How Web 2.0 will change the face of business

The following is an article that I wrote recently for a magazine...I'm sure the marketing team will shorten it.:-) Feedback welcome...unless of course you are posting a URL to cheap watches.

Speaking to the IT architects of multi-national corporation about their plans around using Web 2.0 in enterprises from the largest oil and pharmaceutical companies to global banking and accounting firm, it is clear that most, but not all, have plans and intentions to use the new technologies that have changed the way we use the internet. Forrester predicts that by 2013, social software, the application of Web 2.0 for the enterprise, will grow at an annual rate of 43% per year to $4.5B by 2013. This is quickly becoming the fastest growing sector in the Enterprise software industry. However, many people are generally confused by what Web 2.0 is and it's significance in the workplace and in culture, including those planning to adopt it. The term has been for around four years old now and was coined by technology gurus Tim O'Reilly and John Battelle to describe the resurgence in activity, venture capital and huge audiences that surrounded new emerging web sites. However, in that time, there is no concise definition of what Web 2.0 is.

Web 2.0 is explained more by example than by defining the technologies that make it up. A collection of brands provide the metaphors for what exactly is different in the way we use new web technologies, such as Google for search, YouTube for video, Flickr for photos, MySpace and Facebook for social networking and Wikipedia for wikis. There are a few more examples and there may be new sites, like Twitter, that may expand our understanding of Web 2.0, but we are coming close to a complete list. These brands as metaphors become the nouns and verbs of describing Web 2.0 as a new way of socializing, communicating and sharing with each other in huge, consumer-scale markets. By being the first to create critical mass in the internet space, these brands have been able to define the way we will live and the way we will work. After all, it wasn't really a PC until IBM named their desktop computer a Personal Computer.

However, Web 2.0 is not really so much a revolution in technology, but in how people use technology and how people interact with each other as a result of that technology. The amazing technological innovations have really been happening behind the scenes with the huge build out of inter-networking and creation of new scalability technologies through open source. The open source sharing of code used to build these sites have made it possible to build and manage the sites on a modest budget and deliver incredible new content and services to absolutely anyone with great performance. This in turn has allowed a whole new class of people have come to use technology that wouldn't have had access to it before. Now even your granny was connected to the internet. The internet and desktop technology was no longer the domain of the geeks and nerds. Real people, average people, artistic people, old people, young people were connecting to the internet and discovering each other. The web sites, in turn, were reacting and evolving a very rapid rate to adapt to these new users.  Sites that appealed to these new users grew out of a Darwinian natural selection and became a lot more facile and adaptable in the process and very large and profitable.

As a result of the introduction of the internet, rapid infrastructure build-out and the new generation of Web 2.0 sites, we have seen one of the most dramatic democratizations of technology since at least the PC, if not the telephone. Through universal access, users discovered that computers could be used for far more than information; that they could be used as a medium of expression, sharing and revelation. Although the PC gave access to computing power to most office workers and many home users, it was generally within the constraints of software created by others using information created by others in business domains defined by others. The information that users created and shared tended to be very textual, columnar, organized and very factual. If you wanted to liven this information up at all, you would add in a few sappy clip art pictures to express what you were really trying to say. In short, it was an environment that was invented by geeks and nerds (like me!) and generally appealed to similar personality types.

By broadening access to information and technology and broadening the types of users accessing that information, new and more expressive types of people looked for ways to use the technology that suited their personality. Users voted with their mouse for sites that appealed to their personal sense of expression. If you were musical, visual, artistic, auditory, adventurous, sympathetic or caring, you could share art, prose, music, visuals or images with those who shared your interest, rather than a production studio in the State of Washington. The place that these people met were generally at sites that catered to introducing one friend to another - first Friendster, then MySpace and slightly more recently Facebook. Depending on your mode of expression, you may end up going to Flickr for photos, YouTube for video, or Last.fm for music and then linking it all into your personal page on your favorite social networking site. The socialization and communication enjoyed by this expression and sharing created a truly different feeling that no spreadsheet or presentation could ever possibly provide. You were Flickring, YouTubing, Googling, Twittering on your MySpace or Facebook, sites that almost have a feel like a real geographic location. For many people, these activities have become compulsive and addictive in the process. This is why the average age of television watchers in the US has now risen to 50 years old and a new generation of users will not be willing to go back.

These compelling experiences have attracted huge numbers of people, which in turn makes the experience even more compelling in a positive feedback loop. Just as in any revolution, once critical mass is achieved, the revolution takes on its own momentum and is self-adapting. A critical mass of people were dictating what is interesting and what is not. What is acceptable is far more likely to be those sites and capabilities that minimize constraints and empower people. Those that put constraints on reasonable behavior were quickly discarded. Sites that allowed individuals to write, like WordPress blogs, to edit, like Wikipedia, or to tag interesting content, like Digg, rose quickly up the internet charts of popularity. Once Facebook removed restrictions on who could join or who your friends could, it quickly grew exponentially to over 60 million users. Web 2.0 became a very democratic revolution with core principles of freedom of speech and freedom of assembly on the internet. The notions of controls are not determined by central authorities, but by the users themselves in terms of their access to the site.

By lowering the barriers to participation, this provides platforms for anyone to contribute to a site like Wikipedia or YouTube. Actual active contribution of content can be a relatively small number, less than 1% of all users according to an article in Time on the 25th April 2007 and much lower for YouTube, but as high as 4.5% for Wikipedia visitors. However with a critical mass of large numbers of people, this can still represent hundreds of thousands of authors and contributors. It also doesn't take into account social networking sites where everyone is a contributor by simply creating their home page and being compelled to enhance and adorn it in response to their friends doing the same thing. I have seen several large corporation that have skills or profile pages for their users, but even senior executives may be more likely to update their Facebook or LinkedIn profiles than their corporate skills page.  In addition, this doesn't include what might be the most powerful aspect of this participation - feedback of the masses. Many people comment on blogs when they feel passionate about a particular subject and are more likely to rate information provided such as reviews or products available on-line. In a world swamped in information, feedback on popularity and rating, hallmarks of Web 2.0 sites, provides a valuable indicator of what is important and what are leading trends.

Dubbed "Wisdom of the Crowds" by James Surowiecki in 2004, a mass of individuals on average is smarter than anyone person or expert could ever be. At some point excesses of disclosure and impropriety go off in their own direction and those seeking refuge of appropriateness find it in communities of like minded people. Those looking for accurate or appropriate information just move off to more appropriate communities. This provides the feedback loop of control through democracy of participation. Wikipedia is a good example of this as it has demonstrated that it can be just as accurate as encyclopedia Britannica, but much faster at correcting mistakes. "Lord of the Rings" provided feedback to the community  on their website on how the story was evolving prior to filming and ultimately became one of the most popular series of films. The "Da Vinci Code" kept everything secret and, despite the popularity of the book, did not fare well in the box office.

Michael Lynch, CEO of Autonomy, suggested in Financial Times on the 30th of June, that Web 2.0 was something that must be tamed. Perhaps this is missing the point. Web 2.0 is not anarchic nor is it necessarily bad for business. Web 2.0 To try to control Web 2.0 is like trying to put one's finger in the dyke. It is happening and there is nothing that business can do to prevent it. In fact, when companies try to restrict access to Web 2.0 they either find that the roadblocks have been circumscribed or that potential employees will go elsewhere. Generation Y, the generation born between 1978 and now, is expected to grow from 25% of the US workforce to 47% by 2014. This is a generation that has only known the empowerment of the internet and have become accustomed to their vote counting. To try and control it now would only disenfranchise them. To empower them would yield not only an optimistic workforce, but also provide an engaging conversation between employees, their customers and their partners in a participatory and enlightened collaboration. In addition, my generation, the Baby Boomers, are starting to retire now, taking with them some of the most valuable knowledge ever accumulated in some of the biggest numbers ever. Knowledge management programs over the last two decades have failed to capture that knowledge, is Web 2.0 our last hope of retaining it? Interestingly, the Time article suggests that those over 35 are more likely to contribute content to Web 2.0 sites, so this may be an indicator that older generations want to contribute their knowledge from experience and are willing to do this through Web 2.0.

Software vendors are now jumping on the bandwagon with social software and collaborative features smelling a bit opportunity. Many are repackaged capabilities from another era of enterprise software. Some are looking at their portfolios and asking whether this is what they were doing all along. This misses the point. Web 2.0 has so far outstripped enterprise software as we know it in usability, accessibility and empowerment, that it causes mass rolling of eyeballs at its mere sight of not just the new generation, but most others as well. Those who are familiar with the ease of use and empowerment of Web 2.0 sites like YouTube, Wikipedia and Facebook are aware of what is possible and have much higher expectations. I believe that the enterprise software vendors will get there, but with much coaxing and coaching of a new generation. It will take a few years, but eventually they will figure out that Web 2.0 is not just a few new collaboration features and highly interactive web technologies, but empowerment of their users and the ability to draw in a critical mass of users from outside the trusted circle.

Enterprise systems won't change immediately, but it will probably change faster than people expect. Care should be taken in what is opened up. However, rather than treating Web 2.0 content and technology suspiciously, corporations should ring fence the information that must be controlled and open up the rest to participation. At the Enterprise 2.0 conference in Boston this June, Pfizer presented how they were using open source technology to enable Web 2.0 collaboration. This is a brave move in the highly regulated world of pharmaceuticals, but they have recognized clear boundaries of what must be regulated in content, particularly in manufacturing and research practices and what can be opened up, such as redefining process or identifying new potential areas of research. The scenarios of "Doctor 2.0" are available on the internet, but they have created a vision and a reality that uses the same technology as Wikipedia to create Pfizerpedia, a wiki of process and ideas that feed into the main areas of research and manufacturing.

Change in the Enterprise is more likely to come from outside as well. In all likelihood, if you are information worker, you use Google more than any of your internal IT systems. You may even rely on blogs to track what is happening in your industry more than you rely on industry press. You and your co-workers are likely to use these and other Web 2.0 technologies to track what is happening in your business world as well as your social world. These web sites will set further expectations on the internal systems you use and a requirement to integrate internal information with these external sources of information. Web 2.0 has an answer for this as well with an integration technique known as "mash up", the ability mix information from multiple sources using the web browser itself as the point of integration. These external sources of information also provide something that our internal information systems could never provide, a critical mass of opinion utilizing the Wisdom of the Crowds. We will ultimately need to combine external opinion with our internal opinion to get more accurate predictive decision making with our own unique insights inside the enterprise.

Ultimately, the most profound effect Web 2.0 will have is on the way we do business rather than just the technology we use. Employees will use this freedom of speech to provide valuable and fearless feedback for the business. Employees will have the freedom to assemble teams with customers without interference. Customers will become part of the decision making process and allow us to design the most imaginative products and services. Control will be limited those areas that ultimately must have control and free up the creative process to speed and enhance business. Empowered employees will build more productive businesses and become more fulfilled participants in the business. With any opportunity comes risk and embracing Web 2.0 is not without its risks. However, smart businesses can already see the opportunities and are willing to take those risks.

Comments

[apoorv]

an excellent article indeed. thanks.

[Niall Riddell]

One thing I can't work out yet is how this behavioral change in Generation Y will force non Y management to adopt the new business models that Web 2.0 requires. One could argue that agile companies will be early adopters in order to gain competitive advantage and will drive through the change from the top down. But the majority of large companies aren't that agile, so I suspect they will pay lip service to Web 2.0 whilst maintaining their existing ways of working until Gen Y workers become influential enough.

I suppose one could argue that their customers and agile partners will drive this change with or without management consent.

A really good read, as always.

Thanks

[Vivek Parti]

That is a valuable piece of information. Very interesting to read. I will link the article to my blog http://www.indiabusinessdatabase.com for readers to benefit.

[Justin Souter]

I too have found this very insightful and an excellent summary.

Key para for me is how to use Web 2.0 in an organisation. I found this http://www.strategy-business.com/resiliencereport/resilience/rr00056?pg=0 to be an excellent summary of issues relating to the US Military.

Good to see Niall Riddell posting here! ;-)

I've google Doctor 2.0 but haven't found a great deal re Pfizer... :'(

[Kendra]

Interesting report out today called "Workforce Collaboration and Web 2.0 - A Powerful Combination", check out this CNN Money article, pretty interesting stuff:

http://money.cnn.com/news/newsfeeds/articles/marketwire/0413639.htm

Take good care,
Kendra
Box.net

[Brian Johnson]

I think you make some great points about web 2.0 and the effect it will have on business in the coming years. Companies can either start to embrace the best of web 2.0 or not. If they choose not to embrace it, once the senior workers retire and get replaced by that growing Gen-Y workforce, they will implement web 2.0.

I work at a professional networking website, Konnects, and part of what we are doing is giving professionals a chance to break into the web 2.0 world. I don't think most people are going to jump right into doing Twitter, Flickr, Friend Feed and all of the other stuff web 2.0 offers, but I think they can start the process by just getting social with their business.

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