Why Enterprise 2.0 and Social Business Design might be of marginal utility to most of us

It seems that I’ve been pulled into the storm that Martijn{{1}} started{{2}}, and as I live somewhere between the Enterprise 2.0 / Social Business Design cheerleaders and detractors, my position of “E2.0 and Social Business Design is of marginal use for many businesses, but that could change” might need some clarification. The following is a cleaned up comment from elsewhere{{3}}.

[[1]]Martijn Linssen[[1]]
[[2]]Enterprise 2.0 prodigal parent[[2]]
[[3]]It’s quite clear what I think in the post.[[3]]

While Enterprise 2.0 and Social Business Design have proven to provide some benefits by improving communication, the main point of my last post{{3}} was to outline how the nature of many businesses that exist today will limit the utility of these tools. Until we change that we can expect E2.0 etc to provide a lot of benefit to a few companies, but little benefit to the majority.

[[3]]The myth of the inevitability of social organisations[[3]]

We can argue that “people are your most important asset”, but the elephant in the room here is that “the people” are not the asset that the business is built around. For many organisations the best result is to remove the people, such as with lights-out factories, or some of the new SaaS plays which are replacing people-driven BPO with automated self-service solutions.

All businesses today are built around some type of centrally owned asset. This might be a consultancy with it’s methodology (there to provide IP which can be valued on the balance sheet, and to ensure quality), a manufacturer with their factories, a logistics company with trucks and planes, and so on. The asset is easy to find: it’s on the balance sheet.

We hire people to support these assets. Need a button pressed every few hours: hire someone. The people we hire are important, as they can have a huge impact on the efficiency and quality of the outcome. However, they are not central to the business – it’s reason for being.

The nature of business today is to sweat these assets: leverage them as much as possible to make short term profits for the shareholders. (Some people think that this is the wrong attitude, but it is the attitude that regulation and policy encourage and allow.) Most businesses do this by reducing the number of people they need. Swap people for software and see quality go up, costs go down, and capacity go up.

The challenge is for E2.0 and Social Business Design is to succeed in this context.

Some organisations are build around communication with the customer – such as Zappos – and their asset is brand value. E2.0 etc play to this very nicely, and we’re seeing this special case succeeding. There’s some very nice case studies out there.

Other organisations just need someone to pull a lever. A happier and empowered employee is a more productive and effective employee – which is the driver behind human capital management, and one of the principles which underly LEAN – but the old rules still apply. The lever needs pulling, and we want to find the cheapest and most reliable way to do it. Maybe I can just use a rubber band which is replaced once a year? The improved communication E2.0 etc can bring might add some marginal value, but up-ending the business around social business principles makes no sense. This is the general case where we are yet to see E2.0 get broad traction.

At the end of my last post I posit that businesses will move away from the need to own a central asset. When this happens, then we can see broad adoption of E2.0 etc. However, and this is a big however, government regulation is built around the need for companies to have some sort of central asset. Look at regulations like Basel2 and SOX: having and maintaining this asset is mandatory. (The market is the beast that forces you to leverage it, as the government doesn’t care if you go bust). Changing this (as I’ve said before) I a big deal.

That said, we already have a limited general solution to using E2.0 etc. The dirty secret of E2.0 is that it’s being used the same way as most technologies to date: it’s being used to remove people from the equation. Rather than empowering the middle office, E2.0 is being used to eliminate the middle office, within the context of existing command and control structures. (If you want to see where this is going then read up on the British civil service in India, where each manager had one hundred direct reports.) The people left are the folk at the coal face and the thinkers in head office (or, as Seth Godin calls them, the architects).

So, I agree with naysayers that the business case for E2.0 etc “transforming business into a more social business” is not there today. I disagree in that I think it will happen, but we need to up-end regulation first.

10 thoughts on “Why Enterprise 2.0 and Social Business Design might be of marginal utility to most of us

  1. The challenge is for E2.0 and Social Business Design is to succeed in this context. ?

  2. Nice one Peter – now I’m really anxious to quantify this all the wayI agree that it is about removing people from the equation, but don’t necessarily see that as a bad thing – there is some dead wood here and there, and automation always is about less people (although not always keeping its promise #PaperlessOffice)In effect though, removing the mid office layer would really harm the C&C structure: http://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-the-office-according-to-the-office/I think complexity, predictability and stability of “an average enterprise task” (ahem) will determine how social a company needs or can allow itself to be: there’s a minimum but also a maximum there – not much use socialising the assembly lines or chain gangs …

  3. yes and no. you’re right about the misperception of people’s value and I’m really glad you’ve brought this subject out. The problem is this. its unbelievably hard to run a business at scale that does anything except one or two extremely well defined things. Flexibility and coordination are really tough, waste is huge. Trying to solve problems for people? R&D, Govt? its just very hard. Also – it really sucks to work in these orgs. e2.0 could/should be a way to make it easier to lead and to contribute, and generally not hate work-life. its also about crappy biz tech. new gen tech is more usable – and more social. its a trojan horse.

  4. Completely agree, but I’m not sure this is an E2.0 / Social Business Design thing.

    My experience is that people in large organisations deserve a lot more respect than they actually get. (IT is part of the problem in this sense, rather than part of the solution.) This is why I like LEAN and the other people driven approaches to solving some of the problems in the enterprise. (In the past I’ve written about seeing this in action at Toyota.)

    Just because the company doesn’t exist to give the people jobs (it’s there to make a profit) doesn’t mean that they can’t have some dignity.

    While I think the E2.0 can help in this context (which is the idea of limited utility), the cynic in me thinks that most companies will see a lot more benefit by focusing on the basics.

  5. e2.0 is a trojan horse for more usable enterprise technology, which is a great thing. it also gives people a little breathing room, and, if we’re doing anything at all right, we’ll start to see those companies that actually engage their workforce leave the others behind. way, way behind. we’ll see. but you’re right – that’s not a tech issue.

  6. yes yes…it’s incompatible with current industrial structures http://johntropea.tumblr.com/post/1404693911/km-is-incompatible-with-the-underlying-philosophy-of

    A company like Google or Apple is really different than a shoe lace manufacturer. Google and Apple are brands and require their employees to be on the pulse and to co-create with the demands of customers (quite different to the supply of cars “have any colour as long as it’s black)…now the customers are in charge…these guys live in a hyper competitive world that is non-linear, uncertain, etc…Google is doing the right thing allowing 20% time to helps others and innovate…but this would not seem as fit for a firm in a stable market who have 20 year history relationship with their clients, with hardly any new entrants.

    If you are in customer service speed and knowledge will build loyalty…keeping customers is important
    http://johntropea.tumblr.com/post/787814165/employees-do-not-have-not-enough-information-no

    Just look at Google’s book value compared to real value…they need to be more than things you can touch to survive in their market
    http://johntropea.tumblr.com/post/1418985523/balance-sheets-do-not-record-intangibles

    If you need creation and improvisation to handle contexts then assets won’t do this
    http://johntropea.tumblr.com/post/935731522/assets-and-employees-are-quite-different

    I like what you say about regulation and policy and reminds me of the denatured role of management
    http://johntropea.tumblr.com/post/1687934492/the-denatured-role-of-management

    Here’s some thinking
    http://johntropea.tumblr.com/post/1057112884/now-this-is-the-real-enterprise-2-0
    http://johntropea.tumblr.com/post/1244559516/the-first-wave-of-distributed-capitalism

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