Following other consumer technologies, social networking sites are
finding a home in corporate settings. For CIOs, the move brings
challenges -- and opportunities.
By Karen J. Bannan
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How do
you grow market share when you already lead the market? For Headwaters
Inc., a South Jordan, Utah, provider of products and services to the
energy, construction and home-improvement industries, the answer
involves social networking.
Headwaters, with 2008 revenue of $819 million, already owned 80
percent of the market in many of its verticals. While company
executives put a priority on pursuing the remaining 20 percent, they’re
also focused on introducing new products as a way to expand into
related markets. Headwaters executives knew this strategy would require
numerous meetings with customers, both current and potential. Yet they
also wanted to avoid costly travel bills. So last year, with help from
CIO Niel Nickolaisen, Headwaters built a customer portal and wiki to
let employees interact online, both with customers and each other. The
company evaluated several popular services, conferred with others at
industry events, and launched social-technology pilots.
Since then, Headwaters has begun using social networking for other
purposes, too. These include helping HR find and evaluate job
candidates, connecting salespeople with customers, promoting supplier
loyalty and connecting customers to potential customers. “You can
invite your customers to share best practices and share their
experiences,” Nickolaisen says of the latter application. “Do it right,
and you’re creating a potentially limitless pool of unofficial company
salespeople.” The company also uses social networking internally to
support its Lean manufacturing efforts. “We use social networking to
gather process improvement information from our employees,” Nickolaisen
says.
Social Work
Headwaters is far from alone. Social networking, a technology
originally designed for consumers, has entered the corporate setting in
a big way. In fact, 60 percent of all U.S. workers have used at least
one social-networking site in the past year, according to market
researchers Compass Intelligence. Another market watcher, Equation
Research, sees even wider adoption; the firm says 75 percent of all
U.S. employees now use social networks for business purposes. “Social
networking began with the consumer Internet and is now finding its way
into the workplace,” says Caroline Dangson, Research Analyst with IDC’s
Digital Marketplace Program. “People are realizing the value of social
networks to connect with colleagues and deepen business relationships,
just as they do with friends on these services.”
Many employees have taken it upon themselves to use these tools,
regardless of whether their organization has its own initiatives,
Dangson adds. In fact, she is one of more than 50 analysts at IDC using
Twitter, the microblogging service. Another 360 or so IDC employees use
Yammer, a free, private social messaging service, for internal
information sharing and virtual brainstorming sessions.
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Also, some companies have improved productivity with social networking,
Dangson says. Mainly, they’ve done so by reducing the time employees
need to spend on the phone solving customers’ problems. “Workers
struggle with information overload,” she says. “Social networks help
them filter and find the information they need through the help of
peers they trust.” A recent MIT study supports this. Researchers there
found that employees with the most online connections were 7 percent
more productive than their less digitally connected colleagues. While
that gain might seem modest, in today’s economy, every percentage point
is worth fighting for.
That’s certainly the case at Textron Information Services (TIS),
which provides IT resources to its parent company, Textron Inc., a
$14.2 billion company based in Providence, R.I., that serves the
aircraft, defense, industrial and finance industries. TIS uses social
networking to help its 800 IT employees communicate with each other and
find answers to difficult problems. “People can reach out and find
someone who has a skill set that can help them,” says Gary Cantrell, VP
and CIO. “Social networking connects them in a way that just wasn’t
possible in the past.”
For CIOs, social networking brings a mix of challenges and
opportunities. Get it right, and the company can benefit. Get it wrong
— and many do, experts say — and the CIO faces wasted time, manpower
and other resources at a time when few companies can afford such
losses. “Social networking isn’t something you can just turn on,” says
Ross Mayfield, Chairman, President and Co-Founder of Socialtext Inc., a
Palo Alto, Calif., developer of enterprise social networking software.
“You need to be aligned to a business goal, and if you are a CIO, you
need line-of-business alignment and a line-of-business manager engaged
in the implementation process.” In fact, companies that take a
try-an-installation-and-see-what- happens approach have a 90 percent failure rate, according to Mayfield.
Statistics like that led Nickolaisen of Headwaters to select his
social networking tools carefully. First, he determined the business
need. Headwaters executives knew that most new product ideas come from
solving new customer problems, which — more often than not — require
the company to spend time with customers, understanding their business
challenges. “But in our business, we don’t have a lot of people in the
field, so we have to be smart about gathering information,” Nickolaisen
explains.
Social Pilots
So Nickolaisen turned to social networking. He and his team began by
evaluating Facebook, LinkedIn, MySpace and other popular services with
firsthand trials. He spoke with other CIOs, both at industry events and
online, asking them what they had accomplished with social networking.
And he instructed his team to launch pilots with select clients to see
how they liked using social networking to interact directly with
Headwaters.
Ultimately, in a bid to save money and reduce complexity,
Nickolaisen selected a software solution that the company had installed
earlier and which provided a portal. Headwaters was using the software
as an internal resource to post ideas and track their process through
the R&D process. To foster internal collaboration, Headwaters set
up a wiki.
Experts say Nickolaisen did well to start with his company’s
business goals. Charlene Li, founder of Altimeter Group, a digital
strategy consulting firm, and coauthor of Groundswell: Winning in a World Transformed by Social Technologies
(Harvard Business School Press, 2008), says considering the business
objectives is essential for CIOs selecting a social networking tool.
“It all depends on the goals of the company,” she says. “Are you trying
to engage customers? Are you looking to drive sales? Are you looking to
get people talking internally? It all starts with that.”
John Kembel, CEO of HiveLive, Inc., a Boulder, Colo.-based developer
of social networking software, agrees. “Some companies start with a
focus on internal collaboration and efficiency, while others start with
more of an external focus on customer engagement,” he says. “We’ve seen
the greatest success with those companies that start externally,
bringing customers closer to their business through a community. This
extroverted posture makes for the fastest cultural shift, driving
innovation and competitive advantage.”
Doubly Social
Nickolaisen of Headwaters may also be leading a trend with his choice
of not one, but two social networking systems. Indeed, Li says many
companies will ultimately select two different social networking
technologies: one for internal use and the other for external use.
Which approach should a CIO take? It depends. Does the CIO need
something that’s one-dimensional and works internally only? Or does he
or she need a bigger ecosystem that connects to public social
networking services such as Twitter or Facebook?
Either way, says IDC’s Dangson, the CIO is best positioned to manage
and support the flow of information within the enterprise — and to
support and direct an organization’s social media strategy. The CIO
should work with the CEO to develop corporate guidelines and policies
that help encourage all employees to use social networks. One best
practice for CIOs evaluating social networks for business, says
Dangson, is to choose a flexible platform, one that aligns with the
company’s business objectives and will connect all departments of the
company. “Corporations that have experienced quantifiable success in
deploying social networks have buy-in and support from upper
management, who understand this is not just an activity for marketing
and sales,” she says. “It’s about connecting the entire company and
leveraging the wisdom of many, not just a few.”
But CIOs should not take too long to decide which social network to
adopt, advises Alan Majer, a Senior Analyst with Austin, Texas-based
nGenera Corp., which bills itself as a next generation think tank. “If
you don’t put a stake in the ground,” he warns, “eventually people will
start using their own tools, and it could be very difficult later to
migrate them over.”
Then, once a social network is running, CIOs should follow up with
controls to protect confidential corporate information and prevent
abuses. For example, the company has also created an “acceptable use”
policy that gives employees and customers a framework to work within,
says CIO Cantrell. “We also do continuous training and awareness to
reinforce proper use and the right behavior,” he adds.
Enforcing these controls can be a delicate balancing act. Too little
control, and corporate secrets could be at risk. But too much control,
and the social network stops, well, networking. Nickolaisen of
Headwaters believes he has found an effective middle ground. “You don’t
want to be too controlling, because that limits the use of social
networks,” he says. “Even when our internal social network initially
turned into a gripe forum, we were patient, and the community
established the standards. Now it has a purpose and its own controls.”
In the end, social networking success may come down to trust. Once
you’ve provided the tools, it’s time to step back and let those tools
create benefits. “You need to trust your salespeople, your CEO, your
customer service people to talk to each other and talk to customers
every day,” says consultant Li. “If you give them specific goals, and
if they see inherent value in using social networking, they are going
to use those tools for the good.” ■
KAREN J. BANNAN is the Executive Editor of Smart Enterprise.
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Five Ways to Succeed with Social Networking
1.Assess your business needs before testing technologies so you can match needs with functionality.
2.Get at least one person from each business unit to test any
potential technologies. Different business units have different needs,
so what works for the IT department may be lacking for the marketing
department, for example.
3.To prevent abuses, create an “acceptable use” policy that provides
employees with guidelines for using the company’s social networking
tools.
4.Determine how easily social networking tools can be integrated
with your existing technology. The more integration you have, the
easier it will be to get people to start using the social networking
tools.
5.Install filtering and monitoring software. That way, you can
monitor what’s going in and out of the company and prevent or detect
abuses.
Source: IDC
Social Networking for Personal Gain
Ian Church has lived all over the world. He’s also changed careers and
industries, moving from the high tech world into sporting goods. His
most recent stop was as VP and Managing Director, U.K./Ireland, with
ProLink Solutions. Along the way he had little time to network and few
people to network with, since his goals and expertise were constantly
changing.
Church knew that networking could be extremely important to his
long-term goals, so he logged on to business networking site
LinkedIn.com, created a profile and joined 23 groups. He connected to
more than 200 people and started answering questions and providing
feedback.
“It is a way to evaluate what’s going on outside the walls of your
company without having to leave your own personal four walls,” Church
says. “Personally, it helped me overcome my many geographic issues. I
was so mobile, I didn’t have the benefit of a face-to-face safety net
of people, so I had to create one.”
This past February, Church learned just how important such a network
— even a virtual one — could be. He was laid off due to the recession.
That same day, Church logged on to LinkedIn and announced to his
network and groups that he was looking for the next opportunity. Within
just one day, he says, three people responded with job leads. Within a
few weeks he was working on a two-month freelance project, and he had a
good lead on a full-time job that would coincidentally start when his
freelance gig ended.
Overall, Church says, while social networking is a boon to those
executives trying to boost their company bottom line, it’s just as
important for personal fulfillment as well. “Social networking becomes
the safety net in this modern world,” he says. “In the 1970s, your
employer was your employer for life. Now you have to create your own
job security.” – K.J.B. |
