Ten Aspects of Web 2.0 Strategy That Every CTO and CIO Should Know
September 14, 2008 Leave a comment
Over the last year I’ve worked with organizations around the world that are attempting to grapple with Web 2.0 and the growing external marketplace pressure being exerted for the change and transformation of their businesses. Along the way, I’ve been fortunate enough to be able to identify and assemble a working list of some consistent recurring issues and themes around Web 2.0 strategy. I’ve provided them below at a high level. Your comments and additions are very welcome as we try to frame up a consistent picture of what’s happening in the marketplace.
It used to be a little surprising how long it’s taken for Web 2.0 to begin to have serious impact on or even high-level interest in the business world. However, the ideas have had staying power and have also largely been validated; there are now fundamentally different and very powerful new models for engaging with customers, designing our products, and applying technology in general to our business that are proven and have growing bodies of knowledge. The Web has become the single most important driving force in many fields of endeavor as well as the leading source of both innovation and potent new modes for communicating, collaborating, socializing, and working together. It’s taken a few years but businesses are now feeling the change in the air.
However, as I’ve said a number of times in my various discussions of Web 2.0, the power of the network has deep roots in some profound shifts in society and culture, particularly the singular move from push-based systems (the 1.0 era going way, way back until right around now) to pull-based systems (the 2.0 era from roughly a few years into this century and going forward). That this shift is well under way is clear if you look at the sudden explosion of the blogosphere, social networking, social media, open source software, online communities, and peer production in virtually all things. The good news (or bad news, depending on how you look at it) is that despite the remaking of more than a few industries already — including media, software, advertising — this shift is only just beginning.
This all raises the question of how to make the transition from 1.0 to 2.0 safely and non-disruptively with your business largely intact, perhaps even with a superior competitive position. That this transition can actually be accomplished by most businesses is still far from clear though some early transitions have met with varying degrees of success. This list represents some of what we’ve learned so far about 2.0 transformation but it’s something that strikes at the very heart of most businesses today: The rules for success are not-so-gradually changing and the marketplace is driving it in an often-subversive grassroots, bottom-up way. The question now is no longer about “if” but increasingly about thriving long-term, period: What are you willing to do to adapt to a new business world?
This list is aimed primarily at CTOs and CIOs since they are mostly likely to be located at the convergence of traditional business thinking and the wave of 2.0 change coming in off the network. However these ideas apply to anyone looking at how to embrace 2.0 transformation in their organization and take advantage of it. This is one of the most exciting eras to be in businesses since so many directions are in flux and the outcomes, players, and market leaders of the near future are far from certain. Those who can see the new opportunities clearly through the lens of 2.0 transformation not only have a fighting chance, but are able to seize them with once-in-a-generation ease.
Note: I’ve dropped the “Web” in Web 2.0 for this discussion because one of the big lessons is that many traditional business thinkers turn off when they hear the word, even though Web 2.0 design patterns and business models have truly profound implications across any business today. Consequently, hat the Web is driving most of these changes is being considered incidental for this discussion (though it’s absolutely the opposite when actually executing on these new models.) Instead, this is targeted a discussion about the transformative models themselves (such as who creates the products and where, how they are used, who supports them, how are they remixed, syndicated, franchised, licensed, IP protected, etc) in a strategic businesses sense. At the core of this discussion is how 1.0 business models of the 20th century are very much being eroded, transformed, and frequently dethroned by the immense motive forces that lie in the pervasive, open networked systems we have today, which are taking us deeply into a very new place: the 2.0 era.
Ten Key Aspects of Web 2.0 Strategy
- It’s not about technology, it’s about the changes it enables. While technology is a close second (and ultimately makes 2.0 business models possible), the real discussion is about the disruptive new opportunities it creates. Instead the discussion should be focused more around strategies such as harnessing millions of customers over the network to co-create products through peer production, engaging in mass customer self-service, customer communities, and open supply chains to thousands of ad hoc partners with open APIs. These are just some of the examples of using the network to create far richer and more profound results than could be created in the 1.0 era. Don’t get caught up in the technology of 2.0 at first other than to understand the business possibilities it affords. Avoid technology-first discussions like the plague. Premature monetization discussions around 2.0 are also to be avoided, they tend to have a negative impact on process if done too early.
- The implications of 2.0 stands many traditional views on their head and so change takes more time than usual. In the 2.0 world customers and partners have a much closer, more sustained relationship because of social interaction and tightly integrated online supply chains, to name just two reasons. The shift of control from institutions to communities of users takes a lot of getting used to. Just understanding how and why intellectual property is better covered by Creative Commons instead of copyright will take the legal department years (if not decades). Each part of the organization will have its miniature 2.0 revolution. These take time to happen and sort themselves out. This means getting these new ideas into people’s heads is one of the first steps…
- Get the ideas, concepts, and vocabulary out into the organization and circulating. If you’re trying to affect 2.0 change in an organization, there’s no better solution that exposing people to it. Demographics can be a problem in this situation depending on the industry. Younger workers tend to live and breath 2.0 while older workers may be aware of it but don’t think it applies to them. I use point education where change needs to happen either first or quickly and then internal communities that bring the discussion of change, innovation, and transformation to the entire organization. Either way, learning and education around 2.0 are a vital trigger to begin change and should be started early and non-disruptively.
- Existing management methods and conventional wisdom are a hard barrier to 2.0 strategy and transformation. You don’t have to get far into discussions about the Perpetual Beta or Product Development 2.0 before existing management methods seem outdated, inflexible, and ineffective. This is one of the more difficult aspects of adopting 2.0 models and the implications is that we’ll have to do a lot of rethinking how we manage businesses driven by 2.0 models, where the boundaries of organizations are less clear, the ownership is much more community-based, and the outcomes are far more diverse and spread out, making them less trackable, controllable, and directed. Overhauling management practices and techniques will be a core activity in a 2.0 transformation and will be hard to achieve quickly enough due to the Innovator’s Dilemma.
- Avoiding external disruption is hard but managing self-imposed risk caused by 2.0 is easier. The great fear than many businesses have is facing a fast-growth competitor that takes these ideas and either wrests away market share rapidly and aggressively or cuts them off at the pass with entirely new products. YouTube did this to the broadcast and cable industry, which responded with Hulu. Apple did this with iTunes to the recording industry and the blogosphere did the same to the newspaper industry. Other industries are next likely including the financial services industry, real estate, and others. Internally, however, risk management is still a challenge but is much more manageable. The big implication for this is that starting internally first with things like Enterprise 2.0 initiatives and prediction markets to learn the ropes on how to deal with unexpected outcomes and results can help organizations climb the maturity curve.
- Incubators and pilots projects can help create initial environments for success with 2.0 efforts. Too much contact with the traditional support environment of an existing, primarily 1.0 organization makes it hard for 2.0 efforts to succeed; everything gets done in the traditional way instead of the new ways that are required. The traditional tools, processes, and skills just aren’t there or are just too slow and burdened with unnecessary overhead. Creating dedicated incubators that are designed to use the strengths of the organization while being isolated from its weaknesses can help. Incubators are at risk of becoming too isolated however, and won’t inform or change the greater organization unless care is taken to roll the lessons and capability back in.
- Irreversible decisions around 2.0 around topics such as brand, reputation, and corporate strategy can be delayed quite a while, and sometime forever. Most organizations get paralysis around change and transformation because of concerns around decisions that can’t be reversed. Concern over damaging the company’s brand is one of the top issues I run into and it’s a valid concern. The good news is that many organizations are discovering they can safely leverage the advantages of their organization (such as their extensive customer base to drive initial growth of 2.0 engagement and adoption of new products and services) without dragging their brand into it whatsoever. New 2.0 products from major companies are now often released under new brands entirely. This enables serious experimentation with 2.0 while taking little risk to the organization.
- The technology competence organizations have today are inadequate for moving to 2.0. This is key if you’re a CTO or CIO today; your organization is almost certainly not ready to handle the development, management, scalability, identity, governance, and openness issues around 2.0. If you’re not sure, just ask your IT staff. Examples include cloud computing, open APIs, mashups, rich user experiences, Web-Oriented-Architecture, community platforms, Enterprise 2.0, 2.0-era computing stacks like Rails and Django, are all disciplines that are considerable in their own right, of rapidly growing importance to organizations in the 2.0 era. These are all likely to be things your staff needs to come up the learning curve on in significant ways and with the rate of change on the network what it is presently, falling behind is too easy to do. Note: The existing technology landscape of most organizations will have to change as well which is where Web-Oriented Architecture (WOA) is getting quite a bit of attention today. And the Web products themselves have moved far beyond the model of the Web page and most enterprises are very far behind.
- The business side requires 2.0 competence as well. This includes how to design, build, launch, market, support, and maintain 2.0 products and services as well as the ways that workers should use the tools and concepts to work together. I recently suggested that learning how to be effective in working within and directing communities of workers/users/partners to accomplish large-scale outcomes will be a vital skill in the very near future. All of this requires both a new perspective as well as a hard-headed effort at skill building and a re-orientation of existing work habits and processes.
- Start small, think big. We have discovered that the leverage the network can give us is almost unlimited. It’s ability to scale ideas, products, and communities of users as fast as they are able to is one of the aspects that makes it so attractive to business. 2.0 products tends to be very simple at heart, and though there is certainly challenges and complications growing, small ideas can become big very, very quickly. Getting to the right solutions, not-overinvesting (which leads to complication and heavyweight management and processes) and letting customers and partners take the seeds of great ideas and run with them is what makes sudden success turn into a large-scale success. On the Web, starting small, and thinking big can take you a long, long way. Read more about network effects driven by architectures of participation .
Please share your ideas around what else is essential in a Web 2.0 strategy below.