FORTUNE – At a breakfast roundtable Tuesday morning at the Fortune Most Powerful Women Summit, author of 11 Rules for Creating Value in the Social Era Nilofer Merchant kicked off discussion with quite the statement: “Corporate strategy has outlived its usefulness.” At her side, General Electric (GE) Chief Marketing Officer Beth Comstock agreed. “The traditional way of corporate strategy is over. [Companies] have to reorient.”

Business is social, Comstock claimed. Technology enables companies to connect with customers by creating more collaborative, transparent relationships – but teaching an old dog new tricks isn’t easy. “In the beginning, [social innovation] doesn’t scale,” Comstock warned, citing the difficulty in convincing executives to alter what they’ve been taught (and put into practice) for the past forty years. “They’ll say, ‘That’s cute,’ or ‘My kids do that, but it doesn’t relate to me.”

Merchant chimed in, referring to the oft-taught business definition of marketing: a way to capture value. “It’s a bit of a war metaphor – capture,” she laughed. “The new [marketing] metaphor is much more relational.” Social shouldn’t be used as a popularity contest, Comstock added, or “you’ll probably lose.” Instead, it should be used as a tool that allows collaboration between consumers and companies. “You’re giving up a certain amount of control, but getting much more back,” Merchant said, adding that every definable problem can be solved by engaging a larger group in the discussion.

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The admission from a company that it doesn’t have all the answers can be tough, Comstock said. But doing so via social yields innovative (and bottom line-boosting) results. GE engages entrepreneurs and experts through competitions, like its Ecoimagination Challenge. “You have to create a platform that invites [innovative ideas].” Merchant nodded her head, saying that companies will see much more engagement if they co-create initiatives and ideas with consumers. “Sharing almost feels unnatural, but it’s the best way to have new ideas.” A closed fist around data will harm, not help, companies.

Open conversation doesn’t mean answering questions via Twitter or Facebook (FB); that no longer “makes a company socially savvy,” said Comstock. “Data is out there, and [companies] have to use data to enhance the experience with the customer.” Merchant cited website Patients Like Me, which allows friends to share personal medical history and stories to help one another, as an example of a community larger companies can emulate to increase discussion and solve problems (whether they be in health or any other subject).

Though inspiring, the idea of sharing customers’ personal information is jolting. But Merchant said hoarding intellectual property is not the answer – it’s in the execution of getting a creative use of that IP to market reality quickly. The exchange of IP creates a relationship with the created community – and therefore the brand. Understanding the worry that sharing data can hurt a company’s competitive edge, Comstock added: The customer tells you what’s valuable. Know your competitive advantage,” and build on that.

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McAfee saw a 5% contribution to its bottom line, said Merchant, by creating a network of peer-to-peer customer support. Other accountant customers answer 74% of customer questions at Intuit; the company is peripheral and supporting. These active consumers aren’t being paid – they’re simply passionate about the brand or subject. “Every company has a mission and we’re judged by how transparent we are,” Comstock said. “People want to see all sides of you as a brand, not just the good stuff.”

By creating an honest dialogue with consumers through social, the brand is strengthened, innovation is sparked, and customer engagement – due to loyalty and interest in the company’s mission – can reach profitable highs.