Why and How Leaders Must Engage in Social Media

When I did a presentation on social media for C-level women executives last year I argued that leaders must engage with stakeholders in order to lead engaged organizations. I believed that then; I believe it now. People just can’t do “social media appreciation,” they have to participate at some level in order to understand how it really works. If they don’t understand how it really works, how can they assess how well their organization is doing?

In the interim, I’m happy to note that there has been research on the issue. The BRANDfog CEO survey published in the spring has gotten considerable attention. It quotes Aman Singh of CSRwire and Forbes.com as saying:

Transparency, vision and open communication are key to great leadership and corporate social responsibility strategy today. . .customers expect to hear from the executive leadership team on social media channels, as a direct way to connect and engage with the brands they love and the causes they support.

The data I find most compelling is that 82% of respondents are much more likely/more likely to trust a company whose executive team communicates openly. That is the gist of my argument.

When I sat down to write this post I looked for other recent studies. I was only mildly surprised to find that IBM’s Executive Exchange has a larger, personal interview survey fielded about the same time; IBM is good at social media, externally and especially internally. Again, one quote seemed to nail the situation: 

Though CEOs frequently mentioned dipping their toes into social media waters, few claim to be personally immersed. This arms-length involvement puts CEOs in a precarious position. They are making critical judgments about a disruptive technology without much firsthand knowledge. And they’re uncomfortably reliant on the counsel of less experienced Generation Y advisors. “For the first time in my career, I feel old. People in their 20s work and think about this social stuff in a different way,” a U.K. insurance industry CEO shared. “We’re using it as a way of connecting with friends and socializing; the kids coming up are using it as a way of life.”

These CEOs see social media use increasing by over 250% during the next five years to become the second most important way of engaging with customers. They still see face-to-face as number one. Over the same time frame, they see the importance of traditional media decreasing by over 60%.

The IBM argument is that connectedness through social media is not just a customer issue. Open communications also build and strengthen ties with employees and partners. There is no implication that it is three separate streams of communication. At the CEO level it’s about vision and values with detail on activities mostly left to the functional specialists. There is no implied platform recommendation either. The advice is “Be where your customers expect you to be.” They emphasize the importance of mobile to expectations about timely information. However, in this context mobile is not a platform. It’s a way of delivering social networks to customers according to their expectations.

The picture is one of a media world in the process of revolutionary change and the IBM study making the clearest statement I’ve yet seen of CEOs knowing they need to be part of that change but not knowing exactly how.

So I go back to my original argument; leaders need some personal exposure. Writing in WSJ, Dr. Alexandra Samuel has interesting recommendations leaders and would-be leaders should read for themselves. She sees interesting time-saving value in effective use of Twitter and mentions pressure for CEO blogs. She also suggests having some fun (“Build a Golf Course”) while learning.

If social media is essential to corporate communications and if executives can engage in ways that use time effectively, what reason is left not to engage in a personal and meaningful fashion?

Social Networks Improve Business Performance

McKinsey says that social networks are “extending the organization;” that’s a key take-away from their fifth annual study of the use of technology in organizations.

They continue to identify the key benefits of effective use of technology as increasing speed to access both internal and external knowledge, reducing communication costs and both increasing customer satisfaction and decreasing marketing costs. In terms of technology usage, they identify 4 types of firms: developing, internally networked, externally networked and fully networked. It should come as no surprise that few enterprises identify themselves as fully-networked while the largest number identify themselves as externally networked.

In this chart they collapse the benefits into internal, customer and partner/supplier benefits. Fully networked organizations have seen the greatest increase in payback from social technology. McKinsey warns, though, that it can be difficult to scale the benefits in a large enterprise. It is clearly worth the effort. They found improvements in market share, operating margin and market leadership from the use of specific technologies. See that detail in Exhibit 5 of their report. See an interactive version, showing changes over the last 4 years, here.

The report also features a chart showing what kinds of technologies are being used for what purposes. Again, it’s no great surprise to see social networks, blogs and video at the top of the list in terms of most overall usage. Many of the firms are using wikis; more than you would see if the emphasis was solely on external audiences. This reinforces the point that you need to select technologies carefully, based on use and audience, before you invest time and effort in them.

The McKinsey report has some data on adoption of technology by industry. Dion Hinchcliffe has an excellent post that includes data from a similar study by IBM and examples of success in healthcare, manufacturing, finance and insurance. He makes the point that across industries have examples of increased worker productivity and efficiency through the use of social networks.

Why is that? Business Intelligence expert Ken Chow has a provocative answer. Writing in the Information Management newsletter he says:

the next evolutionary force that will impel the BI market will come by way of technologies that overcome these limitations [heavy architectures, long development cycles and high costs] and deliver high-value information to people in much more productive ways. Information delivery of the future will include the collaborative and social mechanisms that already dominate our personal interactions.

We are familiar with these social tools and we already know how to use them. Chow continues:

Tools built into social media sites allow users to convey opinions, emotions, share data and interact with greater abundance, speed, transparency and collaboration, making the pros of this approach in BI readily recognizable.

I remember in the “early days” giving the advice that businesses should test social tools internally, learning to use them before deploying them to interact with their customers. That advice has now been upended. Firms are making extensive use of social platforms to deal with their customers, and rightly so. Now they need to take a strategic look in how to use some of those same tools internally to create a more efficient and effective business.

Article first published as Social Networks Improve Business Performance on Technorati.