The Bottom-Up Changes of “Social Business”

originally posted here on

There is a great deal of news, opinion, and discussion these days about the wave of social business which is generally thought to include a shift toward new ways of doing business largely through the use of social technologies like wikis, social networks, etc.

As people who are thinking about the implications of this shift to social business for our future careers, or as managers or a members of the c-suite who are thinking about the implications of this shift for the future of the organization, it seems to me we need to step back from the river of information and predictions for a moment, and ask ourselves a basic question:

How fundamental are these changes likely to be, really?

After a good deal of research into , and thinking on the matter, i have come to the conclusion that the answer is: quite fundamental.  To make my case, i won’t be relying on poll data, or industry stats, or historical analysis or case studies, but rather a series of simple logical propositions derived from decades of theory and research on organizations. As you follow along, check these against your own experience, and i think you will reach a similar conclusion. Ready? Let’s dive in.

Every institution (regular pattern of human interactions, i.e., open source software production, crowdsourcing, viral spreading, vendor relations management, group buying, etc.) or organization (a particular type of institution, i.e., WalMart, Zappos, IBM, Threadless, etc.) only exists because of a set of formal, informal, spoken, unspoken and textual agreements between people (a.k.a. attributions of function, rules, norms, institutional statements, in which two or more people “agree” that x counts for y in a given context, like “dollar bills count for purchasing power in a market” or “the title CEO counts for power in an organization”). No agreements, no institution or organization. Different agreements, different institution or organization.

Agreements are always constituted by social interactions like conversations, sharing of information, etc. No social interactions, no agreements. Different social interactions, different agreements.

Social interactions are completely reliant on symbolic communication. No symbolic communication, no social interactions. Different symbolic communication, different social interactions.

Symbolic communication is dependent on the medium that is available (broadly defined as something which expands the speed and scale of human events, like language, telephones, computers, etc.) and the way that the medium is used (speaking, writing, broadcast, social networking). No medium and use, no symbolic communication. Different medium and use, different symbolic communication.


At this point you may be asking yourself why you read this far. This all seems pretty obvious, right? Here’s where it gets interesting:

Working back up this logical chain, we can see that the increasing availability of new media forms, and the increasing use of these new media in very different ways, is making it possible to form new types of institutions and organizations. It is also making it more likely that people will form new types over time, largely because these new media and uses of those media are making new forms of symbolic communication possible and likely, which in turn makes new forms of social interactions possible and likely, which in turn makes new forms of agreements possible and likely.

When different types of institutions and organizations begin to be formed, whole ecosystems of institutions and organizations begin to change as these new forms (and the old ones) begin to interact with each other. Groupon interacts with box stores, Anonymous interacts with the FBI, Local Motors interacts with Crowdsourcing and General Motors, student bodies interact with teachers, teachers with school administrations, etc.

When these ecosystems change, some of the old types, and some of the new types of institutions and organizations survive and thrive, and others wane and disintegrate, sometimes from lack of continuity (waning use of the formal titles Ma’am and Sir or the lack of subscriptions for news corporations), and sometimes from formal disintegration (legal bans on the institution of hazing or the legal dissolution of a corporation).

With all of this in mind, now we can revisit our question: How fundamental are these changes, really?

Very. Because logically, the ways that social technologies are profoundly different technically, and differently used, than previous technologies are changing organizations not just by providing a new set of tools, but by fundamentally changing the nature of the agreements that constitute our institutions and organizations. Evidence of these shifting agreements show up in ongoing questions about whether hiding information still counts for power in all contexts, whether a unified company brand counts as more valuable than one co-created with consumers, whether a leader’s willingness to show faults counts as weakness in organizations, if owning source code counts as more valuable than sharing it widely, if paid content editors count as more qualified than groups of volunteers, whether playing World of Warcraft counts as quality social interaction or not, etc. etc.

We can see evidence of these shifting agreements when we look at new, powerful and sustained social business institutions and organizations like Wikipedia, Zappos, SalesForce, Anonymous, etc. which are only possible to form, and likely to be formed, because of the new technologies and their widespread new forms of use. We can also see evidence of this when we look at established, and surprisingly collapsing institutions and organizations like newspapers, encyclopedias, etc. whose agreements within their organizations, and with the public have shifted in an ecosystem of new media and new uses of those media.

Armed with a little deeper, more basic perspective, we can go back to the flood of news and opinions and predictions about the coming wave of social business with a more critical eye as we think about our future careers and our future organizations and institutions.


Here is an abbreviated list of sources you might want to read to further explore this topic:

  1. Searle, John. (2005). What is an institution?. Journal of Institutional Economics, 1 , pp 1-22.
  2. American, The, Political Science, and No Sep. “A Grammar of Institutions Sue E . S . Crawford ; Elinor Ostrom.” Political Science 89, no. 3 (2007): 582-600.
  3. Ostrom, E. (2005). Understanding Institutional Diversity. Princeton University Press.
  4. Orlikowski, W.J. and Scott, S.V. (2008). Sociomateriality: Challenging the separation of technology, work and organization, The Academy of Management Annals 2: 433–474.
  5. Scott, W.R. (2008) Institutions and Organizations: Ideas and Interests, 3rd edn (Thousand Oaks: Sage).
  6. Zammuto, R.F., Griffith, T.L., Majchrzak, A., Dougherty, D.J., & Faraj, S. (2007). Information technology and the changing fabric of organization. Organization Science, 18(5), 749–762.
  7. Organization Design: An Information Processing View. Jay R. Galbraith Interfaces Vol. 4, No. 3 (May, 1974), pp. 28-36
  8. Beniger, JR.(1986). The control revolution: Technological and economic origins of the information society. Harvard University Press.
  9. McLuhan, M. (2003). Understanding Media, critical ed. Corte Madera: Gingko Press


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