In a Live Business, Social Gets Its MBA

Stop confining social media to marketing. To boost returns, it must be embedded into how companies do business.

On April 14, 2010, Iceland’s Eyjafjallajökull volcano erupted, spewing ash into the skies and triggering the biggest disruption in European air traffic since World War II, as reported by BBC World News. When the rush of calls and online traffic from stranded travelers overwhelmed KLM’s call centers and Web site, travelers turned to Twitter and Facebook, bombarding the Dutch airline with communication.

Those grounded planes set KLM on its journey to becoming a social business.

KLM quickly responded with updates and suggestions for alternative travel arrangements. But the company, which had been using social media before the eruption, had never experienced this kind of traffic. So it mustered volunteer employees who responded in real time around the clock to help rebook the flights of some of the 50,000 stranded passengers using Facebook and Twitter, as KLM describes on its blog. The event transformed the way KLM interacts with travelers through social media, going from trading tweets to conducting business transactions within days.

sap_Q216_digital_double_feature2_images2Today, KLM has 150 employees dedicated to serving travelers using social media 24 hours a day, 7 days a week, according to an article in VentureBeat. These social agents field 70,000 weekly messages from Twitter, Facebook, and other social networks, booking flights, providing information on pricing, and even sending personnel scurrying through airports to retrieve lost items, such as iPads and teddy bears.

The result is lower costs for handling trips, quicker responses to messages, and faster resolution of problems because KLM agents can route questions to the right departments. By using social as a platform for business transactions, KLM has created a pull for customers to have more social interactions with the company, which lets it pinpoint new business opportunities, including new routes and services.

Most Companies Are Skimming the Surface of Social

As KLM discovered, social drives your customers’ expectations for live interactions. Yet most businesses are doing it wrong. They only skim the surface with social, using a small team buried inside marketing to monitor, respond, and create campaigns. Meanwhile, company executives continue to see social as something their kids do or that’s just a part of marketing.

Companies need to go deeper than that. KLM’s entry into social may have started out as a marketing effort, but it has now become part of the business, coordinating multiple functions and lines of business to meet customer needs.

KLM offers a preview of what’s to come for all companies. The kind of live awareness, anticipation, and responsiveness that KLM has built around social will eventually need to take root in all areas of the organization. As the digital economy matures, companies need to become Live Businesses—businesses that can predict, respond to, and even create moments that matter to customers across the entire customer experience. Social business is an important first step toward that goal.

As part of the transition to becoming Live Businesses, companies must make social business a part of the fundamental business processes that run their operations.

“It’s the way things are going,” says Dale Vile, founder of Freeform Dynamics, a technology research firm that conducts analysis on social business. “There’s no escape from this way of doing business. The only issue is how you get there.”

This is why, after a period of hype as well as fits and starts, social business is advancing. An MIT Sloan Management Review and Deloitte University Press global survey found that nearly 73% of respondents see social business as “important or somewhat important” to their organizations, up from 52% in 2011. In 20 years, social will be woven into how businesses work, just as e-mail is today, predicts Gerald C. Kane, an associate professor at Boston College and coauthor of the report.

Where to Start

Here are the components you need for the social business journey:

  • The most basic step is monitoring, analyzing, and responding. Real-time monitoring is where every company starts its social business journey. Businesses collect and analyze structured and unstructured customer data from public social networks, their e-commerce Web sites, apps, and marketing campaigns to track and understand patterns so they can improve customer retention, conversion, and brand engagement. By layering on targeting and data analysis, companies dish up the right messages at the right time. These tools are paying off in a big way for Mohawk Industries, the world’s largest flooring company, according to an SAP case study. The company began carefully monitoring and analyzing social media conversations so that it could reach out at the right time to customers and help them find the right products and retailer. It has closed 50% of the deals that started through this monitoring.
  • Weaving social metaphors into your customer-facing processes, such as the ability to “like” things in your catalog or see collaborative filtering, dovetails with the ways people interact today. User reviews, ratings, and comments, paired with recommendation engines, are powerful tools for everything from internal collaboration networks where employees share research, contacts, and documents to commerce Web sites and mobile apps. Because these metaphors are so intuitive, they encourage employees to use social business applications—and the data they create provides an invaluable troveof insights.
  • Go beyond marketing and transform service and sales processes using social. Companies are creating socially driven applications by integrating external data collected from social networks with internal data pulled from different silos, including marketing automation, customer relationship management (CRM), and help desk systems. Social selling and sales collaboration applications use live data to drive efficiency and effectiveness. For instance, a sales team can use a workspace created for a particular deal to swiftly pull together information from other employees, partners, and customers to answer questions raised by the client and track tasks needed to close the deal. Socially powered customer service applications, meantime, let employees tap company-wide resources to supply fast, accurate responses to customers’ issues and track how quickly problems are resolved. KLM loads every tweet or post it gets into an application connected to its customer, ticketing, and complaints databases, giving customer service reps access to everything on one screen in real time to prioritize questions and collaborate on responses that need additional input, according to an article in the MIT Sloan Management Review.
  • Further up the chain, companies begin embedding social into other backend operations. Social data can be integrated with enterprise resource planning, business process management, procurement, order fulfillment, and workforce analytics systems. Internal social strategies integrate social into the workflows of all employees, making these technologies part of the systems and processes they use every day to increase speed, efficacy, and collaboration. With supply chain management, for instance, a company can combine actual rather than forecast data about demand, including point-of-sale numbers and social media, to monitor customer demand in real time and respond immediately.
  • Social innovation has been an idea since the advent of social media, but it takes sophistication and dedication to create successful programs that can spur new ideas or tackle existing challenges. These can be internal programs or ones open to customers and partners. The Innovation Pipeline (TIP) from AT&T is a crowdsourcing platform that encourages employees to submit, vote on, and work together on promising innovations. Since 2009, TIP has attracted more than 130,000 active members, put more than 75 projects into development, and allocated more than US$44 million in funding, according to AT&T.
  • Use social as a disruptive ingredient in new digital business models. Social gives you a direct connection to and understanding of customers, employees, and partners that you could never have had before. Exploit it. Social eliminates traditional transaction costs and points of friction. It dishes up massive amounts of granular data about people’s real needs and actions and provides a powerful feedback loop. Taken together, the different components of social, such as personal connections, reviews, the network effect of people using a single platform, and live interactions, can form the basis for powerful new digital business models (see Social Makes Disruption Easier).

Social Makes Disruption Easier

Most people don’t realize the extent of Uber’s social business model. Some of the tools it uses are social and some aren’t. But without that social business model, the company wouldn’t exist. Social eliminates the traditional transaction costs that the taxi industry was built on and successfully exploits collaborative rating, making its flexible fleet of drivers possible.

23707913564_c0079b5a0b_oUber wouldn’t exist without its social business model. Most people don’t realize the extent of Uber’s social business model. Some of the tools it uses are social and some aren’t. But without that social business model, the company wouldn’t exist. Social eliminates the traditional transaction costs that the taxi industry was built on and successfully exploits collaborative rating, making its flexible fleet of drivers possible.

Uber’s app lets riders and drivers connect directly to each other when and where it fits both sides. No more waiting in lines, no more calling a central dispatch, no more standing on street corners with your hand raised. It’s the ultimate social connection.

But on top of that, Uber harnessed the power of the social network to dish up better driver ratings, improving the service overall. This is a network effect that helped lock Uber into the dominant position it has now. It offers real-time service and immediate gratification whenever and however a customer wants. Because the company has fulfilled those wants, its customers have turned Uber into a formidable force that’s now ploughing into taxi markets worldwide and ramping up real-time delivery services.

Stuck on the Path to Live Business

Companies have adopted some social technologies and approaches, but most are far from becoming true social businesses. They don’t take full advantage of social business because they can’t get beyond using social in shallow ways. Some 74% of executives surveyed in 2015 by IBM agreed that a social business is an organization that uses social technology to foster collaboration among customers, employees, and partners.

But just 20% of those executives report that their own companies are reaching that level of social interaction. “The question is whether you are using these tools to the greatest impact,” says Kane. “It’s not whether companies are doing it; it’s whether they’re doing it well.”

In fact, MIT’s 2014 report found that while businesses were starting to see real value from social business initiatives, companies with the most social business maturity were reporting the biggest benefits. Just 17% of the companies surveyed put themselves in this category. So what is the single biggest driver of social business? It’s whether, how, and how quickly companies use and analyze data from their social business initiatives.

Roadblocks to Social Business

Why have so few companies become true social businesses? One reason is that the benefits aren’t always obvious. Departments and employees often need time to figure out how to use tools effectively, which can lead to struggles and learning curves in the short term in exchange for longer-term gains.

“What’s really interesting is often you don’t recognize the business possibilities until you’re actively using these systems,” says Kane. “It’s the chicken-and-egg argument with social business, which I think is why it can be challenging for businesses.”

Another major roadblock is the established mindset of some older managers who still don’t entirely trust or who aren’t comfortable with social when it moves out of the marketing sphere. Many executives aren’t comfortable with new, less hierarchical ways of interacting or problem solving.

sap_Q216_digital_double_feature2_images3Red Robin executives, though, quickly learned the value of being involved in more fluid conversations after the casual dining chain implemented a social communication network in 2012. Employees posted on the network that customers didn’t like a new menu item, forwarding reviews to executives and the company’s test kitchen. That kick-started discussions on the network about how to fix the problem. Within four weeks, the company had rolled out a new version to customers, according to an article in the Harvard Business Review.

On the flip side, one of the biggest impediments to getting the rank and file to adopt social can be their ingrained concern about expressing their opinions openly. “Despite how at ease people are using Facebook in their personal lives, it can be scary in a business context to go public company wide,” says Vile. “Many people don’t do that lightly.”

Companies can overcome this in different ways. One approach is to start by keeping internal platforms or communities smaller until employees get used to being out in the open. Another is to get people started with social content that they know the higher ups will like. Mitel, a global communications company, distributes preapproved tweets for its employees to use whenever it puts out an announcement. This helps ease its employees into more public social networking. Almost one-third of Mitel employees have participated in the social advocacy program since it was launched in 2014, according to an interview with the Pravda Media Group.

As social expands, companies will inevitably lose more of the traditional control within their walls that they were used to having, as they did when e-mail first appeared on the scene (see Social Business as a Force for Talent Retention). Social amplifies this dynamic exponentially, but just as managers learned to adjust to the changes that e-mail brought and came to appreciate the benefits of faster, more immediate communication with employees, partners, and customers, they will also learn to appreciate social’s benefits by embracing it internally. Only by coordinating responses both internally and externally will companies survive the transition to Live Businesses.

sap_Q216_digital_double_feature2_images4Six Strategies Live Businesses Use to Drive Successful Social Business 

Transformative technologies are, by nature, hard. They require a basic rethinking of how each company gets things done. Which is why it took years before established businesses harnessed the Web. Some never figured it out.

Expect social business transformation to be equally difficult. It is about trial and error: two steps forward, one step back.

Here are six ways to get past the challenges of social:

01Put processes before platform.

sap_Q216_digital_double_feature2_images5Rather than rolling out social for social’s sake, the companies that get it right pinpoint specific business processes that can be improved using social instead of just meeting some vague aspiration to “be social.” Program- or campaign-centric activities, such as sales, operational improvement, or R&D activity, are natural starting points, says Vile of Freeform Dynamics.

“That sort of project is particularly open to encouraging a broader set of inputs into the process,” adds Vile. This creates a playbook and proof points for expanding the use of social first throughout a department and then throughout the organization. It also demonstrates to employees that changing how they work is worth it.

02Take an iterative approach to building internal social networks.

Many companies choose a vendor for a social collaboration platform and then roll it out, expecting employees to buy in. BASF took a more deliberate approach. Executives at the German chemical group began by encouraging different social media experiments throughout the organization. When some of those projects showed promise, they created an internal think tank that learned from those experiments and developed the collaboration platform. Employees who had run the early social projects were invited to be part of the team working on the new collaboration application, according to an article at Simply Communicate.

Four years after the project launch, the company had 4,500 communities working together on business topics, and community leaders estimated that the platform was helping boost project efficiency by as much as 25%, according to a report published by MIT Sloan Management Review and Deloitte.

03Overcome resistance with a plan.

You need a blueprint for encouraging the adoption and use of social tools—not just at launch but for the long run. Persuading employees to change the way they work is a huge challenge. So many new technologies and programs come and go in companies that it’s natural for people to be skeptical about the latest thing. You need to convince them (and their middle managers) that this is important not just for the company but also for them.

“The reality is that in organizations people don’t have time or they actively resist being told to do things differently,” says Angela Ashenden, a principal analyst at consultancy MWD Advisors. “You have to be much more strategic and think of ways to make it more relevant to them.”

sap_Q216_digital_double_feature2_images6BASF understood that simply touting the importance of technology can work against you. During the launch of its collaborative platform, called connect.BASF, the company didn’t talk about the technology. Instead, it focused on the practical benefits this new service would give employees in their work, and on how this platform would be BASF’s only corporate social communication network, according to the Simply Communicate article.

Successful businesses draw up lists of clear steps to drive adoption, including communicating about the upcoming deployment of the tool, running online and in-person training sessions, and sharing examples through blogs or videos of colleagues tackling tasks using the tool. They create programs run by professionals who have in-the-trenches experience with rolling out social business. They put managers in charge of overseeing the project after launch, arming them with clear benchmarks. These might range from the most basic activity measurements, such as unique monthly logins and document sharing, to ones that measure higher business impact, such as productivity improvements and customer satisfaction.

The key is to keep pushing forward after the initial launch. When adoption of its social collaboration technologies plateaued a year after the initial rollout, Bayer MaterialScience (now called Covestro) took action. It implemented a “reverse mentoring program” that pairs younger, social media savvy employees with senior executives. It also developed a program that actively seeks out and shares best practices and success stories, and it studies reports to help understand how community use is developing, according to a ZDNet article and presentations published online by the company. After 18 months, half of the organization’s employees were active users.

04Get leaders to embrace social.

The backing of company leaders communicates that social is strategically important to a company. KLM didn’t simply sail into becoming a social business. Despite the airline’s success in using social after the volcano eruption, employees and managers went back to their silos when the crisis ended. A few months later, the CEO of KLM, fed up with this relapse, took action. He prodded executives to get moving and assigned managers to shepherd the widespread use of social business that has taken hold within KLM today, according to an article in the MIT Sloan Management Review.

sap_Q216_digital_double_feature2_images7Executives need to show that they actively support social business. Many are hiring chief digital officers (CDOs), who are in charge not just of social but of the overall transition to Live Business. The CDOs need to set processes for monitoring projects so they can step in when needed. Practically, this means using social monitoring tools, dashboards, or other analytics tools linked to CRM or other key business process systems. Executives need to be involved in determining specific business processes and use cases that they want to apply social to and the benefits they want to achieve. That way, the project is seen as being central to business objectives.

Leaders also need to take a role in appointing managers, whether organization-wide or within lines of business, to oversee new social business projects and implement work patterns, which are templates for collaborating on business processes such as sales or customer support. Executives don’t need to lead the day-to-day charge themselves, but they need to lead by example, whether by writing a monthly blog or leaving comments or likes on employees’ pages, to telegraph their digital commitment.

05Find social champions and empower them to drive adoption.

Building an army of advocates is crucial to success. There are plenty of natural enthusiasts you can tap to become social business advocates. After all, outside of work many of your employees are already experts at tweeting, blogging, and sharing videos and links.

sap_Q216_digital_double_feature2_images8Take advantage of this enthusiasm. But also make sure that the training and interaction between your advocates and other employees happens in person as well as digitally. “If you’re constantly doing WebEx sessions, it’s not the same as meeting people face-to-face and having someone local who understands the challenges of a particular office culture or business routine,” says Ashenden.

Pearson, the education publishing and testing company, created a structured network of advocates when it rolled out a series of a social collaboration platforms to replace its 130 intranets and improve interaction among its employees, partners, and customers. During the launch of its first platform in 2011, the company created an evangelist group from the 500 employees who were pilot users of the platform, training the evangelists to spread the word and provide local support. In late 2012, a select group of individuals picked from the evangelist group were recognized as champions. A bimonthly call with these champions, now involved in testing new features, continues to gather feedback.

About 18,000 users, or 45% of the company, log into the employee platform daily, and Pearson estimates that about a third of its employees have changed the way they work, according to a 2014 report by Ashenden.

Social Business As a Force for Talent Retention

If you want to attract and keep employees, you’d better have a digitally enabled company. 

Most employees between the ages of 22 and 60 surveyed for an MIT Sloan Management Review and Deloitte University Press report wanted to work for digitally enabled companies, defined as organizations that integrate social, mobile, analytics, and cloud. Some very fundamental trends are shaping this expectation. First, people see digital as the future, but they don’t want to work for companies that use social technologies only in marketing; they want to work for Live Businesses.

“Given the chance to work for a nimbler, faster, smarter company, people are going to do it,” says Gerald C. Kane, an associate professor at Boston College. Companies that aren’t as digitally sophisticated or that aren’t seen as being well prepared to adapt to future markets will lose employees to competitors.

Another driving trend is the changing makeup of the workforce. By 2020, contingent workers will account for more than 40% of the workforce, according to a study by Intuit. This shift will require companies to be prepared to interact and work electronically with more partners and contractors outside of their walls.

Rounding out the forces shaping the workplace of the future are the expectations of Millennials, who will make up 50% of the global workforce by 2020, according to a report by PwC. Nearly half prefer to communicate electronically at work and just over three-quarters believe that technology makes them more effective at work, the PwC report also finds.

06Use measurement and data to understand social business value.

The common conception is that it’s hard to measure the impact of social business, but mature social businesses prove this wrong. Social technology success measurements and the use of key performance indicators are growing and becoming increasingly sophisticated. Companies are moving beyond basic measurements, such as unique monthly logins, to advanced measurements, like tracking the business impact of social on improvements in productivity, process effectiveness, and customer satisfaction.

sap_Q216_digital_double_feature2_images9Within the social business technologies themselves, companies are using more sophisticated approaches to track the impact they’re having on employees. A report by Ashenden describes how Royal Philips works with a data scientist to draft quarterly reports that track trends and metrics within its employee collaboration network. The tracking includes how quickly questions are being answered; whether employees are interacting primarily with peers, executives, or middle management; and what the trending discussions are.

 

Social Business Is Integral to Live Business Strategies

Whether companies are being pulled along or are actively embracing social business, they will need to adapt for one simple reason: it’s part of digital transformation. The immediacy of social, the connections it forms, and the information it dishes up all shape what customers want these days from businesses.

Companies must embed this customer-centric approach not only in their marketing but also in how they run their companies. Anticipating what customers want, interacting with them on their own terms, and meeting their expectations of live interactions mean that an organization must make social part of its business processes, how its employees do their jobs, and how it works with partners.

Being partly social is no longer an option. D!

About the author:

Anthony Leaper is Senior VP and Sales GM for Enterprise Social Software at SAP.

Karie Willyerd is Workplace Futurist at SAP Success Factors and co-author of the book Stretch.

Heather Green is a writer and researcher at Heather Green Media LLC.

Tags:

Executive Quarterly, Feature 2, Q2 2016, Live Business