McKinsey Global Institute estimates the business potential from social technologies to be between $900 billion and $1.3 trillion, roughly divided as follows:
- $345 billion of this value potential from product development and operations
- $500 billion from marketing, sales and after-sales support activities;
- $230 billion from improvements in business support activities
The new report is titled The social economy: Unlocking value and productivity through social technologies. In it, the firm defines social technologies as:
IT products and services that enable the formation and operation of online communities, where participants have distributed access to content and distributed rights to create, add, and/or modify content.
Increasingly, people use digital media and social technologies to get things done and connect. These exchanges, “likes”, and connections are all ways to express human nature, some of which is manifested through commercial transactions.
Unlocking business opportunity with social
The opportunity for businesses in this environment is to do something that creates real meaning between people, something that actually matters to them. Citing loosely from the report, organizations are starting to use social technologies to:
- identify new forms of consumer insights at lower cost and faster than conventional methods both by interacting directly with them and watching what people do and say to one another on social platforms, which provides unfiltered feedback and behavioral data
- enlist users to “crowdsource” product ideas and even to co-create new features
- social platforms have become a tool for managing procurement and logistics, allowing instant communication between different parties on B2B supply chains
- promise to extend the capabilities of high-skill workers (increasingly in short supply) by streamlining communication and collaboration, lowering barriers between functional silos, and even redrawing the boundaries of the enterprise to bring in additional knowledge and expertise in “extended networked enterprises”
Other ways businesses can drive value with social technologies:
The organizations that can benefit the most are those with one or more of the following characteristics:
- a high percentage of knowledge workers
- heavy reliance on brand recognition and consumer perception
- a need to maintain a strong reputation to build credibility and consumer trust
- a digital distribution method for products or services
- an experiential (e.g.,hotels) or inspirational (e.g., a popular sports drink) product or service offering
Organizations that have more than one of these characteristics stand to gain the most provided they trade their assets accordingly. Which means this applies to individual corporations rather than whole industries.
With that in mind, McKinsey mapped the potential value and ease of capture across sectors
We're already seeing significant inroads in some of those sectors where individuals and communities are driving social technology adoption and organizations/institutions are following (or starting to).
As expected, media and entertainment is high on ease of capturing value potential. Some examples that come to mind with individual entertainers who have the ability to go direct to fans as Louis CK did with ticket sales and Lady Gaga with her community.
B2B is still grappling with the adoption of social technologies and since the report highlighted in several places that much of the value potential of social technologies centers around collaboration and specifically professional collaboration among colleagues and with businesses, this is a solid starting place, especially for highly regulated sectors.
There are more opportunities for business than outlined in this space. I will share further thoughts with Premium Newsletter subscribers for the August (21) issue (link below).
Valeria is an experienced listener. She is also frequent speaker at conferences and companies on a variety of topics. To book her for a speaking engagement click here.
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