Social Business, Knowledge Is Power: What's Your Strategy for Social Business?Social business has no value without purpose.

This is the third article in my mini-series exploring the social business phenomenon. I began by claiming that there is a problem with "social," because despite all the hype, there’s confusion over the meaning of the term "social business" and its many synonyms, no one can clearly explain how or why it works, and there’s little reliable evidence that it delivers any business value at all.

In the second article I argued for a redefinition of "social business." I claimed that a social business is an organization that explicitly and systematically harmonizes management approaches to people, knowledge, strategy and technology with the aim of delivering benefits associated with knowledge worker productivity and innovation.

Editor's Note: Symon will be presenting a free session at this year's SharePoint Saturday UK based on this series.

Since my last article, MIT Sloan Management Review and Deloitte have published the findings from their 2013 Social Business and Global Executive Study and Research Project. This is one of the few credible pieces of market research regarding social. The study finds that although increasing numbers of executives are recognizing the importance of social, the majority of companies are stuck in first gear and making little progress in becoming social businesses. Respondents to the survey cite three barriers holding companies back with regard to social; a lack of strategy, a lack of proven business case or strong value proposition, and too many competing priorities.

One of the key themes of my consulting work around SharePoint has been the principle that technology has no value without purpose and although I define social business as being wider than just technology, the adage still applies. Social business has no value without purpose. If you know what you are trying to do (strategy) then that will give you the means to measure success (business case or value proposition), and that in turn will help you assess investments in social against other priorities. The starting point is strategy and that’s the focus of this article.

In my ongoing research and consulting I’ve found that the fields of strategic management, organizational learning, knowledge management and social network analysis provide complimentary perspectives that help executives to understand and select between the basic strategic choices when it comes to social business.

Strategic Management

One of the fundamental questions in the field of strategic management research is how do organizations create and sustain competitive advantage? In seeking an answer to this question the strategic management literature developed a resource based view in which firms are perceived as bundles of idiosyncratic resources and capabilities. From this perspective, firms with resources that are valuable, rare, inimitable and non-substitutable can achieve sustainable competitive advantage.

With the emergence of the knowledge based economy in the 1990’s, some researchers argued that knowledge is the essence of the resource based view and that knowledge is the basic source of competitive advantage. If you’re thinking that this is all a bit dull, academic and that it has little to do with you then its worth noting that it’s this knowledge based view which has fueled the industry for knowledge management and related technologies such as SharePoint for the past 20 years.

A key criticism of the resource based view, and by extension the knowledge based view, has been the argument that the accumulation of valuable resources may not be sufficient to achieve sustainable competitive advantage, especially within high-velocity or rapidly changing markets. The argument is that in the dynamic global markets the winners are agile firms that combine rapid, flexible product innovation and the management capability to co-ordinate and redeploy internal and external competences. This ability to adapt and to achieve new forms of competitive advantage is referred to in the literature as Dynamic Capabilities.

Dynamic capabilities has become one the most vibrant research topics within the field of strategic management with hundreds of research publications over the past decade. One key area of discussion is the distinction between operational capabilities and dynamic capabilities. Operational capabilities can be thought of as the capabilities a firm needs to enable it to earn money today, and dynamic capabilities can be thought of as the ability to adapt to change and develop capabilities needed to earn money tomorrow.

Organizational Learning

In the field of organizational learning the discussion distinguishes between strategies of exploration and exploitation. Exploration is a strategy which focuses on innovation and the creation of new knowledge which is necessary for a firm's long term survival and which is closely associated with dynamic capabilities.

Exploitation focuses on leveraging existing knowledge for efficiency and effectiveness necessary for survival in the short term and is closely associated with operational capabilities. Some researchers have claimed that the mind-sets for exploratory and exploitative strategies are so different that it is all but impossible for an organization to effectively purpose both simultaneously.

Trying to simultaneously implement exploitative and exploratory strategies is referred to as organizational ambidexterity, and there are two broad approaches. First, structural based approaches align the goals of business units or functions with the most appropriate learning strategy. For example the R&D function may find an explorative strategy most closely aligned with its goals, whereas the sales and marketing function might be better served by an exploitative approach.

A second approach is contextual ambidexterity in which organizations build a set of systems or processes that enable and encourage individuals to make their own decisions about how to divide their time and effort between conflicting demands of exploration and exploitation.

(Are you thinking about SharePoint and Yammer yet?)

Knowledge Management

In the field of knowledge management there is a well-established duality between knowledge which is tacit in nature and that which is explicit. Tacit knowledge is based on learning and personal experience -- it is hard to transmit or share and is often associated with innovation. Explicit knowledge can be more easily written, taught and shared with others and is typically associated with efficiency and effectiveness.

The distinction between tacit and explicit dimensions of knowledge gives rise to two distinct knowledge management strategies. A Codification strategy focuses on connecting people with documents and content to achieve efficiency and effectiveness through the reuse of knowledge assets. A personalization strategy is focuses on connecting people with people to create innovative solutions.

Research emphasizes the importance of aligning the choice of knowledge management strategy with the organization's competitive strategy. Codification is particularly well suited to organizations where the business model is based on repeatable processes and solutions, and on high volume but low margin economics. Personalization is particularly well suited to businesses that deliver bespoke or customized solutions and services to clients and is based on low volume but high margin economics.

In very simplistic terms if your looking to follow a codification strategy then we might want to start by looking at SharePoint’s content management and search features, alternatively if you’re following a personalization strategy then SharePoint’s social features or Yammer are more likely to be of use.

Social Networking

There’s an obvious link between the concept of social business and research into social networks within organizations. One of the leading figures in social network research is Rob Cross.

In an article published in the Harvard Business Review in 2005 he noted that although executives are often quick to introduce new technologies to promote collaboration, most admit that they don’t know if such investments actually work. He advises that rather than think about collaboration from a "more is better" perspective executives should take a clear eyed and strategic view and determine exactly what configuration of connectivity will best help them achieve their goals.

The research identifies three types or patterns of social network. Customized response networks exist in situations where problems and solutions are ambiguous and the network is characterized by both dense and redundant internal and external connections. Examples include new product development and investment banks.  

Modular response networks are best for solving problems where components of the solution are known, but the sequence is not and are characterized by network connections that allow reconfiguration to deliver the required expertise. Examples include surgical teams and law firms.

Routine response networks are found in environments where work is standardized and problems and solutions are well defined and predictable such as call centers and insurance claims processing departments.

There are some similarities and overlap between the research on knowledge management strategies and social networks. The difference is that the knowledge management perspective focuses on the nature and the type of knowledge, whereas the social network perspective focuses on the network through which the knowledge is passed.

So What?

Operational and Dynamic Capabilities, Exploitation and Exploration, Codification and Personalization, and routine, modular and customized network configurations are broadly analogous strategic concepts. In the simplest terms our strategic choices when considering social business are productivity for the short term, versus innovation for the long term.

The problem is that most of the industry literature -- or in some cases propaganda -- would have us believe that all we have to do is deploy social technologies and magically we will see improvements in both productivity and innovation but the research tells a different story.

First it shows that simultaneously aiming for productivity gains and innovation is extremely difficult. Second it shows that the choice between productivity and innovation as strategic goals can be made at a number of different levels; the nature of the market and external environment, the competitive strategy of the organization, the goals and needs of business units or functions, the needs of teams, or individual knowledge workers. Third it shows that it's not just about the technology. The technology needs to be aligned with the competitive strategy, the type of work, and the nature and use of knowledge.

These approaches provide interesting food for thought when considering a SharePoint or Yammer deployment. One size doesn’t fit all strategic needs.

Next time…

In the next gripping installment of Knowledge Is Power I’ll begin to explore the business case and value proposition for social business by examining the argument that social business improves productivity.

Title image courtesy of pupunkkop (Shutterstock)

Editor's Note: Check out Symon's other series, The Art of SharePoint Success