Social Networking : Good for Business or Not?

There is no question that right now, Social Networking and Social Mediated Business Models are Hot Hot Hot topics.

At Helix, we don't see any end in sight for creating new business models as companies go inreasingly digitally native. There is a long list of social networking solutions, from: Bebo, Facebook, Friendster, Linked In, MySpace, Neighborhood, Ning, Perfspot, Orkut, etc.

Masses of users are signing up to social network services at an astonishing rate; MySpace alone currently has over 300 million accounts. But even as social networking makes it easier than ever to communicate online in real time, democratizing the Web and deluging cyberspace with information and opinions posted by millions of people eager for ”virtual” conversation, poses many challenges for the business world.

Results of an exclusive MessageLabs survey conducted in September 2007, reveal that approximately 75% of companies said the number of visits their employees were making to social networking sites had increased over the previous six months.

About 60% thought this had damaged productivity; while over 75% believed corporate reputation could be seriously threatened if staff posted negative comments about their organization online.No wonder over 70% of respondents said they were thinking of restricting employee access to social networking sites.

There’s a lot of anxiety around at the moment in companies and many are struggling to get to grips with the full implications of social networking and what it all might mean for their business.

For many organizations, this free flowing, unregulated environment seems a truly intimidating place, the Internet’s answer to a lawless Wild West. With concerns over identities stolen or corporate networks infected with unwanted malware as cyber-criminals hijack social networking for their own malevolent purposes.

Hence, it is not surprising that a number of big-hitting organizations, such as Lloyds TSB and Credit Suisse, are reported to have outright banned employees’ use of social networking sites. The Ontario Government has banned the use of Facebook for its employees, and in recent discussions with their CTO they are planning to reverse this decision, given the enterprise application value of Facebook and recruiting linkages that Facebook is now providing to the marketplace.

But not every business has followed suit. Some see the craze as a gilt-edged opportunity to expand networks of contacts, accelerate business processes, engage with (and listen to) customers more closely, and even identify and recruit high-caliber staff more cost-effectively than previously possible.

Others are adopting a “wait and see” policy or looking to follow an intermediary path between unfettered access and blanket ban.

Recent research by Emedia revealed that over 10% of social networkers visit social networking sites for business reasons. This growing trend is reflected in the appearance of an increasing number of business-oriented sites, such as: LinkedIn, Viadeo, Huddle and BT Tradespace, designed to help companies initiate and strengthen relationships with colleagues, clients, suppliers and partners, wherever they are in the world. Moreover, this is a medium that not only promotes exchange of knowledge, ideas and information, but can also make it an unusually energizing and rewarding experience.

Social networking also plays a major role in collaboration and increasing staff communication,improving morale, motivation and job satisfaction. Big brands are also getting inon the act as they recognize the benefits of building a presence in the social networking environment.

Research by Microsoft has shown that almost three-quarters of UK social networkers have already visited profiles set up by companies specifically to promote particular brands.

On the other side, these solutions also can be addictive. In a recent poll by silicon.com, 8% of workers owned up tospending between one and five hours a week and 2% admitted to spending between five and 10 hours a week – on social networking sites while in the office.

Facebook users spend on average over 20 minutes a day for example.

Risks that need to be understood are: bandwidth implications, the risk of indiscreetly broadcasting confidential commercial information and valuable intellectual property or inappropriate comments on the company that can have major impacts on brand reputation etc. Other real threats include: spammers, virus-writers and their partners in crime who set up false profiles, trawl through social networking sites and piece together job titles, phone numbers, email addresses and so on –just the sort of information they need to launch sophisticated, highly targeted attacks on corporate networks.

Results of an exclusive MessageLabs survey conducted in September 2007, reveals that approximately 75% of companies said the number of visits their employees were making to social networking sites had increased over the previous six months.

Leadership Actions

We recommend the following actions to our clients to take advantage of Social Mediated Solutions:

1.) Ensure you have a corporate policy defined clearly so employees understand expectations and limitations;
2.) Set up a governance counsel in the early stages for Web 2.0 or Web 3.0 to ensure the organization collectively learns on how to use these tools vs having one-off experiences;
3.) Ensure an overall architectural strategy for the Web 2.0 social mediated technology toolkits vs having a series of toolkits that are not easily integrated or provide the business intelligence on usage across different solution sets for: wikis, blogs, podcasting, IM, social networking tools (facebook) etc.,
4.) Fund pilots that help the organization learn from and then share these experiences to support the organization's learning

At this stage in the Canadian landscape there are some leaders in developing innovative Web 2.0 approaches in companies like: Bell Canada, MTS Allstream, Royal Bank of Canada, TD Canada Trust, and early days for Bank of Nova Scotia and CIBC as well.

Concluding Comments:

This is a new way of working and designing business processes. Community networks are critical for organizational evolution. No organization can hide from these new needs or block its evolution. The market is about conversational value and a new performance metric in time will impact an organization's valuation. Community Reach is powerful and as new accounting standards evolve based on Social Capital fundamentals, this will heighten organization's awareness for the need to change.

The biggest reality is to attract Gen X and Y talent and now generation V (Virtual) -organizations need a focused Web 2.0 and Social Mediated Business Strategy to take advantage and learn from the increasingly connected world.