Social technologies and the effective use of data can stoke economic productivity, according to the McKinsey Global Institute. McKinsey’s business and economics research arm is producing a series of reports propounding the economic value of big data, of which social media is an exemplar.
McKinsey Global Institute principal Michael Chui expresses modest satisfaction that the firm’s 2011 big data report, Big data: the next frontier for innovation, competition, and productivity has been so frequently cited. “It was one of the first reports to assess the economic potential of the trend," says Michael Chui.
“We didn’t invent the term ‘big data’, but McKinsey’s access to business leaders and dialogue with them means we can articulate the value of the effective use of big data to them, as a basis of competition."
The term itself is “a helpful nickname. At some point people will become tired of it, but the underlying drivers are important, and we are just at the beginning of data as a basis of competition."
Last year the MGI published another report, in a similar vein, the social economy: unlocking value and productivity through social technologies.
Again, the focus was on potential economic benefit, particularly increased productivity. The report calculated the annual amount than could be opened up by social technology in the sectors of consumer packaged goods, consumer financial services, professional services and advance manufacturing to be $900bn to $1.3tn. Much of that is calculated to come from an estimated 20-25% improvement in knowledge worker productivity.
“The current ways in which knowledge workers communicate and collaborate could be much more effective and efficient,” says Chui. The institute says that the average knowledge worker spends 13 hours per week just sending and receiving email and 20% of their time trying to find information. Valuable information is trapped in email inboxes, the “dark matter of the enterprise," he says.
For more on social media to boost efficiency
While email tends to be used for one to one or one to a few communications and is marked by the vestiges of older forms of communication still – think of the CC or BCC lines – social technologies enable much broader communication, and so enterprise collaboration. And the capacity to modify or comment on content is important to such collaboration.
The MGI has pinpointed a paradox. While social technologies are the fastest adopted in human history – it took 38 years for radio to hit 50 million users, television 13 and Twitter nine months – corporate adoption has been comparatively slow.
“It has been difficult for corporate IT to absorb and adopt these consumer technologies”, says Chui.
Security is an obvious issue, but, he says “organisations often hire people to stop bad things happening. They do not always counterbalance by hiring people to make good things happen.
“What’s in the workflow is what gets used. You tend to see a spike in social technology adoption [in corporate organisations], but it then drops off. Participation becomes just one more thing to do. Where it does take off is when it is part of what you do day to day."
And it is not, he stresses, a matter of the formal workflows indicated in an organisation chart, nor the flows dictated by enterprise resource planning (ERP) systems, “which tend to instantiate standard operating procedures. Social technology has to support how people really work, often across the organisation”.
And outside, too, he adds, including online communities of customer enthusiasts, in professional services and electronic devices.
Chui and his co-authors write, in the social economy report: "We believe that the interactions enabled by social technologies can encourage more employees to bring their creative gifts to their work."
Why do they believe that?
“People spend tremendous time and energy creating content in social media communities, without being paid: ‘"How can we get a fraction of that intrinsic need to create and communicate, at work?”
That is the question.
This was first published in March 2013