IIMB’s doctoral programme research initiatives get a fillip from Wipro 01-18

Shyam's views on this project

We often ask as to why Indian Universities do not rank high in global rankings while China has some. Even a small country like Singapore has world class Universities.

This was explained by the former HRD minister and a scholar Dr. Shashi Tharoor. He says the main criteria for ranking of Universities are the amount of Research they do and citations they receive in International Papers. These two factors carry 60 weightage in the rankings.

Our Universities and the Educational... Institutions lack the funds to spend for research. They also seem to be very lethargic in approaching the corporates and multinationals for funding or collaborations in their research programmes.

in this background, it is really heartening to know the fact that Wipro has come forward to fund the research programme in sustainability at IIM Bengaluru.

IIM Bengaluru's Fellow Programme in Management (FPM) will now be funded by Wipro for research into Sustainability.

IIMB’s doctoral programme research initiatives get a fillip from Wipro

Sustainability Fellowship and Sustainability Grant from the IT major to boost FPM students’ research on sustainability.

BENGALURU, JANUARY 19, 2016: The Indian Institute of Management Bangalore (IIMB), in its efforts to reach greater heights in the domain of education and research, has entered into a partnership with Wipro Limited (NYSE:WIT, BSE: 507685, NSE: WIPRO), a leading global information technology, consulting and business process services company, headquartered in Bangalore.

Wipro will partner and support the Wipro Sustainability Fellowship and the Wipro Sustainability Grant, for doctoral students of IIM Bangalore. This is as part of their overarching charter on sustainability in education – the Wipro-earthian program. The Fellowship and Grant will commence during the academic year 2015-16.

Mr. P.S. Narayan, Vice President and Head-Sustainability, Wipro Limited, said: “We are delighted to partner with IIMB in a joint effort to foster doctoral research on areas that lie at the intersection of business and sustainability. The business sector has a critical role to play in facing the manifold challenges of sustainability. Therefore, embedding sustainability in management education has become a critical imperative.”

The Fellow Programme in Management (FPM) is the globally ranked doctoral programme of IIMB, which is committed to training individuals who will excel in their area of research and publish high quality work. Professor Shashidhar Murthy, IIMB’s FPM Chairperson, said: “We at IIMB are glad that Wipro values our students and the nurturing provided by our faculty. We thank Wipro for their generosity. This will provide an impetus to students’ research in the area of Sustainability.”

The FPM at IIMB is a premier source of rigorous and inter-disciplinary research in all areas of business management and public policy, including Corporate Strategy & Policy, Economics & Social Sciences, Finance & Control, Marketing, Organisational Behaviour & Human Resource Management, Production & Operations Management, Quantitative Methods & Information Systems, and Public Policy.

The Wipro Sustainability Fellowship & the Wipro Sustainability Grant each allows up to two FPM students to be funded, to support research interests that fall in the broad area of sustainability.

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Do today’s philanthropists hurt more than they help? 10-11

Do today’s philanthropists hurt more than they help?

As philanthropy enters a second golden age, real social change is getting lost in the hype of market-based giving.

In one of his short stories, “Counterfeit Money,” Charles Baudelaire describes a fictional encounter between two friends who come across a beggar in the street.

In this short piece, the narrator and friend offer the beggar spare change, but the friend offers a much larger coin. The narrator commends him for his generosity. The friend accepts the compliment and then adds, once they’re out of earshot of the beggar, “It was a counterfeit coin.”

The narrator is astounded. Not only has his friend duped the beggar on purpose, what’s worse, he feels self-congratulatory for his gift. His satisfaction lies in the fact that the beggar doesn’t realize that he has been duped. The narrator sees that his friend’s “aim had been to do a good deed while at the same time making a good deal; to earn forty cents and the heart of God; to win paradise economically; in short to pick up gratis the certificate of a charitable man.”

Baudelaire’s story was written in the latter half of the 19th century, a time when industrialists such as Andrew Carnegie and John D. Rockefeller Sr. began channelling their vast fortunes into some of the greatest acts of philanthropy ever known. From Carnegie’s spending on public libraries to Rockefeller’s investment in biomedical advances, their giving helped to shift charity from the dispensing of alms in a largely unsystematic manner to a business in itself, overseen by paid philanthropic advisors.

Many did not feel grateful for the robber barons’ generosity, however. In his essay, “The Soul of Man Under Socialism,” Oscar Wilde berated the tendency of benefactors to use their charity as a bulwark against redistributive demands.

“The best among the poor,” Wilde wrote, “are never grateful. They are ungrateful, discontented, disobedient, and rebellious. They are quite right to be so … Why should they be grateful for the crumbs that fall from the rich man’s table? They should be seated at the board, and are beginning to know it.”

As philanthropy enters a second golden period, with the gifts from benefactors such as Bill Gates and Warren Buffett rivaling those offered toward the end of the gilded age, sceptics are starting to ask: Are Wilde’s and Baudelaire’s concerns still relevant? Are today’s philanthropists knowingly dispensing “false coins?” Are they trying to “pick up gratis the certificate of a charitable man?”

In most cases, the answer is a firm no. Charity is dispensed in good faith, with empathy toward close and distant strangers. And yet, at the same time, a new trend is growing: philanthrocapitalism, a more muscular philanthropy that seeks to combine profits with poverty alleviation. The effort to do a good deed while at the same time making a good deal is the driving impetus behind the new philanthropy. Another question Baudelaire raised still lingers: Who benefits more from charitable acts, the giver or the receiver?

At the forefront of the new philanthropy is the effective altruism movement, something upheld as radically different from earlier philanthropic approaches through a purportedly novel emphasis on measuring the results of giving. A pioneer in the movement is Peter Singer, the controversial bioethicist who has praised Buffett and Gates for being “the most effective altruists in history.”

His praise rests on the magnitude of their giving rather than evidence of their effectiveness. It’s true that in dollar terms, their generosity is jaw-dropping. Joel Fleishman points out in The Foundation that Buffett’s 2006 announcement of a gift of $31 billion to the Gates Foundation represented, in 2006 dollars, more than Rockefeller Sr. and Carnegie gave away combined.

But as a proportion of the overall U.S. Gross Domestic Product, the size of today’s foundations pales next to their predecessors. The Ford Foundation’s endowment in the early 1960s represented more than double the share of U.S. GDP in comparison to the Gates Foundation 50 years later. Ever since the 1970s, overall charitable giving in the U.S. “as a share of GDP has rarely strayed far from 2 percent,”Suzanne Perry points out in the Chronicle of Philanthropy, “despite the huge growth in the number of charities and fundraisers and periodic crusades to encourage greater giving.”

Corporations have become far stingier. Mark Kramer and Michael Porter pointed out in the early 2000s that corporate philanthropy as a proportion of corporate profits dropped since the 1980s. Since then it’s sunk even further, from 2.1% of pretax profits in the mid-1980s to 0.8% in 2013.

Singer’s presumption that Buffett and Gates are any more effective than earlier philanthropists isn’t backed by data. Some of the Gates Foundation’s work has led to measurable gains. Vaccination rates are rising; global child mortality has fallen—the foundation’s work in global health has contributed to these gains. But in comparison to government donors, Gates Foundation grants are a small drop in the global health landscape: The U.S. government has committed over $65 billion to global HIV/AIDs programs alone. That’s double the amount of overall giving by the Gates Foundation toward U.S. education, global health, and global agriculture since its inception.

To date, there has been far more hype than hard evidence about effective altruism’s achievements; its progress often seems to be measured and underpinned by self-sustaining feedback loops. Donors privilege what critics see as low-hanging fruit: aid projects where measuring the effect is relatively easy to do.

We hear a lot about the positive effects of different programs, such as the benefits of deworming efforts worldwide that were once thought to have contributed dramatically to education attainment in developing nations, until a recent review from independent health research group Cochrane cast doubt on that link. Far less attention is paid to counterfactuals, such as the cost to welfare programs when tax revenue is lost as a result of philanthropists receiving lucrative tax exemptions for pet projects.

Today’s philanthropy enthusiasts are never short on hyperbole. An organizer of a recent effective altruism conference at Google’s Quad campus in Mountain View reportedly averred that “effective altruism could be the last social movement we ever need.” But it’s clear that rises in global giving over the past 10 years have not made a dent in reducing economic inequality in rich nations such as the United States or Britain.

Individual philanthropic foundations have grown at a fast clip in the U.S. over the past 15 years: In that span, the number of individual foundations has doubled from about 40,000 to over 85,000. But this surge hasn’t helped alleviate extreme poverty. A 2012 report from the National Poverty Center at the University of Michigan points out that within the U.S., “the prevalence of extreme poverty rose sharply between 1996 and 2011.”

One of the biggest ironies facing 19th-century philanthropy was the question of whether growing charity simply exacerbated economic inequality by thwarting demands for better wages and the right to unionize.

Carnegie published his first “Wealth” essay, in which he urged the rich to share their spoils, just a few years before the Homestead battle of 1892, one of the bloodiest labor standoffs in U.S. history, where he brutally stamped out burgeoning union efforts even while liberally dispensing charity to his workers. “Paradoxically,” David Nasaw, Carnegie’s biographer, has pointed out, “Carnegie … became, if anything, more ruthless in pursuit of profits once he had determined that those profits would be distributed during his lifetime.”

“In remonstrating that only the millionaire could be trusted to dispense his millions, and that whatever that millionaire thought ‘best’ was best,” Nasaw adds, “Carnegie was promulgating a profoundly antidemocratic gospel, almost feudal in its paternalism.”

Effective altruists insist that private charity is the best means for improving livelihoods. ‘Today’s philanthrocapitalists see a world full of big problems that they, and perhaps only they, can and must put right,’ Matthew Bishop and Michael Green write inPhilanthrocapitalism: How Giving Can Save the World, a book that’s become something of a bible for the new philanthropists.

In contrast to claims of novelty, the results-oriented approach of today’s donors is little different than Carnegie or Rockefeller, who were both outspoken about the need to give away their money in an efficient and effective manner.

And just as in Carnegie’s day, philanthropy is often upheld as justification for gross profiteering.

“I donated a total of $5,000,000 to various causes recently. Looking forward to telling you all about it,” Martin Shkreli, the CEO of Turing Pharmaceuticals who was vilified for raising the price of Daraprim by 5,000%, tweeted in mid-September.

This is a prime example of philanthrocapitalism in action: the use of philanthropy to thwart attention to business practices that hamper access to life-saving medicines. And much like in Carnegie’s time, many aren’t buying it.

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Conscious Capitalism is not CSR 07-11

Conscious Capitalism is not CSR

Many people think that Conscious Capitalism and Corporate Social Responsibility (CSR) are very much branches of the same tree. On first glance, many of the activities undertaken by conscious businesses and corporations adopting CSR appear similar.  However, dig a little under the surface and you’ll soon realise that there are significant differences between the two.

According  to the Conscious Capitalist Institute, “Conscious Capitalism is a philosophy based on the belief that a more complex form of capitalism is emerging that holds the potential for enhancing corporate performance while simultaneously continuing to advance the quality of life for billions of people”.

OK, certainly an impressive aspiration, but how does the Conscious Capitalism philosophy have practical applications in running a business?

At its heart, Conscious Capitalism is a business model where interests of all major stakeholders (employees, customers, suppliers, communities, investors and the environment) are served, and the ultimate aim is to maximise shared value for all (not just maximising the value for one group, ie shareholders). Conscious capitalism is embedded in the core structure of a business which, in turns, influences leadership, decision making, business strategy, processes, recruitment and performance management, customers service practices, and so on.

Corporate Social Responsibility, on the other hand, is a term that describes the way a corporation takes into account the financial, environmental and social impacts generated by the business. Philip Kotler defines CSR as a “commitment to improve community well-being through discretionary business practices and contributions of corporate resources”. For example, businesses may engage in CSR activities to go beyond minimum regulatory standards or expectations of environmental groups or social welfare advocates so that they may seen as good “corporate citizens”.

One way to think about the differences between Conscious Capitalism and CSR is that Conscious Capitalism is the engine that drives the car while CSR is an optional extra (especially if you’re running a business with a “conventional economic” engine). Decisions that drive the engine of a conscious business are based on the philosophy’s four pillars (see below), whereas the practice of CSR is often subordinated to the primary goal of a corporation – that is, to maximise the financial return to shareholders.

Indeed, the key difference between the two terms can be found in Kotler’s definition above. CSR is clearly a “discretionary business practice”, which is markedly different to the approach of conscious businesses where creating value for all stakeholders (not just shareholders) is intrinsic to the success of their businesses. Thus, “doing good” and creating shared value is part of the operating model and DNA of all conscious businesses.   So for a conscious business the term “CSR” is superfluous – by its very nature, a conscious business embeds its financial, environmental and social impacts as part of “business as usual”.

John Mackey, Co-Founder of Whole Foods Market, describes the four pillars of Conscious Capitalism as:

“higher purpose, stakeholder integration, conscious leadership, and conscious culture and management. The four are interconnected and mutually reinforcing. The tenets are foundational; they are not tactics or strategies. They represent the essential elements of an integrated business philosophy that must be understood holistically to be effectively manifested. Higher purpose and core values are central to a conscious business and all the other tenets connect back to these foundational ideas.”

A charged often levelled at CSR is that it is “added on” to a business as a way to improve a company’s public image often through public relations, marketing, philanthropy, donations or corporate support (time and/or money) to a community organisation or public cause. This has led many observers to discredit CSR as a form of “greenwash”, and in some cases the charges have stuck.

According to a  TIME magazine article: “This will not surprise anyone familiar with Enron, the once-high-flying energy company whose bosses were not only responsible for one of the great acts of corporate fraud in history but also an almost unprecedented level of corporate philanthropy in the years leading up to their unmasking. Likewise, just two years before the Deepwater Horizon fiasco knocked the stuffing out of British Petroleum in 2010, CEO Tony Hayward announced that the firm’s safety record was among the industry’s best, reflecting a culture of conscientiousness meant to satisfy internal and external stakeholders. Alas, not everyone was listening, especially those tasked with preventing deep-water rigs in the Gulf of Mexico from blowing up.”

Conscious capitalism is a more integrated, cohesive and impactful approach to business than CSR. As Professor Raj Sisodia, Founder of the Conscious Capitalism Institute, states: “Innumerable companies today have a CSR department or have at least nominated a CSR expert, because it is in vogue at the moment and not necessarily because it fits with their inner attitude and the company culture. Often companies study the negative effects of their industry and then invest a lot of money to mitigate these negative effects instead of creating a new business model, so that these negative effects don’t occur to begin with. Many corporations have a significant investment in CSR without integrating it into the existing business model. Conscious Capitalism is solid business management and not just a CSR department.”

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Solar Light Libraries, A Social Business effort at Sustainability in Africa 10-04

Solar Light Libraries, A Social Business effort at Sustainability in Africa 
   

Are you looking for a way to grow demand for solar lights in Africa that doesn't undermine attempts to build a sustainable market? We thought so. Then perhaps this Guide to our successful Light Libraries project is right up your street.

You may remember from a previous blog the Light Library project is funded by Lighting Africa, a World Bank/IFC joint initiative, and delivered in partnership with the Senegalese Rural Electrification Agency and the Ministry of Education.

Nearly 5,000 solar lights, 58 schools and an estimated 55,000 people gained direct exposure to the solar lights through the project whose objective was to support market-building by overcoming two of the main barriers to uptake: lack of trust and awareness.

As a follow up to the project, our social enterprise SunnyMoney, delivered its traditional sales campaign to assess change in demand and found that sales were dramatically higher in the Light Library schools at 35% of school population (2,138 lights) than in control schools with15% uptake (966 lights).

The Light Library model not only appears to have increased uptake but also seems to have reduced the perception of risk. Many of the Light Library schools included customers from lower-income families who are generally more risk averse and less prone to become early adopters.

The Guide shares information on the design and delivery of the project and the subsequent delivery of SunnyMoney’straditional sales model. It shares the results of the evaluation as well as the lessons learned, challenges faced and key issues addressed.

We know that the only way we’re going to be able to eradicate the kerosene lamp is by being open, transparent, and sharing our knowledge with others. As part of this ethos we will make the tools and materials designed for the Light Library project available for public use.

‘Hybrid’ Organizations a Difficult Bet for Entrepreneurs 08-16

‘Hybrid’ Organizations a Difficult Bet for Entrepreneurs

 Hybrid organizations combine the social logic of a nonprofit with thecommercial logic of a for-profit business, but are very difficult to finance. So why would anyone want to form one? Julie Battilana and Matthew Leeinvestigate.

 

by Michael Blanding

Consider two organizations with the same noble purpose: to solve the problem of poor eyesight in developing countries. The first, the Centre for Vision in the Developing World  , follows a traditional nonprofit model, soliciting donations that fund the creation and distribution of specially designed eyeglasses that can be calibrated by the user to circumvent the need for an optometrist. 

The second, VisionSpring  , follows a different approach, working to build a network of entrepreneurs who sell eyeglasses in their communities. Rather than raise funds through donations, it sustains itself primarily by the sale of the glasses themselves.

VisionSpring is what organization scholars call a "hybrid" social venture, since it combines the social welfare logic of a nonprofit and the commercial logic of a for-profit business. When hybrids work, they can be a fantastically creative means of solving real-world problems in totally self-sustaining ways, harnessing the strengths of both for-profit and nonprofit models.

But they are a difficult bet for entrepreneurs starting out in the field of business. Because hybrid social ventures fall into a gray area between business and charity, they aren't easily funded by venture capitalists on the one hand or philanthropic foundations on the other.

“IT’S MUCH HARDER TO GET STARTED AND BE SUCCESSFUL IF YOU DON'T FIT INTO A WELL-DEFINED FORM THAT PEOPLE UNDERSTAND.” —MATTHEW LEE

So what would make anyone want to create a hybrid organization? That is the question Harvard Business School Associate Professor Julie Battilana   and doctoral candidate Matthew Lee   ask in a new working paper, How the Zebra Got Its Stripes: Imprinting of Individuals and Hybrid Social Ventures.  

"It's much harder to get started and be successful if you don't fit into a well-defined form that people understand," says Lee. "Creating a new hybrid is difficult to explain as a rational choice taking this limitation into account."

Lee and Battilana sought other explanations for the existence of such "zebras," including the entrepreneur's family, education, and work background. "Knowing these social ventures are diverging from the more traditional commercial or nonprofit ventures, we wanted to understand what made their founders diverge," says Battilana.

In order to gain that understanding, the researchers partnered with Echoing Green  , a nonprofit that funds social entrepreneurs through a highly competitive fellowship program. The organization agreed to facilitate research on the many early-stage social entrepreneurs who applied to the annual program. The researchers followed up with a survey that asked questions about their background and experience, ending up with more than 700 responses in their final sample.

Some of what they found was to be anticipated. Sure enough, having a family member who worked in a for-profit firm as opposed to a nonprofit organization corresponded closely with an individual's tendency to incorporate a business logic into his or her venture.

"When you are in a family background and you are socialized into that environment, you adopt certain ways of thinking and behaving and internalize certain values that are dominant in your environment," says Battilana.

The same went for educational background. "When you are exposed to a certain type of content, you start internalizing it and taking it for granted," she says.

The final factor, work experience, however, didn't play out as might be expected. Working for a few years in a commercial firm significantly increased the chances that an entrepreneur would create a hybrid social venture rather than a traditional nonprofit.

 But after that initial spike, the increase diminishes with each successive year. After 22 years working in a corporate environment, additional business experience actually makes an entrepreneur less likely to incorporate that experience into a social venture. (The researchers corrected for age in their analysis.)

Lee and Battilana explain this finding by pointing out that as people stay in a certain type of organization for a number of years, they may become more rigid in their modes of thinking about organizational possibilities and less able to see connections between different modes. 

When longtime businesspeople go on to start a social venture, they are consequently less likely to see how the for-profit and social welfare approaches can be combined. In this way, business experience may actually make them more likely to create a traditional charity, rather than a hybrid social venture.

JUMP SOONER

That's good news for those who are considering starting a hybrid social venture, an increasingly popular interest among her students, says Battilana.

"Young people are getting more and more excited about these new forms of entrepreneurship, but they also realize it's quite complicated, so they think they need to get some for-profit experience to equip themselves," she says.

According to the researchers' findings, however, they may not need as much corporate experience as they think.

"Many people are asking themselves when they should jump from their corporate job to start the social venture they've been dreaming about. Our findings suggest that if you're working in business to get the business mindset, there may be a case for jumping sooner," says Lee. 

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Social Business: Shifting Out of First Gear

Social Business: Shifting Out of First Gear

Reproduced from MIT Sloan Management Review

This is part 1 of 6 from the 2013 Social Business Global Executive Study and Research Project.

In an interview for this year’s social business report, Gerald Kane, professor at the Carroll 

School of Management at Boston College, succinctly characterized where social business stands today: “Any new technology experiences a faddish hype cycle where people adopt it because they feel they have to,” he says. “With social, we are passing the peak of faddishness. Companies are starting to crack social’s code and turning to it for business advantage, intelligence and insight.”

In this second annual report from the MIT Sloan Management Review and Deloitte Social Business Study, we probed executives’ views of the social business opportunity and how companies are harnessing its value. The study included 2,545 respondents from 25 industries and 99 countries. It also incorporated interviews with nearly three dozen executives and social business thought leaders.

Echoing Kane’s observation, a key finding of the research is the rapid growth in importance of social to business. In 2011’s survey, 18% of respondents said it was “important today.” One year later, the number doubled to 36%. The time horizon of its importance is also shrinking. In last year’s report, 40% of respondents agreed that social would be important one year from now. In 2012, the number jumped to 54% (see Figure 1).

FIGURE 1

More Industries Are Getting On Board

The immediacy of   the social business opportunity is growing across industries, another indicator of its move from faddish hype to business value. Between last year’s study and this year’s, respondents from all industry sectors increased the value they place on social business. None remained at the same level. None reversed course (see Figure 2).

FIGURE 2

While Media (entertainment, media and publishing) and Tech (IT and technology) continue to lead all industry sectors in the importance they assign to social business, other sectors demonstrated a marked increase in the value of social business. Of particular note is the Energy and Utilities sector. The number of managers in this sector who feel social is important surged from 7.1% to 29% from last year. Of the multiple factors driving the growth, this sector’s increasing efforts to engage with customers is the most significant. Pike Research estimates 57 million customers worldwide used social media to engage with utilities in 2011. Pike projects that number will jump more than 10-fold to 624 million by the end of 2017.While utilities currently use social media to resolve billing issues and provide information on services, they are expanding social media use to include crisis/outage communication, customer education (for example, information on recycling, renewable energy and energy efficiency), customer service, green energy promotion, branding and recruitment. Utilities are beginning to see the value of social listening to keep abreast of consumers’ interests. This is especially the case as new types of competitors enter the market, including solar power and energy management providers.

Market Drivers

Social business is capturing significant business attention. McKinsey, for example, reported that social can create as much as $1.3 trillion in value in the four business sectors it examined (consumer package goods, consumer financial services, professional services and advanced manufacturing). Suppliers are covering all bases from marketing to social enterprise networking. In the social marketing software market, which includes a wide range of vendors from established players like Adobe, Lithium and Salesforce.com to a multitude of startups, Forrester predicts that the landscape “will look dramatically different in two years.” 

Leading vendors will partner and merge, and stragglers will be “swallowed or trampled by larger players from outside the social space.” In the enterprise collaboration software market, Gartner recently announced its revenue projection for team collaboration platforms and enterprise social software — $2 billion by 2016, with a notable five-year compound annual growth rate of 16.1%.Business leaders are keenly aware that social is becoming a primary tool that people use to share information and create knowledge.

 The consumerization of technology is making everything from tablets to smart phones as popular inside the enterprise as they are outside its walls. In addition, companies want their brands to be where their customers are — and where competitors already might be.

But perhaps the strongest harbinger of social’s growth is the closing generation gap. “It’s not just young people or Millennials,” says Bill Ingram, vice president of analytics and social at Adobe. “It’s everyone, including grandparents who want to follow how their children and grandchildren are growing up.” Deloitte’s seventh annual State of the Media Democracy survey put hard numbers to the closing gap. 

The survey found that both Generation X and Baby Boomers see increasing value in social media: 81% of Generation X respondents and 70% of Baby Boomers see it as a powerful tool to interact with friends. And both generations have jumped on the texting bandwagon: nearly 80% of Generation Xers and nearly 60% of Baby Boomers see social networking sites, instant messaging and texting as an effective means to stay in touch. As the generation gap closes, businesses will find all age groups prepared to embrace social technologies.

Struggles With Social Business

Although the recognition of social’s importance is mounting, progress towards becoming a social business isn’t. The majority of companies we surveyed appear to be stuck in first gear. Our study found three major culprits holding back progress: lack of an overall strategy (28% of respondents), too many competing priorities (26%), and lack of a proven business case or strong value proposition (21%). Left unaddressed, these barriers can lead to daunting odds. Gartner estimates that 80% of social business projects between now and 2015 will yield disappointing results because of a lack of leadership support and a narrow view of social as a technology rather than a business driver.

Nonetheless, some companies are poised to beat the odds. But they aren’t likely to beat them with one-size-fits-all enterprise transformations. Instead, businesses that assess themselves as more socially mature are building momentum by applying social tools and technologies to specific business challenges and assessing the impact. “Social is not an app nor a layer,” says J.P. Rangaswami, chief scientist at Salesforce.com. “Social is a philosophy and way of life that empowers customers and users.”

In this report, we delve into how some companies are bringing that philosophy to ground level — and what is holding others back.

Page 2. Snapshot: The State of Play

Page 3 Focus on Business Challenges

Page 4 Shifting Out of Second: Spur the Effort

How Companies Can Move Past Trough of Disillusionment in Social Business 06-09

How Companies Can Move Past Trough of Disillusionment in Social Business

Reproduced from MIT Sloan Management Review

Dion Hinchcliffe, Chief Strategy Officer of The Dachis Group, says companies are at a stage of disillusionment with social business, but building social media literacy, integrating initiatives, and connecting social tools to how work gets done will help ensure success.

Dion Hinchcliffe is chief strategy officer of The Dachis Group, and co-author with Peter Kim of Social Business by Design (Jossey-Bass, 2012).

In this interview, Hinchcliffe says that some companies are finding themselves in what he calls a “trough of disillusionment” in their social business projects, but he explains that this trough is a normal part of the technology adoption cycle. Furthermore, because the tools for social business were originally created for consumers, it presented business-specific issues surrounding security and administration that are just now being addressed.

Hinchcliffe provides advice on how a company can show progress towards becoming a more fully enabled social business. A key point, he says, is to measure how far apart the distance is between a social activity and the connection to specific work or business process activities. He also says that those firms that are most advanced in their social business initiatives are those that employ executive leadership, perform community management capabilities, build social business literacy for employees, and do not artificially isolate their various social business efforts.

Most important of all is to connect social tools to how work gets done. Hinchcliffe advises correlating social business efforts with one’s existing Key Performance Indicators (KPIs), which will help convince other executives about the value of a social business effort. It also is important to “turn the knob on social to the right.” In other words, don’t make social business efforts just a little window dressing, or you’ll only get incremental results: Hinchcliffe discusses companies that have “used social to knock one of their business processes out of the park” by taking this tack.

Finally, Hinchcliffe outlines what companies are facing when communicating to people around the world and in other cultures through social networks.

You’ve written that when it comes to social business, companies are currently in a stage you call a “trough of disillusionment.” Can you say more about this?

Yes. I definitely see that we’re in the trough. But the trough is an inevitable part of the technology adoption cycle. For example, the failure rates for ERP in the early days was very high, I think, upwards of 80%. I think they’re still over 50%.

So, we don’t see organizations having nearly the failure rate of the early days of ERP so we’re doing not bad.

Information Week just published a survey saying that 85% of organizations have broadly deployed some form of social technology. This could just be Twitter customer care, or it could be an enterprise social network. But only 18% from that same survey said that it was a great success. I think that we have to understand that social media was never designed with a business audience in mind. It came from a wave of consumer companies trying to create a better model for consumers to connect with each other. In consumer social media, enterprises originally did not have their needs met for functionality around security and compliance and control and different external cross-border conversations.

All those requirements have just made their way into the tools in the last couple of years. We’re only now at the point where we can actually say that we can even do this in a way that would be acceptable for most organizations. So, from that standpoint, I think that we’re in the trough because we’ve tried for a number of years to apply this to our organization. The tools weren’t ready. Our organizations weren’t ready. I think the overall mood is, “Hey, we’ve been trying this stuff for a while. We tried to be social for a while. It’s hard. It’s time consuming, and it seems like it’s increasingly demanding more of our management attention.” But this is necessary if we want to see social media flourish in the enterprise.

Are there any low-hanging fruits for companies to pick that can generate returns from their social investments?

The low-hanging fruit apparently lies in two areas. One is pre-sale and marketing and customer support. The other place where we see a lot of value is in customer retention.T-Mobile uses social data and integrates and cross-references social conversations about people unhappy with their T-Mobile products or services and correlated that with their database, and then did just-in-time marketing to prevent them from defecting. They were able to cut customer defection by half in just 90 days. And if you know those kinds of businesses, those are remarkable figures.

Where do you feel culture and/or leadership play a role in making a social initiative successful?

That is a really important conversation because I don’t think we’re talking about it as an outright barrier because we see social business happening anyway. As Euan Semple said, the easiest way to become a social business is to not do anything. It’s going to happen anyway. It’s also the worst way to do it. You have no control over that process. You’re basically abdicating responsibility.

Do you feel that there are specific indicators or signs that a company can look at to measure their progress along the way in becoming a more fully enabled social business?

There does seem to be a broad progression. And, of course, most organizations are at the very beginning of that progression, meaning they’re experimenting with the tools and they have some early adopters.

There are many ways to measure progress along the way. The one that seems to matter the most is to measure how far apart the distance is between the social activity and the connection to specific work or business processes activities.

If there is a lot of distance between the social conversations and the business processes, then it is less likely there will be impact for a meaningful change. This seems to be a good indicator of how substantially the company has adopted social. We can look at SAP, and you can see how they increase sales processes deeply in the beginning, especially through their social channel.

Is there such a thing as a fully-enabled social business? Is there an endpoint where social has become embedded in just the way of doing business?

Well, there’s never going to be an organization that’s 100% a social business. They’ll get to 80%, 85%, or 90% and there will still be some corners of the organization that do things differently. But there are some good examples. 

Thomson Reuters is one and Burberry is another, although not quite as much. Thomson has the creation of a social enterprise as a stated vision. They’ve completely overhauled everything that they’re doing and basing everything on the Salesforceplatform. They have the full-strength vision, and the data shows that they’re getting results.

BASF is another firm and it’s getting there, but they’ll be the first to tell you though that it’s going to take them a long time. For five years they’ve been laying groundwork with corporate sponsors in getting its highly respected scientists inside the company onboard and connecting with the community and getting all the IT stakeholders from all the different siloed systems onboard. They probably have the most comprehensive vision I’ve seen. They’re a large global company with 100,000 people, but they’ve probably got five years to go for being mostly a social business.

What, if anything, do socially advanced companies have in common?

There are some threads. One is that technology and media companies are way ahead of everybody else. They’re very comfortable using technology, or they’re in the communications industry, so this is natural for them. The other indicator is executive leadership and a couple executives would be most helpful, but even one really well-liked and respected executive leader in the company, particularly if it’s the CEO, can make the change happen inordinately faster.

Also critical is building community management capability. And building social business literacy. Not social media literacy. Social business literacy is different as it means helping employees who don’t know what they’re supposed to do with these tools and don’t know how to get the best use out of them. It’s not complicated, but they’ve just never been told.

And I’m seeing a new pattern where organizations that don’t artificially isolate their effort is another indicator. Because for the last two years or so when I go into organizations and I ask about their social business efforts, it turns out they always have at least two big ones: the inside one and the outside one. And the inside and the outside efforts have selected their own sets of tools. They’ve created their own policies and procedures. They’ve built their own team. And they’ve put it in two entire social environments. One is the customer community and the other one the employee social network.

And then they wonder why people keep leaving them, especially on the inside one, to go somewhere else where they need to spend time to communicate with people because they have all these constraints on what they can actually do. If you’re in that employee social network, you probably can’t talk to your business partners. You can’t talk to your own customer. You can’t talk to the marketplace. So, I’ve been trying to get everyone to look at the new McKinsey findings that show that organizations that don’t put artificial barriers from the inside and the outside on social have outside results by a large margin. That’s what seems [to be] where the return is. Social really takes off there.

The problem was that we’ve  organically grown these in each one of our functions, and then as they’ve gotten big, they’ve bumped into each other and we realize, oops, that stuff all has to work together. And social works best when you don’t have artificial constraints. The tools couldn’t do this before, but now there are options. There is IBM Connections andSalesforce, with cross-border intelligence that allows you to bring people in dynamic situations from outside the company.

What’s your view on the need to measure a return on social initiatives?

The place I’ve really seen metrics actually being used in any kind of widespread way is in measuring adoption — who is using it and who is not. It’s very easy to see. And most of the tools now can show you, hey, this group over here is using it. This department’s not using it. These guys over here, they’re using it a lot. So, that’s good, but that’s not ROI, but a goal.

What really matters, is: are you running the business so that social ends up making it better? Correlate your social business efforts with existing, highly respected KPIs. I see companies get credibility for having done something with social. They said, all right, so customer retention is one critical product management process. And everyone measured that process because it’s the core of their business. And whenever people switched over to the social method of operating that business process, it went about a quarter faster.

By showing that your social media effort has impacted KPIs, other executives who don’t know anything about social recognize that, yeah, that’s it. That’s all you really have to do. You have to convincingly correlate. Without that, they’re thinking you’re guessing or else it just has a pretty soft impact.

A Gartner report said that by the end of 2015, 80% of social business initiatives are going to fail. Do you think that forecast is accurate, and if so, what can a business do now to avoid becoming one of the 80%?

First, remember that you’re looking at the same numbers you have with most types of initiatives in their early days because most of them failed. The bigger the project and the newer the technology, the more likely that an information technology initiative is going to fail. I mean, you’re going to be way over budget or way late. Social is no different. ERP was the worst offender. We routinely see $100 million implementations utterly fail. I was just at a big company on the fifth year of their SAP implementation and it still hasn’t happened yet. They know that problem is tough. So I think Gartner is probably in the ballpark.

What can organizations do? Well, one is don’t set the project off to the side. If it’s not required, if you don’t need to use this to get your job done, you’re not going to use it to get your job done.This seems self-evident, but we have had to learn that. We’ve often put it off to the side and say go over here and work with each other. And they go, well, I already have places to do that. I already have tools and I don’t need more. I already know how to do my job.

So, we see it’s hitting too much against that distance thing I talked about. Connect your social tools to how work gets done. Just build the process around it. Build it around how social works best, which is open and participatory. Anyone can participate. That’s principle number one on social business.

Your business process is going to work best when anyone can participate — any stakeholder, anywhere. Maybe that’s just inside your company, but it’s going to work a lot better if you’re bringing in suppliers. It’ll work even better if you bring in your customers early on whenever you can and let them participate. If they think what you’re doing is interesting, get them involved, because you’re going to do it again anyway when you end up talking to them.

And I think that you have to turn the knob on social to the right. So, in other words, if you put a little window dressing around the edges of a business process, you get value, but you don’t get a lot of value. It’s baking it into the middle. I have some really great case studies now on companies who used social to knock one of their business processes out of the park. T-Mobile retained half their customers going forward more than they could before they started their social program as key to the process. But you have to turn the knob all the way up. If you keep it pretty low, you’re going to get very incremental results.

Are people starting to get sensitive to how to fine-tune their social efforts if participants are from around the globe?

The pattern I see all the time now is that you have headquarters in developed countries whose fastest-growing area is overseas, but no one really knows who those people are. Those overseas offices are growing by double and triple digits, whereas the home office is growing by single digits. I was talking to the CIO of a large global auto parts manufacturer. He told me that he has to hire 100,000 Chinese workers in the next two years. He’s asking himself, “What makes us special? What makes us a leader? Because they don’t know anything about us. They don’t know what we value, or what we care about. And I can’t talk to all of them. I can’t engage them in scale. Or can I?” So he’s looking at social tools to do that even though in China, for example, they don’t use social media while at work.

What’s interesting is our work is that we’ve seen, for example, that even in Asia there’s very big differences, such as in Japan. In that country, the communication is extremely formal. The status updates look like typed letters, if they even use them at all.

And there’s the other thing where male and female communication does not happen. You see this in the Middle East as well, even though women are allowed in the workforce. It turns out that with young people, the only way they can talk to the opposite sex is to use social networks. They use them heavily. I was actually invited to a couple Iranian social networks. It’s very interesting given our regional differences. And what it really turns out is that community management is a key capability to deal with things quickly and educate very quickly and effectively. You have to be able to move forward and actually start to integrate it and build cultures together.

Reproduced from MIT Sloan Management Review