Fortune 500 Lag in Social Media Adoption, To Their Great Cost

At the end of last month McKinsey published the results of their fifth annual survey on the ways organizations use social technologies.

For the most part, the results are a snooze: The adoption of social media tools, from Twitter to Quora, is steadily rising; measurable benefits are steadily if slowly increasing; and the sophistication in the way organizations use social media has seen significant gains. All good, although hardly ground-breaking news.

But wait. The McKinsey people aren’t anything if not thorough, so they also tried to show a correlation between adoption of social media and self-reported organizational performance (that is, market share gains, operating margin compared to competition, and being first in industry market share). To my surprise, on the latter measure – showing a link between market share leadership and adopting social tools – the correlations are mostly negative. This suggests that the adoption of social media is adversely associated with being a market leader, a counter-intuitive and strange result. If it were so, then the good people at McKinsey should be telling the titans of industry to flee Facebook, ban blogging, and terminate Twitter post-haste.

But wait. The researchers’ explanation of this is that “while market leaders may use social media technologies within the organization, they might be less inclined than market challengers to push for a full range of benefits [and use social media externally].” So, according to McKinsey, they suspect that market leaders as a group are actually under-utilizing social media.

This sounds plausible. Indeed, very detailed research by UMASS Dartmouth shows that for blogs, about 23 percent of the Fortune 500 (large, market-share leaders) have corporate blogs, compared to well over 50% if the Inc. 500, a list of the fastest-growing companies compiled by Inc. magazine. There are similar results for corporate adoption of Facebook and Twitter – the Fortune 500 lag the rest of industry, especially the fastest-growing companies.

Put these two pieces of research together and we have strong data suggesting that large, market-share leaders – think companies like WalMart, Exxon-Mobil, Proctor and Gamble, Hewlett Packard, Boeing and Dow Chemical – are collectively failing to extract value from the social media revolution. These findings play into the stereotype of the lumbering, bureaucratic multinational that often enjoy a market-share lead but fail to take first-mover advantage of new innovations.

And the research clearly shows that the price of late adoption of social media is very high indeed.