Creating real wealth by combining 2.0 technologies with new ways of doing business
Technology alone is not the key to unlocking economic value: companies create real wealth when they combine technology with new ways of doing business. Web 2.0 technologies can enhance business activities by enabling executives to broaden their access to talent and resources and by improving on the productivity of knowledge workers.
Broadening access to talent and resources
The Internet and web 2.0 technologies provide companies with new ways to harvest the talents of innovators outside of their corporate boundaries. Today, companies routinely involve customers, suppliers, small specialist businesses and independent contractors in the creation of new products. While companies control the innovation process, these outsiders offer insights that help shape product development. Distributing innovation through the value chain reduces costs and ensures that new products get to market faster because the bottlenecks associated with total control and limited resources are eliminated.
The downside to this is that companies have less control over innovation and the intellectual property that goes with it and they also compete for the attention and time of the best and most capable contributors.
As the Internet has evolved through web 2.0 technologies it has become a widespread platform for interaction, communication and activism. Consumers increasingly want to engage online with one another and with organisations. Companies can benefit from this customer engagement by involving customers in design, testing, marketing and the after-sales process get better insights into customer needs and behaviour and cut the cost of acquiring customers, engendering loyalty, and speed up development cycles. But a company open to allowing customers to help it innovate must ensure that it isn’t unduly influenced by information from a vocal minority and be careful to avoid raising and then failing to meet their expectations.
As more and more sophisticated work takes place interactively online and new web 2.0 collaboration and communication tools emerge, companies can outsource increasingly specialised aspects of their work and still maintain organisational consistency. Much as technology permits them to decentralise innovation through networks or customers, it also allows them to parcel out more work to specialists, freelancers and talent networks.
New talent-deployment models could emerge from this application of 2.0 technologies, such as crowd-sourcing where a company gives customers access to a pool of talent. Customers define what they want and offer rewards to the developers who do the best job creating it. This approach costs less than employing experienced engineers. Changes in the nature of labour relationships could also lead to new pricing models that would shift payment schemes from time-and-materials to results-driven compensation.
We see evidence of this in sectors where companies can easily segment work into discrete tasks for independent contractors and then aggregate it again. Competitive advantage lies with the companies with strong project management competencies that can master the art of breaking down and recomposing tasks.
Enhancing knowledge worker productivity
Companies have been automating an increasing proportion of their production and manufacturing activities and their clerical or simple rule-based activities, for years. As a result, a growing proportion of the labour force in developed economies have become knowledge workers, engaging primarily in work that involves negotiation and conversations, knowledge, judgment and collaboration.
Huge inconsistencies persist in the productivity of knowledge workers. Improving their high value activities is more about increasing their effectiveness rather than standardising or automating their behaviour. Web 2.0 technology tools that promote these interactions, such as wikis and virtual team environments are becoming as ubiquitous as automating software is now. As companies learn to use these tools, they develop managerial innovations, smarter and faster ways for individuals and teams to create value through interactions that are difficult for their rivals to replicate.
As companies improve the productivity of knowledge workers, it is necessary to couple investments in technologies with robust processes and the right combination of incentives and organisational values to drive their adoption and use by knowledge workers.
Creative leaders have a broad spectrum of web 2.0 enabled options available, to innovate their strategies and executives need to reflect on how web 2.0 is reshaping their competition, markets and industries and the opportunities to catalyse change and shape their outcomes.
