The 2.0 movement – What does it mean for an Enterprise?
These days, 2.0 is everywhere. It started with Web 2.0 but every other field have a tag 2.0 attached to it. Is it a hype which will go bust like dot com boom or have we reached an inflection point? If it is a passing phase then we can relax and wait for it to blow over, but if it is an inflection point then every enterprise has to take urgent action to remain relevant.
Though there have been many attempts, there is no common definition for any of the 2.0 terms. However, there is universal agreement that it has to do which World Wide Web. What web has achieved is to connect people, machines, devices and organizations together. When we look around us, when we go back in history we find that when things get connected to each other the overall behavior changes.
Experts have called this phenomenon “Collective Intelligence” of a multi-agent system. What it means is that, when many individual agents each with limited intelligence is connected together, the whole system can become much more intelligent than the sum of all the intelligence of the individual agents. It can be seen in nature how ants find food, how birds fly as a flock and how ants build anthill. Our brain is also a classic example.
If you look at web, there are two very startling examples. The first example is how Linux was build. It violated every norm of how enterprise class robust software can be developed. The second example is how Wikipedia was created. Again it violated every norm of how encyclopedia is to be created. In both cases, web made it possible.
In the year 2004 Dale Doherty and Tim O’Reilly noticed this phenomenon, named it Web 2.0 and explained it as “Network as the platform”. Other thinkers have recognized the same phenomenon, but have given it different names.
- Charlene Li and Josh Bernoff of Forrester have called it Groundswell
- Don Tapscott and Anthony D. Williams have called it Wikinomics
- C. K. Prahalad along with Venkat Ramaswamy, in the book Future of Competition called it Co-Creation and coined the acronym DART (dialogue, access, risk sharing and transparency)
- Andrew McAfee, originator the term Enterprise 2.0, coined the acronym SLATES (search, links, authoring, tags, extensions and signals)
- C. K. Prahalad along with M. S. Krishnan in the next book The New Age of Innovation explained it with the acronym N=1 (one consumer experience at a time) and R=G (resources for multiple vendors around the globe)
Weighing all these evidence, I think it is more likely that we have reached an Inflection Point and it is not a passing phase. The change that is taking place can be summarized in the four points.
Relation between consumer and organization is changing
Alvin Toffler coined the term Prosumer to represent this change where the consumer not only consumes service but also produces it. The new class of users want more interactive sites, wants to tailor the site to meet their taste, and wants to mix and match options from multiple sources. They also want transparency in every transaction and want to a play a role in product and service design.
They also interact with each other to get the things they need from each other, rather than from enterprise. This interaction can generate word of mouth, which can either generate a cult following for a product or it can create negative campaign. In either case an enterprise has very little control over it and can only take action to take advantage of it or minimize the fallout.
They also leave a trail of data about themselves and their usage pattern. Based on this usage data the software needs to evolve.
Channels for consumer touch point are proliferating
Traditionally the consumer interaction used to happen through physical channels like retail outlets and call centers. To this list internet and specialized kiosk got added and they are now considered as a part of traditional channels.
Mobile applications, after languishing for several years, seem to be on the verge of take off. However, there are too many competing technologies and devices and that makes a fragmented channel.
To this list we can add emerging channels which has not been fully explored. This includes social networking sites and micro blogging sites. There are other channels of providing free software to users in the form of downloadable applications and different types of widgets. It is difficult to predict which of these channels will succeed and which will go out of use, but it can be safely predicted the more channels will emerge.
User expects a seamless experience across all these channels. The software needs to be flexible and needs to have the ability to incorporate new channels quickly.
Long Tail effect is opening up new consumer segments
Chris Anderson, in his book The Long Tail, explains how web has made it feasible and even profitable to sell products which individually have a very small demand but the aggregated demand is large. Web has also made it possible to address consumer with very specialized needs.
These are unaddressed consumer segments and more possibilities open up with more usage. The aggregate business generated from these segments can be substantial. Again it comes down to the power and flexibility of the software. The basic design of the software has to support such extensions.
Interdependence among providers of service is increasing
According to C. K. Prahalad the enterprise centric view of the consumers is giving way to a consumer centric view which is more like a nodal network rather than a supply chain. Services have to unbundled and offered through different sources. Services from different providers need to be bundled along with the services offered by the enterprise.
It becomes a complex maze of both cooperate and competition. Interrelationship between enterprises keeps changing and this implies that the underlying software needs to adapt quickly.
How should an enterprise react to this change?
Grady Booch has said that “Every advance for the future state of the world requires the presence of software yet to be written”. Software has become central to whatever an organization does and there is a software component in every product or service to be designed.
To survive and function effectively in the new environment a thorough house cleaning is required. It involves revamping the processes and the software architecture. It also involves relook at how enterprise looks at organization boundary and intellectual property. Not the least, it involves evaluating organization structure and management practices.
Here is an indicative list of things that need to reexamined:
- Software architecture: adopt SOA and other technologies which will help in having loosely coupled configurable application
- Development processes: adopt agile and lightweight processes
- Governance standard: have strong governance standard to maintain reliable and uninterrupted operation
- Level of transparency with all stakeholders: assess impact of sharing anything and everything
- How products and services are designed: try many options – get user feedback – adopt or abandon
- How to leverage resources external to the enterprise: leverage network effect on the web through anybody willing to participate