If Social Business is really transforming the way we do business why are most of the stories and cases out there focused on changes to a single business function like marketing, human resources, or customer service? Shouldn’t it act as a change across several of these functions, or for that matter will these functions go away or change so fundamentally that we can no longer tell them apart?

...If these hold out commonly, then we are starting to see the cracks in the Value Chain model at least in terms of the separation of functional areas.

This is an interesting post (and follow-up), but an unfortunate mistake in Rawn Shah's argument is that he appears to have interpreted the Value Chain as something that describes organisational structure, when in fact it is a model of activities.

Briefly: Porter's Value Chain concept was introduced in 1985 as a tool to help large organisations make a more holistic cost analysis of their competitive position. It is true that this concept was developed primarily for product-based businesses, but has been adapted for service and knowledge-based organisations. Some people also use the model for qualitative analysis.

But Shah's main question about organisational structure are worth considering through the lens of the Value Chain. My questions from this perspective are:

• What is the impact of Social Business on different activities in the Value Chain?
• Are organisations reconfiguring themselves enough to completely optimise the linkages between activities, bearing in mind what is possible as a Social Business?

Shah's example of Social Learning is actually an excellent example of this shift in practice but isn't a failure of the Value Chain. "Learning" activity is still happening, just in a different way. The question about structure is really about if the centralised corporate training function is actually adding enough value in this new environment.

More broadly I believe that Social Business is starting to have an impact, but most organisations have not fully optimised for it. Time to use the Value Chain to drive change, rather than throwing the baby out with the bath water.

• What’s different about the social business category is there are multiple entry points for a sale.  The sale could come from IT, Sales, Marketing, Customer Support, HR, Corporate Communications or more often than not a  Business Unit.  < Key learning: this is different in software investing.  Buyers abound.

• The Social Business story has reached a tipping point.  No longer are sales “missionary” sales.  There are line item budgets for social business software, and large RFPs are on the market from F1000 companies who are investing in these platforms.    Further, every software company is now incorporating social into its product suite, albeit mostly still relegated to “silo” functional software for specific departmental needs (Sales, HR, etc.)

• Social Software is not a “replacement” category of software like  Salesforce was with Seibel or Workday is with various ERP modules.  This is not a cloud v. on premise alternative. (Jive sells both on and off premise).

• The deals are larger.  Jive closed three million dollar plus deals in the fourth quarter of 2011.  Large institutions in various industry segments (PwC, Thomson Reuters, and Ace Insurance) chose Jive  to introduce a new way of working to their firms.

• Social Business software delivers real value to every knowledge worker in the enterprise. The market opportunity exceeds that of traditional enterprise software which typically serves a discrete business unit function (manufacturing, HR, finance, sales, etc.).

Following on from my post yesterday, my Dachis Group colleague Susan Scrupski has posted some points (from a Jive investor call) about the value of the social business software market. I'm sharing this not because I think you are necessarily interested in how much money companies might make from "social business software", but rather because its an indicator of what defines "social business" and how it is different from other technology driven initiatives.

In 2011, the US hit a milestone — more than half of all adults visit social networking sites at least once a month. But when it comes to using social-networking technologies inside organizations, many business leaders are at a loss to understand what value can be created from Facebook-like status updates within the enterprise. Some organizations have deployed social-networking features with an initial enthusiastic reception, only to see these early efforts wither to just a few stalwart participants. The problem: Most companies approach enterprise social networks as a technology deployment and fail to understand that the new relationships created by enterprise social networks are the source for value creation. In this first of two reports, Altimeter looks at four ways enterprise social networks create value for organizations.

While I think we should recognise the limitations of the Altimeter survey (i.e. the small sample, a variety of organisational/business units sizes and geographies mixed in the results) there are definitely some interesting points to reflect on in this free report (and thank you Altimeter for sharing both the report and the data).

However, I think looking at this report and reflecting on Sameer Patel's reaction, I think he is painting an overly gloomy picture of 'social business' because it hasn't (yet) come up with a set of generic spend x on software y and we promise you'll receive z. (ok I'm paraphasing - read Sameer's post and then read the rest of mine!)

Firstly, no-one in this survey felt that that were measuring the impact of ESNs "very well" (31% said somewhat well and the rest either somewhat poorly or very poorly). Further, many of the measures reported are highly questionable, particularly if used in isolation - e.g. % of employees using it.

Secondly, we have no data here that indicates either how they approached the deployment of these tools or how well they rated the effectiveness of the approach taken. The assumption is that they have all deployed them 100% effectively.

Finally, we have no benchmark data for organisational performance for both organisations attempting to become social businesses versus those that haven't.

I've mentioned before some research in Australia that reported how high-performing workplaces are up to 12% more productive and three times more profitable than their peers. However, only 15% of organisation in Australia exhibit management practices that support this - these are: being highly responsive to changes in customers' and suppliers' circumstances, encouraging high employee participation in decision-making, achieving on-the-job learning through mentoring and job rotation, making effective use of information and technology and attracting and retaining high quality people.

But since the benefits are clear in bottom line terms, why aren't organisations falling into line behind these practices?

In a way, I think I agree with many of Sameer's points but its a stretch to write off Social Business based on this data alone. Really there is whole bigger and more complex picture to understand around what makes organisations more productive or effective that we actually don't understand that well.

In the aftermath of the credit crunch people are thinking about the way banks work, the way financial markets operate, and the values and purposes of the companies that use those markets.

And some of the big management thinkers are beginning to put forward ideas that challenge many of the assumptions that have dominated the way business has worked for the past several decades.

In this progamme Peter Day hears from management guru Gary Hamel and gets his thoughts on the future of capitalism.

I only just got around to listening to this podcast, an interview with Gary Hamel. The title is perhaps a bit misleading, although Hamel did make me pause for thought in light of the #occupywallstreet movement. Is this what he meant by consumers mobilising?

However, this podcast actually contains a broader discussion about the difference between business in the 20th Century and the needs of the 21st Century. This isn't just about "Capitalism", but actually about why and how organisations are organised and managed. The active role of the citizen-consumer is also important and themes such sustainable profitability.

Critically he highlights the challenges this creates for large, legacy organisations built on 20th Century management principles. The practice of management is firmly in the sights of Hamel and he doesn't think academic management theorists will have the answers we need.

He mentions the example of The Morning Star Company, where:

"Our company is operated by colleagues without titles or a hierarchy of unilateral authority. Authority relative to other colleagues' activities is lateral, with our Mission as the guiding principle of action. Although we have grown significantly, we would like to maintain a culture of individual responsibility and self-management. A colleague's influence and success at Lucero Farms is relative to such colleague's integrity, competency, effort, persistence and straight-forward persuasiveness."

This, he suggests, is a model of management for the 21st Century.

Thinking about this example, if you step back for a moment to reflect on the technology changes and human events going on around us right now, then they suddenly stop being isolated phenomenon and instead you realise they are all taking place on the same backdrop.

According to the lead researcher, Dr Christina Boedker, high-performing workplaces are up to 12 per cent more productive and three times more profitable.

...

The management practices that do best, according to the study, are being highly responsive to changes in customers' and suppliers' circumstances, encouraging high employee participation in decision-making, achieving on-the-job learning through mentoring and job rotation, making effective use of information and technology and attracting and retaining high quality people.

Ross Gittins, Australia's respected and clear thinking economics columnist for the SMH, reports on the government sponsored research into productivity by the Society of Knowledge Economics (SKE).

Ross notes that only 15 per cent of the research sample exhibit the characteristics of such "enlightened" business practices. I imagine that the other 85% are still waiting for bottom line ROI on the minutiae of individual practices, tools or technologies to be proved - symptom or cause do you think?

UPDATE: Here is the actual report. Hat tip to Nicky.

In an article published in the journal Nature, West and Bettencourt found that up to 85 per cent of the character of a city is determined simply by its size. Only about 15 per cent - perhaps 20 per cent at most - of a city's character is distinctive, and that is often aesthetic or determined by a natural feature such as a harbour, river or mountain range.

''The majority of the organisation, functionality, even maybe its structure and dynamics is, to a large extent, determined, amazingly, independent of the details of the city,'' West says.

This magical 85 per cent is made up of what West... calls ''social networks'' - the clustering of human beings and the social interactions and hierarchies that flow from them. Basically, whenever a bunch of people get together in an urbanised, or even low-density sub-urbanised, form, they operate in a largely uniform way, regardless of culture.

...

''You see the same phenomenon, repeated continuously at all scales,'' West says. ''The history, geography, culture, locality, much of the urban planning, is transcended by these network principles, which tell you it is roughly this 85 per cent level that is pretty much the coarse grain of the city. But there is this 10 to 15 per cent left over, and that is something the mayors and city fathers, designers, architects can influence.''

Organisations, I suspect, are like this too. 85% is all about scale and avoiding bad management practices that break the dynamics of the natural social networks that exist, but only something unique or by working on the remainder will bring innovation, differentiation and better performance.

The hierarchical organization that we see today was invented in the last century, and it is an incredible invention. It can direct and coordinate the actions of thousands of people making and selling thousands of products or services across thousands of miles, and do so effectively, efficiently, and profitably, week after week after week. If you had told an average citizen in the year 1900 what this structure and those sets of processes were accomplishing everywhere today, they would have thought you daft.

But 20th-century, capital "H" Hierarchy (a sort of hardware) and the managerial processes that run on it (a sort of software) do not handle transformation well. And in a world with an ever-increasing rate of change, it is impossible to thrive without timely transformations. The data, case studies, and personal anecdotes to this effect abound

I've written about the history of the hierarchical-organising model and organisational chart the before. Wikipedia has a brief overview of the historical development of management. This is important background for the social business design conversation.

Hat tip to Samuel.

Misguided social business advice urges us to automate and digitize whatever we can that might make work more efficient.

It puts new digital architecture on top of old digital architecture. It tries to separate content from process, as though process were content-agnostic.

Wise social business advice has a generative orientation. It has a creative flavor.

Wise social business advice starts with the questions like: “What more can we contribute together, to each other?
What tools can we use to foster and support these contributions”?

CV Harquail mythbusts seven different problems with superficial thinking and approaches to social business. Each is worth reading, but the point quoted above particularly caught my attention. I think the same concern should be directed at the similarly misguided and reductionist goal of creating more efficient 'digital workplaces'. Simply layering, integrating or flattening digital architectures ignores the sociotechnical relationship between technology, people and how (and why) we organise.

There has been a surge of passionate debate and discussion about "social business" and related topics. Over on the ReadWriteEnterprise, they make a brief attack on 'management' and argue that none of this is new - there is lots of interesting reading to follow up if you have the time.

However, I think RWE and others are working from an assumption that everyone who talks about 'social business' (or what ever you want to call it) is working from a blank sheet. Nothing could be further from the truth.

For example, there is a great series of posts (essays?) by ThoughtFarmer's Gordon Ross describing the history of mechanistic versus organic thinking and social intranets. I can see many common influences here, but even Gordon's reading list is incomplete (and that isn't a criticism). You can check out more book reviews and past recommended reading lists here and here on my old blog. Again, none of this is exhaustive.

One of my posts that I would like to highlight in particular is Social Business Design as a metaphor. Social Business Design simply puts a name on a particular way of how we go about understanding the world around us, in particular one that is being changed by Internet technologies and social software in our very recent living memory (as opposed to the world that Taylor and others from earlier generation of management inhabited). From this perspective you either believe that some level of change is happening or you don't. If you believe it, do you want to try and take advantage of this fact? The choice is yours.

If you are interested to be part of this conversation, then join me at Intranets2011 in a few weeks time or engage with others who are passionate about this topic by joining The 2.0 Adoption Council.

BTW The image above is from a set of Connected Company visuals that Dave Gray has released under a creative commons license.

Image credit: Time to re-org the org Dave Gray & Dachis Group CC-BY-2.0

As this presentation highlights, gamification in the enterprise isn't new and its easy to over simplify things by thinking its all about badges. To me, this boils back down to properly understanding intrinsic and extrinsic motivators - something we used to worry about a lot in knowledge management.