
Last week, Business Week published a
great article by Robert Hof (Silicon
Valley bureau chief) entitled “Web
2.0 Has Corporate America Spinning” as part of their “CEO Guide to Technology”
series.
There is just
so much good information in this article that you really need to read it all—together
with the ton of links to other related Biz Week articles, such as A
VC's View of Web 2.0, E-Mail
Is So Five Minutes Ago, and MySpace
for the Office. Here are some interesting bits from the article:
And though these Web 2.0 services have succeeded in luring
millions of consumers to their shores, they haven't had much to offer the vast
world of business. Until now. Slowly but
surely they're scaling corporate walls. “All these things that are thought
to be consumer services are coming into the enterprise…”
For all its appeal to the young and the wired, Web 2.0 may end up making its greatest impact in business. And that could usher in more changes in corporations,
already in the throes of such tech-driven transformations as globalization and
outsourcing. Indeed, what some are calling Enterprise 2.0 could flatten a raft of
organizational boundaries—between managers and employees and between the
company and its partners and customers…”It's the biggest change in the organization of the corporation
in a century.”
…the notions behind Web 2.0 clearly hold great potential for
businesses—and peril for those that ignore them. Potentially, these Web 2.0
services could help solve some vexing problems for corporations that current
software and online services have yet to tackle.
Despite all the activity so far, it's still early days for
this phenomenon some techies (who can't help themselves) call Enterprise 2.0. For now, the key challenge for executives is learning about
the vast array of Web 2.0 services. And that requires more than simply checking
in with the premier Web 2.0 blog, TechCrunch…
It's also critical for executives to try out these services
themselves…
Executives, long used to ruling from the top of the corporate
hierarchy, will have to learn a new skill: humility. “Companies that are extremely hierarchical have
trouble adapting,” says Tim O'Reilly, CEO of tech book publisher O'Reilly
Media, which runs the annual Web 2.0 Conference “They'll be outperformed
by companies that don't work that way.” Ultimately, taking full advantage of Web 2.0 may require –
get ready — Management 2.0.
One of the related links in this
article leads to a very insightful and enlightening interview
with Tim O”Reilly, where Tim talks about the paradigm shift that Web 2.0 is
generating and provides many real world examples and applications (which I like
a lot). It’s definitely worth listening to all 28 mins of the interview, but
here are some highlights that (hopefully) capture the essence of it:
ON PARADIGM SHIFTS:
When you
look at these paradigm shifts, you realize that companies that don’t get it end
up losing very badly. So for example, in the PC revolution, Digital Equipment
Corporation was headed by Ken Olsen, who said “the PC is just a toy.” He didn’t
get it. He lost out.
…I think that we’re in
this period of tremendous change in the fundamental rules of the computer
industry…a key part of web 2.0 [is that] you don’t sell software. You just
perform. You deliver a service with it and you monetize it in some
other way. And that’s a huge challenge to existing business models.
ON HARNESSING COLLECTIVE INTELLIGENCE:
Amazon [is a] really interesting case.
Amazon has the same product catalog as all their competitors, but they were much better
at harnessing their users to annotate that data and, as a result, their data
got better and better and better; and they have pulled away from the pack…They have a business
that is not naturally a “network effects” business. Google leveraged the
natural network effects of the web. Ebay is a natural network effects business,
but Amazon isn’t. What you see is a series of concentrated, consistent,
persistent efforts that they make to harness their users to improve their
product and I think that’s where the real lesson is for companies.
ON APPLYING IT TO YOUR BUSINESS:
…I think companies can also create
various kinds of interesting network effects in the way they relate to their
employees. By looking at and studying what’s happening on the consumer
internet, you can see the shape of what’s possible in a networked world and
then you have to apply this to your situation. Creating those effects
where communication networks are in place within a corporation allows
innovation to bubble up from the bottom; from the edges.
I think
the lesson to be learned from all this is that executives of any business
really need a wake up call if they have been treating Web 2.0 as a passing fad
or a phenomenon restricted to geeks and teens. Web 2.0 is here. And it’s now. And
it’s going to have a powerful affect on any business. Top management needs to
get off their pinnacle of hierarchy
and start
focusing on many of the Web 2.0 principles—like “collective intelligence” and “network
effects”—that are facilitating this paradigm shift towards Enterprise 2.0.
In
summary, here’s one final quote from the Tim O’Reilly interview:
Studying what works and
why it works and throwing away what’s just marketing hype is in fact the
challenge for any CEO today who is trying to understand how the internet is
changing business…There is a fabulous blog by Kathy Sierra, called Creating
Passionate Users, that I would say “hey, put that high on your [reading list]”
because it’s a lot about the spirit of Web 2.0—how do you get your users
engaged?
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