Social Business By Design – A peronsal summary (Chapter 5)

Chapter 5 – How Business Will Make the Transition

It is far easier for small and medium-sized (SME) companies to make the transition than large organization because of the following :

  • Changes are easier to make because of its size
  • Has few constraints

Some challenges faced by shifts of control required by Social Business are :

  • How we communicate (Move from point-to-point to social)
  • How we organize (Organization of Hierarchies to communities)
  • How we create (central output to peer output)
  • Where value comes from (hierarchies to networks)

Next-Generation Business will be OPEN, SOCIAL and SELF-SERVICE

Some obstacles/barriers organisation might face transiting to social business are :

  • Organizational
  • Cultural
  • Structural
  • Legal
  • Regulatory
  • Rethinking of how business gets done

What Social Business Consists Of :


3 Unique and critical aspects

  1. Social business creates and delivers most of its value over the network, usually indirectly. (Not centralized production, but peer production)
  2. Social Business consists of a loosely coupled entity – usually a very large number of customers and suppliers who have as much control over outcomes as any other part of the business.
  3. Social Business has effective strategies to take advantage of the new balance of abundance and scarcity, along with greatly reduced dependencies on the old balance.

Figure 5.1 (modelled) : Societal and Economic Shifts Leading to Social Business

Drivers of Social Business

  1. Strategic control  over peer-produced community data drives market dominance
  2. Peer production is the most efficient and richest source of value creation
  3.  Social power structures are the means of self-organizing and governing
  4. Mass self-serving of market niches achieves the highest economic scale
  5. Cloud- and ecosystem-based open supply chains are the basis of growth and agility
  6. The ability to dynamically adapt and rapidly respond to the current needs of the cloud is vital.

Macrotrends affecting how Social Business will emerge

  1. New Resource constraints
    1. Need for organizations to find new ways of accomplishing goals using fewer resources
    2. Currency of the realm on the network
  2. Sustainable value moving from business transactions to relationships
  3. Industries in flux with new ones emerging
  4. Moving from change as the exception to change as the norm
  5. A shift of control to the edge of organization

Personal Note :

a. In general, it true that it will be easier for SME to make the transition to social business. I believe, the toughest hurdle for SMEs will be cultural, as they tend to be highly traditional and hierarchical .

b.It was noted (pg 55) that old media and software industry has already been impacted by social business

c. With reference to the 3 unique and critical  aspects of social business, having difficulty visualizing it in the head :(.

d. On drivers of social business (ref : 58), driver 1, agree with the point that up-to-date data sources is very important as information is power.

e. . On drivers of social business (ref : 58), driver 2. agree that peer production is typically most efficient as you can draw on the knowledge of people. Playing the devil’s advocate, will it apply to all sorts of production as the saying “too many cooks spoil the soup” comes to mind and not to mention about differences in stakeholders of that production. Believe other process needs to company peer production for it to be truly beneficial.

f. Reading driver 3, future organization would be flat and I can the feeling that the future of middle management is not very bright. Coincidentally, while reading the book, I also changed upon an article  from HBR article titled “TheEndofMiddleManager”. The article suggest that much of the role of traditional manager can be taken over by technology (aka social media) and Gen Y do not see any value in reporting to someone who simply keeps track of what they do.

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