Social enterprise: the rise or fall of corporations

Social enterprise has traditionally been more of a non-profit organization type of enterprise, but in the last 2 or 3 years, the term has taken a whole new dimension: A Social Enterprise can now refer to an enterprise that embarrasses Social Networks in every way. Internally this enterprise needs to foster collaboration, externally this enterprise needs to have a presence, monitor and interact with social media channels, and generally this enterprise needs to be much more open. All this has to happen in the context of a fundamentally mobile world.

I believe that we are in the middle of a grand scale transformation where large corporation are going to fall faster than ever because of social networks. New product come to market at lightning speed (Facebook, Groupon, iPad) taking over the worldwide market share in a matter of a few years, leaving established businesses in the dust. One of the most stiking example is Nokia.. After reading Stephens Elop’s burning platform memo (here) on how Nokia has found itself waking up with no better option than attempting to avoid drowning in about 2 years only, and Eric Schmidt admitting he “screwed up” with facebook (here), you can see how bad the situation is getting for those big companies. Granted Google is still pumping money in the machine like crazy and they are not necessarily in bad shape right now, but even then, as search is turning social local and mobile, Facebook is an very serious and dangerous competitor for Google already and in the years to come. Failing to recognize that social media changes everything is the guarantied failure of a company, big or small.

In my work, I now meet more and more of those big corporation and I can see how worried they are that they will not be equipped for this paradigm shift. There is no time to wait anymore, they have to adapt and we can see two attitudes:

The first (and very common one) is trying to work around social with minimal investment just as a way to say your are doing it.. For example, the enterprise sets up a facebook fan page, has a tweeter account, blogs a bit. It names a person or two to take care of this but doesn’t give much budget for it. This feels to me like the early days of the internet. Every company had a web site, but where was the presence? Where is the engagement toward a true change in the nature of business and of how your customers are interacting with you. The companies that did embrace the web at full speed are the one that benefited the most and have been successful. The raise of SaaS companies in the last 10 years versus on-premise offering is a demonstration of the shift. As the Internet grew, as people became more and more confident with putting data in the cloud, as technology enabled and supported this change, companies had to adapt to it. I wouldn’t go all the way to say that on-premise software is dead, but the next 10 years are going to be about the cloud and SaaS applications. Companies that do not understand this will fail.

The second is to recognize that social is where the world is going and make it a strategy for success. This has to come from the highest level of the organization and has to be nurtured internally as a cultural change. The change will come through more openness and transparency, more internal collaboration, and put processes and tools in place to manage the social channel presence. Having social agents dedicated to social conversation, having tools to monitor, sort, prioritize and drive business intelligence around social conversations. Collaboration is one of the major pillar of becoming a social enterprise. Collaboration is not just having meetings and sharing some files, it’s about open communication internally, open access to anyone, it’s about breaking silos in the enterprise, between teams, groups and the hierarchy. Being scared of social channel is a route for failure, isn’t offense the best defense??

Not a lot of companies can enable that change, the Microsoft of this world are entrenched in an old mindset, not necessarily because they don’t see the opportunity, but really because it’s in their DNA. Their business model, their technologies, their processes are not tailored to support the speed of change. How can a company adapt to change when they release major updates every 1 or 2 years? the iPad is just a bit over 1 year old!! ONE year!! have you seen the impact it had on the enterprise, on mobile workers? By the time people adopt a new product like the iPad, software vendors, and other company need to adapt their entire offering and almost business model. It is not with release cycles of a year or two that it is possible.

This situation also explains partly why startups are rising so fast. To be efficient in a world that’s moving so fast, companies have to be extremely agile, which is usually the strength of start-ups. This open tremendous opportunities for startups actually. One way to go at it is to try to find what what feature set of technology established companies need to adapt to the new social world. That would open for a good exit strategy.

The point here is really that I’m expecting some really established company to fail badly in the comping years, either taken by ultra-fast growing startups, or by companies that are agile enough to adapt fast to those changes. It is going to be interesting to live this change and see if the current frenzy of investment by the VC community will pay off. Who’s the next google? who’s the next facebook? who’s coming out with the next iPhone/iPad? I for one, love this uncertainty which is a bastion for innovation.