Here is a brief excerpt from an article co-authored by Michael Chui, Martin Dewhurst, and Lindsay Pollak for the McKinsey Quarterly in which they explain how, by following a few simple principles, leaders can realize the vast potential of social technologies to engage employees and transform organizations. To read the complete article, check out other resources, learn more about the firm, and register to receive email updates and direct access to free resources, please click here.

To check out the McKinsey Quarterly, please click here.

* * *

Why do so few companies capture the full value of social technologies? There’s no doubt organizations have begun to realize significant value from largely external uses of social. [Note: Roxane Divol, David Edelman, and Hugo Sarrazin, “Demystifying social media,” McKinsey Quarterly, April 2012.] Yet internal applications have barely begun to tap their full potential, even though about two-thirds of social’s estimated economic value stems from improved collaboration and communication within enterprises. [Note: See the full McKinsey Global Institute report, The social economy: Unlocking value and productivity through social technologies, July 2012.] Although more than 80 percent of executives say their companies deploy social technologies, few have figured out how to use them in ways that could have a large-scale, replicable, and measurable impact at an enterprise level. [Note: See “Evolution of the networked enterprise: McKinsey Global Survey results,” March 2013.] Just over a quarter of executives say that their companies have significantly incorporated social technologies into the day-to-day work flow by, for example, adapting internal structures, systems, processes, and practices to the greater connectedness they enable. Maximizing the odds of successful integration by coupling them with a robust organizational-change program is generally an afterthought, at best.

Companies are missing a potentially huge prize. The McKinsey Global Institute last year estimated that $900 billion to $1.3 trillion in annual value could be unlocked in just four sectors by products and services that enable social interactions in the digital realm. That’s not easy to do, but a large part of the problem is that many companies, viewing social technologies as yet another tool to be implemented rather than as an enabler of organizational transformation, fail to identify the specific organizational problems social technologies can solve.

These companies find that mind-sets are hard to shift, whether they’re trying to persuade employees to use social technologies rather than e-mail or to evolve into an environment where information sharing is standard. Often, leaders think social technologies can be left to IT or marketing, while others are simply intimidated by possible risks. And many are so focused on the technologies themselves that their ability to empower a dynamic, integrated business- and cultural-change program that drives productivity, innovation, and collaboration in core business processes is largely ignored.

So what should be done? We see four principles that should guide the implementation of social technologies.

[Here’s the first]

Add value, not complexity

Social technologies add the most value when they become central to the organization and complement (or, ideally, substitute for) existing processes. They shouldn’t be distracting “extras”—they should be embedded into the day- to-day work flow. Consider the experience of The MITRE Corporation, a not-for-profit organization that provides IT, research-and-development, and systems-engineering expertise to the US government. When the company identified an urgent need for employees to collaborate more easily with colleagues and external partners, it used open-source social-networking software to build and customize its own social platform, called Handshake. The platform is secure, invitation only, and integrated with MITRE’s collaboration- and knowledge-management tools, so staff can start using the tool and make it part of their daily work seamlessly.

* * *

Employees, customers, external stakeholders, and future talent are all embracing social technologies. While the true impact of building them into the culture, structure, and work flow of organizations remains to be seen, we know that companies adapting to a more open, sharing, and flexible world stand to create tremendous value. They could also be the pioneers of new, more nimble and entrepreneurial operating models that will change business as we know it. In that sense, understanding social media is now a critical element of every executive’s tool kit.

* * *

To read the complete article, please click here.

Michael Chui is a principal of the McKinsey Global Institute and is based in McKinsey’s San Francisco office; Martin Dewhurst is a director in the London office; and Lindsay Pollak is a consultant in the Silicon Valley office.

The authors wish to acknowledge the contributions of Roxane Divol and James Manyika to the development of this article.