Enterprise and business first, 2.0 and social second

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Summary : Enterprise 2.0 and social business when they become, as it often happens, their own goal, struggle to convince businesses of their significance. The reason is simple : beyond soft and qualitative benefits, the quantitative aspect is often overlook while, in the end, the enterprise has no other purpose than producing tangible wealth. This being the very basis of the concept of enterprise, there’s a need of reconsidering the social phenomenon regarding to this goal. Benefits of these new approaches are obvious in terms of value creation provided the changing nature of our economy that relies more and on people, knowledge and accumulation processes is taken into account. In this context, social and 2.0 speed up the processes that allow the accumulation of knowledge, relationship capital, trust and even reputation. This leads to a conclusion : pushing change in organizations which plan and value creation model does not take this factor into account won’t be more than a pleasant distraction. Organizations need the courage to bring the matter back to its real level where it has to be tackled : the value creation and business model one.

An increasing number of people are working through the world on transforming their organization into a social business or enterprise 2.0. In fact, this is partly wrong. In most cases it’s about making organizations adopt enterprise 2.0 or implement it where it’s possible (even in competition with the current organization), what is not the same thing. I’ve often said what the concept of adoption means to me, easy but fragile replacement for a real reflexion on sense and alignment, so I’ll change and mention this brilliant post from Oliver Marks where Oliver reminds us that “adoption is for kittens”.

Things happen this way for many reasons. Sometimes the people in charge are so passionate that 2.0 and social have become their one and only goal. The rest does not matter as long as many people use the wonderful tool that come with and form communities, regardless to the real business value of these communities. Sometimes the project is managed at a too low level of responsibility, sometimes with a poor sponsorship, so the person in charge does what he/she can with the available means, the provided support and the existing risk of doing too much. We all know what happens in such situations. If, in the first case, it’s only an excess of passion (and passion makes people blind), what causes the second (and may also apply to the first) is that there is no consciousness of the context in which people are operating. Enterprises are enterprises before being 2.0, business is business before being social. If organizations take no benefit from change in the context of reaching their goals, they have no reason to change.

If social and 2.0 forget the reason why enterprise exist, they become their own goal and are, at best, useless. The two above-mentioned cases are perfect evidences : when confined in a stooge role or added to the existing organization without being integrated in real business operations, social/2.0, even adopted, brings nothing. If the enterprise plan is not coherent, aligned with what social can bring, few progress will be made. Of course, many enterprise plans and discourse mention these points but it seldom means that the core of the organization is changing. Instead it’s often a nice making-up on things what don’t fundamentally change.

Don’t you find exasperating that too many discussions and event on the future of business are focused on how such or such technology spreads ? It seems that more and more people do. This revolution is presented as the remedy to all the things businesses suffer from in this early XXIth century. If I compare to this excellent post by Umair Haque, the problem is bigger and the cure needs a deep change of DNA. As a matter of fact most of the businesses that are mentioned in the most aren’t “2.0” in the traditional meaning. They integrated this paradigm in their corporate plan, their value creation model instead of just trying to make people change the way they work. In this context, social and 2.0 are an important part of tomorrow’s enterprises, but not the only one. But, when applied to good old plans without taking into account new realities at a higher level, they won’t help to avoid the placebo effect.

So…what’s the goal of an enterprise ?I wonder how many people think about this question before rolling out such a plan. Let’s go straight to the point : the goal of any enterprise is to make money. Knowing how this money will be used belongs to another discussion, knowing how is about ethics and value from a qualitative standpoint and the understanding of the world we live in from an organizational standpoint.

We may also argue that money is a means to something bigger. This bigger thing is the mission, not the goal. But, on a day to day basis, enterprises want and need to make money. If they don’t, they die. Period. Let me add that when one want to bring anything, service or product, to the people without paying attention to profitability, that’s an association or a fundation. And the question of funding still exists. In fact that’s the difference between the goal and the mission..

We have to admit that, among the means used to meet this goal, the better and the worse have been tried. The price for the ecosystem (people, partners, suppliers and even customers) has been high. As a matter of fact, organizations used to adopt an operatinf model that relies on profusion of resources (whatever their nature), specialization of tasks, repeatability of work and the substitutable nature of human capital (x can replace y and be as efficient without any adaptation). Consequence : the system optimize the exploitation of the resource until exhaustion. If the resource is natural if will regenerate by itself (at least…that what the assumption), when it was human it was replaced. Reaching (even surpassing) the objective was done though two levers : more resource and more intensity (when applied to human, it meant more pressure).

Today it’s obvious that some of these assumptions were wrong from the start and others became wrong over time. Work in the knowledge economy is about complex tasks, people are poorly substitutable because of the knowledge capital that is proper to each individual (what causes latency periods when someone has to be replaced) etc.. Intensity becomes obsolete (working better instead of working harder) and adding resources does not help to perform tasks that are about innovation and solving problems. Addition does not matter. Combination does.

First conclusion : “making money” is still the goal but the way to meet it has to change. Even if it means making some people mad, that I fully subscribe to Mintzberg’s point of view when he says that the last crisis was rather a management crisi. Let’s add a value creation models one.

But that’s not all. The need for creating an enterprise memory, to capitalize on the knowledge of those who are here to transmit it to those who will come is a vital constraint the “old” system used to overlook. Not only it takes time but it also implies to invest on human capital before getting any return. On the other hand, losing a resource before it become able to do its best while some money has been spent to learn and ramp-up costs a lot. In the lines bove I wrote that not only natural resources but also human ones were becoming rare. Don’t mistake ourselves : businesses are already facing a talent shortage. And the societal evolution that was on track for decades is speeding up : people are looking for trustful relationships at work (that are necessary for network collaboration too), for specific values…what leads to rethinking the relationship between enterprises and their resource, to think in terms of values, of reputation.

Knowledge organization relies on accumulation. They need to invest today on what will make them successful tomorrow, on what will make the resources productive. Contrary to a system where adding arms to produce instantaneously produce more…. As knowledge and its owners are becoming central into value creation processes and as human are the essential but slow factor of the system, immediate performance becomes a relative notion because depending on a long process of intangible capital accumulation : knowledge, relationship capital, values, reputation etc.. In this context, social and 2.0 speed this accumulation process up.

That leads to the following conclusion : my definition of the goal of an enterprise is wrong. Or partly wrong. The goal is to make money today and tomorrow. The “tomorrow”, the need for sustainability into the exploitation of resources,  management and value creation processes is key. It justifies the move from an old model to new organizational models where social and 2.0 will make sense. Corporate plans make these new kind of organization relevant. Not the reverse.

Any social or 2.0 project must take profitability into account. But instead of squaring circles, rather than setting social as a goal by itself, that’s the value creation model that has to be revamped. The rest will follow. But maybe it implies efforts organizations are not ready to make, questioning sacred cows no one dares to.

What justifies change is “tomorrow” and the need for improving the intangible capital accumulation process.

So I wrote “Enterprise and business first, 2.0 and social second”. This is not a matter of priority, only of reminding what serves what.