Everyone is aware of how social media has taken the Internet by storm.

Facebook, the leading social media application, grew from 20 million US users in October 2007 to 103 million US users, about one third of the entire population, in January 2010.But not everyone is embracing it.

Today’s front page of the Arizona Republic ( “social media raise red flags for employers“) worries that “bosses have struggled with managing employees’ Internet access at work since e-mail and web browsers became part of the daily grind,” the article stated the additional fear driven by social media technology:

“The explosion of social media, which encourage users to spend a moment here and a moment there all day long, has given workers even more reason to use their office computers for personal activity.”

But is it really so bad? Will social media be merely another distraction to already distracted employees further reducing productivity?

There are three reasons why this fear is misplaced. You shouldn’t fear social media.:

1. If you are a CEO trying to create a workforce that responds rapidly to changing situations, taking initiative independent of the central management structure, without a lot of overhead.
2. If you want to design and implement a corporate system centered on constant improvement and change.
3. If you want to engage employees and unleash their experience and creativity to improve both products and process.

Welcome to the developing fields of collective intelligence and collaboration science. And welcome to the use of social media tools in the daily fabric of business.

James T. Lincoln, the founder of Lincoln Electric Company,  and one of the pioneers in employee engagement programs, succinctly stated the problem in 1946, saying that“Management, if it is to be the best obtainable, must be the collective intelligence of the whole organization.” (Yes, people actually had some useful ideas prior to social media!)

To harness this “collective intelligence,” Lincoln designed an “incentive management” system that enabled Lincoln to become and remain for more than 100 years the world’s largest manufacturer of arc-welding equipment and supplies.

A major limiting factor in the development (and exercise) of “collective intelligence,” however, was the limitations of paper and face-to-face communication systems.

Fast forward 50 years — the rise of the Internet. It’s how hundreds of millions communicate and collaborate on a scale previously unimaginable, leading scientists to focus on the processes of communication, collaboration and knowledge sharing that take place among all these connected individuals.

Take for instance what Dr. Thomas Malone, Director of the MIT Center for Collective Intelligence observes about intelligence gathering,:

“With new information technologies—especially the Internet—it is now possible to harness the intelligence of huge numbers of people . . . however, we need to understand what the possibilities are in a much deeper way than we do so far. The time has come make collective intelligence a topic of serious academic study.”

What does all this have to do with social media technology? Simply put, social media is the prime engine driving the rise of collective intelligence and collaboration networks. More and more businesses are turning to social media tools and methods to build internal communication tools that build on the strengths of applications like Facebook. Starbucks has been using a social media approach in My Starbucks Idea to ask customers for ‘big ideas, little ideas, revolutionary ideas.’ Services such as Idea Scale help a company tap into such ideas from the community.

Most CEOs have received advanced education in business processes which allow them to design successful manufacturing or sales outcomes. But few have received any training in fields of knowledge that will be necessary to understand how to deliberately design what MIT researcher Peter Gloor calls Collaborative Knowledge Networks leading to Knowledge Flow Optimization. Knowledge of how to use social media tools will be a critical part of know-how to create these new processes.

Fortunately businesses won’t have to spend much on training. Facebook users aged 55+ grew 922.7% in the last year, to 10% of all Facebook users. Amazingly, the 35-54 age group, (29%) is now the single largest demographic, replacing the 18-24 demographic, which was the largest (at 40%) at the beginning of 2009. It grew from 7M to 30M, while the 18-24 grew from 17M to 26M.

Businesses should not fear social media tools. Rather, they should embrace them as valuable ways to channel the collective intelligence of their employees.

So, all you CEOs out there, it is up to you to harness the power of social media to … start the conversation.

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