The Moment Social Media Became Serious Business

It happened last year, around the first of July. In my experience, the switch was just about that abrupt.

All last spring, most senior business leaders I met shrugged off the business applicability of Web 2.0. Allowing access to social networks in the workplace was something they were willing to consider only if it was absolutely necessary to keep younger employees from complaining. Twitter? What was that?

But by summer, the conversations I was having with senior executives about the use of these new technologies took on a very different tone. Recognition grew that 2.0 technologies could be used to change the way work gets done in fundamental ways. Interest in exploring these new ways of working, of sharing information, of collaborating to enhance productivity and meet business goals, was here.

Advances in our ability to communicate always change the way we live and work — the two are inextricably linked. The advent of writing facilitated the development of a complex, stratified Egyptian society as rulers were able to document their holdings and express their wishes; the printing press spurred democracy as information spread among the populace; the telex allowed the growth of major cities as headquarters became physically separated from the factories.

And, like the hesitant adoption of 2.0, these advances in communication capabilities have almost always met significant resistance. Early assessments of the telephone predicted that it would be used primarily for social, non-business applications. What business would want to use a technology that provides no permanent record of a conversation, when the telex was available as a dependable alternative? Initial assessments of what became the core technology for Xerox completely missed the mark — no one could imagine why any business would need copies of a document. It’s hard to envision the usefulness of new ways of communicating, and easy to dismiss new technologies as frivolous.

But each time our communication capability expands, several predictable things occur:
An increase in the scope (distance and speed of reach) and richness of our interactions affects the way we organize, shifts the balance of power, and influences how we get things done.

Ronald Coase, a professor at the University of Chicago, won the Nobel Prize for Economics for his work showing how transaction costs influenced institutional structures. In “The Nature of the Firm,” published in 1937, Coase explored how the cost of communication influenced the size of organizations. He found that high communication or transaction costs encouraged bringing as many functions as possible inside the organization — explaining, for example, the push toward vertical integration as a strategy in the mid-1900’s — a strategy since largely discarded as communication costs have decreased.

Harold Adams Innis, a professor at the University of Toronto, outlined several predictable results that occur whenever there is a reduction in the cost of communications in his 1951 work, The Bias of Communication. Although Innis was writing well before Web 2.0, note how many of his predictions accurately reflect the major trends of today:

  • Redistributing knowledge and, in doing so, shifting power
  • Making it easier for “amateurs” to compete with “professionals,” because access to knowledge substitutes for mastery of complexity
  • Allowing individuals and minorities to voice ideas
  • Reducing the advantages of speed that formerly accrued because some had knowledge before others
  • Reducing the advantages of size that are based on the ability to afford high costs.

I believe the impact of the combined technologies of the past decade, of Web 2.0, will have as powerful an impact on the ways we live and work as many of the blockbuster steps of the past — the printing press, telex, Internet — have had. Today’s new technologies allow people to interact without specifying how they should do so, cause patterns and structure to appear over time, and allow activities to occur asynchronously and virtually. Even more importantly, the sophisticated search algorithms allow us to find what we’re seeking in a sea of information. Together they offer significant improvements in generating, capturing, and sharing knowledge, letting people find helpful resources, tapping into new sources of innovation and expertise, and harnessing the “wisdom of crowds.”

Today, the frontier of human productive capacity today is the power of extended collaboration — the ability to work together beyond the scope of small groups using the new tools of collaboration.

This train has left the station. Social media is on track to become an integral part of the way we work — a core tool of serious business. The story of how businesses use technology is in the midst of becoming a lot more interesting.

Read the original here, by Tammy Erickson @ Harvard Business Publishing