The Moment Social Media Became Serious Business

All last spring, most senior business leaders I met shrugged off the business applicability of Web 2.0. Allowing access to social networks in the workplace was something they were willing to consider only if it was absolutely necessary to keep younger employees from complaining. Twitter? What was that?

But by summer, the conversations I was having with senior executives about the use of these new technologies took on a very different tone. Recognition grew that 2.0 technologies could be used to change the way work gets done in fundamental ways. Interest in exploring these new ways of working, of sharing information, of collaborating to enhance productivity and meet business goals, was here.

Advances in our ability to communicate always change the way we live and work — the two are inextricably linked. The advent of writing facilitated the development of a complex, stratified Egyptian society as rulers were able to document their holdings and express their wishes; the printing press spurred democracy as information spread among the populace; the telex allowed the growth of major cities as headquarters became physically separated from the factories.

And, like the hesitant adoption of 2.0, these advances in communication capabilities have almost always met significant resistance. Early assessments of the telephone predicted that it would be used primarily for social, non-business applications. What business would want to use a technology that provides no permanent record of a conversation, when the telex was available as a dependable alternative? Initial assessments of what became the core technology for Xerox completely missed the mark — no one could imagine why any business would need copies of a document. It's hard to envision the usefulness of new ways of communicating, and easy to dismiss new technologies as frivolous.

But each time our communication capability expands, several predictable things occur: An increase in the scope (distance and speed of reach) and richness of our interactions affects the way we organize, shifts the balance of power, and influences how we get things done.

Ronald Coase, a professor at the University of Chicago, won the Nobel Prize for Economics for his work showing how transaction costs influenced institutional structures. In "The Nature of the Firm," published in 1937, Coase explored how the cost of communication influenced the size of organizations. He found that high communication or transaction costs encouraged bringing as many functions as possible inside the organization — explaining, for example, the push toward vertical integration as a strategy in the mid-1900's — a strategy since largely discarded as communication costs have decreased. Read More Here!