[This post was originally published on Memeburn]

The term social media refers to a set of web-based and mobile tools, technologies and platforms that enable connection, communication and collaboration in ways never before possible. Hopefully you’ve cottoned on to this by now.

The problem is that this definition doesn’t encompass the undeniable impact social media has had on society and business. I’ve been saying for years now that social media is not about tools, but about people. I believe that companies that grasp the ethos behind social media — and the behavioural changes resulting from the integration of these tools into daily life — will easily differentiate themselves from their competitors in years and decades to come.

Modern companies are still constructed on industrial age principles. The way information is disseminated and shared within organisations has not changed much in the last fifty years. Sure, the technologies have evolved but the hierarchies remain. Few technological advancements have been able to challenge this hierarchical mindset until social media burst onto the scene.

The social web gave us things like Wikipedia and Twitter, where influence is determined by what you share and contribute, not by your salary band or the plaque on your office door. There is no direct financial reward for those contributions — we share because we know we’re building something bigger and more important than ourselves. Our Boomer parents were taught that the intellectual property you learned and retained made you valuable and competitive. Today that IP is smeared all over the Web. Becoming an “expert” can be as simple as conducting a few Google searches and reading a few blogs. As the Cluetrain Manifesto prophesied 13 years ago: “Markets are getting smarter faster than most companies can keep up.”

As a result we have employees with an information age mindset trying to flourish in industrial age organisations; Square pegs in round holes.

Countless organisations still ban their staff from using social media during office hours fearing that they will waste time and bandwidth. This is short-sighted — their staff will either continue to engage on their personal computers or mobile phones or, even worse, find ways to access these sites via proxies or otherwise. Instead of banning use, why not incentivise the correct (or most constructive use) of social media during office hours? Make the content that staff find online and share with their colleagues a KPI come salary review time. Judge the relevance and usefulness of these content submissions via a simple internal “Like” mechanism coupled with a points system. This is hardly rocket science — the proof of concept is the web itself. Your organisation should emulate a microcosm of the social web.

Business needs to change. Well, business is changing and you either keep up or become redundant in the minds of your existing employees, your prospective employees and your customers. Because social media is changing human communication at the most fundamental levels, it touches all aspects of business. From a business perspective, social media should describe the tools used to communicate with employees and customers. But we need to start thinking about social business as the term that could address the way rapidly evolving consumers and employees are challenging we way we do finance, legal, human resourcing, strategy, governance and more.

Comments, thoughts?