Wednesday, September 08, 2010

Making the case for internal social media software to a CFO

The theory of the experience curve is based on the idea that the time, and hence cost, required to perform a task decreases as a worker and the organization gain experience.

Worker and organizational experience is gained by awareness, observation, conversation and experimentation. Traditional workplaces provide this awareness, observation, instruction and conversation a few times a year. This is, more often than not, done outside the context of day-to-day work.

For example, training programs are conducted a few times a year and performance discussions are conducted once or twice a year.

The theory of the experience curve also states that the more often a task is performed, the lower will be the cost of doing it. A task can be the production of any good or service. Each time cumulative volume doubles, value added costs (including administration, marketing, distribution, and manufacturing) fall by a constant and predictable percentage.

Workers and organizations with access to timely knowledge from trusted sources will provide services and produce goods faster and in a more efficient manner. Until recently, social interactions to share and gain such knowledge was limited by constraints imposed by geography, time and to some extent technology. This is not the case any more.

Social media tools in the workplace enable a worker to share what she is  doing or thinking effortlessly. They enable a supervisor to be aware of what others are doing without interrupting their work. Social media tools enable a worker to keep track of everyone she cares about at work and interact with them more frequently. Awareness is high, conversations are made in context , observation is keen, feedback is rapid, and experimentation is frequent.

A social media platform, enables synchronous and asynchronous connections and spreads the body of knowledge, through people who know and trust each other. The experience and confidence of the organization as a whole, not just the workers, increases exponentially.

So when a company that has a social media platform for its workers, competes with another company without one, all other things being equal, the former will make more money.
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