Cynics sneer at what they characterize as the Kumbaya tone of some social media advocates. As far as these cynics (or as they prefer to say, realists) are concerned, only Pollyanna would make such rosy projections of network effects and community building. Exhortations to share and share alike, or to just give your personal intellectual property away without charge or expectation of reciprocity are met with disbelief. This is so far outside the reality of life within many businesses that it’s not surprising that management occasionally finds the social media talk high on new age bromides and low on concrete facts.
One of the problems facing those of us who try to explain the value of Enterprise 2.0 tools is that most companies have not measured the cost to the enterprise of their failure to nurture internal social networks and a spirit of collaboration. Does management know how many deals weren’t closed because expertise was hidden rather than shared? Has management measured the hits to efficiency and effectiveness that result when critical information is buried in a silo rather than easily accessible via the community? Does management understand the impact that dysfunctional communities have on employee morale and productivity?
Until you’ve counted the cost of a dysfunctional community, how can you properly value the potential benefits of social media tools that could help build and strengthen a healthy community?
[Photo Credit: Niall Kennedy]
Above and Beyond KM 
Mary -Your points are true, but how do you measure dysfunction? One of the Kumbaya messages at the Enterprise 2.0 conference was a dismissal of ROI. It's true that nobody measures the ROI on email anymore. But when email came to businesses, it was obvious that it was cheaper and faster than the alternatives (postal and FedEx). I am sure that many organizations ran the numbers in the early days. Of course email is just an expected part of the business infrastructure.I don't think that Enterprise 2.0 has the obvious advantages of email. ROI is a real obstacle to adoption. I think that is why we are seeing the most adoption through small, underground adoptions. If you want a positive ROI, it is easier to achieve when the “I” is small. (That leads to the whole safe fail discussion.)I expect that we will continue to see a few big, company-wide installations and more small, ad hoc adoptions. The companies that can articulate the compelling business need will be able to get the resources for the big projects. Personally, I think we are better off targeting small groups for adoption, then letting grow organically as people see how it can benefit the organization.
Doug – How to measure dysfunction? That depends on the particular enterprise. If you've got an organization that tracks performance carefully, it should be possible to identify instances when dysfunction cost the firm — perhaps in terms of canceled projects or unhappy clients or excessively high billables that had to be written off. For most firms, however, I suspect this level of quantitative analysis will be challenging to produce and they'll need to rely on qualitative reports via anecdotes. – Mary
This is an excellent perspective, (Mary?). Sort of like, “what is the opportunity cost of not doing this?”I've heard this from a CEO of a community platform startup called SmallWorld Labs. I believe they have some data that supports your assessment.
Thanks so much, Susan. You're absolutely right — there is an important element of opportunity cost here. Until we've calculated it, we're going to have trouble explaining the potential value of new E2.0 tools to managers who are inclined to be skeptical.I expect that unless a business is keeping very close track of its performance numerically, the best way to establish the opportunity cost will be through anecdote. Nonetheless, if we can find enough painful stories that illustrate in neon the negative effects of inadequate knowledge sharing and collaboration, we should be able to get our point across to even data-bound managers.- Mary
I'm a big believer that the ROI of communities and social networks IS obvious and intuitive, that this ROI CAN be proved in various ways, that it's early enough that it's difficult to do (and not enough of us do it actively yet), and that the negative financial and business impact of NOT engaging an ecosystem of customers/partners (or of doing it wrong) can also be measured / proven. Natalie Petouhoff (PhD) of Forrester published (June 30, 2009) a good paper on “The ROI of Online Customer Service Communities” that focuses – obviously, from the title – on one aspect of virtual communities and social networks, yet this paper is a good starting point to also apply similar ROI thinking to “Innovation” and “Adoption” and “Expert Info Dissemination,” and other types of communities. I recommend it as a starting point. When I talk to groups internal and external to SAP, I sometimes include a slide that covers the benefits (financial and otherwise – such as loyalty, reach, immediacy, inbound customer preferences, early market trend info, etc.) of communities PLUS the dangers of “doing it wrong” when it comes to orchestrating communities. You can find that slide #31 (and #23 might be relevant / helpful too) over here: http://www.slideshare.net/markyolton/sap-cn-for… Regards, Mark Yolton
Mark – Thank you for the slides and for pointing me to Natalie Petouhoff's paper. This is an area that many law firms simply haven't considered yet. It's good to know that other industries have already begun to tackle the challenge of quantifying the benefits of healthy communities and the negative impact of inadequate communities. We're going to have to follow their good example.- Mary
Hi Mark, thanks for mentioing my doc… if you want to hear about the research, check out the link http://digg.com/d1ul2o or email me at npetouhoff@forrester.com We did a narrow focus on this first ROI — but we are looking at ROI of Twitter and other social media applications. The ROI is there… just people need to see how social media can be applied to corporate settings. It's quite astonishing…Natalie
Doug and the O.P. make a very valid point. How do you measure ROI when opportunity costs are in the equation? Here is an example, we have a challenge based collective intelligence app called Cogenuity. Challenges are promoted. Contenders submit solutions. What is the ROI? Can we just claim the net profit from the implementation of all winning solutions? Who is to say that some of these challenges wouldn't have gotten solved without Cogenuity?
Really good pithy post Mary.I love the idea of measuring the cost of what could of happened, or how it could of been more optimal, or of quality. I guess the hard part is that if we don't allow the opportunities to emerge, then we don't even recognise they may potentially exist. You and me are so used to emergence that it's ubiquitous…you really have to dive in to experience it (perhaps using groups spaces first to get some traction and quick traditional ROI, as networks require network effects http://libraryclips.blogsome.com/2009/05/22/do-… )Emergence wouldn't be so ubiquitous to companies at first as it may save them thousands, and that's alerting.Also reminds me of a post I read the other day (I probably found it via your tweet linking), about a wiki anecdote (http://www.emergingwebmemo.com/2009/06/enterpri… <http://www.emergingwebmemo.com/2009/06/enterpri… ) The take away was: “…we should be careful not to always interpret the question of ROI as “What will it cost me to build this”. Sometimes the more important question is “What will it cost me if I don't build this”” I agree with Susan about “opportunity cost”. Clay Shirky never mentioned this term in his book, but the term rung true for me. In that we are almost able to collapse the opportunity cost. Well it's always there, but if it's so low cost, and using a co-evolution approach ( http://www.kmworld.com/Articles/News/News-Analy… ), then it's safe to fail, and we can try all alternatives, rather than just trying one at the expense of the otherHere's my tumblr on this ( http://johntropea.tumblr.com/post/85144573/here… )
Hi Mark, thanks for mentioing my doc… if you want to hear about the research, check out the link http://digg.com/d1ul2o or email me at npetouhoff@forrester.com We did a narrow focus on this first ROI — but we are looking at ROI of Twitter and other social media applications. The ROI is there… just people need to see how social media can be applied to corporate settings. It's quite astonishing…Natalie
It's wonderful to read about a female poet coming of age in this era, especially with Anne Sexton as a mentor for a short while, but so many other poetic luminaries as well. I'm also finding it encouraging to know, being 38 myself, that one can jumpstart her career at this age. Thank you for this inspiring interview, Julie Kane. http://Like-Acer.com write's unique point.It is useful and benefit to your daily life.You can go thosehttp://www.chaneloutletstores.com