1

N OV E MB E R 2 0 11
How social technologies are
extending the organization
Our fifth annual survey on the way organizations use social
tools and technologies finds that they continue to seep into
many organizations, transforming business processes and
raising performance.
Jacques Bughin, Angela Hung Byers, and Michael Chui
M C K I N S E Y G L O B A L I N S T I T U T E
2
Companies are improving their mastery of social technologies, using them to enhance
operuLIons und expIoIL new murkeL opporLunILIes-key hndIngs oI our hILI unnuuI survey
on LIese LooIs und LecInoIogIes, In wIIcI we usked more LIun q,zoo gIobuI execuLIves Iow
orgunIzuLIons depIoy LIem und LIe benehLs LIey conIer.
1
When adopted at scale across
an emerging type of networked enterprise and integrated into the work processes of
empIoyees, socIuI LecInoIogIes cun boosL u compuny`s hnuncIuI perIormunce und murkeL
sIure, respondenLs suy, conhrmIng IusL yeur`s survey resuILs.
BuL LIIs Is u very dynumIc envIronmenL, wIere LIe guIns Irom usIng socIuI LecInoIogIes
someLImes do noL persIsL, perIups becuuse IL Lukes so mucI eIIorL Lo ucIIeve LIem uL
scuIe. Some compunIes, respondenLs IndIcuLe, reuped Iewer benehLs und LIus becume Iess
networked, while a smaller percentage learned how to deploy these technologies to become
even more neLworked. ExecuLIves suy LIuL LIeIr compunIes ure usIng LIem Lo Increuse
LIeIr ugIIILy und Lo munuge orgunIzuLIonuI compIexILy. Muny beIIeve LIuL II orgunIzuLIonuI
barriers to the use of social technologies diminish, they could form the core of entirely new
busIness processes LIuL muy rudIcuIIy Improve perIormunce.
Usage at scale and continued benefits
SocIuI LecInoIogIes us u group Iuve reucIed crILIcuI scuIe uL LIe orgunIzuLIons represenLed
In our survey. SevenLy-Lwo percenL oI LIe respondenLs reporL LIuL LIeIr compunIes ure
deploying at least one technology, and more than 40 percent say that social networking
und bIogs ure now In use (ExIIbIL 1). TIese LecInoIogIes ure beIng depIoyed ucross
secLors, uL LIe IIgI IeveI oI 86 percenL oI LIe respondenLs` compunIes In IIgI LecI und
LeIecommunIcuLIons, buL uL 6z percenL oI compunIes even In LIe energy IndusLry (ExIIbIL
z). eveIs oI reporLed benehLs noL onIy remuIn IIgI wIen respondenLs` orgunIzuLIons use
socIuI LooIs Ior InLernuI purposes buL Iuve uIso Increused umong LIose LIuL use LIem Ior
communIcuLIng wILI cusLomers or Ior InLegruLIon wILI purLners und suppIIers (ExIIbIL ).
The performance edge of networked enterprises
usL yeur, we IdenLIhed u smuII group oI respondenLs wIo IndIcuLed LIuL LIeIr compunIes
had experienced superior performance from the use of social technologies across key
sLukeIoIder groups. We repeuLed LIe unuIysIs LIIs yeur, IookIng uL LIe uveruge IeveI oI
ImprovemenLs In busIness benehLs LIuL execuLIves reporLed. our cIusLers emerge Irom our
unuIysIs. ExecuLIves uL InLernuIIy neLworked orgunIzuLIons noLe LIe IIgIesL ImprovemenL
In benehLs Irom InLerucLIons wILI empIoyees; LIose uL exLernuIIy neLworked orgunIzuLIons,
Irom InLerucLIons wILI cusLomers, purLners, und suppIIers. ExecuLIves uL IuIIy neLworked
1
TIe onIIne survey IncIuded q,z61 respondenLs ucross secLors, geogrupIIes, compuny sIzes, Lenures, und IuncLIonuI specIuILIes.
As wILI surveys In pusL yeurs (wIen we reIerred Lo socIuI LecInoIogIes us Web z.o) LIe survey covers LIe udopLIon und usuge
oI LecInoIogIes, LIeIr benehLs, und corporuLe perIormunce. TIIs yeur, we uIso usked ubouL Iow orgunIzuLIons ure usIng socIuI
LecInoIogIes und LIe Lypes und mugnILude oI LIe orgunIzuLIonuI und process cIunges LIuL couId resuIL.

Exhibit 2
% of respondents (n = 4,261)
Web 2011
MoBT social tech
Exhibit 2 of 9
Exhibit title: Adoption of social technologies across industries
High tech, telecommunications
Business, legal, professional
services
Public administration
Pharmaceuticals
Retailing
Transportation
Health care, social services
Manufacturing
Financial services
Energy
86
77
74
74
69
69
67
64
64
62
Companies using at least 1 social-technology tool
Exhibit 1
% of respondents
1
whose companies use each technology
1
Respondents who answered dont know are not shown.
2
Microblogging was not offered as a technology in the 2008 survey.
Social tools and technologies currently used by companies
Web 2011
MoBT Social tech
Exhibit 1 of 9
Exhibit title: Rising adoption rates
Social
networking
Blogs
50
40
28
23
41
38
32
29
Microblogging
23
19
12
N/A
2
2011, n = 4,261
2010, n = 3,249
2009, n = 1,695
2008, n = 1,988
Video sharing
38
33
31
27
Adoption of social technologies across industries
Rising adoption rates
4
orgunIzuLIons reporL greuLer benehLs Irom both InLernuI und exLernuI InLerucLIons. n LIe
IourLI und by Iur LIe IurgesL group, deveIopIng orgunIzuLIons, respondenLs reporL Iower-
LIun-uveruge ImprovemenLs ucross uII InLerucLIons uL LIeIr orgunIzuLIons.
2

As we Iound IusL yeur, LIe number oI IuIIy neLworked orgunIzuLIons Is smuII. BuL LIe
percentage of externally networked organizations is higher and that of internally
neLworked ones Iower (ExIIbIL q),

reecLIng LIe IucL LIuL LIe guIns Irom LIe use oI socIuI
LecInoIogIes ure noL sLuLIc (see dIscussIon beIow). We cuII LIe compunIes In LIe IuIIy und
externally networked groups extended enterprises, since their use of social technologies in
cusLomer und purLner ouLreucI bIurs LIe boundurIes oI LIe orgunIzuLIon.
Exhibit 3
% of respondents reporting at least 1 measurable benet at their companies
Internal purposes
1
Customer purposes
2
Partners, suppliers, and
external-expert purposes
3
Web 2011
MoBT social tech
Exhibit 3 of 9
Exhibit title: Benets remain consistent over time
1
In 2011, n = 1,949; in 2010, n = 1,598; in 2009, n = 1,008.
2
In 2011, n = 2,227; in 2010, n = 1,708; in 2009, n = 956.
3
In 2011, n = 1,142; in 2010, n = 1,008; in 2009, n = 686.
Increasing
speed to
access
knowledge
Increasing
speed to
access internal
experts
Increasing
speed to
access external
experts
Reducing
communication
costs
74
77
69
58
60
56
51
52
44
Increasing
effectiveness
of marketing
Reducing
marketing
costs
Increasing
customer
satisfaction
69
63
54
47
50
44
43
45
39
Increasing
speed to
access
knowledge
Reducing
communication
costs
65
57
53
61
53
50
50
40
43
2011
2010
2009
Top 3 measurable benets of technology adoption, by use
2
As we dId IusL yeur, we sorLed LIe respondenLs InLo Iour cIusLers bused on LIe uveruge meun ImprovemenL reporLed ucross LIe
dIIIerenL benehLs wIen Web z.o Is used In InLerucLIng wILI empIoyees, cusLomers, und exLernuI purLners or uny combInuLIon
LIereoI. uIIy neLworked enLerprIses ure dehned us LIose wILI un uveruge ImprovemenL greuLer LIun 1o percenL wIen Web
z.o Is used Lo InLerucL wILI empIoyees, cusLomers, und exLernuI purLners. ExLernuIIy neLworked enLerprIses ure LIose wILI
u greuLer LIun 1o percenL uveruge ImprovemenL wIen Web z.o Is used Lo InLerucL wILI cusLomers und exLernuI purLners.
nLernuIIy neLworked enLerprIses ure LIose wILI un uveruge ImprovemenL greuLer LIun 1o percenL wIen Web z.o Is used Lo
InLerucL wILI empIoyees. TIe remuInder oI respondenLs work Ior wIuL we cIussIIy us deveIopIng enLerprIses.

See Jucques BugIIn und MIcIueI CIuI, TIe rIse oI LIe neLworked enLerprIse: Web z.o hnds ILs puyduy, mckInseyquurLerIy
.com, December zo1o.
Benets remain consistent over time
5
We Iound sLuLIsLIcuIIy sIgnIhcunL correIuLIons beLween seII-reporLed corporuLe-
performance metrics and certain business processes that networked enterprises use
(ExIIbIL ). TIe murkeL sIure guIns respondenLs reporL ure correIuLed wILI Lwo sucI
processes. IrsL, LIese orgunIzuLIons use socIuI LooIs Lo scun exLernuI envIronmenLs.
Second, LIey use LIem Lo muLcI empIoyees Lo Lusks: InLernuI wIkIs und socIuI neLworks
help project leaders to identify employees with the most appropriate skills and to assign
LIese empIoyees Lo LIe projecLs Ior wIIcI LIey ure besL suILed.
AnoLIer key perIormunce meusure, seII-reporLed operuLIng-murgIn ImprovemenLs,
correIuLed posILIveIy wILI LIe reporLed percenLuge oI empIoyees wIose use oI socIuI
LecInoIogIes wus InLegruLed InLo LIeIr duy-Lo-duy work. Among LIe compunIes oI
respondenLs wIo Look LIe survey In prevIous yeurs, LIese ImprovemenLs uIso correIuLed
posILIveIy wILI gains in the reported percentage of employees whose work is highly
InLegruLed wILI socIuI medIu. MurkeL sIure IeudersIIp In un IndusLry, LIe hnuI seII-
reporLed perIormunce meusure, correIuLed posILIveIy wILI LIe InLegruLIon oI socIuI LooIs
In empIoyees` duy-Lo-duy work, us weII. ConsIsLenL wILI IusL yeur`s unuIysIs, we Iound LIuL
murkeL IeudersIIp correIuLes neguLIveIy wILI IuIIy neLworked und exLernuIIy neLworked
orgunIzuLIons. WIIIe murkeL Ieuders muy use socIuI LecInoIogIes wILIIn LIe orgunIzuLIon,
LIey mIgIL be Iess IncIIned LIun murkeL cIuIIengers Lo pusI Ior u IuII runge oI benehLs.
Exhibit 4
Developing,
n = 2,413
Internally
networked,
n = 224
Externally
networked,
n = 365
Fully
networked,
n = 101
Web 2011
MoBT social tech
Exhibit 4 of 9
Exhibit title: Tracking the four types of organizations
Improvement
in benets,
mean %
Integration,
% of
respondents
Extent of
social-
technology
usage, % of
respondents
Very or
extremely
integrated into
employees
day-to-day work
18 49 45 80
% of employees 39 37 43 48
% of partners 40 48 55 64
% of customers 26 37 54 51
Internal benets 2 18 8 26
Customer benets 1 3 13 21
Partner benets 1 2 11 24
Organizational type, based on social-technology benets
Tracking the four types of organizations
6
Networked organizations: Not a steady state
We uIso unuIyzed LIe responses oI execuLIves wIo purLIcIpuLed In boLI LIe zo1o und zo11
surveys Ior cIunges In our dehned enLerprIse cIusLers. AccordIng Lo LIese responses, u
surprising number of organizations made the transition from one type of enterprise
Lo unoLIer. RougIIy IuII oI LIe InLernuIIy und exLernuIIy neLworked enLerprIses sIId
buck InLo LIe cuLegory oI deveIopIng orgunIzuLIons; LIuL Is, LIey dId noL muInLuIn LIe
benehLs oI usIng socIuI LecInoIogIes LIuL LIey Iud ucIIeved eurIIer. ess LIun 1 percenL
Exhibit 5
Web 2011
MoBT Social tech
Exhibit 5 of 9
Exhibit title: Correlations with corporate performance
P-value (less than
0.05 = statistically
signicant)
1
Reflects repeat respondents only.
Correlation
coefcient (higher =
greater correlation)
0.263 0.007
0.130 0.016
0.422 0.002
0.254 0.001
0.007 0
0.276 0.007
0.325
0.014
0.325
0.035
Processes that signicantly
correlate with self-reported
corporate-performance metrics
1. Market share gains Using social technologies to scan
external environment
2. Operating margin
compared with those
of competitors
Level of social-technology integration
into day-to-day work
Using social technologies to match
employees to tasks
Positive change in level of social-technology
integration into day-to-day work (201011)
1
Share of employees using intranet
to conduct transactions
Positive change in level of social-technology
integration into day-to-day work (201011)
1
Using social technologies to assess
employee performance
0.616
0.001 0.444
0.019
0.004 0.044
0
3. Market leadership
ie, rst in industry
share
Fully networked
Externally networked
Share of sales done online
% of employees using social technologies
0.135 0.005 Level of social-technology integration into
day-to-day work
0.003 0.021 Share of employees using intranet
to conduct transactions
Correlations with corporate performance
7
oI LIe compunIes In uny gIven cuLegory moved up Lo LIe nexL LIer-In oLIer words, Irom
u deveIopIng Lo u neLworked enLerprIse or Irom un InLernuIIy or exLernuIIy neLworked
enLerprIse Lo u IuIIy neLworked one (ExIIbIL 6). L uppeurs LIuL IL Is eusIer Lo Iose LIe
benehLs oI socIuI LecInoIogIes LIun Lo become u more neLworked enLerprIse, wIIcI
suggesLs LIuL sIgnIhcunL eIIorL Is requIred Lo ucIIeve guIns uL scuIe. We uIso Iound InILIuI
indications that if the percentage of employees who integrated social technologies into
LIeIr duy-Lo-duy work decIIned, LIeIr compunIes were more IIkeIy Lo bucksIIde.
Changing processes
We asked respondents about current and future uses of social technologies for a range of
business processes and found that the greatest number say their companies use these tools
Lo scun LIe exLernuI envIronmenL Ior new Ideus. RespondenLs uIso reporL LIuL dIIIerenL
LecInoIogIes ure beLLer suILed Lo specIhc Lypes oI busIness processes, us LIe uccompunyIng
IeuL mup sIows (ExIIbIL ;). SocIuI neLworkIng und bIogs, In purLIcuIur, ure used mosL
IeuvIIy In exLernuIIy Iocused processes LIuL guLIer compeLILIve InLeIIIgence und supporL
murkeLIng eIIorLs.
Exhibit 6
% of repeat respondents
1
Organizational
type in 2010
Web 2011
MoBT Social tech
Exhibit 6 of 9
Exhibit title: Shifting network classications
Shifted to new organizational type, % Remained
the same, %
2011
Developing Internally
networked
Fully
networked
Externally
networked
Organizational type, based on social-technology benets
Fully networked,
n = 29
14 17 35 35
Externally focused,
n = 24
4 38 13 46
Internally focused,
n = 94
18 52 19 11
1
Figures may not sum to 100%, because of rounding.
Developing,
n = 500
83 2 5 10
2011
2010
Distribution of organizational types,
n = 647
7 74 13 5
15 77 4 4
N/A
N/A
N/A
N/A
Shifting network classications
8
Exhibit 7
% of respondents
1
whose companies use at least 1 social
technology in given process
How companies are using social technologies
Total,
n = 3,103
Blogs,
n = 1,322
Micro-
blogging,
n = 654
Podcasts,
n = 502
Social
networking,
n = 1,728
Video
sharing,
n = 769
Wikis,
n = 809
RSS,
n = 642
Web 2011
MoBT Social tech
Exhibit 7 of 9
Exhibit title: Supporting a variety of processes
Determining
compensation
20 6 4 2 1 2 1 1
Allocating
resources
30 10 5 4 3 4 2 2
Assessing
employee
performance
26 7 4 3 2 3 1 2
Matching
employees to
tasks
29 11 4 4 2 5 2 3
Finding new
ideas
73 36 29 11 10 12 7 13
Scanning
external
environment
75 40 29 11 14 9 8 13
Managing
projects
55 19 12 11 5 17 4 5
Developing
strategic plan
43 16 11 8 4 8 4 5
2040%
1020%
510%
<5%
1
Respondents who answered other are not shown; <10% of respondents use tagging, rating, mash-ups, and prediction markets
for any of the tasks and are not shown.
RespondenLs expecL socIuI LecInoIogIes Lo modIIy muny oI LIeIr orgunIzuLIons` currenL
processes. n uddILIon, muny beIIeve LIuL enLIreIy new processes couId urIse II burrIers Lo
use-cuILuruI obsLucIes, Ior exumpIe-IuII (ExIIbIL 8). TIe respondenLs uIhIIuLed wILI IuIIy
neLworked orgunIzuLIons ure LIe IIkeIIesL Lo beIIeve LIuL greuLer process cIunge wIII occur
In LIeIr own orgunIzuLIons. n Iurger numbers LIun respondenLs In oLIer cIusLers, LIey
think that social technologies will lead their companies to adopt entirely new processes
under currenL condILIons und Lo do so even more uggressIveIy II uII consLruInLs were
removed. TIIs opLImIsLIc vIew muy reecL LIe IucL LIuL LIese respondenLs ure seeIng LIe
greuLesL IeveI oI benehLs ucross LIe bourd.
Supporting a variety of processes
9
Exhibit 8
% of respondents,
1
n = 4,261
At respondents companies
Web 2011
MoBT social tech
Exhibit 8 of 9
Exhibit title: A mix of old and new
1
Respondents who answered dont know are not shown.
2
3
26 5 4 10 56
Determining
compensation
37 18 10 12 24
32 7 7 11 44
Assessing employee
performance
38 24 13 8 19
35 8 7 11 39
Matching employees
to tasks
37 27 13 7 15
36 8 7 9 38 Allocating resources 40 23 14 8 15
42 9 9 8 31
Developing a
strategic plan
40 27 15 6 11
48 18 17 6 13 Finding new ideas 32 43 17 6
46 20 17 4 13
Scanning external
environment
30 44 17 6
45 10 11 8 25 39 30 17 4 10 Managing projects
At an organization with no technology-
related constraints
Entirely new
process
Mix between more
new processes and
fewer traditional
processes
Equal mix of
new and
traditional
processes
Mix between more
traditional processes
and fewer new
processes
No change
in process
Extent to which social technologies can change organizational processes
PeerIng uIeud LIree Lo hve yeurs, muny respondenLs expecL sLIII more proIound
orgunIzuLIonuI cIunges (ExIIbIL q). TIey suy LIuL wILI Iewer consLruInLs on socIuI
LecInoIogIes uL LIeIr compunIes, boundurIes umong empIoyees, vendors, und cusLomers
wIII bIur; LIuL more empIoyee Leums wIII be ubIe Lo orgunIze LIemseIves; und LIuL duLu-
drIven decIsIon mukIng wIII rIse In ImporLunce.
Looking ahead
Our reseurcI sIows LIuL respondenLs uIhIIuLed wILI IuIIy neLworked orgunIzuLIons
suy LIuL LIey conLInue Lo reuIIze compeLILIve guIns und perIormunce ImprovemenLs.
SenIor execuLIves sIouId LIInk sLruLegIcuIIy ubouL Iow socIuI LecInoIogIes cun supporL
busIness processes by IeIpIng orgunIzuLIons Lo nuvIguLe LIe exLernuI envIronmenL und
Lo Iorge sLronger IInks wILI cusLomers und vendors. nLegruLIng socIuI LecInoIogIes InLo
LIe workow und usIng LIem Lo opLImIze InLernuI processes wIII, LIese resuILs suggesL,
provIde uddILIonuI compeLILIve benehLs.
A mix of old and new
10
Don`L resL on your IuureIs: compeLILIon wIII Increuse us LIe udopLIon oI socIuI LooIs und
LecInoIogIes conLInues Lo rIse und us progressIve compunIes use LIem Lo Improve LIeIr
processes. ndeed, muny compunIes we cuLegorIzed us neLworked orgunIzuLIons IusL yeur
sIIpped Lo u Iower rung LIIs yeur us LIe benehLs LIeIr execuLIves reporLed IeII. nLegruLIng
Web LecInoIogIes InLo LIe duIIy workow, our resuILs suggesL, Is LIe mosL eIIecLIve wuy
Lo muInLuIn compeLILIve posILIon or become more neLworked.
CompunIes sIouId prepure Ior more subsLunLIuI dIsrupLIons. SInce muny execuLIves
beIIeve LIuL sIgnIhcunL cIunges wIII occur us (or II) consLruInLs on socIuI LooIs und
LecInoIogIes ure IIILed, compunIes LIuL cun creuLe cIunge LIemseIves-InsLeud oI
reucLIng Lo IL-ure IIkeIy Lo benehL LIe mosL.
The authors would like to thank Angela Hung Byers for her contribution to the development of this article.
Jacques Bughin is a director in the Brussels ofce; Michael Chui is a senior fellow of the McKinsey Global Institute and
is based in the San Francisco ofce. Copyright 2011 McKinsey & Company. All rights reserved.
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Exhibit 9
% of respondents,
1
n = 4,261
Web 2011
MoBT social tech
Exhibit 9 of 9
Exhibit title: A blurring of boundaries
The boundaries between employees,
vendors, and customers will blur
The organizations formal
hierarchy will become much atter
or disappear altogether
Internal markets or other voting
mechanisms will be used to allocate
resources (eg, talent, capital, ideas)
Strategic priorities will be set from
the bottom up
Data used for decision making
will mostly be collected through
experiments
Decisions will be based primarily
on the examination of data rather than
reliance on opinion and experience
Financial transparency will
increase dramatically
Teams will self-organize
35
32
32
27
20
19
18
Individual performance will be
evaluated by peers rather than
by managers
Large companies and/or business
units will disaggregate
Compensation decisions will
be made by peers rather than
by managers
Employees will play a much
greater role in selecting leaders
Employees will have much more
discretion in choosing which tasks
to work on
14
12
10
9
3
17
1
Respondents who answered none of the above or dont know are not shown.
Likeliest organizational changes in next 35 years, without constraints
A blurring of boundaries