The Context Of Business In The Social Era

by Jay Deragon on 12/13/2012

In the midst of change there is always opposing forces. One force is rapidly transforming the landscape while the other is resisting the forces of change. The missing link to pull things together is context.

Today we are witnessing the rapid and intense change aimed at transforming the business landscape.  The very purpose of business is being challenged as a new generation of willing workers reject old business models and cultures of command and control.  The context of business is being redefined by the Social Era.

Nilofer Merchant writes: In the Information Era, value was created through and by the organization itself. Today, in the Social Era, you can create value by connecting individuals who don’t even belong to your organization.

The core question I address is: Why do we keep thinking about things in old ways? For example, why do we need to have everyone inside one building to collaborate? Why do we insist people come to work at a set spot each day, instead of going to where they are most creative? Why do we define work as a thing people do to get a paycheck, rather than something we do to create value?

The industrial era traditionally defined an organization’s value as being the profits it generated internally, and suggested that the organization can then “do good” by involving others as charitable acts afterwards. That construct makes profits the core, and things like “purpose” and “meeting people’s needs” are the frosting on the cupcake. But by finding ways to build value through community, “purpose” and “meeting real people’s needs” stops being the frosting and becomes the core—a bigger, better cupcake. evia How to Lead in the Social Era – OPEN Forum :: American Express OPEN Forum.

The Core Of Business Is The Intangibles

Notice that Nilofer Merchant statement: But by finding ways to build value through community, “purpose” and “meeting real people’s needs” stops being the frosting and becomes the core—a bigger, better cupcake. In the Social Era the core of business is fueled by the intangibles: relationship capital, human capital, structural capital and strategic capital. It is all that previously labeled soft stuff that was typically delegated to human resource managers but never embraced by leaders and managers.

The context of business in the past has been centered on the tangibles: financial numbers, strategic goals, market share and sometimes customer satisfaction. What has not been recognized until the Social Era is that the intangibles drive the tangibles and not the other way around.  The context of business and what fuels growth and profitability has been flipped upside down and inside out.

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