Here is a brief excerpt from an article co-authored by Roland Deiser and Sylvain Newton for The McKinsey Quarterly, published by McKinsey & Company, in which they explain how and why organizational social-media literacy is fast becoming a source of competitive advantage. Learn, through the lens of executives at General Electric, how you and your leaders can keep up. To read the complete article, check out other resources, obtain information about the firm and a subscription to The Quarterly, and sign up for email alerts, please click here.

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Few domains in business and society have been untouched by the emerging social-media revolution—one that is not even a decade old. Many organizations have been responding to that new reality, realizing the power and the potential of this technology for corporate life: wikis enable more efficient virtual collaboration in cross-functional projects; internal blogs, discussion boards, and YouTube channels encourage global conversations and knowledge sharing; sophisticated viral media campaigns engage customers and create brand loyalty; next-generation products are codeveloped in open-innovation processes; and corporate leaders work on shaping their enterprise 2.0 strategy.

This radical change has created a dilemma for senior executives: while the potential of social media seems immense, the inherent risks create uncertainty and unease. By nature unbridled, these new communications media can let internal and privileged information suddenly go public virally. What’s more, there’s a mismatch between the logic of participatory media and the still-reigning 20th-century model of management and organizations, with its emphasis on linear processes and control. Social media encourages horizontal collaboration and unscripted conversations that travel in random paths across management hierarchies. It thereby short-circuits established power dynamics and traditional lines of communication.

We believe that capitalizing on the transformational power of social media while mitigating its risks calls for a new type of leader. The dynamics of social media amplify the need for qualities that have long been a staple of effective leadership, such as strategic creativity, authentic communication, and the ability to deal with a corporation’s social and political dynamics and to design an agile and responsive organization.

Social media also adds new dimensions to these traits. For example, it requires the ability to create compelling, engaging multimedia content. Leaders need to excel at cocreation and collaboration—the currencies of the social-media world. Executives must understand the nature of different social-media tools and the unruly forces they can unleash.

Equally important, there’s an organizational dimension: leaders must cultivate a new, technologically linked social infrastructure that by design promotes constant interaction across physical and geographical boundaries, as well as self-organized discourse and exchange.

We call this interplay of leadership skills and related organizational-design principles organizational media literacy, which we define along six dimensions that are interdependent and feed on one another.

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Please click here to check out an Exhibit, “The six dimensions of social-mediate-literate leadership (Adviser, Architect, Analyst at the Strategic/organizational level and Producer, Distributor, and Recipient at the Personal level) and read the completer article.

Roland Deiser is a senior fellow at the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University and author of Designing the Smart Organization: How Breakthrough Corporate Learning Initiatives Drive Strategic Change and Innovation (John Wiley & Sons, October 2009). Sylvain Newton is the GE Crotonville Leadership Senior Leader for Business and Regions.