Posts Tagged ‘Web 2.0’

Markings: The Emerging Networked Enterprise

September 3rd

A global survey of business use of Web 2.0 by McKinsey and Co. (September 09 McKinsey Quarterly) has offered new insight into the use of the Internet social media (How Companies are Benefiting from Web 2.0, McKinsey Global Survey). At this point in the evolution of the Internet this new survey gives powerful impetus to the argument that the new networked, collaborative marketplace is creating a platform for innovation – at least for those who are participating.

In the past several years there has been an explosion in the popularity of social media, what are often called Web 2.0 technologies. Wikipedia explains that Web 2.0  is “web development and web design that refers to interoperability, user centered design and collaboration” on the world wide web.” The technology of web 2.0 – wikis, blogs, “folksonomies” – and 2.0 sites allows the users to change the content as opposed to the interactive sites of web 1.0 which allow only the passive viewing of information that is provided.

The phrase 2.0 is attributed to Tim O’Reilly and a 2004 conference that he hosted in which Internet experts gathered to survey the wreckage of the dot com crash. What they observed was that even though the Internet bubble and its hyperbolic rhetoric (Web 1.0) following Netscape going public in 1995 had clearly crashed, there were many new models that showed promise. Indeed, the users were changing the way in which they used the Internet.

One family of new models that has offered strong hope for the new media has been called Web 2.0.   From Wikipedia, to eBay to YouTube to Google Maps, there have been multiple examples of new web applications in which the users create content. Simply to be able to accelerate the process of reaching out and obtaining new ideas seemed to drive innovation. Many early spotters of new trends such as, the Aspen Institute studied the potential for the use of social media to “co-create value.”

There has been interest in the business community in the capacity of Web 2.0 – interactive social media – to add value in a commercial context. Books such as Groundswell have documented the multiple personalities of on-line information consumers and interactors and contributed to understanding that there are many ways in which individuals consume information on-line. The growing popularity of social media has fostered a mini-industry of comment.

But is it real? Have the Web 2.0 technologies proven to be worth the overhead?  So what did McKinsey find?

➢ Internally, within companies, Web 2.0 tools increased the speed of access to knowledge (68% of the respondents with an average of 30%) and reduced communications costs (54%). In customer facing uses, a majority reported increased marketing effectiveness (52%) and customer satisfaction (43%). And in working with business partners and suppliers there was also an increased access to knowledge and access to experts.

➢ Equally powerful there are reports of faster time to market (25%) and development of innovation (25%). These reports of internal improvements were essentially matched by applications related to the customer and the business partners.

➢ Perhaps it should not be surprising that in considering the applications that are gaining prominence have been the ones that illustrate the revolution in communications – the sharing of video (48%), blogs (47, 51 and 51% – internal, marketing and collaborative applications), RSS (syndication) and social media. In general half of the respondents were reporting at least one instance of seeing an impact from the 2.0 media and a quarter were reporting measurable benefits.

➢ The survey’s results would seem to set aside the discussion of whether or not the social media will find an application in the commercial marketplace. Clearly for many businesses throughout the world there is a significant ongoing development of interactive technologies for internal communications, enhanced marketing communications and communications with partners and suppliers.

➢ Yet there were a third of the companies in the survey who have yet to find any impact from the social media either because they have not yet tried it or found the help needed to make it effective.

In looking across the technologies that were included in McKinsey’s global survey, there would appear to be three categories that are drawing interest:

• Communications technologies: video sharing, blogs, RSS (real simple syndication), microbloggimg

• User generation of content: wikis, podcasts, rating, tagging, and P2P (peer to peer), and

• Analysis or processing of content: mashups (where multiple streams of data are combined in a single tool).

Almost in this sequence the survey respondents reported their observation of at least one instance in which value was created or where they found measurable value through the use of 2.0 technologies.

In sum, and perhaps most interestingly, McKinsey found the emergence of a new corporate model, a networked enterprise, in which these advanced communications technologies were being used to enhance communications within functions and across the enterprise and were then being built into interaction with customers and suppliers/partners.  Expect the next reports to be on the cost effectiveness and productivity of the networked enterprise (results will be mixed) and on the competitive success of the new form (they will be the ones who prevail in their marketplace, often because of their innovative successes.)