the social economy: unlocking value and productivity...

The social economy:

Unlocking value and productivity Unlocking value and productivity

through social technologies

Social technologies share three key characteristics

We define social technologies as digital technologies used by people to

interact socially and together to create, enhance, and exchange

content. Social technologies distinguish themselves through the

following three characteristics:

1. They are enabled by information technology.

McKinsey & Company | 1SOURCE: McKinsey Global Institute

2. They provide distributed rights to create, add, and/or modify

content and communications.

3. They enable distributed access to consume content and

communications.

Social technologies include a broad range of

applications that can be used both by consumers and enterprises

NOT EXHAUSTIVE

RatingsEvaluate and rate

products, services, Crowd-

Harness collective

knowledge and

Social

gaming

Connect with friends

and strangers to

play games

Media

and file

sharing

Upload, share, and

comment on photos,

videos, and audio

Social

networks

Keep connected

through personal and

business profiles

Blogs/

microblogs

Publish and

discuss opinions

and experiences

McKinsey & Company | 2

1 Social analytics is the practice of measuring and analyzing interactions across social technology platforms to inform decisions.

SOURCE: McKinsey Global Institute analysis

Ratings

and

reviews

products, services,

and experiences;

share opinions

Social

commerce

Purchasing in groups,

on social platforms,

and sharing opinions

Wikis

Search, create and adapt

articles; rapidly access

stored knowledge

Discussion

forums

Discuss topics in open

communities; rapidly

access expertise

Shared

work-

spaces

Co-create content;

coordinate joint

projects and tasks

Crowd-

sourcing

knowledge and

generate collectively

derived answers

Social technologies have been adopted at record speedTime to reach 50 million users

50 million users

Radio

TV

iPod

38 years

13 years

4 years

ILLUSTRATIVE

McKinsey & Company | 3SOURCE: Various press reports

iPod

Internet

Facebook

Twitter

4 years

3 years

1 year

9 months

Adoption of social technologies within enterprises lags far

behind consumer adoption

81

84

Video sharing¹

Social networks

38

50

Consumers Employees

Consumer vs. company penetration, global, 2012

%

Social media technologies


23

36

57

56%

Microblogging³

Wikis²

Blogs

23

25

41

35%

1 As of October 2011.

2 Classified as directories.

3 Includes microblogging sitesTwitter, Tumblr, Weibo, Plurk, and Posterous Spaces.

SOURCE: comScore, May 2012; comScore Global Online Video Viewing, October 2011; "How social technologies are

extending the organization," The McKinsey Quarterly, November 2011

Average

Social networking accounts for just 5 percent of the time spent

communicating and consuming media

6

7

8

9

10

11In person

TV1

Landline telephone

Radio1

Print

Mail

Time spent consuming messages by technology type

in the United States

Hours per day

Non-digital

Potential to be socially enabled

Currently socially enabled


0

1

2

3

4

5

6

2010200019901980

Instant messenger

1960195019401930 1970192019101900

Social networks

SMS

Mobile phone

Other Internet3

E-mail2

Recorded music1

TV

1 Radio, TV, and recorded music are slightly discounted to account for the time spent using these concurrently with other media.

2 Does not include e-mail sent internally within companies, which is not counted as Internet traffic.

3 Includes all social technologies that cannot be explicitly separated in available data.

SOURCE: Bureau of Labour Statistics; WAN-IFRA; Statistical Abstracts; National Bureau of Economic Research; US Census Bureau;

Radicati Group; Yankee Group; Nielsen; ITU; eMarketer; and others; McKinsey Global

Institute analysis

Use social technology as an intra- or inter-organizational collaboration and communication tool

Enterprises can apply social technologies across the entire

value chain, as well as across and between enterprises

Operations and distribution

Product development

Co-create products1

Leverage social to forecast and monitor2

Use social to distribute business processes3

Derive customer insights4

9

Enterprise-

4 Derive customer insights1

Organizational functions Across entire enterprise


Use social technology to match talent to tasks

Marketing and sales

Use social technologies for marketing communication/interaction

5

Generate and foster sales leads6

Derive customer insights4

Social commerce7

Provide customer care via social technologies8

Enterprise-

wide levers

1 Deriving customer insights for product development is included in customer insights ( lever 4) under marketing and sales.

2 Business support functions are corporate or administrative activities such as human resources or finance and accounting.


10

Customer service

Business support2

Improve collaboration and communication

Match talent to tasks

Potential of social technologies to improve productivity at

different points in the value chain in major sectors of the

economy% of cost base in each value chain step

1–5

5–10

10–20

>20

Potential benefit from productivity increase along the value chain

Total value

at stake

% of total costIndustry/segment

Product

development

Operations

and

distribution

Sales and

marketing

Customer

service

Business

support

functions

Financial

services

Insurance—

P&C~2–3

Insurance—

life~3–4

Retail

banking~6–12

McKinsey & Company | 7SOURCE: McKinsey Global Institute analysis

banking~6–12

Consumer packaged goods ~6–9

Professional services n/a ~8–11

Advanced

manufacturing

Semi-

conductors~5–6

Automotive ~4–6

Aerospace

and defense~2–3

Social sector

Potential of social technologies to create value across

the value chain in major sectors of the economy% of revenue1

<0.5

0.5–1.0

1.0–2.0

>2.0

Potential benefit from productivity increase along the value chain

Total value

at stake

% of revenueIndustry/segment

Product

development

Operations

and

distribution

Sales and

marketing

Customer

service

Business

support

functions

Financial

services

Insurance—

P&C~3–6

Insurance—

life~3–4

Retail

banking~4–7


1 Value potential for the social sector is expressed as a percentage of costs.


banking~4–7

Consumer packaged goods ~5–6

Professional services n/a ~8–11

Advanced

manufacturing

Semi-

conductors~5–7

Automotive ~4–6

Aerospace

and defense~2–3

Social sector

Value available through collaboration and other benefits

of social technologies varies across industries %

6662

43

76

98

70

5251

37

Collaboration

Other benefits

McKinsey & Company | 9SOURCE: McKinsey Global Institute analysis

63

49 48

3024

57

38 34

AverageAero-

space

AutoSemi-

conductors

Profes-

sional

services

98

Retail

banking

2

Life

insurance

P&C

insurance

CPG

5.5–6.5

7.0–8.5

Improved communication and collaboration through social

technologies could raise productivity of interaction workers by

20 to 25 percent

19

28

Searching and

gathering information

Reading and

answering e-mail

Tasks of

interaction worker

% of average week

Productivity

improvement

%

Increased

value-add time

% of workweek

25–30

30–35


20.0–25.0

4.0–6.0

3.5–5.0

5.5–6.5

SOURCE: International Data Corporation (IDC); McKinsey Global Institute analysis

14

39

100Total

Role-specific tasks

Communicating and

collaborating internally

gathering information

25–35

10–15

20–25

Many companies need a cultural transformation to prepare for

successful internal implementation of social technologies

Transformation Transaction Tacit

Interactions

Strategy and

innovation

Centralized and

top-down

Decentralized,

bottom-up, evolutionary

OrganizationHierarchies,

command and control

Flat, flexible,

contingent, porous

McKinsey & Company | 11SOURCE: McKinsey Global Institute

Knowledge

and learning

Rote and instruction-

oriented, top-down

Apprenticeship,

decentralized,

knowledge marketplace

Technology

leverage

Substitute, automate Substitute, automate,

accelerate, scale

Complement, extend,

adapt

Role of

management

Set targets, assign

tasks, optimize

Set direction, enable,

learn

Performance

management

Physical and activity

outputs, efficiency

Outcomes,

effectiveness

Physical outputs,

efficiency

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