Chapter 15
Business Cases, Pilots, Return on Investment, and Value
Tying Them Together
As social business enters a new stage of maturity after a half-decade of business application, a number of lessons learned stand out. Now that social media are no longer the shiny yet unknown objects of years past, more practical considerations have entered into social business discussions. The focus now is on how to create, manage, and govern social business communities successfully and sustainably. Businesses are also moving beyond initial experiments toward specific ways to deliver measurable business value. Perhaps most of all for middle to late adopters is a desire for proof and efficacy to learn what works best—and what perhaps does not—in social business.
Fortunately, the broad outlines of new social business models have emerged, along with the techniques to deliver on them successfully. Elements include business case, tool selection, worker policies, community management, and governance of social business environments. Just as important, as we have demonstrated throughout this book, companies large and small are now implementing social business at scale, providing valuable content for case studies as peers and partners embark on similar journeys.
We have seen the end of the beginning for social business. Lessons learned from developing business cases, operating pilots, and calculating return on investment have led to proof points for social business adoption (see Figure 15.1). Most large companies require detailed business cases for large investments, and these points can be instrumental in overcoming the questions and challenges for those preparing social business strategies for approval by corporate governance committees and boards of directors, who will have to stake their goodwill and reputation on the thoroughness and accuracy of the business cases that are put to them. Success metrics include:
- Higher productivity. Research by Frost and Sullivan and the McKinsey data cited in Chapter One has made it clear that definitive productivity gains are achievable, including an average 15 percent decrease in operational costs to get the same work done and a 30 percent average increase in access to knowledge to get work done.1
- Better access to experts. Senior business leaders report a 35 percent increase in access to internal expertise.
- Information discovery. Information can be found more quickly (30 percent faster) in the open ecosystems of social business than in the trapped silos of traditional communication channels.
- Business agility. There is a surprisingly close relationship between social business and agile methods. The more transparent and participative processes of social business can provide substantially faster work cycles and feedback loops (30 percent average improvement).
- Improved innovation. Tapping into a broader pool of innovation using social media can lead to better products and improved services, but this is also one of the hardest types of improvements to quantify. A 20 percent increase in successful decision-making is one of the benefits, but it's the only unassailable quantifiable improvement to the innovation process—that is, deciding which innovations developed through social business methods processes to implement.
- Competitive positioning. An average 10 percent increase in sales revenue was reported. More successful innovation and higher productivity rates can create new products to move a company ahead of its competitors, while productivity can lower the cost of producing products. In some cases, dramatic cost reductions can be achieved by methods such as crowdsourcing, allowing breakthrough margin and pricing opportunities.
- Workplace modernization. The expectation by millennials, also known as Generation Y, the so-called next-generation workforce of those aged thirty and under, is very different from previous generations. They expect a work environment that is much more open and responsible than in the past and is always connected.2 Social media are a leading activity of this demographic, the future of the workforce. Social business processes are a natural and expected part of the work landscape.
- Higher levels of transparency. A 35 percent increase in cross-functional collaboration, 20 percent increase in successful decisions, and 30 percent increase in access to knowledge are attributable to the openness and participative nature of social business solutions.
- Less duplication. Because of the higher levels of transparency inherent in social business approaches, one of the biggest anecdotal benefits reported by implementers is a reduction in duplicate work taking place in organizations.3
- Better communication and collaboration. A nominal 35 percent improvement in collaboration and a 20 percent reduction in communication and travel costs were reported by social business adopters.
- Increased resilience to disruption. Organizations using social business to drive mass participation in their business processes, from product development to customer care, should receive a direct benefit by having faster, more durable processes that are less susceptible to disruption by virtue of broader and more diverse inputs. Limited quantifiable data exist in this area, although early studies have shown promise.
- Higher revenue and profit. Numerous studies have shown that adopters of social business generate either higher revenue on average than companies that aren't fundamentally social, higher profits, or both. Although some studies show only a correlation, increasingly the evidence of a causal link is mounting.4
The pilot process is an ideal time to collect data about the benefits of a newly designed social business solution. While it's often much easier to use existing processes in place within a business to measure key performance indicators, the list above also provides useful guidance for crafting a business case on the likely returns, estimating the return on investment on an average basis (specific industry averages will vary, but supported data is not generally available), and identifying what to measure so that a case can be made to leave the pilot and provide a solution to a broader target audience.
