Why Social Business Initiatives Fail

Why do so many social business programs fail?

Gartner research estimates that fully 80% of social business initiatives will deliver disappointing results over the next three years.

That’s a bad track record. It’s almost as if organizations were sabotaging their own efforts.

A careful look at data from the 2013 social business report from MIT Sloan Management Review and Deloitte, “Social Business: Shifting out of First Gear,” provides three interesting and common sense insights into why social business initiatives often fail to meet expectations.

1. Managers go into social business with unclear objectives.

The first insight can be found in the question that asked respondents whether the social business initiative they were involved in was started to address a specific business problem. Sixty three percent of respondents indicated “no.”

This situation, a classic one with information technology, occurs when managers hear about the latest technological developments and decide their organizations need to adopt these tools simply because colleagues and competitors are doing so. “Because it’s there” may have been sufficient motivation for Sir Edmund Hillary to climb Mount Everest, but it’s a lousy reason to adopt social business tools.

Uncritical adoption of technology, particularly when associated with social business, is a recipe for failure. Managers need a clear vision for how these technologies will influence business operations and communicate this vision to employees through both word (i.e. training of and clear expectations for employees) and deed (i.e. incentives and job performance reviews). It is important to ask first why an organization is adopting social business tools and what it hopes to gain from them. The answer to these questions will drive which tools to adopt and how.

2. Initiatives start as pilots then fizzle out due to modest participation.

A clear business objective may not be initially necessary, however, if the initiative is explicitly started as a pilot project. In this case, technology is adopted with the explicit intention of trying to figure out exactly what the business applications of these new technologies might be. Indeed, about half of the respondents indicated that the social business initiatives without a clear business objective were intended as a pilot project.

The problem with pilot projects is that they require an important condition for success that is often painfully lacking in most organizations — slack resources. If employees are going to figure out how to employ new social business tools in their work, they need free time to explore the technologies and figure out how to integrate it into their work.

While the 2013 report did not explicitly collect data about whether employees were given time to explore the technology in these pilot initiatives, anecdotal evidence suggests that most organizations simply tack new social business initiatives onto employees’ existing job responsibilities. Thus, most employees have little free time or motivation to learn how to use these technologies, let alone help realize their business purpose.

Slack resources are even more critical for internal social business initiatives, because of their inherent dependence on network effects. These initiatives are only valuable to the extent that other people also use them. Even if a few employees find the time to experiment, the project will not yield results unless a critical mass of others do, too.

3. Companies expect social initiatives, even pilots, to deliver a financial return on investment.

The third insight comes from the fact that 53% of social business initiatives are expected to deliver a financial return on investment (ROI). This finding, by itself, is not surprising of course. The desire to demonstrate ROI is understandable in for-profit companies, even if it is often notoriously difficult to achieve with social business initiatives.

More surprising is that there is a surprisingly low correlation between the desire for a financial return on investment and responses to the previous two questions.

Analysis of the survey results indicates that nearly half of respondents expect their social business initiatives (pilots and non-pilots) to deliver a financial return on investment, despite the fact that these initiatives were not started to address a particular business purpose. It is difficult to quantify ROI in social business initiatives when its business objective has not been clearly defined.

Similarly, nearly half of respondents involved in pilot projects expected the pilot to deliver a financial return on investment. This focus on the financial bottom line runs counter to the purpose of pilot projects. Organizational research has shown that exploratory projects tend to underperform in the short-term before leading to higher performance in the long term. It is a mistake to emphasize bottom-line outcomes too early in any pilot project, a mistake that is most clearly seen in the failure of MySpace despite an early and commanding lead in the online social networking arena.

None of these decisions regarding social business initiatives — pilot project vs. addressing a specific business problem, measuring short term ROI or not — are inherently right or wrong on their own. Nevertheless, managers should ensure that they are aligned with the objectives and the other business decisions associated with their social business initiatives to provide the greatest chance for success.