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By Karen J. Bannan

How do you grow market share when you already lead the market? For Headwaters Inc., a South Jordan, Utah, provider of products and services to the energy, construction and home-improvement industries, the answer involves social networking.

Headwaters, with 2008 revenue of $819 million, already owned 80 percent of the market in many of its verticals. While company executives put a priority on pursuing the remaining 20 percent, they’re also focused on introducing new products as a way to expand into related markets. Headwaters executives knew this strategy would require numerous meetings with customers, both current and potential. Yet they also wanted to avoid costly travel bills. So last year, with help from CIO Niel Nickolaisen, Headwaters built a customer portal and wiki to let employees interact online, both with customers and each other. The company evaluated several popular services, conferred with others at industry events, and launched social-technology pilots.

Since then, Headwaters has begun using social networking for other purposes, too. These include helping HR find and evaluate job candidates, connecting salespeople with customers, promoting supplier loyalty and connecting customers to potential customers. “You can invite your customers to share best practices and share their experiences,” Nickolaisen says of the latter application. “Do it right, and you’re creating a potentially limitless pool of unofficial company salespeople.” The company also uses social networking internally to support its Lean manufacturing efforts. “We use social networking to gather process improvement information from our employees,” Nickolaisen says.

Social Work
Headwaters is far from alone. Social networking, a technology originally designed for consumers, has entered the corporate setting in a big way. In fact, 60 percent of all U.S. workers have used at least one social-networking site in the past year, according to market researchers Compass Intelligence. Another market watcher, Equation Research, sees even wider adoption; the firm says 75 percent of all U.S. employees now use social networks for business purposes. “Social networking began with the consumer Internet and is now finding its way into the workplace,” says Caroline Dangson, Research Analyst with IDC’s Digital Marketplace Program. “People are realizing the value of social networks to connect with colleagues and deepen business relationships, just as they do with friends on these services.”

Many employees have taken it upon themselves to use these tools, regardless of whether their organization has its own initiatives, Dangson adds. In fact, she is one of more than 50 analysts at IDC using Twitter, the microblogging service. Another 360 or so IDC employees use Yammer, a free, private social messaging service, for internal information sharing and virtual brainstorming sessions.

Click on image to enlarge it.

Also, some companies have improved productivity with social networking, Dangson says. Mainly, they’ve done so by reducing the time employees need to spend on the phone solving customers’ problems. “Workers struggle with information overload,” she says. “Social networks help them filter and find the information they need through the help of peers they trust.” A recent MIT study supports this. Researchers there found that employees with the most online connections were 7 percent more productive than their less digitally connected colleagues. While that gain might seem modest, in today’s economy, every percentage point is worth fighting for.

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