Survey shows that companies using social media and web 2.0 applications are more successful

Recent research carried out by leading consultancy firm McKinsey shows that a new class of company is emerging — ones that uses collaborative Web 2.0 technologies such as YouTube and Facebook intensively to connect the internal efforts of employees and to extend the organisation’s reach to customers, partners, and suppliers. They call this new kind of company the networked enterprise.

Results from their analysis show that that those companies making good use of Web 2.0 applications are significantly improving their performance. In fact their data shows that fully networked enterprises are not only more likely to be market leaders or to be gaining market share but also use management practices that lead to margins higher than those of companies using the Web in more limited ways.

McKinsey claims the implications are far reaching: in many industries, new competitive battle lines may form between companies that use the Web in sophisticated ways and companies that feel uncomfortable with new Web-inspired management styles or simply can’t execute at a sufficiently high level.

Going forward – four key steps

McKinsey says that the “imperative” for business is clear: if you fall behind in creating these internal and external social networks it could well be a “critical mistake”. McKinsey suggest executives take four steps to push their organisations forward:

1. Integrate the use of web 2.0 into employees’ day-to-day work activities. This is the key success factor in all of its research.
2. Continue to drive adoption and usage. Benefits appear to be limited without a base level of adoption and usage. Those who reported the lowest levels of both also reported the lowest levels of benefits.
3. Break down the barriers to organisational change. Fully networked businesses appear to have more fluid information flows, deploy talent more flexibly to deal with problems, and allow employees lower in the corporate hierarchy to make decisions. Organizational collaboration is correlated with self-reported market share gains; distributed decision making and work, with increased self-reported profitability.
4. Apply Web 2.0 technologies to interactions with customers, business partners, and employees. External interactions are correlated with self-reported market share gains. So are internal organizational collaboration and flexibility, and the benefits appear to be multiplicative. Fully networked organizations can achieve the highest levels of self-reported benefits in all types of interactions.

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