Note: This post originally published in our CIO Insights blog on Dec. 3, 2012.

Social media will transform businesses from top-down, hierarchical organisations into meritocratic “social capitalist” communities, according to analyst house Gartner.

The report predicts that as people increasingly cooperate through social media they will expect businesses to take a similarly collaborative approach in the way the take decisions.

“While capitalism won’t collapse, there are fundamental changes under way as it morphs to a new form that is more in tune with the technology and attitudes of the 21st century,” says Nigel Rayner, research vice president at Gartner.

“The coming capitalist era is that of the Facebook generation, in which the values and behaviours that pervade the internet and social media will also be adopted by innovative and disruptive businesses. With half the world’s population under the age of 25, this may happen sooner than many think.”

Social media will break down the walls between a business’ leadership and its staff, customers, suppliers and other interested parties, the report predicts. The constant dialogue between these groups and the business via social media will result in them having a stronger and more direct influence on a businesses’ decision making and strategy than today.

As a result businesses will move away from a hierarchical command-and-control structure to more democratic and meritocratic alternatives, the report says. It predicts that employees will increasingly be judged, and granted influence, based on their contribution in the eyes of this community of interested parties – rather than on job title, age or social background.

Elements of Gartner’s “social capitalist” organisation exist today. Businesses have been experimenting with opening up decision-making to staff and customers for years by building community-led idea pools. Initiatives such as Dell’s IdeaStorm and the Department for Work and Pension’s DWPeas add elements of game design to stimulate contributions, where good ideas are rewarded with points that can be invested to take an idea further.

Not every enterprise can follow a social capitalist model, the Gartner report says but it forecasts those that can will be the “most admired companies” over the next 10 years.

Businesses need to prepare for the impact that social media will have on the corporate world, it says, by ensuring that social media is incorporated into their business and IT plans.

“IT and business leaders must identify how soon their industries and companies will be affected by these changes,” says Rayner.

He says organisations should find a senior executive who supports the greater integration of social who can work with the IT department to trial social technologies ahead of wider adoption throughout the organisation.