The Social Economy: Unleashing Value and Productivity through Social Technologies
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About this Webcast:
08 November 2012
Sir Drummond Bone, Master of Balliol College, University of Oxford
Dr Michael Chui, McKinsey Global Institute (MGI)
James Manyika, McKinsey & Company
Dr Marc Ventresca, Saïd Business School, University of Oxford
In a few short years, social technologies have given social interactions the speed and scale of the Internet. Whether discussing consumer products, or organizing political movements, people around the world are constantly using social media platforms to both seek and share information. Companies are using social technologies to reach consumers in new ways too; by tapping into these conversations, organizations can generate richer insights and create precisely targeted messages and offers.
While 72 percent of companies are using social technologies in some way, very few are anywhere near achieving the full potential benefit. In fact, the most powerful applications of social technologies in the global economy are largely untapped. While companies will continue to develop ways to use social technologies to reach consumers and B2B customers to gather insights for product development, marketing and customer service purposes, we find that twice as much value potential lies in using social tools to enhance communications, knowledge sharing, and collaboration within and across enterprises. According to MGI estimates, by fully implementing social technologies, companies have the opportunity to raise productivity of 'interaction workers' (high-skill knowledge workers including managers and professionals) by 20 to 25 percent.
By looking into how social technologies are being used today and how they are likely to evolve in the coming years in five sectors of the economy (four commercial sectors and the nonprofit sector) we have identified eight value-creating 'levers' that are used across the value chain, from product development through after-sale customer service. Overall, we estimate that between $900 billion and $1.3 trillion in value can be unlocked through the use of social technologies in the commercial sectors we examined.
This level of value creation could have transformative impact across sectors and economies. But capturing this value will be a challenge for enterprises—for organizational and cultural reasons, rather than technical ones. Since 'social' is a feature that can be added to virtually any IT-enabled human interaction, the technical challenge is relatively light. But the organizational challenges are significant. For social technologies to deliver their potential economic benefits, enterprises must be open to information sharing and create cultures of trust and cooperation. They must also deal with significant risks to confidentiality, intellectual property, and reputation. Policy makers are confronted with similar challenges to ensure that personal and property rights are protected in online communities. On balance, we believe that the benefits are so compelling that business leaders, policy makers, and individuals will find ways to meet these challenges.
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