June 27, 2012

Social Business and Managing Intangible Assets

One of the most interesting, and apparently best attended sessions at last week’s E2.0 Conference in Boston was Catherine Shinners’ talk on communities, entitled Building an Online Community – from Strategy, Planning and Launch to Effective Engagement and Adoption.

The topic is obviously important – in fact, it was interesting that E2.0 this year had session tracks for non-technical areas such as Community Management, Human Capital Management, and Organizational and Operational Readiness. This is clearly an acknowledgement that there is still much room for growth and education in how social platforms work within organizations – not from a technical perspective, but from a human and organizational perspective.

Intangible Assets

It’s also an acknowledgement that social business is as much about these less well-defined and hard to measure areas as it is about the technology (as much as we technology vendors would like to tell you otherwise). To economists, things like shared knowledge, organizational effectiveness and employee engagement are all “Intangible Assets“, which simply means they aren’t easily measurable.

Social business is all about effectively enabling the knowledge-based intangible assets of an organizations. So, how important are the intangibles?

Very important! In fact, Catherine included a fascinating graphic in her talk that underscores this point:

Over a decade ago, intangible assets represented 84% of the Market value of the S&P 500; we can assume the 2012 percentage is even higher.

So, if over 84% of an enterprise’s market value is tied up in its intangible assets, why the reluctance in adopting tools, behaviors and processes that optimize those assets?

Maybe it’s because there is no direct relationship between intangible assets and financial outcomes, so its very difficult to justify and motivate executives to embrace that which they cannot measure. This may in fact be the primary challenge in getting broad acceptance of social platforms in the enterprise.

Measuring Intangibles

The Balanced Scorecard was created a couple decades ago by David Norton and Robert Kaplan. It’s purpose was to define and manage a strategy with an approach that included more than mere financial measures. The Balanced Scorecard, or BSC, identified three other “perspectives” beyond the financial perspective and mapped out strategies and measures along all four dimensions that enabled a more holistic approach to managing a business. The BSC perspectives are:

  • Financial
  • Customer
  • Internal (Process and technology)
  • Organizational (“Learning and Growth”)

As you can see, the other three dimensions can all be directly impacted to the adoption and deployment of social tools. The BSC provides a much more nuanced and realistic framework within which social tools and processes can be measured. With the BSC, the discussion of ROI of social becomes less superficial, and more operational and strategic.

Thinking More Broadly about Social Business Adoption

So maybe it’s time to think more broadly about the adoption of these social tools, and frame their adoption in the context of the strategic dimensions that impact a business. After all, a social platform – even one as compelling as Convo – is merely a tool, a means to an end.

If you’re thinking about justifying your intuitions to go with a social business platform, consider framing the rationalization in a broader, more strategic context. (And we can help you find partners who will work with you on this).

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