Enterprise 2.0 is vital for business

Enterprise 2.0 is vital for business
By Andrew McAfee

Published: December 9 2009 16:29 | Last updated: December 9 2009 16:29

Every day, more companies are deploying the technologies of Web 2.0, and also adopting the approaches to teamwork and interaction that have made Wikipedia, Facebook, Twitter, and other Web 2.0 resources so phenomenally popular.

I call this trend Enterprise 2.0 (E2.0), and have made it the subject of much of my research since 2006.

Corporate executives ask three excellent questions about E2.0. What, if anything, is so novel about it? What are the benefits? And the risks?

Enterprise 2.0 is actually something new. It is enabled by technologies that were not widely available 10 or even five years ago. These include blogs, wikis, social networking software such as Facebook, and “microblogging” utilities such as Twitter.

All of these tools share three fundamental properties. First, they are “frictionless” – easy to learn and make use of.

Second, they are free-form, meaning that they do not have pre-defined workflows and do not place users into categories. Instead, everyone starts as equals, contributing to a blank slate. This sounds like a recipe for chaos, but it is not.

The third property shared by all 2.0 technologies, and the most remarkable, is the emergence of patterns and structure in a system without central co-ordination.

To make this concept concrete when I’m speaking, I ask audience members to raise their hands if their organisation’s intranet is easier to search and navigate than the public internet. Very few hands go up, even though intranets are designed and maintained by professionals whose job it is to build navigable web environments.

The internet works better because even though it is radically decentralised and unco- ordinated it is not unstructured. It has a dense structure defined by all the links between pages.

This structure changes continuously and actually becomes more refined as the net grows. It is emergent, rather than imposed. The technology- enabled communities of Enterprise 2.0 work the same way.

Beyond better intranet navigation, what benefits can an organisation expect from E2.0?

The consultancy firm McKinsey has conducted three annual surveys on this question. In the most recent, published in September, respondents reported benefits that included better access to knowledge and internal experts, greater employee and customer satisfaction, and higher rates of innovation.

The magnitude of the gains was striking, ranging from 20 per cent (innovation rates) to 35 per cent (access to internal experts).

These self-reported and subjective data must be interpreted with caution, but are still compelling. They indicate that real business benefits await successful adopters of emergent tools and work practices.

Such improvements arise because E2.0 brings much-needed technological support to the informal organisation. The formal organisation is characterised by hierarchical organisational charts and standardised, repeatable business processes.

It received a technological shot in the arm in the mid 1990s when large-scale commercial applications such as ERP and CRM became available. Research suggests these applications significantly boosted productivity and performance. They did so primarily by allowing companies to standardise best practices and by making huge amounts of structured data available for analysis.

These tools, however, did not do as much to support the less formal and structured work of an organisation. And as we all know, the informal organisation is tremendously important. It is where many exceptions are handled, questions answered, and connections made. It is also often where novel ideas are sparked and new threats and opportunities identified.

Yet until now, the informal organisation has been almost entirely unsupported by IT. E-mail works when you know who you want to send a message to, but what about when you do not – when you are not sure who has the knowledge or expertise you are looking for?

The first generation of knowledge management systems attempted to address this challenge, but they were too structured; they did not match the emergent nature of the informal organisation.

E2.0 technologies do. When they get going, it becomes easy to find a bit of knowledge, or a knowledgeable person. It also becomes easy to learn what others are working on, and to be helpful to them. And it becomes possible to float a question to the entire organisation.

As Eric Raymond, the open source software advocate, says: “With enough eyeballs all bugs are shallow.” Enterprise 2.0 delivers benefits because it brings all of a company’s eyeballs to bear on challenges and opportunities rather than assigning them only to the “proper” authorities.

Now for the final question: what are the risks of E2.0? I find that they are actually quite small. The tools themselves are comparatively cheap, so financial risk is minimal. The biggest potential threat is that people will misuse the new technologies, either by putting up inappropriate material or by inadvertently revealing secrets.

This very rarely happens in practice, however: my collection of E2.0 horror stories is essentially non-existent. There are two main reasons for this.

First, contributors in corporate environments are almost always identifiable. Without the cloak of anonymity, bad online behaviour is much less common. Second, people know how to behave at work, and most are inclined to do so.

I believe that we are in the early phases of another era of technology-fuelled business improvement. Enterprise 2.0 is bringing significant gains to companies of all sizes, and in all industries.

Given the mismatch between its benefits and risks, and given the competitive imperative to seize all possible sources of advantage, sitting this one out seems like a very bad idea.

Andrew McAfee is a principal research scientist at the Center for Digital Business at MIT. He is the author of Enterprise 2.0, published by Harvard Business Press. His blog is andrewmcafee.org/blog; his Twitter identity is @amcafee

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