What makes enterprise social networks and communities relevant and valued today? It’s useful to look back slightly on a significant market dynamic that occurred in the last two decades of the 20th century.
The asset base of S&P companies shifted dramatically from tangible to intangible assets. Prior to that the activities of American industry primarily created value through extracting raw materials and transforming them into product.
At the start the 21st century the economy shifted towards a service-oriented and knowledge-based economy which predominantly rests with added value: returns beyond the costs of capital, through innovative work in strategic management, product and market development and by creating deeper and expanded relationships with customers, business partners, employees or ecosystems of contingent workers.
In this kind of economy, it’s the talent and knowledge of people, and the results of their productive interactions that create value - the ability to solve complex problems or invent new solutions, and engage with customers in more authentic and compelling ways.
Yet companies and organizations often continue to organize and relate to their workforce or customers as if it is still 1982.
This is a profoundly transformative era. Now the value of organizations is its ability to connect those intangible assets - the ideas in peoples mind, the tacit knowledge of their experience - to bring business or social value.
In the move to social business, that’s where the focus of the organization needs to be, and why the rise of communities is so important
In the ensuing first decade of the 21st century the proliferation of Web 2.0 technologies has fostered the emergence of a category of company that McKinsey called ‘the networked enterprise' reflecting the connectedness externally with customers as well as internally with employees.
A 2010 McKinsey report, The Rise of the Networked Enterprise: Web 2.0 Finds Its Payday, showed quantitatively that networked companies showed significant margin share gains, higher operating margins and advanced their market leadership position.
The companies that are fully networked, on the inside and the outside are the real winners.
Many companies have embraced external facing customer communities to support them more effectively, foster dialogue and exchanges of information from customer to customer, reap new ideas and engage in ways that are more direct, personal and insightful.
This kind of engagement not only allows the development of new market potential, but helps companies yield more complex, nuanced and sustained relationships - a realization of 'long-tail' potential.
Internally companies focus on strategic plans and annual business plans identifying the resources and organizational priorities that need to be devoted and aligned to achieve business results. Those priorities are focused on the front, large end of the tail and as such are high cost transactions.
When community collaboration is fostered by both access to simple, adaptable tools and technologies, and a cultural and management approach that supports collaborative work styles, productive ideas and work habits can flourish.
Internal communities can help fosters lots of “cheap, plentiful transactions,” of ideas, innovative ad hoc projects, or simply accelerate every-day project work.
In this era of networked engagement, there are emerging models to assess and understand how value is achieved through community dynamics and participation mobilized to a purpose.
Depending on the nature of a community the value can be various forms such as the immediate value from the interactions and activities or the potential value of various forms of knowledge capital (i.e., sharing personal assets [human capital], developing relationships [social capital, gaining access to resources [tangible capital], collective intangible assets i.e., the prestige of the community or profession [reputational capital] or the transformed ability to learn [learning capital])
The dynamics of community in turn support a climate of trust that allows self-selected, self-motivated people to negotiate their way forward whether they are on a work team, are a customer assisting other customers with product usage, or partners bringing new ideas for business opportunity. “Where trust is the currency, reputation is a source of power.” - and is also a driver of productive behavior and the surfacing of leader mentors.