This is a remarkable 184 page document produced by McKinsey Global Institute (MGI). The title of the report is The Social Economy: Unlocking Value and Productivity Through Social Technologies. This report shows what a tremendous advantage Social Technology is to the world of business. Here I am going to highlight some of these benefits to save you having to read 184 pages…
Advantages to business of social technologies
- Co-Create Products
- Derive Customer Insights
Operations and Distribution
- Leverage social to forecast and monitor
- Use social to distribute business processes
Sales and Marketing
- Derive customer insights
- Use social technologies for marketing, communication and interaction
- Generate and foster sales leads
- Social commerce
- Provide customer care via social platforms
Enterprise wide levers, social as organisational technology
- Use social technology to improve intra-or-inter organisational collaboration and communication
- Use social technology to match talent to tasks
Reading that list you would wonder how the hell companies are dithering, the whole business cycle can now be effectively carried out via social technologies across all sectors of enterprise, both inside and outside the organisations.
The following are examples of social collaboration for business.
- Working from home
- Social platform-based resource center for business critical documents and knowledge sharing
- Sharing document with clients in the development stage of a project, saving turnaround time
These are three ways in which business can now adapt to the new technology that is the online social space. Like many I work from a home base and no longer have the costs associated with an office. All documents and knowledge sharing can be easily achieved online, which increases the speed in which my work colleagues can access the data. Bringing the clients into the development process early also leads to more efficiencies.
This is still seen as revolutionary as email is not that old and is part of the online space. This is one of the disruptive elements to social platforms, IBM’s Luis Suarez believes that the time wasted in dealing with unwanted and unnecessary emails is costing business millions of dollars.
He advocated for an internal IBM social platform and this has led to an huge efficiency increase, plus the internal benefit to IBM is that people are dealing with people through their online profiles, communities and friendships have developed within the company across international times lines that would never have occurred previously and Luis’ daily emails have dropped by over 90%.
Forecasting Market Demands
Intel are now using the wisdom of crowds to predict demand for their products. By capturing individual and collective assessments for up coming demand, they can now predict with 20% more accuracy the future demand. This allows for efficiencies in cash flows, inventory planning and production.
In the same role; wisdom of crowds is now being used to predict movements on the stock exchange, by analysis of Twitter comments. Gathering together the sentiment expressed in Twitter comments and adding them to the existing model used to predict the Dow Jones Industrial Average (DJIA) has improved the models accuracy from 46.7 % to 86.7%. These sentiments reflected in the DJIA 3 to 4 days later.
Now that seems like a lot of WONGA
You might have seen the Wonga.com adverts on Sky, spitting image type puppets of older ladies and gents in an office, extolling the virtues of borrowing short term money from Wonga. I personally wondered how these companies managed to survive in what is known as the biggest default area in money lending.
Wonga have disrupted this model by leveraging big data and using social platforms. It has reduced it’s default from over 50% to single digit default by developing an algorithm which takes 30 key points of information from the applicant. Based on that 30 point check Wonga have found that they can access 6,000 to 8,000 more online data points about the applicant from the online space, this is called data mining.
Designing a vehicle for the US Military
Local Motors where asked to produce a new military vehicle by the US Defense Department, in 1/5 the normal time frame of 5 years. By offering a $10K prize fund Local Motors enlisted the help of it’s already active online community and produced the vehicle in 5 months. The fully built and functioning model was unveiled by US President Obama. He praised the efforts and rightly said that crowd-sourcing could save billions in development costs.
Businesses large and small can benefit from the disruptive influence of social technology. This report leaves you in no doubt about that. The savings to business across the four sectors MGI have covered in this report is put at between $900 Billion and $1.3 Trillion per year if the Social Business Model (SBM) is adopted. It is the ROI of online and as the Burberry CEO Angela Ahrendts said some time ago, if you don’t have an SBM you will not have a business in five years.
This post is only skimming the report, there are also examples of how social is saving lives, helping people stay safe in Hurricanes. I will cover that in more detail at a later date. Can CEO’s and the C-Suite in general continue to ignore the Social Platforms and the Social Business Model? On the evidence of this report I don’t believe so, come join the most disruptive technology in the worlds history, sure mistakes will be made, but isn’t that part of the fun?
Thanks to McKinsey Global Institute and to the 8 writers accredited to the document, Michael Chui,James Manyika, Jacques Bughin, Richard Dobbs, Charles Roxburgh, Hugo Sarrazin, Geoffrey Sands, and Magdalena Westergren for an incredibly insightful report.