The McKinsey Quarterly has just published the results of its global survey on Buillding the Web 2.0 Enterprise.
Companies that are deriving business value from these tools are now shifting from using them experimentally to adopting them as part of a broader business practice. Companies report that they are using Web 2.0 both within and outside their walls—to forge tighter links with customers and suppliers and to engage employees more successfully.
Our findings also suggest that after an initial period of promise and trial, companies are coming to understand the difficulty of realizing some of Web 2.0’s benefits. Only 21 percent of the respondents say they are satisfied overall with Web 2.0 tools, while 22 percent voice clear dissatisfaction. Further, some disappointed companies have stopped using certain technologies altogether.
However, fundamental changes are beginning to take place among the satisfied companies as a result of their ambitious use of Web 2.0. These companies are not only using more technologies but also leveraging them to change management practices and organizational structures. Some are taking steps to open their corporate “ecosystems” by encouraging customers to join them in developing products and by using new tools to tap distributed knowledge.
Most companies are using some form of web services. Around a third report using blogs, wikis, RSS, podcasts, and social network tools. These findings strike me as oranges and apples. An individual can spark the use of a blog or wiki; web services is an IT decision. Furthermore, none of the statistics show penetration; a handful of bloggers doesn’t amount to much in a large organization.
How these 2,000 companies are using web 2.0 technology is more interesting than the usage figures. McKinsey breaks out in-house applications, customer-facing applications, and work with partners and supply chain.
The in-house applications highlighted by 70% or more of the organizations are areas I place under the broad umbrella of learning & development: knowledge management, collaboration, corporate culture, and training. CLOs should be actively engaged in each of these areas.
The popularity of various web 2.0 tools varies by region. Americans are highest on social networking. Asia-Pacific and India are crazy for blogs. India is into wikis, video-sharing, and podcasts. Americans and Europeans are into RSS. Peer-to-peer and prediction markets rule in China.
McKinsey notes, “There are some notable regional differences in the importance of tools: for example, a larger share of respondents in North America (the birthplace of popular community Web sites such as MySpace and Facebook) than in other areas rated social networks as important.” America is also the birthplace of blogs, wikis, RSS, podcasts, etc., so I don’t think the “first mover advantage” meme is relevant here. Consider, instead, the differences in social structures across the continents.
Asked to name the top three barriers to Web 2.0, McKinsey got the same sort of whiney answers I did on my recent survey. “My company doesn’t understand the potential financial return…,” “My company’s culture doesn’t encourage the use of Web 2.0 technologies,” “My company doesn’t provide sufficient incentives to adopt or experiment with Web 2.0 technologies,” and “My company’s structure is too hierarchical.” My advice to these folks: WAKE UP AND SMELL THE COFFEE. Web 2.0 is not something you can pass up. Not only that, the train is leaving the station.
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Jay, looking at this specifically from a cultural point of view I have a number of specific observations. My commentaries follow each quote from the report.
McKinsey: After an initial flurry of interest, some companies haven’t been able to sustain participation and are abandoning the use of some tools; 7 percent of respondents have tried and stopped using one or more
technologies.
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This is typical of the initial stage of a cultural transition. The technology is imperfect and the habits of optimal use do not exist. The low percentage of “dropouts” (not of the whole Social Web but of particular technologies) indicates that the trend is ongoing and that research on optimisation is continuing.
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McKinsey: a larger share of respondents in North America (the birthplace of popular community Web sites such as MySpace and Facebook) than in
other areas rated social networks as important
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Looking at the percentages it’s interesting to note that North America (35%) is closely followed by China (32%). Could this be the effect of guanxi (the Chinese sense of personal networking)? More surprising is the low rating of India (22%), but I suspect this is related to other cultural factors, such as the fact that North
American style social networking has a strongly narcissistic character, a form of self-advertising that may not be the best fit with Indian culture. I expect others in China and India may have better insights into this gap between the two emergent powers.
It’s nteresting that Asia-Pacific scores highest on blogs. With the notable exception of Japan, I expect that the use of English throughout these countries is instrumental in reaching a score that is significantly higher than the US. Unfortunately, there is no
breakdown on the individual countries, so we can’t know whether Japan is an exception that brings the percentage down or conforms to the overall pattern. India rises to near the top of the class for blogs (again,
probably thanks to English).
China’s strong score on peer-to-peer may be related to the loose attitudes towards intellectual property rights and again to guanxi.
RSS is strong in North America and Europe, possibly reflecting a greater concern with controling and managing information and a more productivist
notion of time.
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McKinsey: Satisfaction, like importance, varies markedly by geography. The developed countries of the Asia-Pacific region had the largest percentage of respondents expressing the highest level
of overall satisfaction with Web 2.0 tools, and Latin America had the lowest. At the other extreme, a larger percentage of North American respondents indicated the lowest level of overall satisfaction.
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I find this result the most intriguing. The level of dissatisfaction is practically non-existent in Asia-Pacific but seriously dominant in North
America and significant in China. The developing countries show a high level of satisfaction. The most surprising is the score for North America. It would be fascinating to see what this is all about, which
the McKinsey study doesn’t try to elucidate. It could simply be the effect of a morose economy.
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McKinsey: A higher level of usage is found at companies that encourage it by using tactics such as integrating the tools into existing workflows, launching Web 2.0 in conjunction with other strategic initiatives, and getting senior managers to act as role models for adoption.
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This seems to me a matter of logic and good judgement that cuts across all cultures, though how it is enacted will obviously vary.
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McKinsey: As might be expected, companies whose respondents are satisfied with the overall results of Web 2.0 employ more tactics to encourage its use—an average of 4, compared with 2.5 at companies where
respondents aren’t satisfied.
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This is also predictable. Return on Investment only comes when you accept to make the investment. This point is worth stressing in light of the study’s conclusion.
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McKinsey: Spurring change: It has created new roles or functions in our organization (33 – 9)
It has changed the way our organization is structured – e.g. flatter hierarchy (33 – 13)
The use of Web 2.0 technologies has not changed the way the company is managed and organized (8 – 46)
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This is a dramatic contrast. Companies that are satisfied are clearly more dynamic and internally creative. Does that mean (because of the percentages cited above) that Asia-Pacific has a significant advantage? Probability theory would say so, but there need be no direct correlation. There is, however, a direct correlation between the perception of the technologies and organizational flexibility, which is
usually seen as an advantage in a globalized economy. Corporate executives and strategists should draw their own conclusions!
The question of “new roles” seems to me fundamental and is likely have an impact on knowledge management, training and learning. We all need to
get ready for that. An example of that is in the following table where “tapping network of experts” shows the highest contrast between satisfied and unsatisfied companies (27 – 13). This is clearly the domain of knowledge management and learning and may include
(increasingly) coaching, mentoring, communities of practice, informal professional communication.
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McKinsey: How companies adopt Web 2.0 tools:
The IT department finds and tests new technologies and then brings them to the business units. (11 – 36)
The business identifies new technologies and brings them into the company without IT support (25 -10)
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This is an even more dramatic breakthrough. Bottom-up correlates with dynamism and top-down with stagnation. The old command-and-control
culture appears to be ill-adapted to the kind of potential represented by Web 2.0. Anyone who has been in the training field promoting the innovative possibilities of new technology for knowledge development (as I have since the 80s) will recognize enemy n° 1: the IT department. Thanks to the Social Web we are beginning to see how out of phase they
are with business development.
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McKinsey: Almost 60 percent of the respondents satisfied with Web 2.0 initiatives (but only 42 percent of other respondents) see them as a driver of competitive advantage. Expect these companies to become more aggressive in the marketplace against rivals that are slower to get on board. … Satisfied or not, all companies plan to spend more on Web 2.0
tools—an opportunity for software developers. …There are few differences in size, region, or even tool use between companies that are satisfied with their Web 2.0 experience and those that are not. This suggests that today’s seemingly insurmountable barriers could be overcome through the adoption of managerial methods that satisfied companies use. …Successful companies already use Web 2.0 for business applications such as communicating with customers and suppliers; soon they may use it to drive innovation.
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This may sound optimistic but the trend is real, logical and clearly irreversible. Nevertheless, their own data suggest that cultural variations are stronger than the
reporters seem to recognize and merit close examination. It is perhaps one of the “new roles” professional interculturalists can fulfill.
[...] not being satisfied with their “enterprise 2.0″ implementations — specifically, a McKinsey report that only 21% of respondents are satisfied with their implementations, while 22% are clearly [...]
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