Social Business: Flat or Hierarchical? A Surprising Answer

Social media represents an enormous opportunity for most organizations, particularly knowledge-intensive ones. While marketing applications of social media are getting the most attention today, the greater impact may come from applications internal to the organization. The McKinsey Global Institute, for instance, estimates that social media is poised to unlock $1.3 trillion of economic value, mostly through the improved efficiency of knowledge workers.

Despite this considerable potential, I suspect that most organizations will have significant difficulties leveraging social media for internal collaboration. This suspicion is borne out by Gartner research, which touts a very high failure percentage for internal initiatives.

The reason: strategy is too often stuck at the executive level.

After reading my recent post, “Procedural vs. Strategic Approaches to Social Media,” one reader, Susan Deisenroth, pointed out that part of the reason that digital teams do not act strategically is that they are not permitted to do so by their companies. She noted that many organizations’ strategy is locked up in the Board Room and the C-suite, with the average employee unaware of — or unable to act on — the bigger strategic vision.

She is right, of course. Traditional bureaucratic mechanisms are too slow to handle the pace of collaboration in social business. A recent Harvard Business Review article noted that one Fortune 200 company took a week to generate and approve an 140-character tweet in response to a critic online — far too long to possibly be effective in the fast moving world of social media. Even if employees can collaborate more efficiently and effectively using social media tools, any impact will be minimal if they still need to navigate the old bureaucratic processes to leverage the results.

Similarly, managers who use traditional mechanisms to oversee their newly efficient employees will drown in the information and activity generated by these subordinates unless they also embrace social media themselves. Tools such as blogs and online video can allow top executives to communicate with managers globally as well as solicit feedback from those managers. The vast amounts of data generated by social media tools can provide unprecedented transparency regarding organizational processes through sophisticated analysis and visualization. Successful innovations in one part of the organization can quickly be identified, highlighted and disseminated to educate managers in other parts.

But technological tools will not be enough to obtain the predicted benefits of social business. MIT Sloan Management Review’s new 2013 Report on Social Business revealed that approximately 70% of C-level executives think social media has the potential to transform the way their company works. This sentiment needs to go one step further: Companies must change the way they work in order to realize the promised benefits of social business.

Consider the groundbreaking Super Bowl Tweet from Oreo during the football game’s unexpected blackout. As the Associated Press noted, “It took Oreo’s marketers roughly 10 minutes after the power went out to tweet a picture of an Oreo cookie in the half-dark with the words: ‘You can still dunk in the dark.’” (Read more at Wired.com.) What was most impressive were the organizational mechanisms in place — 18 months in the making — that allowed Oreo to create and post an on-message ad within minutes.

A fixation on “real time marketing” has followed this success, but this trend will likely continue as organizations transform toward “real time business.”

What might such a transformation look like?

It will likely look quite different than the co-called flat organizations that were heralded at the dawn of the Internet era. It will also likely look very different than the flashy techniques peddled by many so-called “social media strategists.”

Rather, social businesses may start to look more like organizations that long predate modern corporations — so-called “loosely coupled” organizations such as military, education and religious institutions.

Loosely coupled institutions push decision-making capabilities down through their hierarchy to better deal with conditions on the ground. Executive leaders communicate the strategic objectives of the organization, and the front line leaders are partially responsible for figuring out how to achieve those objectives. These organizations remain deeply hierarchical, but these hierarchies operate differently than modern corporations.

Today’s companies might look to these older forms of organizing for guidance on how to manage in this fast-changing, social media-driven business environment. Managing in this environment will require allowing, enabling and empowering employees to act strategically and with less direct oversight. It will require educating these employees on the organization’s strategic objectives and developing “rules of engagement” that guide employee action. It will require that executives learn new ways of managing and leading. Companies and executives may look to structures of the past for lessons on how to lead in the future.

The most pressing questions facing organizations are whether executives have the courage to let social media transform the way those companies work, and whether they have the confidence to adapt their own leadership styles in response.