.

What social business is not

One argument says social business is culture change. That’s wrong. Culture change is required to become a social business, but it’s not the social business itself. Culture change is a long-standing discipline with a comprehensive body of literature. A culture change expert does not need to be a social business expert in order to guide the company from a non-social to a social culture; he can learn that as part of the assignment.

Another argument says social business is all about using social media strategically to achieve business outcomes. If that’s the case, I’ve been a social business consultant for the last 16 years.

Then there’s the argument that social businesses want to listen to customers and empower employees to have an open conversation with them. That’s an aspirational statement, though, not a definition.

There are those who say social business is the institutionalization of social marketing. But social business affects every part of the organization—even manufacturing—and not only in support of marketing objectives.

Digging into the idea of social business, it becomes clear that the transition is a long-term, multi-disciplinary process that affects every corner of the organization. Commitment is required at the highest levels of the company. Virtually every process needs to be examined and the opportunities for integration with social principles evaluated. Departments, business units and staff functions need to work together to ensure systems and process compatibility to ensure information moves seamlessly where it needs to go. It doesn’t need to happen all at once, but the goal must be clearly articulated before everybody from leadership to the front line can figure out what needs to change in order to get there.

What social business is

These are the key elements of social business transformation:

Infrastructure

There’s more to social business than getting the right social tools in place. The insights and knowledge that emerge from social interactions need to be exposed to the right parts of the organization to take action on them. While some of this can be done manually (an employee sending an insight to the right person),
the huge volume of data social processes will produce means much of the transfer of information will need to be automated.

Social software will need to be integrated into existing systems and processes. While the integration of social is the business transformation activity, the goal is to improve efficiency and agility by making it easier for employees, customers and other stakeholders to contribute ideas and information that is then delivered to the right people to investigate and execute.

An Oracle white paper on social business offers an example of the interaction between well-established ERP and CRM systems in order to initiate a sales order:

Usually, data is input and follows a set of repeatable and automated business rules and processes. But when an unusual or unanticipated situation arises—such as when a customer requests a discount because that person’s company agreed to participate in reference activity—there is likely to be a disconnect between systems whose resolution requires ERP and CRM user interaction. Earlier, that might have required an e-mail, a phone call or a walk down the hall, any of which could slow down the process and wasn’t tracked as part of the business process.

With Enterprise 2.0 tools, ERP and CRM workers can communicate within their system in real time and the interaction and decision are captured as content other workers can manage and reference to resolve any future conflicts.

Data analysis is another vital component of a social business. Without sophisticated analytic capabilities, social business devolves into a lot of chatter. A social business without a quant or two addressing big data isn’t likely to produce stellar results.

Mobility is another dimension of infrastructure to consider. The societal shift to mobile computing isn’t the only reason to weave smartphones and tablets into the organization. The need to be nimble is one of the overarching characteristics of a social business, and employees need access to information, each other and other stakeholders wherever and whenever it makes sense.

Ecosystem engagement

A lot of social business chatter invokes the age-old desire to tear down silos. Silos exist to ensure resources are allocated where they’re needed and that people are clear about their roles and responsibilities. Tearing silos down is a bad idea. Punching a lot of holes in them is a good idea and core to becoming a social business.

A business ecosystem is made up of the company’s stakeholders: employees, customers, partners, suppliers, distributors, contractors, communities and others. You should even consider competitors a part of the ecosystem. After all, cooperation among cometitors—sometimes called coopetition—is often important. Right now, a lot of those activities are delegated to trade associations that represent an industry’s interest when it comes to issues like regulation. However, consider the video game industry, which created an infrastructure from scratch based on collaboration between competitors like Ninentdo, Sega, Atari and Sony.

Social businesses apply strategy, technology and process to engage all of these moving parts of the business. The interaction between the organization and its publics is not just two-way (which itself is counterintuitive to historical business behavior), but multi-directional and real-time. As IBM notes in its excellent social business white paper, this requires both embedded engagement, but also transparency that removes “boundaries to information, experts and assets, helping people align every action to drive business results.”

Employees represent a critical part of the ecosystem. Blocking access is the opposite of a social business. Leadership needs to perceive employees as “digital systems,” according to IBM’s Senior Manager of Digital and Social Strategy, Ethan McCarty, providing training so they can become effective contributors to the process. “Good conversation creates good outcomes and that brings value to the organization and to the individual,” McCarty says.

McKinsey & Company refers to this concept as a “fully-networked organization,” with employees and customers networked together. McKinsey has correlated fully-networked businesses with iimproved market share.

Organizational change

The change required to transform a company into a social business environment is one thing. This change is complex and multi-faceted, touching on everything from high levels of trust (so leaders are comfortable with employees at any level engaging with other ecosystem members) to a rethinking of the purpose of the organization: a fundamental shift from producing value for shareholders to producing value for everyone in the ecosystem.

Part of the evolution to a social business involves accepting the adoption of new communication and collaboration tools. Most companies are reluctant to reduce the role email plays, for example, but the transition to a social business will require tools that transcend email. (Email will still have a role, just one that is smaller and clearly defined.) The day-to-day communication/collaboration tools need to enable more effective, multi-directional, real-time collaboration and knowledge sharing across time zones, geographies, work teams, and stakeholders.

If culture is defined as the way things get done in an organization, the existing culture needs to be studied to determine what needs to change, how, what stands in the way of that change, and how employees from all corners of the company will cross that chasm. Do managers in your organization still see knowledge as power, giving it up only when they get something in return? Fixing that would be part of the culture change component of morphing into a social business.

But change is also an ongoing characteristic of social businesses. Social businesses are nimble enough to change constantly. Instigating change is not confined to leadership decisions in the social enterprise; it can be instigated by any element of the ecosystem in order to jump on opportunities and solve problems based on the information and insights that surface from the networks of people that serve as the foundation of a social business.

Listening

Having all the systems built into the infrastructure to capture feedback and input from all stakeholders is fine, but won’t amount to much if the organization has not adopted a mandate to analyze what it’s hearing and take action quickly where the intelligence gathered can add value to the ecosystem. Within the organization, the signals received from listening processes are converted into such actions as adjustments to operational guidelines to continuously and incrementally improve business processes and organizational culture.

Macro and micro

The big picture matters in the social business, but so does the individual customer and employee. According to Marketing Profs, social businesses don’t send emails from “Do Not Reply” addresses or leave callers on excrutiatingly long phone holds. Mattel, where I once worked, has been subjected to jeers for rejecting product ideas from children, sending a form legal letter explaining that the company accepts no external product ideas. Patents and trademarks underlie the rationale, but the practice still prevents Mattel from being a social company. They would have to reconcile legal issues with strong customer engagement.

Social companies also elevate the individual employee’s voice, both inside and outside organizational boundaries, no matter where in the company an employee may work.

Who is best equipped to lead the transformation?

Clearly, the metamorphasis from a company’s current state into a social business can’t be delegated to any one individual or team. It’s a closely-coordinated cross-functional effort that involves hard work from the C-Suite, IT, organizational development, training, marketing, internal communications, operations, legal, HR, and sales, among others. There are roles for change management specialists, including culture change (which makes social business the embedded way things are done in the company) and process transformation (to address systems and technologies that need revision or replacement).

But every team, especially cross-functional ones, needs somebody to make sure the machinery of change is well-oiled and functioning properly, that schedules are maintained, that objectives are achieved, that issues and problems get ironed out. While consultants and advisers of all stripes are rushing into the social business consulting space—some of which may well be qualified and staffed for the job—at this point I’d lean toward organizations that have long experience guiding all kinds of transformations. The IBMs, Deloittes, McKinseys and Accentures of the world are well-positioned to develop the framework for this kind of change and manage all the moving parts.

Where is your organization on the path to becoming a social business? How are you going about getting there?

Incidentally, I just got the Kindle version of Get Bold: Using Social Media to Create a New Type of Business, by Sandy Carter, IBM’s Vice President of Social Business Evangelism. I’ll review it as an FIR Book Review after I’ve read it. Also, MIT’s Sloan Management Review has an excellent series outlining how real companies are transitioning into social businesses.

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