Social business means a company has a social objective instead of a financial objective. For example, Divine Chocolate is nearly half owned by farmers and utilizes fair trade practices. Many companies swear by social business as the way for their company to flourish in today’s landscape. But many others encounter obstacles to making social business really work for them. What accounts for this difference? What makes some companies struggle with social business and others excel at it? In a 2012 study, MIT Sloan Management Review and Deloitte University examined these questions.
The study surveyed 2,545 business professionals about social business. On one hand, the results survey made clear that social business is of increasing importance to business owners. 36% of respondents said it was important, up from 18% in 2011. An increase was seen across all business industries. 70% overall believed that social business can fundamentally transform the way their business runs.
On the other hand, businesses are clearly reacting slowly to the need to cultivate social business. When asked to rank their “social business maturity,” more than half of respondents marked their company at 3 or less out of 10. Just 17% ranked themselves at 7 or above. While most companies understand its importance, few seem to have made social business a priority.
According to the survey, companies that appear to struggle in maturing their social business run into three common barriers:
- Lack of an overall strategy (28% of respondents)
- Too many competing priorities (26%)
- Lack of a proven business case or strong value proposition (21%)
The findings of the study suggest that the difference between struggling and successful social business lies in using it as more than just a tool. Companies that expanded their use of social business by integrating it into all areas of operation found the most success.
These successful companies used social business to:
- Improve understanding of market shifts (65% of respondents)
- Identify internal talent (45%)
- Increase visibility into operations (45%)
Mature social business use also depends on making appropriate changes to accommodate social business. According to the study findings, important factors include:
- Using social business in daily decision making
- Integrating social business into multiple functions
- Assigning individuals with responsibility for social media
- Using a variety of tools including social media and social software
- Obtaining senior management and developing social business strategies
Structuring a company to focus on social goals seems to be the key to closing the gap between its perceived importance and its too-slow progress for many companies. By “shifting out of first gear,” as the study’s authors suggest, companies can make social business valuable by putting it center stage.
Source: 2013 MIT Sloan Management Review and Deloitte social business study, July 16, 2013 by David Kiron, Doug Palmer, Anh Nguyen Phillips and Robert Berkman