The social economy: Unlocking value and productivity through social technologies

McKinsey & Company

July 2012 | by Michael Chui, James Manyika, Jacques Bughin, Richard Dobbs, Charles Roxburgh, Hugo Sarrazin, Geoffrey Sands and Magdalena Westergren

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… Whether discussing consumer products or organizing political movements, people around the world constantly use social-media platforms to seek and share information. Companies use them to reach consumers in new ways too; by tapping into these conversations, organizations can generate richer insights and create precisely targeted messages and offers.




English: Infographic on how Social Media are being used, and how everything is changed by them. (Photo credit: Wikipedia)

While 72 percent of companies use social technologies in some way, very few are anywhere near to achieving the full potential benefit. In fact, the most powerful applications of social technologies in the global economy are largely untapped. …  [The] McKinsey Global Institute (MGI) finds that twice as much potential value lies in using social tools to enhance communications, knowledge sharing, and collaboration within and across enterprises. MGI’s estimates suggest that by fully implementing social technologies, companies have an opportunity to raise the productivity of interaction workers—high-skill knowledge workers, including managers and professionals—by 20 to 25 percent.

Exhibit



Social economy (Photo credit: Wikipedia)

MGI’s report, The social economy: Unlocking value and productivity through social technologies, explores their potential economic impact by examining their current usage and evolving application in four commercial sectors: consumer packaged goods, retail financial services, advanced manufacturing, and professional services. These technologies, which create value by improving productivity across the value chain, could potentially contribute $900 billion to $1.3 trillion in annual value across the four sectors.

Two-thirds of this potential value lies in improving collaboration and communication within and across enterprises. …[When] companies use social media internally, messages become content; a searchable record of knowledge can reduce, by as much as 35 percent, the time employees spend searching for company information. Additional value can be realized through faster, more efficient, more effective collaboration, both within and between enterprises.

The amount of value individual companies can capture from social technologies varies widely by industry, as do the sources of value. Companies that have a high proportion of interaction workers can realize tremendous productivity improvements through faster internal communication and smoother collaboration. Companies that depend very heavily on influencing consumers can derive considerable value by interacting with them in social media and by monitoring the conversations to gain a richer perspective on product requirements or brand image—for much less than what traditional research methods would cost.

To reap the full benefit of social technologies, organizations must transform their structures, processes, and cultures: they will need to become more open and nonhierarchical and to create a culture of trust. Ultimately, the power of social technologies hinges on the full and enthusiastic participation of employees who are not afraid to share their thoughts and trust that their contributions will be respected. Creating these conditions will be far more challenging than implementing the technologies themselves.

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