Digital Business Ecologies: How Social Networks and Communities Are Upending Our Organizations

As we’ve watched digital networks reshape just about every aspect of business these days, I’ve found that we’ve struggled to come up with the right words and ways to describe a very different way of working. From vast app stores and pervasive streams of big data to enterprise social networks and customer engagement, the rules that Internet-based models of business impose are often very different.

Yet some well-known elements of business haven’t necessarily changed and have only become more pronounced: For example, scale is one of the single biggest challenges in moving to digital and social business, but has also been a challenge in our globalized world for some time. Today’s pervasive network connectedness is making this factor ever more pronounced. For organizations now this typically means having to maintain tens of thousands, or even millions, of simultaneous conversations with the marketplace for critical activities such as marketing, sales, and customer service. It also means most businesses will have to manage an order of magnitude more suppliers, business partners, and other 3rd party relationships (example: open APIs are a great harbinger of high scale in digital supply chains.)

Thus, the challenges of magnitude infuse everything in digital: Distribution, supply, engagement, control, competition, and even — or perhaps especially — security and sustainability. However, in other areas, especially where digital and social networks fundamentally change the fabric of things, we still don’t have clearly identified constructs, or even good words that we can use.

Digital and Social Business Ecologies: How Workforce and Market Engagement Are Blending

For instance, it’s been abundantly clear for a decade now that open digital communities are a new and revolutionary construct that have gone on to literally change the world. From upending media and software (social media and open source communities, respectively) to remaking the fundamental nature of how business in all industries gets done (collaborative economy), large, self-organizing communities are taking the lead. Digital technology even changes the underlying forces of the age-old concept of community. For example, even though the idea of community has been around since there have been people, the digital incarnation seemingly does something a bit different: Instead of forming insular walls that group people together, digital communities tends to group people together and break the walls down.

It’s here that I think we’re missing the name of a key concept, or at least, we’re not using one that needs to be applied here. Specifically, I believe that the relationship between the traditional enterprise and online communities has been greatly underexplored. For sure, we have many good examples now of enterprise communities that have created results across our value chains today.

But what we don’t have is a good understanding of what relationship communities should have to business at a strategic level. Are communities an adjunct to a specific function under certain conditions, such as customer service communities or product development/innovation communities when existing traditional processes underperform? Are communities to be the primary delivery model, or a secondary? My belief is that this thinking is now too incremental.

Instead, I believe businesses should now focus directly on moving to community-led business structures and processes as a first class citizen. The force multiplier of social technology here has simply proven far too great not to put at the core of our businesses, and not doing so has begun to have significant competitive and sustainability implications.

To get there, we need to talk about digital communities and business in new ways that explain their new relation to the enterprise much better than we do today. I’d like to suggest that as digital business practitioners we starting exploring this landscape in the form of ecologies, when we talk about business and community. Why ecologies? Because of what the term means:

Ecology (from Greek: οἶκος, “house”; -λογία, “study of”) is the study of interactions among individuals and their environment.

Therefore, it behooves us to much better understand — in relation to our stakeholders — the exact nature, interaction, and possibilities of communities and business, a twin environment we’ve not really had before in business as the highest order concepts. The motivation here is that the new fundamental environment for business in the 21st century is the digital network, and specifically, online communities of every description. Given the way they are upending what’s possible in terms of how to achieve just about every function in business, it’s time we capture a more complete conception of their role. I believe this means articulating their centrality to the operating model of many or most activities in the enterprise today.  While that sounds like a bold statement, I believe the results we’ve seen so far (see the nearly 100 case examples we put in Social Business By Design for a small sample) fully bear this out.

As my good friend Stowe Boyd recently wrote [my emphasis]:

We need a CDO-style figure in most businesses — if not the CEO — to make that transition to a postnormal footing, where work technology is at the core of what everyone does, not an afterthought or add-on. The inability of traditional IT to deliver on the promise of today’s technology is the universal business facepalm of our day.

Network technology is dominating the transformation of business today. Now we need to successfully adapt our management theories and practices to this new reality.

Additional Reading:

Digital diaspora in the enterprise: Arrival of the CDO and CCO | ZDNet

What Most Digital Strategy Underestimates: Scale and Interconnected Change | On Web Strategy

A new reality between the CMO and CIO | ZDNet

Enterprises and Ecosystems: Why Digital Natives Are Dethroning The Old Guard | On Web Strategy

Four key takeaways for digital transformation | Econsultancy

How We Gave Up Control Over The Social Web

A short but pithy piece over the weekend by Dave Winer titled “Why the Web 2.0 model is obsolete” got me thinking about where we’ve ended up with social media after nearly ten years. Blogs, wikis, and other tools of easily shared self-expression from the early days have given away in recent years to a much less diverse social media monoculture. A few large social networks now control our social identity, content, and behavior, and through their terms of service, often literally own our online existence legally and de facto.

This evolution was perhaps inevitable given the rules through which networks operate and certainly the result has its strengths. It’s far easier for consumers and businesses to adopt a hosted service than set up their own social presence, with all the complicated bits it requires to set up a fully functional social identity on your own these days. It’s also probably more secure, safe, and reliable long term. It’s certainly the shortest route to connecting with the vast captive audiences that the leading social networks now wield.

Yet in the process of making many short term decisions in the name of reach and convenience, many of us have given away our social capital, and along with it much of our online autonomy and freedom. I’ve long since stopped advising companies to drive their traffic to Facebook (disclaimer: I am a shareholder) and build their own online communities and digital ecosystems if they are intending to be strategic about things like social business and open APIs.

Network Effects, Social Media, and Centralized vs. Federated

The impressive thing is that we’ve largely achieved the original vision of Web 2.0 and it’s just how we do things now. We share by default. We use social media more than any other digital activity. Social media is now woven into so much of what we do today. Yet the majority of all of this user generated content and online community is now centralized in a few large social silos that can no longer talk to each other.

Even worse, if we go the opposite direction that might seem better long term, we’ve discovered issues with that model too. For example, we’ve learned that when we create many smaller, self-controlled, and more autonomous social environments we then create fragmentation. We can’t easily communicate or collaborate with each other across these social islands. Thus, for as many downsides as the monolithic social networks have, they do achieve one important thing: They create a very large single social universe that we can all communicate across.

So what should we collectively do? Should we cave in and trust that the corporate owners of the social world will be benevolent, even when they clearly have business models that are very often at cross purposes to our needs and desires? Or should we find a way to solve the problem of creating our own social corners on the Web and then connecting them together, all while making it very easy to do so? Personally, I’m hoping it’s the latter. Certainly I’ve explored previously how open social standards have a genuine shot at helping with this, even if it might be a bit of a long shot.

The reality is that social media silos are now holding us back, both as individuals and as businesses. We can do much better if we want. But getting there requires a little long-term discipline and plenty of widespread demand. That makes it pretty unlikely in the face of the enormously strong network effects of the largest social networks today. But perhaps there’s a third option to regaining control over our social lives. In fact, I predict the next big breakthrough in social media is likely to come from the need to resolve this tension between the unfortunate long term consequences of centralized social media and the benefits of a much more federated and user controlled model. Unfortunately, recent history has been a steady march towards the former.

So until then, we all need to mull over where our collective decisions are taking us, for as social media is perhaps the greatest communication revolution in history, its intrinsic power cuts both ways.

What Most Digital Strategy Underestimates: Scale and Interconnected Change

Over the last couple of years, I’ve been advising IT and business leaders that they need to gear up their digital/social/mobile strategies to match the advances taking place in the technology world today. On its face, this only makes sense. Technology change continues to accelerate and the growth in the cloud, social media, mobility, big data, and just about everything else is increasingly off the charts as I recently presented to a group of CIOs. As JP Rangaswami once said, we have to design our organizations now so that change is an integral function of how they operate.

Unfortunately, most organizations largely haven’t done this effectively for a variety of reasons. For one, it’s surprisingly difficult to do if your business wasn’t built around high technology from the outset. Frankly, since so many other organizations are having a hard time with it as well, the competitive implications haven’t always been severe.

However, that also doesn’t mean that some organizations aren’t failing outright through poor digital adaptation. Some clearly are, and the closer technology is to how you do business, the riskier slow digital transformation is. Just ask Blackberry, AOL, Borders, R.H. Donnelly, or a long list of companies that haven’t adapted to how digital innovation transformed their industry.

In the last few years, consumerization has emerged as a leading force in most organizations that is driving emergent, grassroots-led tech change due to increasingly pent up internal demand. The signs are all there: Bring-Your-Own-Technology (BYOD, BYOA), Facebook as the largest enterprise collaboration platform, app stores as the easiest + cheapest IT department alternative, and the list goes on. This pressure — combined with the inherent complexity in moving more swiftly towards adopting new technology — by the various stakeholders of most businesses has become increasingly untenable, even with consumerization taking some of the pressure off around the edges.

Technology Change and Proliferation: The Shortcoming of Enterprise IT Models

Yet somehow, many large organizations are currently sustaining it, despite being greatly outmatched by the growing chorus of “more” they get from their workers, customers, business partners, and the marketplace. To keep their spot on the treadmill, some organizations are now looking for new models to keep all of this sustainable. But I believe that we’re now starting to realize what one of the core obstacles is: Identifying the best way for businesses to leverage the vast existing resources they already posses, and then devising and realizing fundamentally new ways to use them to engage at scale across today’s digital channels and ecosystems.

Thus a fundamental mismatch between how our enterprise resources are connected to the digital world lies at the root of poor digital transformation. And the solution is likely a deeply engaged, muli-faceted, multi-channel digital approach sized to the scale of the challenge.

To address this mismatch, businesses have started to make significant changes in how they are organized around technology. The whole conversation about the new role(s) of the CIO, the CMO, and the new Chief Digital Officer are taking place in many industries today. Some of this discussion has started to be effective, and with so many companies struggling to successfully grapple with the torrent of digital innovation today, the window perhaps hasn’t closed.

So now I believe it’s time to tell a more nuanced story. Technology famously drives the leaders and laggards apart. For every Apple, Google, or Facebook, there are many generations of legacy enterprises trying to adapt their old businesses to the new digital landscape. A few lucky ones are protected by regulation, geography, or other happenstance, but most are exposed to the raw digital winds of change. Only a few are making it across the digital divide, while most have reached the limits of growth given the lens through which they originally built and now operate their businesses. But I believe there is a little breathing room, despite the hundreds of digital startups being launched each year to reinvent how we live our lives and conduct our business in radically improved new ways that also upend our existing business models (see the fast growing and rather exciting collaborative economy story for more examples of imminent disruption for many traditional enterprises.)

Large companies still retain very significant ecosystems, resources, and network effects if they are willing to use them. While it’s later than many companies think (just one example: a quick look at what’s most popular in the Apple or Android app stores right now shows little presence by today’s Fortune 500, despite mobile’s dominance in today’s world), there are ways to close the opportunity gap with digital. However, at this point, these must be major initiatives at the top of the organization, being led by new business units and IT both. They will have a high rate of failure (just like startups do) but by addressing the scale of the challenge head on, and applying the now many lessons learned we have at our disposal. A great new piece of research from McKinsey highlights this challenge, by asking “how [enterprises can] get beyond the small share of the prize they are capturing today in digital by looking for impact across the whole value chain.”

Most organizations need to update their digital strategies much more often than they are, revisiting their core business models, and making the resulting outcomes far more highly interconnected and organically structured. They also need to inject the solution to digital scale and velocity deeply into their operations. Those that do this well can become the digital leaders and not the legacy laggards.

This Year’s Ten Digital Strategies for the Next-Generation Enterprise

It’s time for most organizations today to uplevel their technology stance: They must become profoundly proactive about external change and innovation. That’s because technology change is currently happening much faster than most organizations can readily absorb, at least how they’re doing it today. But that doesn’t mean they shouldn’t try. More importantly, they should begin putting in place the processes and structural changes required to begin adapting and co-evolving more quickly.

Technology is an enormous amplifier of human effort. However, because it also uses itself as a ladder, it changes more and more quickly as time goes by. Add in the fact that anyone, anywhere can now innovate on top of the current technology curve and distribute their efforts to the world at practically zero cost, and you have a near-perfect recipe for disruption of the traditional status quo for IT in the enterprise. So how can a central bureaucracy that is greatly outnumbered by its customers ever help bring in enough new technology to satisfy the increasingly voracious demand for apps, data, devices, and more?

In short, it’s much later than most IT departments think. Disruption is coming fast in a mobile, cloudy, social world.

Fortunately, there are indeed some ways that might work to address this headon as I’ve explored recently. But as organizations implement these strategies, they also need to bring in the fundamentals of the biggest and most important advances right now. Falling too far behind and becoming a technology laggard means significant and sustained loss of competitiveness that’s very difficult to recover from. With change happening so rapidly, and technology creating a widening gap between the top performers and the 2nd tier, it requires organizations to run a bit faster just to stand still while they make the changes needed to have a more sustainable future. What’s needed is a short list of specific high-impact changes that will also lay the groundwork for future growth and digital transformation.

In my professional opinion, the list below represents the absolute minimum that enterprises should be building skills in and piloting this year. However, most of these are really must-haves now, to have at least in the experimental phase in your organization today. I also realize, from working with hundreds of companies in the last few years, that you’ll typically have less than half of these represented in your organization today. But that’s the point of the list, to find the gaps in your next-generation IT arsenal. I’ve omitted obvious items like BYOD and Big Data platforms like Hadoop, since virtually all organizations have these on their lists already. Note that this is a more tactical viewpoint that what I usually provide. For example, I pick out key planks of new approaches, such as Social CRM and employee social networks, instead of the entire view of social business. Organizations need clarity on where to start to become a next-gen survivor, and this breakdown will help I believe.

Visualizing Next-Generation Enterprises: Social Business, Consumerization, Gamification, Employee Social Networks, Unified Communication, Open APIs, Cloud Computing, mobile CRM, Smart Mobility, Social CRM

First though, what’s a next generation enterprise? My definition is this from my recent breakdown of emerging enterprise IT for 2012:

A next-generation enterprise describes organizations that are proactively moving into the present by changing how they assimilate, architect, apply, and maintain their technology solutions in the context of updating and transforming their processes, structure, and business models to effectively align with and work natively in today’s networked and highly digital economy. While that may be a mouthful, it also accurately describes what most organizations must do to ultimately avoid disruption in the marketplace as technology increasingly defines how our businesses engage with and provide value to the world.

How do organizations start moving into today’s technology present? Below are the top ten digital strategies I believe more enterprises are behind in and need to begin addressing this year:

  1. Mobile customer self-service. This is an official company mobile app that lets your customers engage in (at least) the top ten most frequent customer service activities. The best of these won’t copy the features from your web site but enable new models of customer interaction made possible by mobile device capabilities. Example: The financial services firm USAA turned every one of their customer’s smart mobile device into a mobile bank branch, allowing customers to deposit checks by taking a picture of them inside their app and transmitting it, saving them a trip to the bank.
  2. Open supply chains/APIs. If you aren’t strategically opening up your business for the world to build break-out new products and services on top of, then you should start and start this year. Organizations like the World Bank, Best Buy, and many others are doing what the Internet giants are doing: Building ecosystems. You must too. Get a sense of where the fast moving world of the Internet is heading with this from an overview of my good friend John Musser’s talk at Glue last week.
  3. Employee social network. There are many genuinely potent ways to apply social media to significantly improve outcomes across any organization — see the detailed case studies in Social Business By Design (Wiley, 2012) for game-changing examples — but it’s now clear that every company is getting its own social network. While some will not be strategic to the business or have low levels of use, the data increasingly shows that most organizations get value from them. We already see that organizations are finding social networks proliferating with Chatter, Yammer, Socialcast, SharePoint, and many others. Enterprises much take charge, provide clear leadership, and anoint official social network(s) as appropriate. Bonus points for understanding where ROI in social business comes from and focusing on it with this effort.
  4. Gamified business processes. Perhaps the least important sounding of all of these next-gen enterprise trends, yet I’ve been surprised at how fast some Fortune 500 companies have adopted this. I spoke with the CEO of Badgeville recently and he indicated that nearly 150 of the Fortune 500 were using their gamification platforms. I recently wrote a detailed breakdown of the enterprise gamification space as well that explores some truly impressive results.
  5. Community-based customer care. Organizations like SAP, Intuit, American Express, and others have all demonstrated that customers can support other customers (in general) far better than a company can. Companies have limited resources, customer care is considered overhead, and other customers with similar backgrounds and needs already have better insight they can share. While Social CRM is the official buzzword for this approach and is the industry where you can find the most applicable technology support, you really only need some community software, a simple strategy, and some community managers. Don’t wait, start now. This is where some of the easiest and quickest returns are on this list.
  6. Unified communication. After years of languishing and with market penetration hovering around 30%, unified communication is set to explode this year to help address the channel proliferation problem today. UC is also incorporating social media and otherwise moving beyond the telephony and IM space to become much more strategic. While I’ll be exploring the intersection of UC and social business soon, the latest data from IDG shows that 90% of organizations are looking at unified communications in 2012, a huge leap from last year and one that should be on everyone’s next-gen roadmap.
  7. End-user led IT and competitive #CoIT. Users are going to help lead the technology adoption for next-generation enterprises. Collectively, they have the resources and bandwidth to explore, evaluate, and apply new forms of IT. These include SaaS, disposable apps, mobile devices, and much more to their local technology problems. IT departments will become the curators and enablers, collecting and disseminating best practices across the edges of organizations. As part of this, IT organizations will deliberating put themselves in a competitive position with outside suppliers and 3rd parties. They’re already facing stiff competition from app stores and outsourcing firms, and now they must demonstrate they can effectively compete. You can read up on the CoIT model in my explorations on the topic over the last year.
  8. Mobile IT reinvention. You must be mobile-first for most of your future IT deployment. Mobile is also going to require rethinking IT. Most organizations already know this now, so I don’t need to belabor this point, other than simple translations of legacy IT to tablets will be woefully insufficient and will drive users to 3rd party apps. Read two great cautionary stories about this from Gartner’s Andrea Di Mao.
  9. Migration to the cloud I currently see less focus on moving to the cloud these days. Part of this is because it’s just happening and being baked into many of the services we now use in the enterprise. But I also see a lack of understanding of how strategic the cloud can be. Start moving the edge of IT into the cloud to reap the benefits that go far beyond cost containment and into business agility and innovation. The cloud really does enable entirely new solutions to old problems.
  10. Digital business leadership and transformation. Start laying the groundwork to drive the business when it comes to moving to digital business models, where the future of most companies lies. CIOs and other IT leaders should be moving away from an infrastructure focus and to a business innovation focus as quickly as possible. While this is far easier to say than do, the very future of IT is at stake as CFOs increasingly focus on moving infrastructure out to the cloud. The future of IT is digital leadership, and less in technical plumbing, even though that will remain vital at a strategic level.


What’s on your list of the top digital strategies for organizations this year? Please add your thoughts in comments below.

See Also:

Connecting Digital Strategy with Social Business and Next-Gen Mobility

Reconciling the enterprise IT portfolio with social media

10 Leading Books on Social Business

During the research for our forthcoming book, Social Business By Design, I ended up taking a close look at a number of other excellent titles on the subject. In the end, I came away concluding there was more than ample room in the market for another entry, but that’s a story I’ll tell when the book goes into the print in the next couple of weeks. Suffice to say I encountered some terrific thinking, quite useful framing, and plenty of fresh ideas — as well as good company in the form of many of the thought leaders that helped define the social business industry. For an industry it certainly is, with all the requisite ingredients.

In fact, the business landscape is now rife with organizations of all sizes who are attempting to grapple with the rapidly changing business conditions brought on by the global growth of social media, particularly its rising domination as a form of communication. There is also a large and vibrant ecosystem of vendors that supply products and services to help said customers, and analysts and thought leaders that observe the interplay between the two — with the rest of the world for that matter — and try to figure out where it’s all going.

The good news, since we’re near the end of the beginning of the social business journey, is that there is a lot of information that can be drawn upon now, particularly some excellent books on the subject, which I’ll list in a moment. However, one question that has come up often about books on social business is whether the format is appropriate for a way of living and working that is essentially based on open participation. In fact, that’s the core tenet of social business: Anyone can participate. While I’ll save a longer answer for my formal announcement of Social Business By Design when it hits the shelves by the end of April, let’s just say that books are still a widely used communication and learning channel, and one that has a large global ecosystem that remains well established and highly valuable. In other words, books (paper or digital) are still an effective way to reach people and quite acceptable as long as its starts a meaningful conversation amongst their audience that continues onward, which Peter Kim and I hope it will.

But if you’re reading this, you probably just want to know what the leading social business books are and I’ll get to that now. Please keep in mind that this is not a definitive list and I’m aware of several other excellent books making their way to the market. I’ll update this list if appropriate. So, in no particular order, here are the leading books on social business in my opinion…

The Leading Books on Social Business

  1. Smart Business, Social Business by Michael Brito. In his book, Michael clearly conveys why it takes more than social marketing to succeed in today’s deeply connected business world. I particularly liked how he explained what’s often the toughest part: That social business transformation requires a genuine cultural shift in how companies do business and in the way they interact with customers and prospects. Readers are given a detailed tour of the people, process, and technology shifts needed to succeed with plenty of details. The book explores social strategy, governance, tools, and metrics with a healthy dose of real-world case studies.
  2. Socialnomics by Erik Qualman. Views on this book vary widely, yet it’s clearly one of the most popular books on social business, albeit primarily of a marketing and customer engagement bent. Erik explores the impact of social media on business to uncover how businesses can take drive better outcomes in new and innovative ways. His best material is about the changes that must happen to achieve results, specifically the transformation of businesses produce, market, and sell products. Much of the focus of the book is on the different methods businesses must use to connect directly with their customers through today’s global social media platforms.
  3. Engage by Brian Solis. Brian has written a number of books on topics related to social business but this one is the most focused on the specific process of social media enablement and transformation. The book lays out how to develop an online ecosystem for the business and cultivates customers’ loyalty and trust in order to engage them for better business outcomes. Other useful details include how to establish an organizational structure that effectively delivers on social media while being poised for the next-generation just around the corner, including “detailed and specific steps required for conceptualizing, implementing, managing, and measuring a social media program.”
  4. The Mesh by Lisa Gansky. While not directly about social business per se, this book articulates a crucial endpoint for processes that are highly open and where everyone can participate (yes, social business.) In Lisa’s view — and I agree — business today is now about enabling entirely new operating models and ways of creating business value that are highly cooperative and self-organizing. Lisa’s book is vital for understanding the bigger picture for which social business is a key plank. Highly recommended for getting business leaders to think outside the box and get ready for culture and organizational change (and innovation.)
  5. Empowered by Josh Bernoff and Ted Schadler. A follow up for Bernoff of the highly influential Groundswell, Empowered is a detailed look at how employees with great ideas in an organization can be enabled to innovate and transform a business to better serve its customers. In their view, powered by pervasive social technologies, customer service (aka Social CRM) has definitively become the new source of marketing. Empowered lays out a detailed process for getting there with managers eponymously empowering employee innovators (described as HEROs in the book) and IT/business stakeholders to better serve customers directly to generate a wide variety of interesting results, from word-of-mouth marketing to better product ideas. Bernoff’s and Schadler’s analyst roots pay off with many case studies and pragmatic examples that demonstrate how social business empowerment is already happening in scale.
  6. Macrowikinomics by Don Tapscott and Anthony D. Williams. The successor to Don’s hugely successful Wikinomics, this book takes the social business conversation up to a whole new level. While some have pointed out that actionable specifics are largely not included in the book, that’s beside the point: The goal of the book is to present a compelling case for the way we’ll organize our businesses, governments, and society now and in the future. A powerful book for those that want the entire big picture of social business (here called mass collaboration) and how it can solve problems that have been intractable or merely just very hard. While not a practitioners book, I advise everyone to be familiar with the strategic conversation Macrowikinomics lays out to get a clear view of the all moving parts that everyone must support.
  7. Cognitive Surplus by Clay Shirky. Coined from a concept that Clay frequently discusses, namely that we’re just now learning how to tap into the full productive and creative capacity of our collective cultures and communities, this book lays out the whys and hows of using participation to create compelling and unique business outcomes. Subtitled “How Technology Makes Consumers into Collaborators“, this book the means, motivations, opportunities, cultural issues, and supporting examples into a coherent story about how emergent business solutions powered by social media will change business forever.
  8. The Social Organization by Bradley and McDonald. Authored by two of Gartner’s leading analysts, this book makes a very strong case for employing social technology in the enterprise to get work done better. Sharing insights from their research into the successes and failures of four hundred plus organizations that have employed social technologies for workforce and customer-facing business solutions, the authors go well beyond technology and into the human element. Discussion includes how and why to build strategic communities, designing new ways of openly collaborating, and how to guide social business efforts to achieve a purpose, and so on. Bradley and McDonald also identify the core disciplines managers should master in order to transform social collaboration into otherwise unlikely yet highly potent results.
  9. Get Bold by Sandy Carter. One of the most interesting social business stories of the decade has been IBM’s not-so-gradual conversion to being a social business. While such transformation is generally quite hard to do for large companies, the global technology giant did it in record time. This book, by one of IBM’s top social business evangelists, clearly demonstrates that they truly “get” the changes happening and know how to get there. After making the case for what social business entails, Sandy lays out the steps to reach social business maturity and includes her AGENDA framework for achieving it.
  10. The Social Customer by Adam Metz. Metz treats Social CRM comprehensively considering it from many angles and aspects, from process to tools. He explores the 23 use cases that simultaneously provide the fabric for actionable, practical and approachable methods for engaging usefully with the social customer. Metz borrows from and builds on the excellent work of Greenberg’s CRM at the Speed of Light and Kim and Mauborgne’s Blue Ocean Strategy to create a picture consistent with a larger set of thought leadership.

Honorable mentions:

Please note, that while I tended to emphasize books that were highly approachable, all of these are worth the time and effort either for your own edification about social business or to help educate your business and technical leadership teams. Finally, while there is no doubt I may have left a few good titles out of this list, I’m happy to — and will — add any titles to this list that commentors are particularly passionate about. I hope you find this helpful and a useful resource for assembling the definitive literature on social business.

Related Reading:

The Social Enterprise: A Case For Disruptive Transformation

Baselining Social Business Maturity: Why and How

Converging on the Social Enterprise

The Path to Co-Creating a Social Business: The Early Adoption Phase

Enterprises and Ecosystems: Why Digital Natives Are Dethroning The Old Guard

Why is it that so many traditional companies with an enormous wealth of assets largely fail to transform them for the digital era? By assets here, I mean established customer base, closely held relationships with trading partners, mountains of data and IP, as well as their bread and butter, the actual products and services they offer. For large organizations, these assets typically represent many billions in long-term investment and accumulated value that is being stranded beneath a digital ceiling they cannot seemingly break through. The lesson has been a hard one: It’s been surprisingly difficult for many companies to make a genuine transformation to digital.

For those just joining this conversation, this transformation is about opening up and digitally enabling the strategic assets of our organizations for better consumption and participation, with as low a barrier as possible. It’s also means doing so in a way that continually maximizes their value over time in today’s deeply networked marketplace. Achieving this triggers the primary engine of growth for digital ecosystems, namely network effects. This is how Apple, Facebook, Google, Amazon (new guard), and Microsoft, IBM, SAP, Oracle, and many others (old guard) eventually built hundreds of billions in combined value. They tapped into the relevant power laws of networks by carefully and deliberating cultivating and then closely managing them by harnessing peer production over the network.

Digital Business: Cultivating and Managing Digital Ecosystems (Open APIs, Social Supply Chain, Web Services, SOA, Online Communities, Peer Production, OEMs)

How exactly was this accomplished? They did it by digitally platforming their businesses in specific ways: Enabling self-service on-boarding, viral adoption, open participation, best-of-breed data capture, ownership and control, and took advantage of the fact that relationships — and therefore, ultimately transactions — must take place on the network with as little friction and cost as possible. They realized that we are now all connected together continuously in a single global network and then designed their organizations around this central fact of the digital age. They are now reaping the results of this mindset:

Networked ecosystems must be a core focus and competency of modern business.

This begs the increasingly urgent question: Why then are a large number of older organizations neglecting their digital ecosystems, often failing to meaningfully cultivate them at all for many of their most valuable assets?

This is a key question that fellow Enterprise Irregular Vinnie Mirchandani recently asked in an internal EI mail thread and later posed on his blog:

But for every Apple which has gone one way, I see so many others piss away this huge asset that is their ecosystem. I hear about musicians and filmmakers auditing, even suing studios for accounting disagreements. I hear SAP mentors complain about legal issues getting licenses and other access to new technology. It’s easy to dismiss Joe Konrath’s litany of complaints against book publishers as one from an unhappy author, but the 230+ comments it has drawn shows a deeper angst about how poorly publishers are managing their author ecosystems.

Ecosystems, communities – call them what you want. They are a vibrant organism which deserve far more ink from all of us. And they need professional managers at the companies at the middle who nourish them and not just treat them as railcars to be hustled away whenever inconvenient.

As companies remain inadequately connected to their customers, partners, and workers via digital ecosystems, many of which they do not control, they are missing a rapidly narrowing opportunity. That’s because it’s very, very hard to disrupt a well-established network effect, which is much more powerful than the equivalent notion in the pre-digital era: traditional market share. Network effects are primary focused on pull distribution, while marketshare is heavily based on push, which is much harder and much more expensive to sustain. As digital natives sew up more and more industries and lay down network effects years ahead of their traditional brethren, any chance to reclaim the throne will be very unlikely.

For leading examples of potent digital ecosystems, see open APIs, social customer care, and app stores.

Why is this? There are a number of reasons but a few are particularly significant. What I wrote in the EI thread in response to Vinnie’s original question was this:

I find that in general, the farther you are from the tech business, the less native skill or familiarity there is with system thinking, which is perhaps the critical capacity to have in order to regard your business in ecosystem terms. This is something that in tech is standard fare with constant discussion and focus on platforms, network effects, SDKs, open APIs, app stores, etc.

Traditional publishers are typical of the technically challenged industries that are being blind-sided by newer, much savvier, techno-centric, network-oriented new digital businesses.

Business leaders that can’t deeply see the way forward for their organizations as flexible, highly dynamic, and organic digital networks of customers, partners, workers, and other (likely and unlikely) participants will ultimately fail. But this isn’t the set of skills or mindset that made them successful in the first place, so they don’t value it and don’t think in these terms. They literally throw off digital rethinking like a sort of corporate immune system. Surprisingly, from my talks in the C-suite the last few years, everyone individually seems realizes they have to change, but collectively they are resistant, it’s fascinating to watch.

A big part of the problem boils down to this: Companies are inherently designed to perpetuate the problem they were invented to solve. It’s a particularly thorny instance of the Innovator’s Dilemma, which ensures that a company is unlikely to aggressively re-invent itself until it’s in the process of being disrupted. Unfortunately, this often means it’s already too late.

In fact, it may be too late for a growing number of industries to fully make the transition to being ecosystem-centric. This includes media, publishing, telecom, retail, and many software companies. Under looming threat is real estate, higher education, financial services, professional services, accounting, and even venture capital. In each of these categories, ecosystem-centric firms are building network effects with open network-based products increasingly built by worker/open communities and delivered to customer communities. Those products are in turn built upon by hundreds or thousands of loyal 3rd party partners to bring their own customers and ecosystems to the table. This is an embarrassment of riches that only a few companies, again mostly digital natives, seem interested or able to tap into.

As Fred Wilson once said, the Web (and therefore digital business) is all about “building networks on top of networks“, which leads to even more powerful outcomes, like 2nd order network effects.

Fortunately, the force multiplier of the ecosystem model can be stated in a simple, fundamental way: It allows one to tap into the vast size and strength of the external network to drive growth, innovation, and revenue for your own ecosystem. As Peter Kim and I wrote in our new book, the fundamental principle of business in the ecosystem era must be to let anyone participate in every aspect of the business, primarily by inverting the facilitation process of driving shared value (i.e. network effects by default.) Being able to elicit the network (Internet, community, shared data, whatever) to maximum effect to fuel and growth your ecosystem is thus the core competency of the digital era. Unfortunately, this lesson is being lost to most organizations that were built well before this next-generation business model was understood. It will be a great loss that doesn’t necessarily have to happen in my opinion, but will ultimately result in the needless disruption of a large number of companies that just aren’t able to become digital natives.

For additional reading see:

4 Ways to Create Sustainable Business Ecosystems

Why Information Power Is The Future of Business

What Will Power Next-Generation Businesses?

A View of Digital Strategy in the Ecosystem Era

Are We Building Businesses Or Are We Building Platforms? Yes.

How Digital Business Will Evolve in 2012: 6 Big Ideas

How Are CIOs Looking at Today’s Disruptive Tech Trends?

Last October I was invited as a guest to participate in the Tuck School of Business 10th anniversary session of their Roundtable on Digital Strategies. This diverse group of senior IT leaders is comprised primarily of CIOs of some of the world’s largest enterprises. The roundtable members came together to discuss what was termed the present “mega trends” in technology, including the effect they are having in how their businesses currently operate and evolve. It was an eye-opening experience, not the least because of the transformative changes that were evidently taking place in the companies represented.

One fact stood out: Many of these tech trends are happening with or without waiting for information technology departments to embrace them and bring them into the organization in an orderly and controlled way.  I’ve spoken about shadow IT for a few years and it’s clear, particularly with mobility, that loss of control is firmly entrenched in a growing number of large IT organizations.

The mega trends that we discussed that day were the usual suspects. They are the ones that I’ve been exploring in detail recently: Next-gen mobility, cloud computing, social media, consumerization (#CoIT), and big data. In attendance were the CIOs from American Express, Bechtel, Chevron, Eastman Chemical, Eaton Corporation, the Hilti Group, Holcim, Nestle, Sysco, and Time Warner Cable, as well as executives from CompuWare, the Dachis Group (myself), Dell|KACE, and ViON. The Roundtable itself was hosted by the Directors of the Center for Digital Strategies at the Tuck School of Business. The session was moderated by Maryfran Johnson, Editor-in-Chief of CIO Magazine and hosted by Adjunct Professor Hans Brechbuhl, who also wrote his own summary of the day.

Disruptive Megatrends in Technology: Smart Mobile, Social Media (Social Business), Consumerization, Cloud, Big Data

The discussion itself was far ranging and explored all of these megatrends in detail. The resulting outcome, a new 17 page report that has just been issued by the Center for Digital Strategies at the Tuck School of Business, confirmed that companies fall across the spectrum when it comes to adoption of these disruptive technologies. While virtually all the companies represented were feeling the full brunt of smart mobility, others had widely varying experiences with areas such as enterprise social media (aka social business in this context), big data, and cloud, though the first two had the most votes I believe in terms of the trends with the longest term and farthest-reaching impact.

Six key insights about new disruptive tech were derived during the back-and-forth discussions that took place at the roundtable session. These are:

  • “Consumerization of IT” is a core catalyst for other IT mega-trends. The spread of social media and BYOD are clear outcomes, but “consumer” expectations play a surprisingly large role in the development of Big Data and cloud-based applications.
  • Mobility is forcing new approaches to data security. User expectations of anytime/anywhere access to enterprise data conflict directly with IT’s charter to secure and protect the same data; this conflict is one of the sources of the rise of rogue IT.
  • Both mobile and social applications are (finally) adding definable value to enterprises. Social media apps with definable ROI are primarily customer-facing; high-value mobile apps are still mostly internal.
  • Big Data” will affect every aspect of business. From plant operations to stock trading to predicting terrorist behavior, the combination of huge data volumes and massive compute power is beginning to answer questions never even asked before, particularly with respect to predictive analytics.
  • “Designing for loss of control” is one of IT’s key challenges. Between consumerization/BYOD, rogue IT and the cloud, centralized IT can’t keep up with demands yet will still be held accountable for security, reliability and performance.
  • IT’s future differentiation is far more about insight than about operations. With technology so widespread, the ability to compete on IT operations has vanished. IT’s future value lies in delivering immediate, actionable knowledge.

What companies are going to do in order to embrace these trends effectively is going to be the signature generational challenge of our era. I’ve explored the various possibilities (ten strategies to be exact), and no doubt others will discover other routes to success. But the fact that so much of the change is externally imposed on IT departments and the lines of business outside of traditional channels is what makes the transition to them so disruptive. Thus, consumerization may ultimately be the underlying root cause of the rest of the trends as well as the primary driver of enterprise technology for the foreseeable future.

Tuck School of Business CIO Roundtable in October 2011

Tuck School of Business CIO Roundtable in October 2011

Be sure to read the IT megatrends report itself for full details directly from the original sources.  In the meantime, I’ll keep exploring these trends and how companies are planning, coping, and hopefully enabling them for their internal and external customers as IT gears up to have its most exciting decade in a very long time.

Related Reading:

Consumerization in 2012: Cloud and mobile blurs into other people’s IT | ZDNet

The “Big Five” IT trends of the next half decade: Mobile, social, cloud, consumerization, and big data | ZDNet

CoIT: How an accidental future is becoming reality | ZDNet

Dion’s Defrag 2011 Keynote on CoIT | On Web Strategy

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