How Companies Can Move Past a Trough of Disillusionment in Social Business

Dion Hinchcliffe is chief strategy officer of The Dachis Group, and co-author with Peter Kim of Social Business by Design (Jossey-Bass, 2012).

In this interview, Hinchcliffe says that some companies are finding themselves in what he calls a “trough of disillusionment” in their social business projects, but he explains that this trough is a normal part of the technology adoption cycle. Furthermore, because the tools for social business were originally created for consumers, it presented business-specific issues surrounding security and administration that are just now being addressed.

Hinchcliffe provides advice on how a company can show progress towards becoming a more fully enabled social business. A key point, he says, is to measure how far apart the distance is between a social activity and the connection to specific work or business process activities. He also says that those firms that are most advanced in their social business initiatives are those that employ executive leadership, perform community management capabilities, build social business literacy for employees, and do not artificially isolate their various social business efforts.

Most important of all is to connect social tools to how work gets done. Hinchcliffe advises correlating social business efforts with one’s existing Key Performance Indicators (KPIs), which will help convince other executives about the value of a social business effort. It also is important to “turn the knob on social to the right.” In other words, don’t make social business efforts just a little window dressing, or you’ll only get incremental results: Hinchcliffe discusses companies that have “used social to knock one of their business processes out of the park” by taking this tack.

Finally, Hinchcliffe outlines what companies are facing when communicating to people around the world and in other cultures through social networks.

You’ve written that when it comes to social business, companies are currently in a stage you call a “trough of disillusionment.” Can you say more about this?

Yes. I definitely see that we’re in the trough. But the trough is an inevitable part of the technology adoption cycle. For example, the failure rates for ERP in the early days was very high, I think, upwards of 80%. I think they’re still over 50%.

So, we don’t see organizations having nearly the failure rate of the early days of ERP so we’re doing not bad.

Information Week just published a survey saying that 85% of organizations have broadly deployed some form of social technology. This could just be Twitter customer care, or it could be an enterprise social network. But only 18% from that same survey said that it was a great success. I think that we have to understand that social media was never designed with a business audience in mind. It came from a wave of consumer companies trying to create a better model for consumers to connect with each other. In consumer social media, enterprises originally did not have their needs met for functionality around security and compliance and control and different external cross-border conversations.

All those requirements have just made their way into the tools in the last couple of years. We’re only now at the point where we can actually say that we can even do this in a way that would be acceptable for most organizations. So, from that standpoint, I think that we’re in the trough because we’ve tried for a number of years to apply this to our organization. The tools weren’t ready. Our organizations weren’t ready. I think the overall mood is, “Hey, we’ve been trying this stuff for a while. We tried to be social for a while. It’s hard. It’s time consuming, and it seems like it’s increasingly demanding more of our management attention.” But this is necessary if we want to see social media flourish in the enterprise.

Are there any low-hanging fruits for companies to pick that can generate returns from their social investments?

The low-hanging fruit apparently lies in two areas. One is pre-sale and marketing and customer support. The other place where we see a lot of value is in customer retention. T-Mobile uses social data and integrates and cross-references social conversations about people unhappy with their T-Mobile products or services and correlated that with their database, and then did just-in-time marketing to prevent them from defecting. They were able to cut customer defection by half in just 90 days. And if you know those kinds of businesses, those are remarkable figures.

Where do you feel culture and/or leadership play a role in making a social initiative successful?

That is a really important conversation because I don’t think we’re talking about it as an outright barrier because we see social business happening anyway. As Euan Semple said, the easiest way to become a social business is to not do anything. It’s going to happen anyway. It’s also the worst way to do it. You have no control over that process. You’re basically abdicating responsibility.

Do you feel that there are specific indicators or signs that a company can look at to measure their progress along the way in becoming a more fully enabled social business?

There does seem to be a broad progression. And, of course, most organizations are at the very beginning of that progression, meaning they’re experimenting with the tools and they have some early adopters.

There are many ways to measure progress along the way. The one that seems to matter the most is to measure how far apart the distance is between the social activity and the connection to specific work or business processes activities.

If there is a lot of distance between the social conversations and the business processes, then it is less likely there will be impact for a meaningful change. This seems to be a good indicator of how substantially the company has adopted social. We can look at SAP, and you can see how they increase sales processes deeply in the beginning, especially through their social channel.

Is there such a thing as a fully-enabled social business? Is there an endpoint where social has become embedded in just the way of doing business?

Well, there’s never going to be an organization that’s 100% a social business. They’ll get to 80%, 85%, or 90% and there will still be some corners of the organization that do things differently. But there are some good examples. Thomson Reuters is one and Burberry is another, although not quite as much. Thomson has the creation of a social enterprise as a stated vision. They’ve completely overhauled everything that they’re doing and basing everything on the Salesforce platform. They have the full-strength vision, and the data shows that they’re getting results.

BASF is another firm and it’s getting there, but they’ll be the first to tell you though that it’s going to take them a long time. For five years they’ve been laying groundwork with corporate sponsors in getting its highly respected scientists inside the company onboard and connecting with the community and getting all the IT stakeholders from all the different siloed systems onboard. They probably have the most comprehensive vision I’ve seen. They’re a large global company with 100,000 people, but they’ve probably got five years to go for being mostly a social business.

What, if anything, do socially advanced companies have in common?

There are some threads. One is that technology and media companies are way ahead of everybody else. They’re very comfortable using technology, or they’re in the communications industry, so this is natural for them. The other indicator is executive leadership and a couple executives would be most helpful, but even one really well-liked and respected executive leader in the company, particularly if it’s the CEO, can make the change happen inordinately faster.

Also critical is building community management capability. And building social business literacy. Not social media literacy. Social business literacy is different as it means helping employees who don’t know what they’re supposed to do with these tools and don’t know how to get the best use out of them. It’s not complicated, but they’ve just never been told.

And I’m seeing a new pattern where organizations that don’t artificially isolate their effort is another indicator. Because for the last two years or so when I go into organizations and I ask about their social business efforts, it turns out they always have at least two big ones: the inside one and the outside one. And the inside and the outside efforts have selected their own sets of tools. They’ve created their own policies and procedures. They’ve built their own team. And they’ve put it in two entire social environments. One is the customer community and the other one the employee social network.

And then they wonder why people keep leaving them, especially on the inside one, to go somewhere else where they need to spend time to communicate with people because they have all these constraints on what they can actually do. If you’re in that employee social network, you probably can’t talk to your business partners. You can’t talk to your own customer. You can’t talk to the marketplace. So, I’ve been trying to get everyone to look at the new McKinsey findings that show that organizations that don’t put artificial barriers from the inside and the outside on social have outside results by a large margin. That’s what seems [to be] where the return is. Social really takes off there.

The problem was that we’ve organically grown these in each one of our functions, and then as they’ve gotten big, they’ve bumped into each other and we realize, oops, that stuff all has to work together. And social works best when you don’t have artificial constraints. The tools couldn’t do this before, but now there are options. There is IBM Connections and Salesforce, with cross-border intelligence that allows you to bring people in dynamic situations from outside the company.

What’s your view on the need to measure a return on social initiatives?

The place I’ve really seen metrics actually being used in any kind of widespread way is in measuring adoption — who is using it and who is not. It’s very easy to see. And most of the tools now can show you, hey, this group over here is using it. This department’s not using it. These guys over here, they’re using it a lot. So, that’s good, but that’s not ROI, but a goal.

What really matters, is: are you running the business so that social ends up making it better? Correlate your social business efforts with existing, highly respected KPIs. I see companies get credibility for having done something with social. They said, all right, so customer retention is one critical product management process. And everyone measured that process because it’s the core of their business. And whenever people switched over to the social method of operating that business process, it went about a quarter faster.

By showing that your social media effort has impacted KPIs, other executives who don’t know anything about social recognize that, yeah, that’s it. That’s all you really have to do. You have to convincingly correlate. Without that, they’re thinking you’re guessing or else it just has a pretty soft impact.

A Gartner report said that by the end of 2015, 80% of social business initiatives are going to fail. Do you think that forecast is accurate, and if so, what can a business do now to avoid becoming one of the 80%?

First, remember that you’re looking at the same numbers you have with most types of initiatives in their early days because most of them failed. The bigger the project and the newer the technology, the more likely that an information technology initiative is going to fail. I mean, you’re going to be way over budget or way late. Social is no different. ERP was the worst offender. We routinely see $100 million implementations utterly fail. I was just at a big company on the fifth year of their SAP implementation and it still hasn’t happened yet. They know that problem is tough. So I think Gartner is probably in the ballpark.

What can organizations do? Well, one is don’t set the project off to the side. If it’s not required, if you don’t need to use this to get your job done, you’re not going to use it to get your job done.This seems self-evident, but we have had to learn that. We’ve often put it off to the side and say go over here and work with each other. And they go, well, I already have places to do that. I already have tools and I don’t need more. I already know how to do my job.

So, we see it’s hitting too much against that distance thing I talked about. Connect your social tools to how work gets done. Just build the process around it. Build it around how social works best, which is open and participatory. Anyone can participate. That’s principle number one on social business.

Your business process is going to work best when anyone can participate — any stakeholder, anywhere. Maybe that’s just inside your company, but it’s going to work a lot better if you’re bringing in suppliers. It’ll work even better if you bring in your customers early on whenever you can and let them participate. If they think what you’re doing is interesting, get them involved, because you’re going to do it again anyway when you end up talking to them.

And I think that you have to turn the knob on social to the right. So, in other words, if you put a little window dressing around the edges of a business process, you get value, but you don’t get a lot of value. It’s baking it into the middle. I have some really great case studies now on companies who used social to knock one of their business processes out of the park. T-Mobile retained half their customers going forward more than they could before they started their social program as key to the process. But you have to turn the knob all the way up. If you keep it pretty low, you’re going to get very incremental results.

Are people starting to get sensitive to how to fine-tune their social efforts if participants are from around the globe?

The pattern I see all the time now is that you have headquarters in developed countries whose fastest-growing area is overseas, but no one really knows who those people are. Those overseas offices are growing by double and triple digits, whereas the home office is growing by single digits. I was talking to the CIO of a large global auto parts manufacturer. He told me that he has to hire 100,000 Chinese workers in the next two years. He’s asking himself, “What makes us special? What makes us a leader? Because they don’t know anything about us. They don’t know what we value, or what we care about. And I can’t talk to all of them. I can’t engage them in scale. Or can I?” So he’s looking at social tools to do that even though in China, for example, they don’t use social media while at work.

What’s interesting is our work is that we’ve seen, for example, that even in Asia there’s very big differences, such as in Japan. In that country, the communication is extremely formal. The status updates look like typed letters, if they even use them at all.

And there’s the other thing where male and female communication does not happen. You see this in the Middle East as well, even though women are allowed in the workforce. It turns out that with young people, the only way they can talk to the opposite sex is to use social networks. They use them heavily. I was actually invited to a couple Iranian social networks. It’s very interesting given our regional differences. And what it really turns out is that community management is a key capability to deal with things quickly and educate very quickly and effectively. You have to be able to move forward and actually start to integrate it and build cultures together.