Should Business Embrace Social Networking?

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Social networking for the enterprise is booming. The sector is unquestionably adding revenues for new providers, adding jobs at old companies, and adding profits throughout the industry. In a wave that seemed to begin in earnest just 18 months ago, enterprises now embrace these tools to achieve better (and less expensive) results across most major business functions despite fears over losing control of company secrets.

For most companies today, the advantages seem to outweigh the risks. Ed Keating, VP of the content division of the Software & Information Industry Association (SIIA), sees a strong trend toward the medium, saying, “Social media is where a lot of companies are trying to go.” Truly, today’s recession feels somehow remote from the industry surrounding social media. With a mood that is robust, there is a feeling of a “new frontier opening up, with the early adopters, the purists complaining of the businesses, and profiteers now at the gate,” surmises Keating. Meanwhile, new companies and new services continue to appear with surprising speed. Indeed, it is beginning to feel like 1999 all over again.

Susan Etlinger, VP at The Horn Group, a firm specializing in digital communications for technology companies, says the top areas for enterprise activity on the social web are lead generation, customer service, brand value expansion, competitive intelligence, and innovation management.

Some of the pitfalls of engaging in social media come from how the medium is distinct from any other type of business engagement in the past. Etlinger, echoing a view generally held throughout the medium, cautions, “The rules for social media are social. For instance, you would not walk up to someone in the street, ask her for an opinion, and then walk away. You have to complete the dialogue.” In a traditional form of data gathering, the focus group, enterprises do exactly that—sit behind a two-way mirror, get the results, and then leave. In addition, Etlinger believes there is resistance relating to fear of the medium itself, “Social media strike at a fundamental human fear of loss of control,” adding that, “Companies that have a traditional command and control model suffer from this the most.”

Certain fears seem justified. Relying on public social networking sites should raise red flags for enterprises given the privacy policies of these sites. Facebook’s terms of service explicitly state that the content posted there is the property of Facebook. Thus, even if a profile is deleted, the content that was posted remains on the site. Hence the phrase “What happens in the Facebook, stays in the Facebook,” made popular in a YouTube video and recently discussed on ABC’s The View.

Despite cautionary tales, Tim Walker, analyst and host of Hoover’s Business Insight Zone, points out that the risks of staying on the sidelines may be a lost opportunity, “Folks are probably talking about you anyway on Twitter, so it’s just an opportunity to be part of the conversation.”

Soumitra Dutta, co-author of the book Throwing Sheep in the Boardroom, credits the rise in social networking technology with three trends: a growth in e-skills with increased access to technology, a generational shift in demographics toward a growing population that favors openness, and “an innate human desire” to establish an identity and a standing in a community. His view as to why the social medium is on fire is that it is a technology that “catches up and unleashes human behavior on a global scale.” Working as a consultant to IBM, Dutta saw a major shift in one corporation’s culture aided by social media. When IBM’s chairman and CEO, Sam Palmisano, took over, he created a community website to gather ideas on company strategy despite heavy pushback from the Old Guard. “He succeeded in getting a large-scale engagement on the values of the company and what they should be,” enthuses Dutta.

To achieve results that also meet the rigorous requirements of enterprise privacy policies, companies are flocking to build in-house solutions that do not reside on the public web. Rob Koplowitz, principal analyst at Forrester Research, Inc., states, “I’m certainly seeing a trend toward social networking becoming a mainstream enterprise technology. Enterprises are looking for IT-sanctioned solutions so that users do not use public offerings where privacy, intellectual capital, and compliance could be compromised. Once they’ve moved toward a strategy that fits the enterprises requirements, the rewards can be substantial. The networking effect that magnifies the value of information and expertise on the public side can be translated to work in the enterprise.”

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