The business value of social technologies

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A common question i have got during the last 2-3 years has been “what is the business value of social technologies”. To me the answer has mostly been a gut feeling that sharing is good and that great ideas are built out of many good ideas. Another answer is the culture change needed in most organizations. 87% of employees in Fortune 500 companies still feels that if they share knowledge with colleagues their own personal relative value will decrease as measured by the employer. In other word many employers values unique competences higher than employees that instead share their unique knowledge and ideas with their colleagues.

Well renowned McKinsey Research has taken on the same question and presented a series of reports (McKinsey Report on the Social Economy, July 2012) based on a large number of interviews. If I understand them right the potential for sustainable productivity growth are phenomenal:

The potential for your organization is 20–25% improved knowledge worker productivity”
Knowledge workers: 20 000
Annual cost per employee: $100 000
Improved productivity: 20%

Yearly productivity improvements: 20 000 *100 000*0,2= $400 000 000

According to McKinsey these productivity gains stand for 2/3 of the value with social technologies and 1/3 ($200 000 000 more in sustainable yearly value) of the value creation comes from other areas like
– Marketing
– Sales and after sales support activities
– Innovation
Of course these numbers are not achieved by software. McKinsey adds a significant note that they require that all participants fully implemented social technologies and complementary organizational changes – and if all time and money saved by social technology were applied in the most productive ways.
link to report