Interesting article in the MIT/Sloan Review about companies who are succeeding in using Social Business tools. They surveyed over 4,800 respondents around the world. In essence the research` shows that value is concentrated most strongly in companies that have reached a certain level of sophistication in relation to their social business initiatives, which they refer to as social business maturity (see diagram above). In summary, they see six major signals of increasing maturity (summarised below):

Social business maturity involves business process transformation, not just using social tools and technologies in the enterprise. We asked respondents whether social business initiatives lead them to develop new business processes or fundamentally transform existing ones. Seventy-one percent of respondents in maturing social businesses say that their social business initiatives involve a fundamental transformation in business processes, as opposed to only 28% of respondents from companies in the early stage of social business maturity. This finding suggests that social business entails more than just adopting social tools in an organization. Rather, it involves redesigning business processes in ways made possible by these tools.

Social business often starts in marketing, then gets applied to other functions and processes. We asked respondents for what purposes their companies used social business tools. Companies in the early phases of social business maturity were more likely to report using social business primarily for externally facing activities, specifically marketing functions. Companies with a greater level of social business maturity, in contrast, were more likely to report social business use balanced between internal and external uses, with both innovation and leadership applications used nearly as much as marketing applications. Only maturing social businesses report applying social business tools to business operations to a great or moderate extent (60%), compared with 13% of the companies in an early stage of social business maturity.

Social business maturity involves increasing sophistication in measurement. Companies have been looking for ways to effectively measure social business results to assess ROI:

First, although 52% of the least socially mature companies do not measure their social business initiatives, this number drops substantially as companies move out of this earliest stage of maturity. Second, although anecdotal evidence is only the first step toward measurement, it remains nearly equally important for companies at all stages of social business maturity. Even the companies with the most mature social business practices apparently need to continue telling success stories to drive use of social business tools. Third, once companies begin quantitatively measuring social business results, our data suggest a path of increasingly sophisticated measurement.

More mature social businesses increasingly rely on social data. Our research also suggests that companies with more mature social business practices are more likely to rely on social data. Eighty-eight percent of respondents from such companies say social data are important, compared with 38% of those from companies in the early stages of social business maturity. Maturing social businesses are also more likely to use this data in different ways than companies with less mature social business practices. For example, while only 8% of companies in the early stages of social business maturity integrate social data into their operations to a moderate or great extent, 67% of maturing social businesses do so.

Social business maturity involves a higher level of responsibility and accountability within the organization. More mature social businesses are more likely to report a single leader or group responsible for social business initiatives. These leaders are also likely to be at a higher level (such as a vice president or member of the C-suite) in more mature social businesses. State Street’s Hannah Grove noted the importance of managerial responsibility for social business. “Ownership is a very important question, particularly when you think about the ramifications for anything not working out well,” she said. “And so there really has to be a sort of singular owner — for lack of a better word, governance and compliance — just to make sure that people don’t go off the reservation.”

Maturing social businesses manage new challenges along with successes. Greater social business maturity does not necessarily mean that a company has overcome the challenges associated with social business. In fact, some of our data suggest successful social business initiatives might actually introduce new problems for companies. In multinational companies, although social business maturity was highly correlated with how much social business helped a company operate across geographies, it was also associated with increased operational challenges across geographies.

This report comes at an interesting time, given that Gartner recently estimated that through 2015, nearly 80% of social business initiatives would fail to meet their stated business objectives. Both that report and this may be true, I recall in the early days of MRP II (precursor to ERP) system implementations, making it work was hard and there were many failures, and the companies that made it work had to change a lot of things – it was quite a journey.

To us the conflicting reports, and many of the first generation suppliers consolidating, is a sign that the market is in a changing phase – but reports of its death are somewhat over-estimated in our view.

McKinsey on using social tools to find hidden influencers in a business. The issue with most major change programs succes is winning over the people:

Winning over skeptical employees and convincing them of the need to change just isn’t possible through mass e-mails, PowerPoint presentations, or impassioned CEO mandates. Rather, companies need to develop strong change leaders employees know and respect—in other words, people with informal influence. But there’s one problem: finding them.

The solution, say McKinsey, is to use Snowball sampling:

…a simple survey technique used originally by social scientists to study street gangs, drug users, and sex workers—hidden populations reluctant to participate in formal research. These brief surveys (two to three minutes) ask recipients to identify acquaintances who should also be asked to participate in the research.

In business, one can use similar approaches to find out:

Companies can construct simple, anonymous e-mail surveys to ask, for example: “Who do you go to for information when you have trouble at work?” or “Whose advice do you trust and respect?”.  In shop-floor and retail-store settings where workers don’t have ready access to e-mail, companies can use anonymous paper surveys.

McKinsey found that:

– influence patterns almost never follow the organizational chart.

– exist at all levels of a company and aren’t easily identified or predicted by role or tenure (although relatively few are senior company leaders, as might be expected given their formal influence).

– even when company leaders believe they know who the influencers will be, they are almost always wrong.

No great surpries there, but useful corroboration.  Good point on needing non-digital tools for finding such people among non or semi-connected workers, many businesses still have many of these. Anyway, once you have found your foxes, the next is to create the conditions to influence the enterpriswith. McKinsey found 4 techniques worked well:

1. Think broad, not deep. The [client] company sought influencers in a swath of regions, functions, and roles (including frontline ones). The diversity of opinion and experience not only helped provide energy and good ideas but also later proved important in communicating the changes, in role-modeling them across the company, and in combating skepticism.

While there is no formula to determine how many influencers a company should include, the sample must be wide enough to pull in a diversity of roles and perspectives….. The goal is finding enough people with influence in enough roles to get a high degree of connectivity across the company through a relatively small number of connections (out of the total number possible). Some roles may prove to be particularly important. (Case study mentioned cashiers in retailers)

2. Trust, but verify. To build trust, participants at the manufacturer [one client] received letters of invitation explaining the program’s goals, why these employees had been nominated, and how the company wanted them to help. It took pains to make the initiative voluntary. Having influencers opt into change efforts builds trust and encourages high-quality results. Indeed, many influencers will be eager to help and view the experience as an honor worthy of their best efforts.

But goodwill dissipates quickly if employees feel coerced. Before extending any invitations, the manufacturing company discreetly vetted all participants with Human Resources and local managers. Vetting the participants helps “screen in” influencers who are well regarded by both peers and superiors, while acknowledging the reality that not all influence is positive and not all influencers want change. Although “bad eggs” should be screened out of important program roles, they still merit attention—as valuable sources of insight about how to convert skeptics.

3. Don’t dictate—cocreate. Both clients studied  engaged their influencers as thought partners in the change effort, not just as mouthpieces for change. That’s an important point because the influencers’ informal authority dwindles if they seem to be doing the bidding of management. The participants were organized in teams addressing themes they helped identify (for example, shop-floor safety, incentives for employees to think more innovatively, and actions to make the company more customer focused). Because both efforts required sustained input from the participants, the meetings inspired and motivated them. As the programs gathered steam, many of these employees helped to spread feelings of empowerment in their usual roles as well.

4. Connect the dots. To boost the odds of lasting change, the manufacturer created an online forum, supported by videoconferences, aimed at encouraging the influencers to meet and support one another periodically. In an effort to make these interactions as meaningful as possible, the company divided the influencers into smaller, volunteer-led groups focused on common themes. This approach not only helps to produce more tangible actions and outcomes but also makes it easier for the groups to connect with colleagues working on similar projects in other regions or business units. The participants’ sense of community, and of themselves as change leaders, grows as they share best practices, discuss new ideas, and address the inevitable challenges. The company’s early commitment to in-person gatherings has made subsequent interactions by e-mail, telephone, or videoconference far more meaningful. In general, creating opportunities for influencers to meet in person usually pays big dividends.

There is a noticeable Hawthorne effect (or should one say a snowball effect):

While the programs at both companies are works in progress, these early success stories have highlighted specific activities and behavior that drive performance. They are thus helping the companies to further articulate and accelerate the expected changes. Employee-satisfaction scores have also improved sharply at both companies, in large part thanks to increased levels of collaboration and empowerment.

It’s interesting to think about how one may adapt social business techniques for this, and vice versa. First thoughts are that as a way of creating an influence programme for social business implementation, it seems fairly sensible. Second thought is that it would go much better with certain social tools already in situ (internal collaboration and communication software, crowdsourcing for internal inovation and problem solving for example.). It would be interesting to see if you could find the same people using email or social analytics, or  see if one could monitor influencer impact digitally.

(Wirearchy Cartoon above by Hugh McLeod of GapingVoid)

There has been a lot of discussion in recent months about ways of organising work and structuring organisations in future enterprises – Podularity, Holacracy, Wirearchy, Post-Shifting , Smart Working, at a conceptual level Umair Haque and what I call “Stowearchy” ( 🙂 ) to name but a few recent thinkers, and that is not to mention all the academic work.  We have been around longer than we’d like to admit, and some of these are using concepts that have been tried before, and we wondered if there was anything to learn from these. The first is to look at the organisational revolution Ricardo Semler started off in SEMCO. To recap, the Semler story in brief is that (Wikipedia):

Ricardo Semler went to work for his father’s company, originally called Semler & Company, then a Mixer & Agitator supplier in São Paulo. Ricardo favoured diversification away from the struggling shipbuilding industry, which his father opposed. After heated clashes,  Antonio Semler resigned as CEO and vested majority ownership in his son in 1980 when Ricardo was 21 years old. On his first day as CEO, Ricardo Semler fired sixty percent of all top managers. He began work on a diversification program to rescue the company.

That was the start of a  fairly revolutionary set of steps

He fired most of the top managers and got rid of most management layers; there are now three. He eliminated nearly all job titles. There was still a CEO, but a half-dozen senior managers traded the title every six months, in March and September. Executives set their own pay, and everyone in the company knew what everyone else made. All workers set their own hours. Every employee received the company’s financial statements, and the labor union held classes on how to read them. Workers choose their managers by vote and evaluate them regularly, with the results posted publicly.

Not all was sun and light, there were problems. Attempts to introduce a WL Gore style matrix organisational structure in 1986 failed to achieve desired improvements.  It takes experimentation to make things work in any one business. There are some specifics worth noting – firstly, on cells (or Pods, as they seem to be called now):

In 1985 one of his managers suggested to Semler that he should create self-managed teams of six to eight production workers who would be entirely in charge of all aspects of production. They set their own budgets and production goals. Compensation was then tied to budget and production performance. Costs went down. Productivity and profits went up. Semler liked that. Many production workers liked that. Others were leery of taking on what they saw as “management” responsibility. It was the middle managers that didn’t like the new concepts. They felt they were losing their power and prerogatives. In a little over a year, one third of them quit.

Then came Brazil’s financial crisis and the Government severely limited access to liquid capital. The company tried everything to cut costs, but eventually it came to cutting staff, which with Brazil’s labour laws would have broken the company. At that point:

…a worker’s committee approached Semler with a proposal. They’d take a pay cut, but with three conditions. First, the profit-sharing percentage would be increased until salaries could be restored. Second, management would take a forty percent cut in salary. And, third, the workers would get the right to approve every expenditure. Semler agreed.

In the plants, workers started handling multiple job duties and using their knowledge of how the factory worked to come up with new procedures that saved time and money. At one factory they divided themselves into three manufacturing units of about 150 people each. Each unit had complete responsibility for manufacturing, sales, and financial management.

The autonomous team idea was adopted throughout the company. As it evolved the teams began hiring and firing both workers and supervisors by democratic vote. Policy manuals disappeared to be replaced by a policy of common sense. There is an actual manual, though. It runs about twenty pages and is filled with cartoons and brief statements of principle.

150 seems interestingly close to the main Dunbar Number. The next step was how these units may be set free to change focus or expand:

One more change had to be completed in order to create the Semco we see today. In the late 80s a group of engineers had received permission to become what was called the Nucleus of Technological Innovation (NTI). The idea was that they, and a group of workers, would become fully autonomous. In effect they were seeking to extend the autonomous team concept to a larger group.

Effectively the group would operate entirely on its own, though with the same culture as Semco. Their performance would be reviewed every six months. They took a percentage of sales as compensation. That model, essentially extending the autonomous teams, eventually became the model for all of Semco.

At the end of the first six months, NTI had identified 18 such opportunities. Following the success of this initiative, satellite units were encouraged throughout Semco. By the late 1980s, these satellite units accounted for two-thirds of its new products and two-thirds of its employees. As Fortune wrote in 2001, “Obviously it’s all insane, except that it seems to work.”  There is much more, described in Semler’s book “Maverick”.

After the first decade, partly due to a fainting spell when he was 25 due to the huge workload inspired him to want a greater work-life balance for himself and his employees,  Semmler wrote a second book “The 7 Day Weekend” describing their ongoing experience, focusing on the human issues. This structural freedom requires real disciple to operate properly:

The corollary of democracy and treating people as adults – the only real rules at Semco – is huge peer pressure and self-discipline. ‘It’s as free market as we can make it. People bring their talents and we rely on their self-interest to use the company to develop themselves in any way they see fit,’ declares Semler. ‘In return, they must have the self-discipline to perform.’

There’s no hiding place for those that don’t, even if performance is judged in non-standard ways. ‘To survive here you have to get on someone’s list of people they need for the next six months, and you can’t do that by playing political games.’

They also had to continually work on reducing heirarchy:

Even now [2002], laments Semler, ‘we’re only 50 or 60 per cent where we’d like to be’. Hence the constant attempts to unsettle even Semco’s unusual order – the latest of which is the disbandment of the firm’s headquarters in favour of satellite ‘airport lounge’ offices dotted around Sao Paulo. Not only do people not have fixed desks, they don’t even have fixed offices.

‘They thought it was about location. In fact, it’s about eliminating control,’ says Semler happily. ‘If you don’t even know where people are, you can’t possibly keep an eye on them. All that’s left to judge on is performance.’

Operating a business with a very low level of heirarchy and structure requires extraordinarily discipline.  In fact,  Semmler noted one of the major tasks was to screen all the New Age Work enthusiasts and those who didn’t want to get fully involved with the business out of the applicant pile, as neither type has worked out (which has provoked many to question what happens to those who cannot become fully engaged with business life). But to finish, he left a series of principles which are interesting to think about in a Social Business context:

• Forget about the top line. (i.e. profit, not revenue)
• Never stop being a start-up.
• Don’t be a nanny.
• Let talent find its place.
• Make decisions quickly and openly.
• Partner promiscuously.

We hear a lot about the “War for talent”, but over here at Agile Elephant we are a bit dubious about whether “talent” is always properly understood by those recruiting it. We know from various studies that a motivated, well organised team of “B listers” can beat superstars on a regular basis, as “Moneyball” showed clearly.

This is an interesting piece about Google’s experience of recruiting, and how they have shifted from Old Google recruiting, which has found smart people but not necessarily the best talent.  Google’s head of people operations, Laszlo Bock, detailed what the company looks for now. And increasingly, it’s not about credentials. Google has spent years analyzing who succeeds at the company, which has moved away from a focus on GPAs, brand name schools, and interview brain teasers.  They have found that the race is not to the one with the strongest CV on paper:

– Graduates of top schools can lack “intellectual humility” – Megan McArdle argued recently that writers procrastinate “because they got too many A’s in English class.” Successful young graduates have been taught to rely on talent, which makes them unable to fail gracefully. Google looks for the ability to step back and embrace other people’s ideas when they’re better. “It’s ‘intellectual humility.’ Without humility, you are unable to learn,” Bock says. “Successful bright people rarely experience failure, and so they don’t learn how to learn from that failure.” Many schools don’t deliver on what they promise, Bock says, but generate a ton of debt in return for not learning what’s most useful. It’s an “extended adolescence,” he says.

– Learning ability is more important than IQ – Succeeding in academia isn’t always a sign of being able to do a job. Bock has previously said that college can be an “artificial environment” that conditions for one type of thinking. IQ is less valuable than learning on the fly, Bock says.  A behavioral interview, in contrast with those that ask people to figure out how many tennis balls fit into a tennis court, might ask how you’ve reacted to a particularly difficult problem in the past. They can also help find people who fit the company’s definition of leadership. It’s not about leading a club at school or an impressive prior title, Bock says, but the ability to step up and lead when it’s necessary.

I must admit, a part of me looks at this and says – “yeah – and?” but its a sign – in my opinion – that the last 15 years or so of recruitment “best practice” are being seen as the chimera they are, having been filled with too much pseudoscience, cod-psychology and arse-covering fear of being seen to make the wrong hire, so the best paper trail proof of “talent” is used as a substitute for judgement.  Y Combinator’s Paul Graham recently noted that they have found the top software engineers are not minted at University, a useful predictor is what they were doing with their teenage years – hacking code and building computers is a good sign.

I think 2 things are happening now, both based on hard headed empirical logic:

– Firstly, we are starting to see a return to things everyone actually always knew, but its now OK to say it, think it, and do it again – human factors and judgement matters. This is largely what is going on with Mr Bock in Google

– Secondly, as data becomes digital its easier to measure the end to end effectiveness of employees vs. their attributes, and calculate algorithmically what sort of profiles work best in different companies.  Some time ago  I wrote about  evidence now emerging that when cold analytics are used, it turns out that the most talented employees and managers are not the highly rated superstars.

Social business, in our view, is a blend of the technology and the human insight –  so recruitment is, I suggest, not going to be any different.  (interestingly, the same thesis comes up when Nate Silver discusses using Big Data analytics – the algorithm is not enough, you need the human insight)

Last week we went to the Enterprise 2.0 Summit in Paris, I posted up my notes from the case studies earlier (Day 1 and Day 2 here), but I’ve been letting the overall lessons from the conference percolate and gel in my mind. Also, I’ve had the opportunity to read a lot of other people’s thoughts over the last few days. I believe that what is emerging in the arena is the following:

1. The “first wave” of the E2.0/Social Business movement is coming to an end, the consolidation of Dachis and Sprinklr, new directions from PostShift, the entrance of major consulting players like McKinsey and Deloitte, and the emergence of (or purchase of) social business tools by major software players, plus the increasing calls for integrated systems, all signal major shifts in a young industry.
2. The increasing number of emerging case studies are starting to make it clear what works, and what does not. We are also starting to see which of the “patchwork elephant” array of social business concepts and theories that have been around for the last decade or so are looking valid, and which are looking  more fanciful (or more kindly, are still before their time).
3. We all noticed a split between what I call the “humanist” and “technical” approaches to Social Business apparent at the conference, and to an extent this article reflects a concern that 2 camps emerge in what should be a holistic ecosystem..

To an extent point 1 is a given, any successful trend has a number of predictable phases in its lifecycle, and what we are seeing in my opinion is the shift from early adopter to the early mass market phase, as the ecosystem changes  case studies are starting to show what sort of Social Business is making it over the Chasm first. This is not to say that other models will not follow as the sector matures, but we are seeing the first phase emerging.

Point 2 I will talk about in a later post when I’ve done a full analysis of all the case studies, but I’ve summarised some emerging clear lessons over here. I was intrigued by the emergence of so many ideas about organising businesses (with wry interest I note that there are a lot of echoes of  theories of 30 – 40 years ago) but it is emerging as a major area that needs addressing. This is hardly new news in Social Business either, Adriana Lukas reflected on this issue in the first Patchwork Elephant conference we ran in 2010, and was looking at Heterarchical and Holon approaches even then based on her client experience. As I wrote in my piece on the many Dunbar numbers, business copied its  structures from the military structures of yesteryear, the military has changed hugely since WW2 but its not clear that business has changed so much. There is clearly a well overdue time for change.

On the point of multiple Dunbar numbers, Dunbar is quite clear that different sizes of human network structure have very different requirements on the human relationship dynamic, this is often forgotten in a world that thinks everyone you link to on a social network is a “friend”. To an extent technology can help (there was some fascinating hints on how social business tools can overturn the Allen curve from the case studies exploring Proximity) but it is extremely unlikely in my view that the way one can organise and run a 5 person cell will ever be the same as running a 15 or 50 person operation, never mind a 150 or 500 person one.

However, what this post is about is point 3, the apparent difference between “technical” and “humanist” approaches to social business and the damage such a split could cause. My view is that they are two halves of the same elephant, a necessary yin and yang if you like. The model I believe best expresses this in a useful way for business is the McKinsey 7S model (another oldie but goodie), so much so that I see it as the “7 Social” model. The model was designed as a strategic vision for groups, to include businesses, business units, and teams. The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing.

The diagram of the model is at the top of this post, and we have a more detailed breakdown over here, but in essence it says there are 2 sides to Social Business, the “Hard” requirements – systems, strategy and structure – and the “Soft” requirements – staff, skills and style, and the whole system has at its hub the Shared Values of the enterprise.

In a bit more detail – the “Hard”  (or Technical) requirements are: