Evolution of the networked enterprise

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McKinsey have published the results of their sixth annual survey on the business use of social tools and technologies.

Their findings show that use of social tools has now moved on from an initial experimentation phase to a position where their use is becoming something close to the norm. (83% of respondents’ companies use at least one social technology and 90% of executives whose companies use social technologies report measurable benefits.)

However, in this post-adoption phase, many companies are now discovering that, in order to fully realise the potential benefits, changes are needed in the ways they structure and manage their organisations.

Evolution of the networked enterprise

Two years ago, in The Rise of the Networked Organisation, McKinsey identified four major types of organisations; those still learning how to deploy the new tools, those using them successfully for internal or external communications and those who have joined up their whole organisation. The latest survey results show that whilst progress is being made, there are plenty of organisations still coming to terms with the new technologies and relatively few who have so far successfully connected their whole operation.

Developing                          48%        (78%, 2011)

Internally networked        13%        (7%)

Externally networked       29%        (12%)

Fully networked                 10%        (3%)

Major benefits of technology adoption

Most companies are continuing to leverage social technologies internally (73 %), as well as with customers (74%) and external partners (48%).  For the third year in a row, nine out of ten executives whose organizations use social tools report some measurable business benefit with employees, customers, and business partners.

Internal

  1. Increasing speed to access knowledge
  2. Reducing communication costs
  3. Reducing travel costs
  4. Increasing speed to access internal experts
  5. Increasing employee satisfaction

Customers

  1. Increasing marketing effectiveness
  2. Increasing customer satisfaction
  3. Reducing marketing costs
  4. Reducing travel costs
  5. Reducing customer-support costs

Partners, suppliers and external experts

  1. Reducing communication costs
  2. Increasing speed to access knowledge
  3. Reducing travel costs
  4. Increasing speed to access internal experts
  5. Increasing satisfaction of partners suppliers and external experts

Most frequently used social tools.

  • On-line video conferencing                        60%
  • Social Networking                                        53%
  • Blogs                                                               43%
  • Collaborative document editing                43%
  • Video sharing                                                41%
  • RSS                                                                  29%
  • Wikis                                                               26%
  • Microblogging                                               25%
  • Podcasts                                                         25%
  • Tagging                                                           20%

Looking ahead – New tools need new methods and new skills

This year’s survey also identifies an increasing number of organisations reporting a levelling out of benefits from these new technologies – suggesting that additional returns are harder to come by after the initial adoption.

Executives still expect further increases in employee productivity – particularly in project management and strategic planning – but now recognize there are often significant organisational barriers that prevent their companies from capturing the full potential of social tools.

To realise all theses potential benefits, companies must continue investing time and effort,

  1. widening the adoption of social technologies and building a critical mass of participation both inside and outside their organisations,
  2. addressing the need for significant organisational change – not simply changing the tools in a company’s portfolio, but developing appropriate supporting structures, processes and cultures.

As the report suggests, those companies that get to grips quickest with the required organisational changes will benefit most from the so far unrealised advantages of the new technologies. And it is these ‘networked organisations that are the most likely to realise competitive gains’.

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