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June 2016

THE EVOLUTION OF SOCIAL


TECHNOLOGIES
Leading companies have passed through three distinct phases of
organizational usage. What should we learn from them?

by Martin Harrysson, Detlef Schoder, and Asin Tavakoli

Since the dawn of the social-technology McKinseys long-running research into


era, executives have recognized the enterprise use of social technologies
potential of blogs, wikis, and social provides a unique vantage point for
networks to strengthen lines of company examining the nature and pace of this
communication and collaboration, evolution. Surveys of more than 2,700
and to invigorate knowledge sharing. global executives over each of the last ten
Many leaders have understood that by years have probed technology diffusion
harnessing the creativity and capabilities within organizations and the patterns of
of internal and external stakeholders, technology adoption.1
they can boost organizational
effectiveness and potentially improve Our review of survey data spanning
strategic direction setting. But they the years 2005 to 2015 suggests three
have also found that spreading the use distinct, progressively more sophisticated
of these new technologies across the phases of usage. Companies in our
organization requires time to overcome sample began with trial-and-error
cultural resistance and to absorb the applicationsfor example, using social
lessons of early successes and failures. platforms such as YouTube to expand
Social technologies, after all, raise their marketing mix to attract younger
new sensitivities, seeking to breach consumers. They then switched their
organizational walls and instill more focus to fostering collaboration. Most
collaborative mind-sets. recently, some have deployed social
technologies to catalyze the cocreation usage, and the benefits of applying
of strategy. Across this spectrum, we also them have evolved over the period. We
found that companies shifted the mix found that overall adoption is plateauing.
of technologies and expanded the terrain (McKinseys Jacques Bughin, using this
of application. longitudinal data, described a similar
pattern for Enterprise 2.0 tools in a
Climbing the learning curve 2015 Quarterly article.2)

Exhibit 1 tracks how companies choice Social-networking sites (such as Facebook


of social tools, the boundaries of their and LinkedIn) and microblogging platforms
Web 2016
Social Technologies
Exhibit 1 of 2
Exhibit 1
Companies approaches to social technologies have evolved
over time.

% of respondents, dashed values estimated1

Adoption of social technologies 2 Social networks Blogs Wikis


100

75

50

25
0
2005 2007 2009 2011 2013 2015

Type of use Customer Partner Internal


100

75

50

25
0
2005 2007 2009 2011 2013 2015

Benefits of adoption Access Cost reduction Process optimization

100

75

50

25
0
2005 2007 2009 2011 2013 2015

1
Estimates derived from those respondents who answered questions about future and prior use of
social technologies; not all respondents did so.
2
Net adoption adjusted for technology churn

Source: McKinsey Enterprise 2.0 surveys of 2,750 global executives over each year from 2005
to 2015

2
(such as Twitter and Yammer) remain business units and within functions such
the tools of choice in the pursuit of as marketing to improve critical functional
broad communication and collaboration. tasks. Marketers used Facebook or
After an initial spate of enthusiasm, the YouTube to acquire new customers or for
adoption of blogging as a leadership- interactions with existing customers,
messaging tool leveled off. Wikis have for example, to build relationships with
had less impact historically, and their social influencers.
use has stalled. We also found clear
evidence that social networks have Collaboration and knowledge work
expanded and become better integrated, Our data show that starting around
with companies first moving to interact 2010, a more collaborative approach
with customers, then creating networks emerged, with advanced companies
linking both employees and outside adopting internal platforms such as
stakeholders. Chatter, Connections, and Yammer to
connect employees. Two-thirds to three-
Finally, we observed benefits from quarters of respondents during this
adoption. The most widespread was middle stage said they were using social
greater access to knowledge and technologies to foster more collaboration,
to experts within and outside the gather insights, or manage knowledge
enterprise. More recently, companies systematically. For example, companies
have achieved cost reductionsfor searched pools of knowledge and talent
example, through more efficient internal across the organization to assemble
communications and the use of video and project teams with relevant expertise.
knowledge-sharing platforms to engage
with customers remotely rather than Strategic insights
traveling to see them. The multiplication In the most recent evolutionary phase,
of knowledge channels drove process social technologies have been supporting
improvements such as faster time to market and shaping strategy, opening up to
and improved product and service quality. wider participation and scrutiny in an
area that has long been considered
Three stages of enterprise usage the preserve of an organizational elite.3
Technology usage has matured at many
As these technology choices and companies that have forged internal and
capabilities evolved, we found that external networks, encouraging a range
they defined three periods of usage. of stakeholders to participate in strategy
This evolution is dynamic, with some development.
companies at the leading edge and
others catching up (Exhibit 2). As part of this broadening base of
participation, companies are encouraging
Tryouts enterprise crowdsourcingsystematically
Beginning in the mid-2000s, companies looking both inside and outside the
began testing social technologies within organization for innovative new ideas

3
Web 2016
Social Technologies
Exhibit 22of 2
Exhibit

The evolution of organizational approaches to social technologies


appears to be moving through three phases of usage.

Patterns of social-technology usage, % growth rate by pattern, dashed values estimated1

Tryouts Collaboration and knowledge work Strategic insights

30 Projected

15

0
2005 2007 2009 2011 2013 2015 2017 and beyond

Rising strategic value 200810 201113 201416

% of organizations using social 20 25 30


tools for strategy development

% of organizations making 16 18 25
decisions and setting strategic
priorities from bottom up

Top 3 appropriated Prediction markets Prediction markets Social networks


technologies for developing Video sharing Collaborative Wikis
strategy Blogs document editing Video sharing
Social networks

Curves in graph are based on tool usage sorted by purposes/benefits and reflect a normal distribution;
1

projected values are based on responses to operational/tactical usage and insights from other
new-technology adoption curves.
Source: McKinsey Enterprise 2.0 surveys of 2,750 global executives over each year from 2005
to 2015

for problem solving and augmenting and transparency on a strategic level


products and services. LEGO is one has emerged only lately. Nearly half of
well-known example of a company that respondents in recent surveys said they
has embedded crowdsourcing into its were using social technologies to develop
innovation processes, and it is far from competitive intelligence, while a quarter
an outlier. More than half of the surveyed said they were using the tools to develop
organizations see further blurring of strategy or marketing plans. Thirty-seven
boundaries among employees, vendors, percent said they were using social tech-
and customers as social technologies nology to cocreate and share the organi-
create new processes for marshalling ideas. zations mission and vision in some manner.

While this openness to crowdsourcing Daimlers Business Innovation


on an operational level is becoming Community (BIC), launched in 2008, is
more common, greater inclusiveness an example of an open strategy initiative

4
1 We surveyed, on average, 2,750 global executives
enabled by social technology. Charged
over the period 200515. We asked them about the
with developing new business models in social-media technologies they had adopted, how they
a transparent, inclusive way, BIC set out were used within the organization, and the benefits they
derived from their usage. Respondents represented a
to identify new growth areas beyond car wide range of industries. Articles describing findings
manufacturing. Some 30,000 registered based on several of these annual surveys are available
on McKinsey.com.
practitioners have posted 2,000 ideas 2 Jacques Bughin, Taking the measure of the
in BICs digital space. After several networked enterprise, McKinsey Quarterly, October
successful pilot projects and spin-offs, 2015, McKinsey.com.
3 Daniel Schlagwein Detlef Schoder, and Asin Tavakoli,
such as new mobility concepts (for Open strategy: Consolidated definition and processual
example, car sharing and end-to-end conceptualization, 2015 International Conference on
Information Systems, December 13, 2015, aisel.aisnet.org.
journey management) powered by mobile 4 For additional ways companies are deploying social
apps, Daimler now is planning a follow-up technologies strategically, see Arne Gast and Michele
to the initiative. Zanini, The social side of strategy, McKinsey Quarterly,
May 2012, McKinsey.com; and Arne Gast and Raul
Lansink, Digital hives: Creating a surge around change,
Companies in our study that have tried McKinsey Quarterly, April 2015, McKinsey.com.

to set strategic priorities from the bottom


up report a flattening of management Martin Harrysson is a partner in McKinseys
Silicon Valley office, Detlef Schoder is a professor
hierarchies and in some cases deeper at the University of Cologne, and Asin Tavakoli is
employee involvement through allocation a consultant in the Dsseldorf office.
of resources using social-voting
The authors wish to thank Michael Chui and Daniel
mechanisms. Forty-seven percent of Schlagwein for their contributions to this article.
executives said that such democratization
of strategy would intensify over the next Copyright 2016 McKinsey & Company. All rights reserved.

three to five years.4

Many companies are climbing the


ladder in their use of social technologies.
Continuing the expansion of their
strategic role will open more pathways,
allowing executives to tap new sources
of creativity. It also will require a
deeper understanding of the risks and
unexpected outcomes that are part of
a more porous and inclusive strategy-
setting environment. We hope this ten-
year perspective offers leaders who may
feel behind the curve a view of what to
expect on the way up.