Social media is reinventing how business is done

— -- When Red Robin Gourmet Burgers introduced its new Tavern Double burger line last month, the company had to get everything right. So it turned to social media.

The 460-restaurant chain used an internal social network that resembles Facebook to teach its managers everything from the recipes to the best, fastest way to make them. Instead of mailing out spiral-bound books, getting feedback during executives' sporadic store visits and taking six months to act on advice from the trenches, the network's freewheeling discussion and video produced results in days. Red Robin is already kitchen-testing recipe tweaks based on customer feedback — and the four new sandwiches just hit the table April 30.

Facebook's initial public offering Friday — the largest by a technology company — is a watershed moment for the consumer side of the Web, but social networking's real economic impact might be ahead as companies learn how to harness "social business" tools.

Beyond advertising on Facebook or Twitter, companies are using social networks to build teams that solve problems faster, share information better among their employees and partners, bring customer ideas for new product designs to market earlier, and redesign all kinds of corporate software in Facebook's easy-to-learn style.

"At a very basic level, Facebook is the most popular application ever, with a billion people who know how to use it," said Marc Benioff, chief executive of salesforce.com, whose Chatter social-networking tools are used by 150,000 companies. "The ability to access information is much better because it's easier to get to it."

After a slow start, Big Business is embracing social media in a big way. Forrester Research says the sales of software to run corporate social networks will grow 61% a year and be a $6.4 billion business by 2016.

Two-thirds of big companies surveyed now use Web 2.0 tools such as social networks or blogs, with use of internal social networks up 50% since 2008, according to a survey by McKinsey & Co. Nearly 90% said they have reaped at least one measurable business benefit, though most say the improvements have been modest.

Heavy use of social tools has a statistically significant correlation to profitability, said Michael Chui, senior fellow at the McKinsey Global Institute. But it's early: Only about 3% of respondents used social business tools for all three major uses — reaching customers, connecting employees and coordinating with suppliers, McKinsey said.

The Social Web seems to be doing a different job in Corporate America than the first-generation Web. In the late 1990s, companies such as Wal-Mart used the Internet to streamline supply chains and better manage inventories to hold down prices. Banks used the new technology to cut the cost of processing mortgages by as much as two-thirds, by eliminating clerical workers and substituting e-mail for expensive overnight deliveries. If Web 1.0 automated routine processes and warehouses, Web 2.0 is about organizing design work and creativity, said Andrew McAfee, professor of technology and operations management at Harvard Business School.

"We asked ourselves where would social networking go once everyone had a Facebook account?" said David Sacks, president of San Francisco-based Yammer, whose software runs Red Robin's internal social network. "Big ideas always move from the consumer market into the enterprise market."