1
N O V E M B E R 2 0 11
How social technologies are
extending the organization
Our fifth annual survey on the way organizations use social
tools and technologies finds that they continue to seep into
many organizations, transforming business processes and
raising performance.
Jacques Bughin, Angela Hung Byers, and Michael Chui
m c k i n s e y g l o b a l i n s t i t u t e
2
Companies are improving their mastery of social technologies, using them to enhance
operations and exploit new market opportunities—key findings of our fifth annual survey
on these tools and technologies, in which we asked more than 4,200 global executives how
organizations deploy them and the benefits they confer.1 When adopted at scale across
an emerging type of networked enterprise and integrated into the work processes of
employees, social technologies can boost a company’s financial performance and market
share, respondents say, confirming last year’s survey results.
But this is a very dynamic environment, where the gains from using social technologies
sometimes do not persist, perhaps because it takes so much effort to achieve them at
scale. Some companies, respondents indicate, reaped fewer benefits and thus became less
networked, while a smaller percentage learned how to deploy these technologies to become
even more networked. Executives say that their companies are using them to increase
their agility and to manage organizational complexity. Many believe that if organizational
barriers to the use of social technologies diminish, they could form the core of entirely new
business processes that may radically improve performance.
Usage at scale and continued benefits
Social technologies as a group have reached critical scale at the organizations represented
in our survey. Seventy-two percent of the respondents report that their companies are
deploying at least one technology, and more than 40 percent say that social networking
and blogs are now in use (Exhibit 1). These technologies are being deployed across
sectors, at the high level of 86 percent of the respondents’ companies in high tech and
telecommunications, but at 62 percent of companies even in the energy industry (Exhibit
2). Levels of reported benefits not only remain high when respondents’ organizations use
social tools for internal purposes but have also increased among those that use them for
communicating with customers or for integration with partners and suppliers (Exhibit 3).
The performance edge of networked enterprises
Last year, we identified a small group of respondents who indicated that their companies
had experienced superior performance from the use of social technologies across key
stakeholder groups. We repeated the analysis this year, looking at the average level of
improvements in business benefits that executives reported. Four clusters emerge from our
analysis. Executives at internally networked organizations note the highest improvement
in benefits from interactions with employees; those at externally networked organizations,
from interactions with customers, partners, and suppliers. Executives at fully networked
1 The online survey included 4,261 respondents across sectors, geographies, company sizes, tenures, and functional specialties.
As with surveys in past years (when we referred to social technologies as “Web 2.0”) the survey covers the adoption and usage
of technologies, their benefits, and corporate performance. This year, we also asked about how organizations are using social
technologies and the types and magnitude of the organizational and process changes that could result.
3
Exhibit 2
% of respondents (n = 4,261)
Web 2011
MoBT social tech
Exhibit 2 of 9
Exhibit title: Adoption of social technologies across industries
High tech, telecommunications
Business, legal, professional
services
Public administration
Pharmaceuticals
Retailing
Transportation
Health care, social services
Manufacturing
Financial services
Energy
86
77
74
74
69
69
67
64
64
62
Companies using at least 1 social-technology tool
Exhibit 1
% of respondents1 whose companies use each technology
1 Respondents who answered “don’t know” are not shown.
2Microblogging was not offered as a technology in the 2008 survey.
Social tools and technologies currently used by companies
Web 2011
MoBT Social tech
Exhibit 1 of 9
Exhibit title: Rising adoption rates
Social
networking
Blogs
50
40
28
23
41
38
32
29
Microblogging
23
19
12
N/A2
2011, n = 4,261
2010, n = 3,249
2009, n = 1,695
2008, n = 1,988
Video sharing
38
33
31
27
Adoption of social technologies across industries
Rising adoption rates
4
organizations report greater benefits from both internal and external interactions. In the
fourth and by far the largest group, developing organizations, respondents report lower-
than-average improvements across all interactions at their organizations.2
As we found last year, the number of fully networked organizations is small. But the
percentage of externally networked organizations is higher and that of internally
networked ones lower (Exhibit 4),3 reflecting the fact that the gains from the use of social
technologies are not static (see discussion below). We call the companies in the fully and
externally networked groups extended enterprises, since their use of social technologies in
customer and partner outreach blurs the boundaries of the organization.
Exhibit 3
% of respondents reporting at least 1 measurable benefit at their companies
Internal purposes1 Customer purposes2 Partners, suppliers, and
external-expert purposes3
Web 2011
MoBT social tech
Exhibit 3 of 9
Exhibit title: Benefits remain consistent over time
1 In 2011, n = 1,949; in 2010, n = 1,598; in 2009, n = 1,008.
2In 2011, n = 2,227; in 2010, n = 1,708; in 2009, n = 956.
3In 2011, n = 1,142; in 2010, n = 1,008; in 2009, n = 686.
Increasing
speed to
access
knowledge
Increasing
speed to
access internal
experts
Increasing
speed to
access external
experts
Reducing
communication
costs
74
77
69
58
60
56
51
52
44
Increasing
effectiveness
of marketing
Reducing
marketing
costs
Increasing
customer
satisfaction
69
63
54
47
50
44
43
45
39
Increasing
speed to
access
knowledge
Reducing
communication
costs
65
57
53
61
53
50
50
40
43
2011
2010
2009
Top 3 measurable benefits of technology adoption, by use
2 As we did last year, we sorted the respondents into four clusters based on the average mean improvement reported across the
different benefits when Web 2.0 is used in interacting with employees, customers, and external partners or any combination
thereof. Fully networked enterprises are defined as those with an average improvement greater than 10 percent when Web
2.0 is used to interact with employees, customers, and external partners. Externally networked enterprises are those with
a greater than 10 percent average improvement when Web 2.0 is used to interact with customers and external partners.
Internally networked enterprises are those with an average improvement greater than 10 percent when Web 2.0 is used to
interact with employees. The remainder of respondents work for what we classify as developing enterprises.
3 See Jacques Bughin and Michael Chui, “The rise of the networked enterprise: Web 2.0 finds its payday,” mckinseyquarterly
.com, December 2010.
Benefits remain consistent over time
5
We found statistically significant correlations between self-reported corporate-
performance metrics and certain business processes that networked enterprises use
(Exhibit 5). The market share gains respondents report are correlated with two such
processes. First, these organizations use social tools to scan external environments.
Second, they use them to match employees to tasks: internal wikis and social networks
help project leaders to identify employees with the most appropriate skills and to assign
these employees to the projects for which they are best suited.
Another key performance measure, self-reported operating-margin improvements,
correlated positively with the reported percentage of employees whose use of social
technologies was integrated into their day-to-day work. Among the companies of
respondents who took the survey in previous years, these improvements also correlated
positively with gains in the reported percentage of employees whose work is highly
integrated with social media. Market share leadership in an industry, the final self-
reported performance measure, correlated positively with the integration of social tools
in employees’ day-to-day work, as well. Consistent with last year’s analysis, we found that
market leadership correlates negatively with fully networked and externally networked
organizations. While market leaders may use social technologies within the organization,
they might be less inclined than market challengers to push for a full range of benefits.
Exhibit 4
Developing,
n = 2,413
Internally
networked,
n = 224
Externally
networked,
n = 365
Fully
networked,
n = 101
Web 2011
MoBT social tech
Exhibit 4 of 9
Exhibit title: Tracking the four types of organizations
Improvement
in benefits,
mean %
Integration,
% of
respondents
Extent of
social-
technology
usage, % of
respondents
Very or
extremely
integrated into
employees’
day-to-day work
18 49 45 80
% of employees 39 37 43 48
% of partners 40 48 55 64
% of customers 26 37 54 51
Internal benefits 2 18 8 26
Customer benefits 1 3 13 21
Partner benefits 1 2 11 24
Organizational type, based on social-technology benefits
Tracking the four types of organizations
6
Networked organizations: Not a steady state
We also analyzed the responses of executives who participated in both the 2010 and 2011
surveys for changes in our defined enterprise clusters. According to these responses, a
surprising number of organizations made the transition from one type of enterprise
to another. Roughly half of the internally and externally networked enterprises slid
back into the category of developing organizations; that is, they did not maintain the
benefits of using social technologies that they had achieved earlier. Less than 15 percent
Exhibit 5
Web 2011
MoBT Social tech
Exhibit 5 of 9
Exhibit title: Correlations with corporate performance
P-value (less than
0.05 = statistically
significant)
1 Reflects repeat respondents only.
Correlation
coefficient (higher =
greater correlation)
0.263 0.007
0.130 0.016
0.422 0.002
0.254 0.001
0.007 0
0.276 0.007
–0.325
–0.014
–0.325
0.035
Processes that significantly
correlate with self-reported
corporate-performance metrics
1. Market share gains Using social technologies to scan
external environment
2. Operating margin
compared with those
of competitors
Level of social-technology integration
into day-to-day work
Using social technologies to match
employees to tasks
Positive change in level of social-technology
integration into day-to-day work (2010–11)1
Share of employees using intranet
to conduct transactions
Positive change in level of social-technology
integration into day-to-day work (2010–11)1
Using social technologies to assess
employee performance
–0.616
0.001–0.444
0.019
0.004 0.044
0
3. Market leadership—
ie, first in industry
share
Fully networked
Externally networked
Share of sales done online
% of employees using social technologies
0.135 0.005Level of social-technology integration into
day-to-day work
0.003 0.021Share of employees using intranet
to conduct transactions
Correlations with corporate performance
7
of the companies in any given category moved up to the next tier—in other words, from
a developing to a networked enterprise or from an internally or externally networked
enterprise to a fully networked one (Exhibit 6). It appears that it is easier to lose the
benefits of social technologies than to become a more networked enterprise, which
suggests that significant effort is required to achieve gains at scale. We also found initial
indications that if the percentage of employees who integrated social technologies into
their day-to-day work declined, their companies were more likely to backslide.
Changing processes
We asked respondents about current and future uses of social technologies for a range of
business processes and found that the greatest number say their companies use these tools
to scan the external environment for new ideas. Respondents also report that different
technologies are better suited to specific types of business processes, as the accompanying
heat map shows (Exhibit 7). Social networking and blogs, in particular, are used most
heavily in externally focused processes that gather competitive intelligence and support
marketing efforts.
Exhibit 6
% of repeat respondents1
Organizational
type in 2010
Web 2011
MoBT Social tech
Exhibit 6 of 9
Exhibit title: Shifting network classifications
Shifted to new organizational type, %Remained
the same, %
2011
Developing Internally
networked
Fully
networked
Externally
networked
Organizational type, based on social-technology benefits
Fully networked,
n = 29 1417 3535
Externally focused,
n = 24 438 1346
Internally focused,
n = 94 18 52 19 11
1 Figures may not sum to 100%, because of rounding.
Developing,
n = 500 83 25 10
2011
2010
Distribution of organizational types,
n = 647
774 13 5
1577 4 4
N/A
N/A
N/A
N/A
Shifting network classifications
8
Exhibit 7
% of respondents1 whose companies use at least 1 social
technology in given process
How companies are using social technologies
Total, %,
n = 3,103
Blogs,
n = 1,322
Micro-
blogging,
n = 654
Podcasts,
n = 502
Social
networking,
n = 1,728
Video
sharing,
n = 769
Wikis,
n = 809
RSS,
n = 642
Web 2011
MoBT Social tech
Exhibit 7 of 9
Exhibit title: Supporting a variety of processes
Determining
compensation 20 6 4 2 1 2 1 1
Allocating
resources 30 10 5 4 3 4 2 2
Assessing
employee
performance
26 7 4 3 2 3 1 2
Matching
employees to
tasks
29 11 4 4 2 5 2 3
Finding new
ideas 73 36 29 11 10 12 7 13
Scanning
external
environment
75 40 29 11 14 9 8 13
Managing
projects 55 19 12 11 5 17 4 5
Developing
strategic plan
43 16 11 8 4 8 4 5
20–40%
10–20%
5–10%
<5%
1 Respondents who answered “other” are not shown; <10% of respondents use tagging, rating, mash-ups, and prediction markets
for any of the tasks and are not shown.
Respondents expect social technologies to modify many of their organizations’ current
processes. In addition, many believe that entirely new processes could arise if barriers to
use—cultural obstacles, for example—fall (Exhibit 8). The respondents affiliated with fully
networked organizations are the likeliest to believe that greater process change will occur
in their own organizations. In larger numbers than respondents in other clusters, they
think that social technologies will lead their companies to adopt entirely new processes
under current conditions and to do so even more aggressively if all constraints were
removed. This optimistic view may reflect the fact that these respondents are seeing the
greatest level of benefits across the board.
Supporting a variety of processes
9
Exhibit 8
% of respondents,1 n = 4,261
At respondents’ companies
Web 2011
MoBT social tech
Exhibit 8 of 9
Exhibit title: A mix of old and new
1 Respondents who answered “don’t know” are not shown.
2
3
265 4 10 56Determining compensation 3718 10 12 24
327 7 11 44Assessing employee performance 3824 13 8 19
358 7 11 39Matching employees to tasks 3727 13 7 15
368 7 9 38Allocating resources 4023 14 8 15
429 9 8 31Developing a strategic plan 4027 15 6 11
4818 17 6 13Finding new ideas 3243 17 6
4620 17 4 13Scanning external environment 3044 17 6
4510 11 8 25 3930 17 4 10Managing projects
At an organization with no technology-
related constraints
Entirely new
process
Mix between more
new processes and
fewer traditional
processes
Equal mix of
new and
traditional
processes
Mix between more
traditional processes
and fewer new
processes
No change
in process
Extent to which social technologies can change organizational processes
Peering ahead three to five years, many respondents expect still more profound
organizational changes (Exhibit 9). They say that with fewer constraints on social
technologies at their companies, boundaries among employees, vendors, and customers
will blur; that more employee teams will be able to organize themselves; and that data-
driven decision making will rise in importance.
Looking ahead
• Our research shows that respondents affiliated with fully networked organizations
say that they continue to realize competitive gains and performance improvements.
Senior executives should think strategically about how social technologies can support
business processes by helping organizations to navigate the external environment and
to forge stronger links with customers and vendors. Integrating social technologies into
the workflow and using them to optimize internal processes will, these results suggest,
provide additional competitive benefits.
A mix of old and new
10
• Don’t rest on your laurels: competition will increase as the adoption of social tools and
technologies continues to rise and as progressive companies use them to improve their
processes. Indeed, many companies we categorized as networked organizations last year
slipped to a lower rung this year as the benefits their executives reported fell. Integrating
Web technologies into the daily workflow, our results suggest, is the most effective way
to maintain competitive position or become more networked.
• Companies should prepare for more substantial disruptions. Since many executives
believe that significant changes will occur as (or if) constraints on social tools and
technologies are lifted, companies that can create change themselves—instead of
reacting to it—are likely to benefit the most.
The authors would like to thank Angela Hung Byers for her contribution to the development of this article.
Jacques Bughin is a director in the Brussels office; Michael Chui is a senior fellow of the McKinsey Global Institute and
is based in the San Francisco office. Copyright © 2011 McKinsey & Company. All rights reserved.
Related thinking
“The rise of the networked
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its payday”
“Clouds, big data, and
smart assets: Ten tech-
enabled business trends to
watch”
“Are you ready for the era
of ‘big data’?”
“Measuring the Net’s
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Exhibit 9
% of respondents,1 n = 4,261
Web 2011
MoBT social tech
Exhibit 9 of 9
Exhibit title: A blurring of boundaries
The boundaries between employees,
vendors, and customers will blur
The organization’s formal
hierarchy will become much flatter
or disappear altogether
Internal markets or other voting
mechanisms will be used to allocate
resources (eg, talent, capital, ideas)
Strategic priorities will be set from
the bottom up
Data used for decision making
will mostly be collected through
experiments
Decisions will be based primarily
on the examination of data rather than
reliance on opinion and experience
Financial transparency will
increase dramatically
Teams will self-organize
35
32
32
27
20
19
18
Individual performance will be
evaluated by peers rather than
by managers
Large companies and/or business
units will disaggregate
Compensation decisions will
be made by peers rather than
by managers
Employees will play a much
greater role in selecting leaders
Employees will have much more
discretion in choosing which tasks
to work on
14
12
10
9
3
17
1 Respondents who answered “none of the above” or “don’t know” are not shown.
Likeliest organizational changes in next 3–5 years, without const