Corporations for the most part aren’t going to reinvent themselves by improving on the core competencies they’ve been honing for years. Instead, if they’re going to change, they’re going to do so from the outside in, allowing ideas from the edge of the company to penetrate to the core. Social media will be a part of that transformation.
If all this sounds too abstract, consider Xerox’s Palo Alto Research Center in the 1970s. Because it was on the company’s fringe, PARC had the freedom to be radical, and it came up with a lot of radical ideas, many of which have become organic to the way we all work, such as graphical user interfaces, Ethernet, WYSIWYG, Smalltalk, and laser printing.
The challenge at PARC was that the company’s core could be resistant to ideas from the edge, so some of those beautiful concepts went nowhere at Xerox.
But the business environment has changed in fundamental ways since then, and ideas from the edge have a much better chance of surviving. For one thing, we’ve got the cloud. Cloud computing means that small, idea-driven operations don’t have to invest in building their own computing infrastructures. For a pretty reasonable cost, they can tap into processing speeds and storage capabilities that would have been unimaginable a few decades ago. They can use these resources to efficiently build prototypes, and when they’ve got something that works, they can also use the cloud to reach out to the marketplace. So they can do a lot on their own — they’re nowhere near as dependent on the core as edge operations used to be.
As a result, some corporations are seeing a lot of exciting things happening on the edge. For example, Amazon Web Services offers cloud-based application services; P&G’s Connect and Develop programs for encouraging external innovation partnerships are becoming a vital part of the company’s growth strategy; and Microsoft’s Xbox has become a platform for delivering a range of entertainment products. Fringe operations are attracting a lot of attention — and people — from the core. That’s a trend that will only strengthen as companies realize the value of edge businesses.
Where does social media come in? Edge operations can use social media platforms such as Facebook and Twitter to engage the people at the core as well as to connect to other edge operations within the corporation — and even to edge companies at other companies. I believe that social media will help create an ecosystem of edge organizations and their parent companies. To get a sense of what this might look like, think of IBM’s Jams platform for collaborative innovation.
This evolution in the way companies innovate reflects a shift in nothing less than the purpose of the firm. The classical view is that the firm exists to minimize transaction costs. But John Hagel and I suspect that the firm has a new purpose — namely, to promote the development of talents and capabilities and thereby attract and retain the best in the ongoing wars for talent and at the same time create an entrepreneurial culture that nurtures employees’ questing and connecting dispositions.
That’s what Google and Facebook seem to be doing. People are attracted to them because of their learning environments and because employees have the freedom to think radical thoughts. Companies like that are much more radical in their approach to innovation than is academia, which is limited by the requirements of the granting agencies. I only wish other companies were as willing as Google and Facebook to move out of their comfort zones when it comes to innovation and marketing.
It’s no coincidence, by the way, that some of the most innovative companies are those that are tied into social media. Social media itself is a threat to the corporate comfort zone. How many executives have you heard say that even though their companies are on Facebook and Twitter, they don’t use social media themselves? The transparency and unpredictability of social media can be deeply unsettling to people who have grown up in the comfort of corporate environments.
But the more executives experiment with social media, the more they’ll see how it can play a crucial part in forming the infrastructure of the new ecology of edges that will ultimately transform corporations for the future.
For more articles like this one, download the Harvard Business Review report: Putting Social Media to Work.
*Reprinted with permission from Harvard Business Review.