Speed Summary: McKinsey Report “The Social Economy” – Unlocking $1.3 Trillion

Great report just out from consultants McKinsey – “The social economy: Unlocking value and productivity through social technologies“. (download)

It’s 170 pages long, a free download, and based on in-depth analysis of usage in four sectors (consumer packaged goods, consumer financial services, professional services, and advanced manufacturing) that represent almost 20 percent of global industry sales.

But here’s what you need to know…

First, McKinsey provide a useful, succinct, and plain English definition of social commerce;

Social Commerce: Purchasing in groups, on social platforms, and sharing opinions (McKinsey more broadly define social technologies as “products and services that enable social interactions in the digital realm, and thus allow people to connect and interact virtually “

Overall, $940bn of consumer spending (one-third) could be influenced by “social” interactions, which could mean that $940 billion of annual consumption in some US and European categories could be influenced by social input.

But social commerce is only one of ten ways social technologies can add business value

1. Co-creating products
2. Forecasting and monitoring
3. Distributing business processes
4. Deriving customer insights
5. Marketing communication
6. Generating leads
7. Social commerce
8. Providing customer care/service
9. Improving intra/inter-organisation collaboration/communication
10. Matching talent to tasks

In terms of value potential yet to be unlocked by social technologies, McKinsey estimate that at $900bn-$1.3 trillion

• $345 billion of this value potential would be available from product development and operations;
• $500 billion from marketing, sales and after-sales support activities;
• $230 billion from improvements in business support activities

Overall, two-thirds of the value creation opportunity afforded by social technologies lies in improving communications and collaboration within and across enterprises. In other words, much of the value potential of social technologies lies in collaboration, not commerce; particularly, professional collaboration between colleagues and businesses.

And for stat-afficiniados…

• By adopting social technologies internally, companies could raise the productivity of knowledge workers by 20 to 25 percent.
• In the CPG (FMCG) sector, the value of social technologies lies primarily in consumer research and market intelligence – for new product development; social technologies can deliver value equivalent to 15-30% of consumer research/MI spend
• $900 billion– 1.3 trillion Annual value that could be unlocked by social technologies in four sectors (consumer packaged goods, consumer financial services, professional services, and advanced manufacturing)
• 2x Potential value from better enterprise communication and collaboration compared with other social technology benefits
• 3% Share of companies that derive substantial benefit from social technologies across all stakeholders: customers, employees, and business partners
• 20–25% Potential improvement possible in knowledge worker productivity
• >1.5 billion Number of social networking users globally
• 80% Proportion of total online users who interact with social networks regularly
• 70% Proportion of companies using social technologies
• 31% Proportion of American SMEs used social media in 2011
• 90% Proportion of companies using social technologies that report some business benefit from them
• 28 hours Time each week spent by knowledge workers writing e-mails, searching for information, and collaborating internally
• 5% Percentage of all communications and content use in the United States takes place on social networks.
• In May 2012, Facebook logged its 900 millionth user. It is estimated that 80 percent of the world’s online population use social networks on a regular basis
• In the United States, the share of total online time spent on social networking platforms more than doubled from January 2008 to January 2011, from 7 percent to 15 percent

Insights

• Social technology has almost primal appeal. It is fundamental human behavior to seek identity and “connectedness” through affiliations with other individuals and groups that share their characteristics, interests, or beliefs. Social technologies have given these basic behaviors the speed and scale of the Internet at virtually zero marginal cost
• For electronics, 16 percent of shoppers rely on social input for purchasing decisions; in home goods, the figure is currently just 2 percent
• “Social” is a feature, not a product. Social features can be applied to almost any technology that could involve interactions among people (e.g., the Internet, telephone, or television)
• Social technologies enable social behaviors to take place online, endowing these interactions with the scale, speed, and disruptive economics of the Internet
• Social technologies enable unique insights, by allowing marketers and product developers to engage directly with thousands of consumers and to monitor unprompted and unfiltered conversations

[hr] Today’s article is sponsored by Milyoni: The Leader in Social Entertainment
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