Networked Blogs

2 May 2011

CIOs’ Emerging Social Business Opportunity

As a speaker at the CIO Forum & Executive IT Summit this past week, I spent two days in focused conversations with enterprise CIOs. The summit is co-sponsored by SIM, TEN and ITEEX and is a relatively intimate setting as most attendees are CIOs, and no press is allowed. We spoke about what was top of mind for CIOs and their experiences with social business. It served as an excellent “current state of the CIO,” and I have some surprising takeaways to share. I’ll also offer a surprising prediction and social business guidance to CIOs.

Having advised CEOs, CIOs, COOs and CMOs on adopting disruptive technology at various stages of my career, I have a broad perspective of the enterprise and executive roles. From the mid 1990s through 2006, I focused on enterprise software and corporate strategy. In 2006, I launched CSRA to advise enterprises on social business strategy, and I’ve been working with CMOs, which has been personally rewarding as I have also led marketing several times in my career. For context, here are a few things that most executives don’t yet appreciate about social business.

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2 September 2010

Enterprise Adoption of Social Business 2010—Social Knowledge Gap a Key Barrier

Social networks let us have more relationships but we don’t know how

“Digital social networks are transforming… [everything], from society and romance to politics and business… because they change the economics of how people discover, develop and maintain relationships.” – Social Networks’ Relationship Life Cycle

Social networks are remaking society because they enable us to have more relationships and more kinds of relationships. Relationships give us more diverse kinds of information, and information leads to more dynamic action. The problem is, most people don’t know how to be social appropriately in this emerging environment, which will delay value creation and pervasive adoption. However, if you recognize these limitations and take them into account, you will have the advantage over your rivals, many of whom will get frustrated and curtail their social media investments.

This post is the third installment of the Midyear Update. It gets personal, where the first tackled strategy, and the second social technologies. I’ll discuss the biggest hidden barrier to social business adoption and how you can guide your firm through it. I include this in the mid-year update because it has been such a prevalent part of client work this year. Understanding it is key to building and maintaining momentum.

Continue reading Enterprise Adoption of Social Business 2010—Social Knowledge Gap a Key Barrier

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18 April 2009

Realizing Value from Social Networks: A Life Cycle Model

pdfFusing Business Development and Social Networking to Create Breakaway Value

IOR Before ROI

lifecycle-headAs disruptive innovations cross the chasm and prepare for widespread adoption, early adopters need to integrate them with the levers of market power to create unusual value.  For over 20 years, I have helped companies seize unusual advantage by adopting disruption ahead of competitors, so here I’ll share how early adopters are creating value with social network investments.  Specifically, I will show how to combine social networking with “business development” (practice development, sales).  I will begin with a high-level description of the social network-led business development life cycle, and I’ll close with key thoughts on value and ROI. Although the immediate context here is B2B and business development, the principles also apply to the B2C environment.

Continue reading Realizing Value from Social Networks: A Life Cycle Model

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4 April 2009

Web 2.0 Adoption Curve, 2009-2015

A Blueprint for Social Networking Investments

Web 2.0 and Social Networks have gained perceptible mindshare during Q1 2009, and conversations with clients, fellow speakers at conferences and online conversation are clearly showing the reappearance of a familiar adoption curve. Here I will discuss the Adoption Curve for Web 2.0 and Social Networks and provide rough milestones, so you can use it to gauge your investments in Web 2.0. You can avoid some of the extremes that the majority of the market will experience.

In addition, I will also show how Web 2.0 provides a rare opportunity to develop competitive advantage ahead of the market.

Continue reading Web 2.0 Adoption Curve, 2009-2015

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27 January 2009

Social Networks Reach Puberty: Miami Social Networking Conference Shows Diverse Enterprise Adoption and Success

Twitter and Facebook Top of Mind | #snc2009 | Awaiting Discovery: The Nascent Power of Weak Ties and Small Touches

What a difference a year makes! The Social Networking Conference debuted several years ago as a forum for social networking sites and vendors, with enterprise clients few and far between. Miami 2009 took place January 22-23, 2009 at the Miami Beach Convention Center, and it was a veritable enterprise 2.0 conference. Many of the presenters hailed from enterprise-focused high technology vendors, but they spoke as social networking practitioners. The good practices they shared reflected the maturation of social networks. Don’t get me wrong, we are still in early days, but it was obvious to see that social networks would be completely mainstream this year. Enterprise-focused vendors provided additional evidence by explaining some of the new social network features in their offerings.

Social Networking Watch’s Mark Brooks gave an overview of key trends, while jetBlue’s Morgan Johnston and IBM’s Adam Christensen drove home the message that companies could be rewarded for trusting their customers in social networks. Ford’s Scott Monty, Sun’s Lou Ordorica and Microsoft’s Marty Collins shared how they were using social networking to evolve their companies by opening up to customers and adopting P2P, two-way communications.Yammer’s David Schwartz and Faceforce’s Clara Shih presented two tech innovators that promised significant disruptive potential. SAP’s Steve Mann, Opera’s Thomas Ford and Dow Jones’ Tom Aley all shared fascinating social networking elements of their portfolios, which were all enterprise-focused. Awareness Networks’ John Bruce was on hand to share good practices and pitfalls. I presented the only industry-focused preso, focused on how social networks were beginning to disrupt the U.S. healthcare industry. I also gave the pre-conference workshop, Successful Social Networking Projects in the Enterprise.

Between my workshop and conference track, I scribbled enough notes to share the high points of many of the tracks, which I’ll summarize before offering Analysis and Conclusions. The reportage follows this convention: the summaries are from my notes of speakers’ remarks, and [when a sentence is bracketed], it is a comment. Click on logos for abstracts of the tracks.

Continue reading Social Networks Reach Puberty: Miami Social Networking Conference Shows Diverse Enterprise Adoption and Success

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29 December 2008

Web 2.0 Case Study: Barack Obama’s Use of Social Media

Conventional Wisdom Scuttled—Disruption Preview—Business in the Batter’s Box

Barack Obama’s presidential campaign was more than a major social media milestone because it ushered in a new relationship model among leaders and their supporters. Due to social media, an unprecedented number of individuals had a new kind of active, direct role in Obama’s campaign; moreover, I predict that the Obama campaign and imminent administration will change citizens’ and consumers’ expectations of “leader” and “follower” roles in government and business. Amazon.com changed consumers’ expectations about retail in general—information on demand, reviews, unbelievable variety at low prices—and a significant portion of Obama supporters will want to continue their support to “make the change happen.” These supporters will bring their changed expectations of action and collaboration to their vendors. That means your company.

The Obama campaign is very instructive to business leaders because business customers are changing expectations of their leaders, as we’ll discuss in more detail below. As the Global Human Capital Journal is not primarily focused on politics, I am less interested in the fact that Obama was elected than how he was elected. Moreover, I’ll go on record now as predicting that you will experience Obama’s use of social media increasingly in 2009, and I believe that the election will prove to be only the beginning: the Obama Administration will leverage social media in governing. Although Global Human Capital endorsed Obama, I have no inside knowledge of the campaign or its strategies. Obviously, this is a huge subject, so I will use this post primarily as a way to frame an ongoing discussion so that it may prove valuable to business and government executives.

Continue reading Web 2.0 Case Study: Barack Obama’s Use of Social Media

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30 November 2008

Enterprise Digital Social Networks: Executive Adoption Snapshot 2008

2009 Poised as Inflection Point in Enterprise Usage—LinkedIn Increases Relevance to B2B Executives

During the 1990s, I was intimately involved with helping global organizations to decentralize their information technology—as a management consultant and marketing executive. However, a far more disruptive force is imminent today: communications and marketing are rapidly evolving into a networked, distributed pattern, following IT’s lead. Individuals that congregate online will have an increasing role in affecting how other people make decisions, significantly weakening the influence of the mass media on which many marketing strategies depend. Organizations that depend on centralized, controlled communications will be astonished at how fast they become irrelevant over the next five years. Although the case studies are still being written, I’ll go on record as saying that the 2008 U.S. presidential election will prove to be an inflection point of digital social networks’ disruptive potential.

LinkedIn is a leading venue for B2B and B2C executives, so it merits significant attention. The inputs for this Executive Adoption Snapshot are varied: I have had the opportunity to work with hundreds of executives to apply LinkedIn to their business processes in 2008. I met two LinkedIn executives this month, and I covered CEO Dan Nye’s recent interview. I will synthesize clients’ experiences and LinkedIn executives’ remarks in three sections: 1) Executive Summary, 2) remarks from Dan Nye, Patrick Crane and Steve Patrizi, and 3) Analysis and Conclusions.

I would also be remiss if I did not share some of my experience around what kind of services enterprises will require to excel in this new environment, so after Analysis and Conclusions, I have provided initial thoughts gleaned from my experiences with clients thus far working with Web 2.0.

Continue reading Enterprise Digital Social Networks: Executive Adoption Snapshot 2008

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2 August 2008

San Francisco Social Networking Conference Provides 2008 Mid-Year Adoption Snapshot

Enterprise 2.0 and B2C Web 2.0 Show Serious Traction—But Social Sticky Wickets Remain—How to Trust?

The Social Networking Conference (SNC) was an excellent place to check the pulse of Web 2.0 adoption from customer and provider perspectives. Producer Marc Lesnick explained in his opening remarks that, in the months preceding this conference, corporations had knocked on his door asking to get involved. His Ticonderoga Ventures had held several SNCs over the past few years, and it had been largely the purview of social networking start-ups and their facilitators. This is a very apt indication of the enterprise adoption predicted by my State of Social Networking Forrester coverage and 2007 Review.

SNC SF 2008 took place July 10-11, 2008 at the UC San Francisco’s Mission Bay Conference Center. It was a focused conference that balanced start-ups’ and enterprises’ innovation—with a dash of perspective from Apple co-founder Steve Wozniak and Social Networking Watch’s Mark Brooks. On the enterprise side, GE’s Grewal and GM’s Denison covered the enterprise 2.0 and B2C Web 2.0 perspectives respectively, while the U.S. Air Force’s Adkins presented nascent cross-boundary collaboration in the armed services. Start-ups Twitter, Mowave, Faceforce and many others gave fascinating examples of innovation along several vectors. I beta-released the Social Network Roadmap in my presentation and moderated a panel with Visible Path, Jigsaw and LinkedIn in which we discussed various aspects of how enterprises were using social networks. IBM’s Rawn Shah offered a useful network for “social context” for planning and solutions for social networks.

Notable, too, was Daniel Brusilovsky’s very lucid presentation, “Social Networks: a Teen Perspective. Daniel is the 15 year old founder of Teens in Tech.

I have coverage of all these tracks, which I’ll summarize before Analysis and Conclusions. The reportage follows this convention: the summaries are from my notes of speakers’ remarks, and when a sentence is parenthesized, it is a comment. Click on logos for abstracts of the tracks.

Continue reading San Francisco Social Networking Conference Provides 2008 Mid-Year Adoption Snapshot

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1 February 2008

Web 2.0′s Impact on 2008 U.S. Presidential Election Declared Minimal at Executives’ Club

But Cantankerous Subtext Hints at Possible Monkey Wrench—Democratic Race in Spotlight

The Executives’ Club of Chicago fielded an expert panel to brief Midwest executives on Web 2.0′s current and likely impact on one of the most watched U.S. elections in recent history. Marie Cocco, a renowned political columnist, Peter Greenburger, Director of Google’s Elections & Issue Advocacy Team, and Alan Webber, Senior Analyst of Forrester Research brought to bear diverse perspectives on the question at the event, which took place at The University Club on January 31, 2008.

They produced a logical conclusion, namely that Web 2.0 was a force in the making but that it would probably not be a decisive factor this year. The session was graciously co-hosted by Communications Committee Co-Chairs David Prosperi, Vice President Global Public Relations, AON and David Blake, Publisher of Crain’s Chicago Business.

As usual, I will share my notes of speakers’ remarks before adding my between the lines analysis and conclusions. As an added bonus, I will also share select points of an influential source who, although not in the room, was virtually present through repeated reference.

Net-net: High Volatility and Standard Deviation

Although panelists agreed that statistical analysis clearly showed that social networks and “the Internet” would have a minimal impact of deciding who would win the U.S. presidency this fall, evidence is complex and all over the map. Panelists referenced several instances in which the Internet added dynamism and uncertainty to the mix: key blog posts and videos can emerge from anywhere and can flash across a growing portion of the nation’s consciousness with unprecedented speed. Moreover, the Internet enables people to communicate, mobilize and act with alacrity, and elections are overwhelmingly about communication and decision, so election monkey wrenches cannot be ruled out.

Marie Cocco, Syndicated Columnist, The Washington Post Writers Group

Marie Cocco is the outsider’s insider in Washington. She uses her strength and experience as a reporter to uncover hidden histories that illuminate the present. Her reporting and commentary on cultural and political topics have won prizes from the Associated Press, the Newswomen’s Club of New York, the New York Newspaper Guild, the New York State Publishers’ Association and the New York Press Club. She has been a guest commentator on CNN, the Fox Network, MSNBC, CNBC and C-SPAN as well as national radio shows.

In general, the prospect of “the Internet” having a material impact on the election is minimal because it does not affect how people vote. Traditional media still provides the lion’s share of information to voters, according to a Pew Research Center study that she quoted several times, Internet’s Broader Role in Campaign 2008.

  • There are turning points in campaigns, but thus far they have had little to do with the Internet. She referenced Hillary’s gaffe in Philadelphia on the U.S. driver’s license issue as well as the resurrection of John McCain in New Hampshire for his tireless sharing during town meetings. The format was particularly suitable for him, and he generated extensive support. Neither of these had anything to do with the Internet.
  • 60% of voters get their campaign information from television (Pew), while only 15% from the Internet—and most of the sites Internet users visit are mainstream media.
  • However, it is clear that the Internet can be a potent fundraising weapon—for the same reason that e-commerce is so popular (“it’s easy”)—which is reflected by Ron Paul and Howard Dean efforts. However, it doesn’t move voters.
  • It is beginning to show its promise for grassroots organization. Voters and political operatives have extensive email lists. here she referred to Huckabee’s mobilization of voters in Iowa by tapping home schooling, religious and other “special interest” email networks, which enabled him to come out of nowhere to win the primary. Hillary Clinton, before announcing her candidacy, tapped all manner of women’s email lists to leverage gender as an election issue. Barack Obama is using the Internet for fundraising and grassroots organization, and John Kerry’s endorsement will mean leveraging his 3 million name prime email list.
  • However, she did admit that the viral video had killed George Allen’s reelection, but she concluded that these things were too isolated to have a defining impact.
  • The demographics of the Internet still skew male, educated and wealthy; they do not reflect the electorate. This makes it particularly difficult for the Democrats, whose core constituencies lag in online adoption.
  • Hillary Clinton has garnered the lion’s share of negative Internet-produced content, according to Cocco. The liberal blogosphere is dominated by white males.
  • Increasingly people are online 24 hours a day. Trust in traditional media is falling, while new offerings of “user-generated content” grow (for one, CNN’s I-Report). What can campaign strategists learn from these developments?
  • The Internet is an emerging tool for grassroots organizing, but two-thirds of young Americans do not go to college. Hillary Clinton figured this out, and she focused New Hampshire organization on low-tech devices like flyers in bars and laundromats.
  • Social networking doesn’t come close to reflecting the electorate: during the YouTube debates, the Republican debate didn’t address taxes while the Democratic debate didn’t take on healthcare. There will also be privacy issues when people begin to understand that communicating online means loss of privacy. She mentioned high school athletes being kicked off teams when school officials found party pictures of them on Facebook.

Peter D. Greenberger, Director of Google’s Elections & Issue Advocacy Team

Peter joined Google in May 2007 to build and manage a new Elections & Issue Advocacy sales team dedicated to introducing Google solutions to political campaigns, committees, and issue advocacy groups. Previously, he grew the public affairs division of New Media Strategies, a Web 2.0 marketing firm, working with clients such as the Democratic Senatorial Campaign Committee, Discovery Networks, Ford Motor Company, the Granholm for Governor campaign, Merck, Inc., Wachovia, the Washington Redskins, and XM Satellite Radio. Prior to that, Peter spent ten years working on presidential, gubernatorial, U.S. Senate and Congressional campaigns, including a stint as the Clinton White House.

  • Peter unsurprisingly saw the Internet’s role in the election as more important than Marie had depicted, citing (Google) research that showed TV and Internet trending toward parity. He postulated that the writers’ strike and the lack of original content was hurting TV.
  • Web 2.0 is clearly causing candidates to lose control of their messages because voter/publishers who create content that strikes a chord and gains significant attention can, even if they are trying to help a candidate, do more harm than good. Communication is becoming more chaotic.
  • It is very difficult to contain news, and response must be within minutes, not hours. How to engage the community and organize people?
  • Google has a “no smear” policy for its advertising. While it is possible to create “negative” ads, they are scrutinized to ensure they are issues-based, not personal. Google does not allow personal attacks.
  • The Internet makes it easy for younger people to get involved, but the question is, “When will online begin to persuade offline?
  • Mobility will add another wrinkle to politics because devices and the context around the mobile user are somewhat unique (and will require a different approach to communicating). Key groups like Latinos access the Internet via their mobile phones. SMS (texting) is a completely different type of messaging (limit 140 characters).

He briefly reflected on Google’s vision for its role in “the democratic process” and explained tools that were particularly relevant to candidates. Among them:

  • Google Trends enables people to track the “popularity” of words and phrases based on Google searches. The example of “Freakonomics” was spiky as a function of mass media acclivity.
  • Google News aggregates myriad news sources, giving voters a dashboard to follow their favorite causes. One feature enables anyone named in an article to respond to the topic or issue about which s/he was quoted. This enables candidates to respond to what they may feel is wrong information. This feature is available to everyone (not just candidates).
  • The Elections 2008 Gadget enables people to display many types of campaign information as Google maps.
  • Google/YouTube’s You Choose is a site whose usage is free to candidates.

Alan Webber, Senior Analyst, Forrester Research

Alan has more than 14 years of experience working with global commercial and government clients on creating positive experiences for customers and citizens. Before joining Forrester, Alan led various strategic planning, performance management, and Web initiative efforts for the US government. He is quoted regularly in numerous business and trade publications, including BusinessWeek, The Washington Post, Government Computer News, Congressional Quarterly, CIO Today, Government Technology, and French CIO Magazine. He began working in political campaigns while a teen.

  • Alan prefaced his remarks by saying that politics was “all about marketing” and it was possible to draw many parallels between business and politics. He shared several elements of Forrester’s Framework for early adopters of social technologies and enveloped them in a political context:
    • Creators are most involved because they create original content, followed by Critics (contributed reviews, playlists), Collectors (taggers), Joiners (social networks, to be with friends), and
    • Spectators (read consumer content, blogs, videos) and Inactives (are aware but are not yet involved).
    • Most of the voting electorate is in the Spectator and Inactive categories.
    • More detailed treatment of the Forrester’s “Ladder of Participation,” see Your Customers Are Revolting
  • Only 35% of U.S. adults have read a blog, and few of the few that read ever post comments to blog posts.
  • 2012 will be the year in which Web 2.0 will make itself felt because youth leads in Web 2.0 activity, and older voters are largely inactive.
  • However, we are starting to see incredible UGC (so called “user-generated content”) like the Hillary Clinton 1984 video, which was created by an individual in three hours.
  • Candidates are exploring how to mobilize supporters, but they have to realize that they are treading new ground, and there will be significant mistakes. Having quick and well-planned response processes is critical.
  • Mobile communications will not be a factor overall because most Americans aren’t using the Internet browsing part of their phones. For more on this, see Impact of Mobility on B2B and B2C. Alan expects mobility to play an increasing role in five to ten years.
  • The Internet does not significantly change the influences of Political Action Committees
  • Social Networking will play an increasing role in politics. He mentioned a 65 year old grandmother blogging politics (no name, maybe he didn’t want to overwhelm her with attendees’ attention ,^). Nothing is off-limits, everything will be included.

The Internet’s Broader Role in Campaign 2008

Before Marie mentioned it, I had not seen this study, but its relevance to the discussion makes it notable, so I encourage you to look it up.

  • Introductory points:
    • “The internet is living up to its potential as a major source for news about the presidential campaign. Nearly a quarter of Americans (24%) say they regularly learn something about the campaign from the internet, almost double the percentage from a comparable point in the 2004 campaign (13%).
    • “Moreover, the internet has now become a leading source of campaign news for young people and the role of social networking sites such as MySpace and Facebook is a notable part of the story. Fully 42% of those ages 18 to 29 say they regularly learn about the campaign from the internet, the highest percentage for any news source. In January 2004, just 20% of young people said they routinely got campaign news from the internet.
    • “The quadrennial survey by the Pew Research Center for the People & the Press and the Pew Internet & American Life Project on campaign news and political communication, conducted Dec. 19-30 among 1,430 adults, shows that the proportion of Americans who rely on traditional news sources for information about the campaign has remained static or declined slightly since the last presidential campaign. Compared with the 2000 campaign, far fewer Americans now say they regularly learn about the campaign from local TV news (down eight points), nightly network news (down 13 points) and daily newspapers (down nine points). Cable news networks are up modestly since 2000, but have shown no growth since the 2004 campaign.
  • Television is steadily slipping as the main source for information about everything, including campaigns, even though it still prevails in 2008.

Analysis and Conclusions

  • We are in the early stages of adoption, but trends are quite clear: mass media will cede its influence to the Internet in 2012 (I still think that’s too aggressive, 2016 or 2020 are more likely). People tend to be quite conservative when they vote, and many demographics are experimenting with new tools and ways to pursue their political interests.
  • General elections are obviously about hits; they are not long tail phenomena. Therefore, the whole niche dynamic that is so key to the influence of social networks may be less relevant to democratic elections.
  • Panelists all mentioned the Internet’s ability to enable fast mobilization of people and action. Communication is near simultaneous, specific and distributed pervasively. Generation Y are active users. One of the most predictable venues for an Internet-produced political disruption would be a Barack Obama victory because his campaign is leveraging the Internet and Gen Y far more than any other campaign. An excellent article on the Obama grass roots campaign is Democrats’ Tactics May Change the Game (23 January 2008, The Wall Street Journal).
  • But let’s indulge a different logic for a minute. The panelists were focused on whether the Internet would influence a large number of votes, and they all made convincing cases that it would not. However, I believe that is the wrong question to determine the true influence of social networks and the Internet. Some interesting alternative questions:
    • How does the Internet influence who runs? This is certainly a year of “non-traditional” candidates. For more on the election’s impact on the U.S. economy, including interesting election insights, see the Economic Outlook for 2008.
    • How do social networks affect the agenda that candidates must address to get votes? How does the online “conversation” bleed over and influence more mainstream issues?
    • How does the Internet detract from intimacy and make politicians more inhuman? (due to the increased consequences of saying something that “can and will be used against you” on tape, which will cause them to say less and less and voters’ decreased ability to relate to them as people) Increasingly everyone will carry a video camera in their pocket (mobile phone), so everything will be video taped all the time.
    • Why is the prospect of Internet-driven change such an attractive prospect (the Pew study attitude, for one)? Why are people losing trust in mainstream media? It serves less and less because it is widely perceived to be less authentic: people’s expectations of authenticity are changing due to the increased (unsanitized) voices of other people. How do candidates balance authenticity with the grave consequences that insure with gaffes that can be magnified so poignantly?
  • Were I doing strategy for any of the campaigns, I would be focused on “tipping point” opportunities to use Web 2.0 tactics to sway influential minorities in tight situations. The last elections have been close, so the influence of strategic minorities could well become a deciding factor, especially considering the Internet’s ability to mobilize people quickly. It often comes down to a state.
  • Although Peter and Alan agreed in principle to the unlikely prospect of the Internet’s having a “tipping point” impact on the election (such as the Hillary 1984 video coming out just before the election), they both said that such a possibility was very unlikely and difficult to predict. Alan pointed out that the impact of the “Macaca incidentcaught on video in George Allen’s campaign was due to the combination of the video and the opponent’s effective (and/or lucky) response as well as to fortunate timing (just enough for the word to propagate to non-Internet users and not too much to be forgotten). It is even likely that George Allen, the incumbent, lost the close election due to the controversy, which was video taped and published on YouTube.
  • Mass media, including television, will always have a place in peoples’ viewing habits, but in general, popular culture is shifting from a push to a pull pattern. People are increasingly accustomed to finding and accessing information on demand to support decision making.
  • People are losing trust in organizations and established interests, and this trend holds true in politics in spades. People are overwhelmingly likely to trust “someone like me” over an expert or organization representative in many situations. How does that translate in terms of a campaign? By the increased importance of “grass roots” organization.
  • The Democratic race best reflects “old vs. new” methods of campaigning. As I write, The Obama campaign is still the challenger, it has less established Democratic support and it is forced to depend on the Internet more: yes, Hillary Clinton is our first female candidate with a serious shot, but at the end of the day, she still represents the reelection of the same wife/husband team, even though the roles would ostensibly change.
  • December 2008 follow-up story: Web 2.0 Case Study: Barack Obama’s Use of Social Media
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1 October 2007

Applying Enterprise 2.0 in Financial Services: Early Notes from the Field

Adoption Weakened by Compliance Risk and “So Obvious It’s Invisible” Value Proposition

fmwcapmktsw2The Global Human Capital Journal’s coverage of Financial Markets World’s Web 2.0 in the Capital Markets Industry conference continues. In this session, Dion Hinchcliffe, a leading writer and consultant in Web 2.0 and Enterprise 2.0, described how capital markets firms were adopting Enterprise 2.0. After some general points on enterprise 2.0 adoption, he referenced early work of Dresdner Kleinwort, AOL, T. Rowe Price, Wells Fargo and JP Morgan. As usual, I’ll summarize his remarks before sharing my analysis and conclusions.

Dion has collaborated repeatedly with O’Reilly, the folks who officially coined the term “Web 2.0″ and hold one of its most well attended conferences. He began his presentation with the definition of Web 2.0: (using) “networked applications that explicitly leverage network effects.” In my view, that means purposely leveraging P2P (peer to peer) technology. They scale exceptionally quickly because they are easy to use, people who like to use them do so on their own time and for their own passion, they leverage the Internet and the cost to use them is negligible.

Enterprise 2.0 Adoption Factors

  • In general, the enterprise is moving away from “central production” to “peer production” and from an internal focus to an external one. YouTube receives 65,000 videos per day.
  • Blogs have developed into a platform; it is now very easy for most users to add widgets to their blogs (incorporating video and audio content). To have cred, they must have comments.
  • Adoption of Web 2.0 is sometimes spontaneous, and we still have little insight into what form it will eventually take. Within days of Hurricane Katrina in 2005, 100,000 people had used blogs (and social network sites) to report on their whereabouts, as other forms of communication were unavailable. The enterprise lacks imagination about how to use these technologies. The tools must be simple to encourage adoption.
  • Is social networking part of Web 2.0? O’Reilly has not addressed this, and the two must be reconciled. Facebook is definitely for business (even though it did not start that way).
  • Consumers are way ahead of the enterprise, which is generally in the pre-definition phase. Consumers are emergent. One example is tagging (emergent) vs. defined taxonomies and analysis paralysis (enterprise).

How Is Enterprise 2.0 Different?

EnterpriseIt is an order of magnitude easier to use. Hinchcliffe calls it SLATES:

  • Search- being able to find content and people very easily
  • Link- automated features for connecting content according to personal preference
  • Authoring- creating content as (or often more) easy than using a word processing program
  • Tag- one-click functionality for identifying and sharing content
  • Extensions- adding features very easily, extending functionality of your space (blog, wiki)
  • Signals- automated distribution; chiefly refers to RSS, Atom

He contrasted Enterprise 2.0 with conference calls, many of which have dozens of people participate. However, this is largely wasteful since only one person is able to speak at once. The tools are getting increasingly sophisticated. For example, wikis and blogs can display different content depending on reader permissions. This is emerging functionality.

Pioneering Uses of Enterprise 2.0 in Financial Services

  • Dresdner Kleinwort—Then led by the indefatigable JP Rangaswami, DrKW launched its first wiki in 1997, and it has scores of wikis in use today.
  • T. Rowe Price—during tax season, 1,200 call center representatives began using a wiki to manage the knowledge base that they used when servicing clients. It features tagging and comments, and permissions enable experts to change content, while all representatives can log comments and tag. This has enabled the knowledge base to “learn” very quickly. The company credits it with saving an average of two minutes per call.
  • Wells Fargo—the bank has an impressive series of firsts, led by Steve Ellis, EVP of its Wholesale Solutions Group. It was the first bank with a business banking blog, the first on MySpace and the first in Second Life. It has an active customer-facing blogging program.
  • JP Morgan—is using innovative applications of Web 2.0 technology such as AJAX to quickly build new mash-up solutions for the bank’s traders.

Parting Shots

  • Putting on his CTO hat, Dion’s mentioned that Microsoft SharePoint 2007 was missing several key features and may lack scalability for certain applications. (Be prepared to be behind the curve when using it).
  • Firms do not have to develop an enterprise 2.0 strategy. Make the tools available, and people will build the ecosystem. Approach it as a “perpetual beta” endeavor.

EnterpriseAnalysis and Conclusions: So Obvious It’s Invisible

  • One of enterprise 2.0′s main problems is SLATES. Looking at the list, there’s nothing that is obviously different, that suggests discontinuous change and a big upside. This fact gives enterprise 2.0 its challenge and opportunity. It looks like continuous change, a matter of degree. I’ll risk sounding cliché here, but the way that SLATES combine delivers a tipping point for widespread collaboration. The tools are easier to use, and they deliver one-click features for identifying and sharing content, which will cause people to share much more, more often. Overlay Gen Y’s penchant for collaborating as well as the tools’ native handling of metadata, and the whole thing resonates. This will catch most executives off guard.
  • Investment banks, as illustrated earlier in the day by the compliance panel, have clear reasons to hesitate before adopting enterprise 2.0 and they don’t yet see a value proposition that compels them to face the compliance risk. Another twist: everyone’s experimenting, but it’s under the radar. They don’t know what their competitors are doing and how they stack up. It’s wait and see.
  • Enterprise 2.0 is practical for CIOs—from people, process and technology perspectives:
    • It does not call for reorganizations or implementing complex, expensive technology solutions. It overlays an emergent web of relationships onto existing enterprise systems and processes. Moreover, it is not an all-or-nothing proposition. Due to the nature of networks and the technologies, CIOs can enable open collaboration in areas that do not harbor conflicts of interest. The technology is rapidly increasing in sophistication, and it will increasingly automate access and permissions. It is an emergent proposition, not a big bang, like enterprise 1.0 (read ERP) was.
    • Wikis, tagging and blogs are highly distributed, and many are built on light, evolved platforms.
    • Enterprise 2.0 tools are exceedingly simple, transparent and real-time. If using proprietary enterprise software solutions is like driving a Ford Model T, Enterprise 2.0 tools are like hopping into a Ford Focus: instead of tweaking the carburetor, turning the crank and fussing with the choke, you just insert the key and go.
    • Current enterprise software solutions generate extensive resistance because they impose highly structured designs and processes.
      Because people think and organize thoughts differently, structured systems alienate some while accommodating others. Their training and learning costs are high.
    • Enterprise 2.0 underlying technologies like Ajax are highly evolved and object-oriented; they are robust and interface easily with SOA-enabled enterprise systems. Enterprise 2.0 coexists easily with existing enterprise systems like email, document management and ERP.
  • I agree with Dion that an enterprise 2.0 (big technology) strategy is not required to succeed with enterprise 2.0. Monolithic big bang IT projects (read “expensive”) were a different animal. However, my experience indicates that vision and strategy will be critical for investment banks and other hierarchial firms to succeed for a different reason: they will need to remove cultural and organizational constraints to collaboration. To be done quickly and effectively, this will require executive understanding and support. Firms that have it will, all else equal, succeed more quickly than those who let it bubble up in isolated pockets, in spite of the organization.
  • Web 2.0 and social networking are dizygotic twins. Web 2.0 largely refers to technology, where social networking focuses on connecting people with each other. The technology enables the discontinuous change that is emerging, but people make it happen, and social networks are a vehicle. In a more abstract sense, online social networks make explicit the kind of networks that have been crucial to humans’ success, even predating the emergence of homo sapiens. Social networks are a medium for people to focus on using the technologies to change behavior and generate opportunity. In a sense, social networks are key customers of Web 2.0 technology.
  • Picking up on Dion’s conference call example, my research shows that chat is giving conference calls a new lease on life. Participants listen to the conversation while they spin off into chat rooms to discuss nuances or related topics. Smart banks analyze the chat conversations, thereby getting a much clearer picture of what “the crowd” thinks about the topic. Prior to chat, the crowd’s thoughts were largely invisible.
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