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Online social networking: The productivity paradox

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Social networkingThe Web 2.0 revolution is transforming the very fabric of business and society today. But does banning wikis, blogs and sites such as Facebook at work boost productivity, or damage engagement, networks and creativity? Matthew Fraser and Soumitra Dutta discuss.


The loudly trumpeted Web 2.0 business revolution has been frustrated by a powerful paradox. While advocates claim that Web 2.0 platforms such as wikis boost productivity by harnessing collective intelligence and fostering innovation, the hard reality is that many corporate managers fear that these same tools will actually undermine productivity at the office.

How can we reconcile this productivity paradox?

It’s important to grasp the basic dynamics of Web 2.0 platforms. Wikis, blogs and online social networks are essentially horizontal and open. This explains why they are frequently regarded as threatening inside corporate hierarchies, whose architecture is vertical and closed.

The social architecture of Web 2.0 tools is thus considered incompatible with organisational environments. Corporations are not cocktail parties. The idea of open-ended wikis or Facebook Fridays would be a non-starter in most companies. Indeed some employees are getting dismissed or disciplined when caught logged onto social networking sites at the office.

“There is a strong belief in many companies that, if you’re logged onto Facebook, you’re not working.”

Web 2.0 sceptics invariably raise legitimate issues like security risks, legal liabilities, and privacy invasion. The most often-cited problem with Facebook at the workplace, however, is time-wasting. There is a strong belief in many companies that, if you’re logged onto Facebook, you’re not working.

Here are some cold numbers: roughly 65% of UK companies deny employee access to social networking sites like Facebook, MySpace and Bebo. In government, figures released under the UK Freedom of Information Act revealed that British departments had disciplined hundreds of employees for using Facebook and similar sites at work. In the period from 2005 to 2007, 132 British government bureaucrats had been sacked, 41 had been forced to resign, 868 had received formal warnings, and 686 had been demoted or punished. All for the same crime: logging onto social networking sites at work. Some estimates have put the negative impact on the UK economy at £132m a day.

Yet, at the same time, many CEOs indeed are intrigued by the business case for Web 2.0. Surveys conducted by consulting firms McKinsey and Forrester Research reveal that executives are showing more openness to web-based collaboration and social networking tools. Some Fortune 500 CEOs, like Jonathan Schwartz at Sun Microsystems, even keep their own blogs. There is a growing acceptance that, if the productivity case can be made for Web 2.0, perhaps a new workplace motto will be ‘wiki while you work’.

Organisational behaviour research has shown that collaborative Web 2.0 tools are particularly effective where technical knowledge is valued. In complex organisations like multinational corporations, finding someone who possesses highly specific expertise is often difficult. One reason is that expertise remains ‘hidden’ – and consequently unexploited – within organisational structures.

In vertical corporate hierarchies characterised by institutional silos and hierarchical organisational roles, however, there is no incentive for employees to look beyond their familiar workplace setting of nearby colleagues as informational resources. Most managers and employees consult colleagues with whom they have close professional ties, regardless of competence. When seeking solutions to problems, most people do not diversify their human options. While this instinct is understandable, countless studies have demonstrated that it’s also counter-productive. The only winner is the status quo.

Web 2.0 software knocks down corporate silos, moats, and walls by encouraging open communication and information sharing. Expertise and solutions to problems no longer remain hidden, they are actively sought out and exploited. Since Web 2.0 tools foster transparent communication visible to all, the collaborative input of any employee, even far down the formal hierarchy, will be known, recognised, and perhaps rewarded. Status and prestige incentives are thus built into the collaborative process. When collaboration is a win-win for everybody, buy-in is universal.

Get competitive

Web 2.0 tools can offer competitive advantages to firms in sectors where innovation produces winners and losers. Senior executives in large-scale corporations are increasingly aware that innovation is not restricted to R&D departments, but is a dynamic social process. Proctor & Gamble, for example, now outsources more than 50% of its new product development through horizontal collaboration.

The UK-based think tank Demos believes that social networking sites such as Facebook and Bebo can be used to encourage staff to forge productive relationships with their colleagues. “They are part of the way in which people communicate, which they find intuitive,” says Peter Bradwell, author of a recently published Demos report. “Banning Facebook and the like goes against the grain of how people want to interact. Often people are friends with colleagues through these networks and it is how some develop their relationships.”

Most experts agree that the key to implementing a successful Web 2.0 strategy in the workplace is to encourage openness; don’t impose many restrictions, encourage bottom-up participation, and don’t overreact to criticism when it comes. One common pitfall is allowing a company’s Web 2.0 strategy to get highjacked by IT departments and middle managers who attempt to control and neutralise its potentially destabilising impact – especially on them.

“If the productivity case can be made for Web 2.0, perhaps a new workplace motto will be ‘wiki while you work’.”

Ironically, despite widespread resistance to Web 2.0 platforms in many corporations, senior managers and HR departments actively use the same platforms to collect information on employees as part of recruitment efforts. While it is not always openly admitted, HR professionals routinely use Google and mine profiles like Facebook and MySpace to gather information on job candidates and employees.

Web 2.0 tools are gathering momentum, especially now that the world’s most powerful high-tech brands – Intel, IBM, Cisco, Google, Jive – have embraced Web 2.0 software. In 2006, Intel led the pack by releasing Web 2.0 applications called SuiteTwo. IBM followed a year later with its Lotus Connections suite – dubbed ‘MySpace for the Workplace’. Global corporations that have integrated social networking into their organisational strategies include FedEx, Shell Oil, Motorola, General Electric, Kodak, British Telecom, Kraft Foods, McDonald’s, and Lockheed Martin.

Forrester forecasts robust corporate spending on Web 2.0 software – including blogs, mashups, podcasts, RSS, widgets and wikis. It projects global Web 2.0 spending growth at 43% annually – from $764m in 2008 to $4.6bn in 2013. While $4.6bn looks like a big number, it’s only a tiny fraction – less than 1% – of global corporate spending on enterprise software.


Matthew Fraser is senior research fellow and Soumitra Dutta is Roland Berger chaired professor of business and technology at INSEAD. Their book, ‘Throwing Sheep in the Boardroom: How Online Social Networking Will Change Your Life, Work and World’, is published by Wiley. For more information on the book, visit: www.throwingsheep.com

6 Responses

  1. web designing

    Thanks for this amazing information shared with thus us about the use of  web2.0  in website design and development.I think many will follow this post.

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  2. Some evidence for productivity benefits
    I have just been reading ‘How Social Networks Network Best, one of the Breakthrough ideas in February’s Harvard Business Review – http://hbr.harvardbusiness.org/web/2009/hbr-list/how-social-networks-work-best.

    It notes, “in one organization the employees with the most extensive personal digital networks were 7% more productive than their colleagues – so Wikis and Web 2.0 tools may indeed improve productivity.”

    But Denis is right that these benefits do not need to come from social networking. This is why I link my probable long-term benefits to collaboration across the team, not just social networking, and note specifically that this collaboration may include activities such as effective team meetings and social events. But sharing a cup of coffee would be fine too.

    I’m less convinced about just using the phone. Social networking is about managing relationships over time, not just about one piece of communication. And if it isn’t electronic, I think it’s best done face-to-face.

    In fact, the HBR article goes on to note: “in the same organization, however, the employees with the most cohesive face-to-face networks were 30% more productive. Electronic tools may well be suited to information discovery, but face-to-face communication, an oft-neglected part of the management process, best supports.”

  3. No one right way
    I was working with a group of 15 year olds last year on a project for a large multinational they were looking at how online social networking could improve communication and team building in that organisation. The young people’s suggestions for an in-house version of Facebook/Bebo was particularly interesting to the client – especially as many of their teams are made up of employees sitting in offices across the globe. I think that it is becoming increasingly important for employees to identify and apply the best combinations of all the communication methods available and for employers to recognise the methods they need to support.

  4. Increasing Performance and/or Productivity
    “but if you need to increase the performance (rather than just the productivity) of a team, then social networking and web 2,0 is probably going to help (alongside other things you can do like holding effective team meetings and social events).”

    I have to chuckle. Everywhere I go, I see public works on roads and building being carried out by teams of workers. Two are working, the other five are talking at any given time. If FaceBook can get them to finish the road so I don’t have to wait in a traffic jam every day, I’ll be very grateful.

    I do think we need to remember that the whole world is not glued to screens all the time, and that some of these social media innovations are elegant solutions to problems that don’t exist.

    I’m reasonably networked across the usual suspects: Xing, LinkedIn, Twitter and yes, even FaceBook. The main virtue is being able to find talent when and where you need it.

    While we’re on the subject, I presume that encouraging staff to forge productive relationships with their colleagues could actually involve picking up the phone or – horror of horrors – share a cup of coffee sometime!!

  5. Comments on the productity paradox
    The productivity paradox comes from confusing short-term and long-term, or perhaps individual and organisational productivity. Short-term, an individual spending time on Facebook is going to reduce the time available to do other things. But given that the point of performance in most organisations is now the team (or increasingly, combinations of disparate, often virtual and temportary teams), anything that can be done to increase collaboration across the team is going to have long-term benefits on organisational productivity.

    Plus of course, it’s not just productity that counts. Other benefits include speed, innovation, engagement etc. I don’t want to make it sound like the holy grail, but if you need to increase the performance (rather than just the productivity) of a team, then social networking and web 2,0 is probably going to help (alongside other things you can do like holding effective team meetings and social events).

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