Managers are increasingly using information from social media: managers, product developers and other managers are exposed to both new benefits and new risks. Companies need to control the risks that arise from using social media information, which also means controlling the tools that bring these data to managers. I’ve been discussing that question today with an international group of colleagues hearing research findings from Yulia Sidorova, part of a team at Politecnico di Milano, Italy’s top university for technology. Politecnico is one of the fifty top institutions worldwide for research into information systems. Sidorova and her colleagues there are researching the stages that firms go through as they start to use, and eventually integrate, social media information into their work.
Their findings are still at an early stage, but I think they help professionals to classify how central social media are to the work of the people they are trying to develop business relationships with.
Robert Simons’ work on Levers of Control discovered how managers use controls in different ways.
- Interactive levels of control, primarily scanning documents, works for managers with cross-functional skills needed to put these media into use and to discuss with other colleagues.
- Diagnostics give clear performance measurements for firms
- Boundary systems give limits of what can the operationally or ethically allowed
- Belief systems develop consistent messages and other behaviour, to align what colleagues do, and allow the alarm to be sounded when boundaries are transgressed.
What sort of strategy allows businesses to adopt any of these or to combine them? The researchers at MIP conducted a series of case studies using Simon’s approach with firms at different stages of adopting social media data. They looked at large firms, with millions (most often billions) in revenues, in the telecoms, automotive, metal and energy industries. These firms used a range of channels, both their social media and platforms like Facebook and LinkedIn.
These firms had to balance two aspects: control and organisation. The research has found that these change through four distinct stages of adoption.
- Initialisation is about specific, often single, tasks. Often one person is responsible for all the collection and distribution of social media information. The targets can be initially unclear, and the distribution of the information can be driven by specific events rather than integrated into regular reporting cycles. Often social media are used to interact with clients before the information is used to develop interaction between departments.
- ‘Contagion‘ involves exact benchmarking and targets. As social media use becomes more contagious, social media are being used to explore new opportunities. Guidelines are still informal and quite limited.
- The Control stage comes third. This is when we see multiple uses of social media by several departments for clear purposes. Management review meetings start to use social media information when departments discuss their alignment. When control starts to become a real factor, regular reporting and alarm systems are introduced. These become tools used in the firm’s approach to explaining to managers and employees.
- Integration is the most mature stage. At this highest level, measures, training and guidelines are all integrated into implicit and explicit processes, actively creating collaboration between departments. In this way, two-way processes create powerful shared beliefs abut social media.
These are distinct stages, but not every firm needs to move up to the highest levels. The processes differ. We see both top-down management initiatives and bottom-up processes (where parallel networks and communities can develop inside organisations, articulated by the common use of social media). That hinges on how far social media are producing information that can broaden and improve co-operation and decision-making inside organisations.
One of the factors with the most difference is the range of processes into which social media information can be used. Some firms use social media only for managing customer relationships. Others can gather information that tests the viability of products and future products.
Use is not only uneven across these organisations, but also within them. This can produce subversion as well. In a setting where social media information becomes used in parallel with traditional accounting controls, we can see that managers can develop different visions of the organisation. In some cases, managers could be aligned more to the social media information than to traditional management accounting measures. This could produce costly dissonance, perhaps as easily as it could produce alignment.
The risk of the dissonance can be concentrated in the areas of the organisation that make the most use of social media. Certainly that is part of PR, communication, customer relations, and then into operational issues like quality control and product development. There are also aspects of this use of social media information that come into the area of accounting. Brand valuation is also driven by social media in countries where intangible value is important: under those circumstances we can see that accounting departments would also become an advanced user of social media information. Project finance and new product development is another function that could be an early adopted: the net present value of products that are in under development can be refined using social media. It would be interesting to compare the uneven adoption of social media information with the adoption of earlier information technologies.
Certainly, we can see that the use of social media information by managers is still at an early stage. It produces new reputational risks. A great example is Toyota and other firms where product failures reported by clients might not be fed diligently into the decision-making by the firm. Many companies have outsourced social media monitoring to firms that have clients that are looking at just one aspect of the corporate interest in social media.
Postscript: Gianni has posted a useful comment (see under this post). I also got a comment from Lyndon Johnson:
How about we define how we classify experts first? Unless somebody can point me to a case where somebody has been called as an expert witness in a social media-related court case, there are none.
That’s an interesting question. In the businesses that the case studies research, the task of using social media information will have come to different people in different ways. The researchers simply looked at the people who had that task of using social media information in their work. That doesn’t mean that they are only or primarily social media experts. Some are: others will be expert accountants, expert communicators, expert product managers and so on. But all of them are professionals who, because they are the people so are using social media information in their firms, are the people who are developing expertise. That’s why I use the word expert to draw together these people into one class; I could as easily have said professional or manager. So, this research is not saying that there is one way to work, namely the techniques of the experts that were tracked in these case studies. Obviously that is not the case, since they found four very different ways of working. But the reality is that within these large organisations these people are the internal experts, because they are the people doing the work.