The Revenue Impact of Enterprise 2.0

I recently read a great study that looked at the impact of social networks inside companies. Information, Technology and Information Worker Productivity was written by academics at MIT, NYU and BU. The authors analyzed the social graph of employees for a 14-office midsize executive recruiting firm.

The firm didn’t actually have a social networking application in-house. It was all email. But what the authors did is look at the email connections of workers to extrapolate their social graphs. And what they found was enlightening.

I encourage you to read the study itself, as it has a wealth of good information in it. I’ll call out my favorite observations from the report:

A one standard deviation increase in betweenness centrality in the email network is associated with approximately $76,000 greater revenue output per year controlling for human capital, demographic variables and use of the ESS system.

A one standard deviation increase in network diversity is associated with approximately $83,000 greater annual revenue output.

Betweenness centrality: What’s the probability that an individual will fall on the shortest path between any two other individuals? This attribute measures the strength of an individual’s connections to other employees. Sort of a probability-based LinkedIn.

Network diversity: Measures the degree to which an individual’s contacts are connected to each other. If your social network consists of people who all know each other well, your network diversity is low. If your social network has a lot of connections that don’t know one another, your diversity is high.

Here’s what the network diversity impact looks like graphically:

The folks with the best access to a diverse set of opinions, knowledge and perspectives outperformed their peers.

How Do You Make These Findings Actionable Across the Organization

The author’s looked at the connections people had built on their own, and those who had the best, most diverse networks outperformed everyone else. What Enterprise 2.0 does is take these characteristics of the top performers and exposes them for everyone else in the organization.

If you force your employees to create these networks on their own with the existing offline relationships and siloed data, you’re not going to create opportunities for network improvements across the board. By making employees perspectives and work visible and searchable, you put every employee a step ahead of where they are now

I’ve got a fuller write-up over on the Connectbeam company blog. Check it out if you’re interested in developing an ROI of enterprise social software.

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