Being 'Half Social' is a Tough Business Strategy

BEING ‘HALF SOCIAL’ IS A TOUGH BUSINESS STRATEGY

In our recent article on the ‘Rise of the Social Business Inside’ we identified how new ROI opportunities exist through exploiting the natural relationship capital inside organisations. In this follow up article we review some of the experiences to date of early adopters of social business technologies applied to innovation management. What we have found is that while social technologies have been able to significantly increase the levels of collaboration across organisations, true ROI is still proving elusive. We suggest that the main reasons for this situation is related to the limits to which social business technologies and practices have been permitted to permeate the organisation. * This paper is a pre-­‐release version of From collaboration models the new prospects for innovation, di Laurence LockLee, Andrea Pesoli, Emanuele Scotti, Rosario Sica HBR Italia December 2011 (in Italian) http://hbritalia.it/article/661/

Laurence Lock Lee, Optimice Rosario Sica, Emanuele Scotti, Andea Pesoli, Open Knowledge

BEING ‘HALF SOCIAL’ IS A TOUGH BUSINESS STRATEGY In our April article on the ‘Rise of the Social Business Inside’ we identified how new ROI opportunities exist through exploiting the natural relationship capital inside organisations.

In this follow up article we review some of the experiences to date of early adopters of social business technologies applied to innovation management. What we have found is that while social technologies have been able to significantly increase the levels of collaboration across organisations, true ROI is still proving elusive. We suggest that the main reasons for this situation is related to the limits to which social business technologies and practices have been permitted to permeate the organisation.

“Crowd-­‐sourcing” ideas or customer feedback only results in a ROI when ideas or changes are implemented. Several open innovation adopters we observed have been able to successfully facilitate a more open and collaborative approach to sourcing and developing new ideas. However, these highly prospective ideas are then forced through a traditional top down capital investment process to receive approval for implementation. The resulting deceleration of the innovation process not only puts the potential ROI at risk but can also have a de-­‐motivating effect on those that have contributed to the open innovation initiative.

We argue that to achieve ROI, social business practices need to be carried right through from exploration, engagement with management and the resulting exploitation for ROI realisation. Being ‘half social’ just doesn’t work.

1 We use the 3E’s model of innovation to

http://www.optimice.com.au/upload/Optimice_ 3Es_of_Innovation.pdf or for academic readers: Lock Lee, L and Guthrie, J (2011), “Corporate 1

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illustrate how businesses can and have achieved ROI through deploying social business practices across the whole value chain, from exploration through to exploitation.

The Open Innovation ROI Dilemma

Open innovation platforms have proven to be a popular entre for organisations looking to adopt new social business technologies and practices.

The promise of engaging employees in an open, collaborative approach to sourcing and developing prospective improvement ideas is compelling. Some of these platforms now include gaming engine features as an added incentive for staff to contribute and 2 participate . Our observations of several open innovation platform implementations have shown that indeed staff are initially enthusiastically participating and collaborating on these platforms in exploring and collaboratively developing new ideas. ROI however does not occur until ideas are effectively exploited. As shown in the 3Es model below, the open innovations platforms have only been able to address the ‘explore’ phase of the innovation process: In the absence of a social business engagement and exploitation process, these organisations were applying the same stage gate ‘select management committee’ approval processes that had typically applied to the ‘suggestion box’ schemes that the open innovation platforms replaced. The result is substantially the same, just a handful of ‘winners’ after a protracted ‘closed’ assessment process. While

social capital in business innovation networks”, Int. J. Learning and Intellectual Capital, Vol. 8, No. 3, 2011

2 http://www.spigit.com

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perhaps the number and quality of the open innovation sourced and developed ideas may have improved, the end result appears not to have changed, resulting now in concerns around ROI for the open innovation platform.

A Social Way for Engagement and Exploitation

The 3Es model of innovation suggests that the progress from exploration to exploitation and ROI is brokered through key individuals who can successfully bridge the separate communities of explorers and exploiters. From a network perspective, we expect the community of explorers will be emergent and open as participants explore for like minds in the open innovation space. Exploitation communities however, are characterised by closer knit and closed networks that are typically required to achieve a disciplined implementation of agreed standardised operating practices or product deployments.

We speculated that while stage gate approval committees are in place to employ objective business criteria to their selections, informally it would be hard not to be influenced by a sense of social cohesion around an idea as an indicator of potential success. By reorienting the role of the selection committee from gatekeeper to idea broker, the speed of adoption could be accelerated, rather than the reverse. To test this proposition we studied the social networking patterns around ideas submitted to an open innovation platform of a major UK Utility. Social networks were identified through data mining the platform for network interaction around submitted ideas. In the first year of operation nearly 1,000 unique registrants submitted or commented on nearly 700 ideas. We found that: •

•

•

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While on launch of an idea, posting activity was equally strong for both rejected and approved ideas, but over time the posting around rejected ideas diminished.

On average posting activity around approved ideas was close to three times that of rejected ideas.

The diversity of posters for rejected ideas was significantly more than that for

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approved ideas. Lower diversity of posters indicates a more closed and

interconnected network, supporting our conjecture that favoured ideas exhibit tighter network characteristics.

that would benefit most from their deployment, in contrast to the current idea ‘push’ process.

Ideas that are not able to gain sufficient ‘pull’, would naturally recede.

The transparency of the process would provide stronger ownership for ideas that are exploited and perhaps less disappointment for those rejected through lack of visible support.

The green squares are a selection of approved ideas, showing the tight clustering in the social interaction patterns surrounding them.

So what differently?

could

be

done

What is apparent from this initial research is that the traditional stage gate approval process was acting like a brake on a natural evolution process. Potentially, social business measures like convergence in the diversity of idea supporters, along with consistently high levels of activity around an idea, could be used to monitor the idea evolution process. Unlike the traditional stage gate selection process, the social approach to engagement and exploitation would see management teams active in facilitating and bridging those with the ideas with those that are best placed to exploit them. Rather than acting as an approval brake or gate, the management team performs a brokering role in helping to accelerate implementation and therefore ROI. Ideas would therefore proceed or fail based on the level of social engagement an idea was able to achieve with the exploitation network. Successful ideas would be ‘pulled’ through the network by those

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A Final Word

The ‘Social Business’ has matured to the extent that hard questions are now being asked about return on the investment. Early adopters have regularly taken an incremental risk based approach to social business activities. Inevitably when social business practices have met traditional top down businesses processes, the results has been a dampening or even halt in potential benefits realisation. Unfortunately, being “half social’ just cannot work. To achieve ROI, social business practices must be maintained across the full value chain, from creation to final implementation and benefits realisation. This means management teams must re-­‐assess their roles from gatekeeper to

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broker if their investment in social business practices and technologies are to be successfully realised.

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ABOUT OPTIMICE Optimice provides specialised consulting services to help organisations map and improve business relationships at multiple levels.

Optimice identifies relationship patterns between people, organisations or markets, and we have improved the basic techniques to optimise these relationships in a compelling business-­‐focused context.

Our Partnership Scorecard™ helps organisations manage the intangible relationship aspects of outsourcing, smart sourcing, alliances, joint-­‐ventures and similar complex business frameworks.

Our specialized survey tool http://www.onasurveys.com provides consultants and other practitioners the most effective and user friendly tool available on the market to collect data on business relationships.

Our Community Mapper tool www.community-­‐ mapper.com helps organisations identify and visually map their internal or external community partners.

Optimice Pty Ltd. 23 Loquat Valley Rd Bayview NSW 2104 Phone +612 8002 0035 Fax +612 8213 6274 www.optimice.com.au ABN 92 123 562 854

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