Rise of the Social Enterprise

Improving business performance, growth and innovation have become top-line goals driving strategic initiatives of virtually all enterprises. Executives recognize that it is imperative to exploit inter-connections across customers, partners and suppliers at the process and information level. Senior leaders also understand the business transformation efforts necessary to become more agile in the marketplace. Over the years, a tremendous amount of time, money and resources have been invested to externalize processes (e.g., CRM, supply chain), outsource low-valued functions, revamp IT systems and implement a more coherent framework towards information management (driven, in part, by regulatory trends).

When it comes to employees however, organizations are full of contradictions. Actions taken in pursuit of top-line goals sometimes have derivative impacts on employees that impair such pursuit over the long run. One such inconsistency has been the lack of recognition by senior management concerning the influential (and sometimes dominant) role employee’s play in enabling top-line goals to be achieved. In particular, strategists fail to understand the value of social capital as a key organizational competency and the means by which it can be leveraged to support top-line goals. Active participation by employees across loosely-coupled groups (e.g., communities and relationship networks) establishes a variety of valuable connections for exchanging vital business insight.

As enterprises face undeniable demographic trends and workforce unrest, such unawareness is waning. Risks from aging workforce pressures have triggered renewed interest in organizational development strategies as a means to grow the intellectual capital and talent base of the organization. Such actions include investigating how to best externalize relationships with outside parties to facilitate fresh approaches and new ideas. Managers assessing younger hires, or contracted professionals, are also exploring more flexible work arrangements than had existed previously for past generations of office workers. Improving the level of workforce commitment in an age where ramifications from globalization often result in continual restructuring has management investigating ways to better encourage staff participation and feedback.

Different work models, building community across employees and new methods to compensate staff (e.g., skill/competency development, talent management programs) are leading indicators that people are being viewed as a more critical business asset than before. This does not mean a return to the good-old-days of lifetime employment or Internet-era bonuses, but a recognized need to improve the well-being, skills, competencies and productivity of those talented knowledge and information-centric workers that will be retained. Aspects of such programs will focus on environments that are more socially-oriented and exploit a more virtual workplace (e.g., mobility, pervasive connectivity). Human capital components of these programs will leverage principals from past knowledge management efforts to better democratize information sharing, communication and collaboration. 

Another contradiction with performance, growth and innovation goals concerns the management methods and decision making practices of most organizations. A typical enterprise might have portions of its management structure centralized, addicted to hierarchy and clinging to top-down decision making. Other business units of the very same organization might be decentralized with varying degrees of autonomy between itself and “corporate” for a variety of reasons (e.g., market needs of its particular line-of-business). Even within a business unit (especially those that are large or global), management and decision making institutions can vary between those that are more command-and-control driven versus those that are network-oriented around self-directed teams and communities. To harmonize the natural tension between centralized and distributed business entities, matrix reporting structures might be put in place to achieving better coordination but likely obfuscates accountability at the same time.

The resulting quagmire of inflexible and unresponsive management and decision making structures is the quintessence of bureaucracy, negatively influencing the institutional agility of an organization, its culture, and sense of community at all levels. Subsequently, workers are often left confused. This in turn has significant, and negative, consequences on the ability of an enterprise to develop its human capital, communicate, share information, and collaborate – all critically important DNA traits of organizations seeking higher and sustained levels of performance, growth and innovation.

This seemingly ironic and paradoxical conundrum has been well summarized in a article published in The Economist (The New Organisation, Tim Hindle, January 19, 2006). In the report (a compendium of articles), several companies (e.g., Philips, Emerson, BP, Toyota, and IBM) are used as examples of organizations that either overcame structural challenges, or leveraged its internal culture, to become more resilient and adaptive in order to excel in today’s competitive environment. The concepts are not new. Management consultancies (e.g., Accenture, McKinsey & Company) and business thinkers (e.g., Peter Drucker, Tom Davenport, John Seely Brown, John Hagel) have long identified the need for business transformation from hierarchical, top-down structures to flatter, networked organizations that push decision-making to the edge. As stated previously, business transformation programs that rely on edge-centric and network-centric organizational models will rely on new ways for employees to work together outside traditional reporting structures and office environments, applying best practices from a human capital and knowledge management perspective to better socialize information sharing, communication and collaboration.