Friday, January 9, 2009

HinchCliffe's 10 Aspects of Web 2.0 Strategy

Dion Hinchcliffe shares his views:

1. It's not about technology, it's about the changes it enables.
While technology is a close second (and ultimately makes 2.0 business models possible), the real discussion is about the disruptive new opportunities it creates. Instead the discussion should be focused more around strategies such as harnessing millions of customers over the network to co-create products through peer production, engaging in mass customer self-service, customer communities, and open supply chains to thousands of ad hoc partners with open APIs. These are just some of the examples of using the network to create far richer and more profound results than could be created in the 1.0 era. Don't get caught up in the technology of 2.0 at first other than to understand the business possibilities it affords. Avoid technology-first discussions like the plague. Premature monetization discussions around 2.0 are also to be avoided, they tend to have a negative impact on process if done too early.

2. The implications of 2.0 stands many traditional views on their head and so change takes more time than usual. In the 2.0 world customers and partners have a much closer, more sustained relationship because of social interaction and tightly integrated online supply chains, to name just two reasons. The shift of control from institutions to communities of users takes a lot of getting used to. Just understanding how and why intellectual property is better covered by Creative Commons instead of copyright will take the legal department years (if not decades). Each part of the organization will have its miniature 2.0 revolution. These take time to happen and sort themselves out. This means getting these new ideas into people's heads is one of the first steps...

3. Get the ideas, concepts, and vocabulary out into the organization and circulating. If you're trying to affect 2.0 change in an organization, there's no better solution that exposing people to it. Demographics can be a problem in this situation depending on the industry. Younger workers tend to live and breath 2.0 while older workers may be aware of it but don't think it applies to them. I use point education where change needs to happen either first or quickly and then internal communities that bring the discussion of change, innovation, and transformation to the entire organization. Either way, learning and education around 2.0 are a vital trigger to begin change and should be started early and non-disruptively.

4. Existing management methods and conventional wisdom are a hard barrier to 2.0 strategy and transformation. You don't have to get far into discussions about the Perpetual Beta or Product Development 2.0 before existing management methods seem outdated, inflexible, and ineffective. This is one of the more difficult aspects of adopting 2.0 models and the implications is that we'll have to do a lot of rethinking how we manage businesses driven by 2.0 models, where the boundaries of organizations are less clear, the ownership is much more community-based, and the outcomes are far more diverse and spread out, making them less trackable, controllable, and directed. Overhauling management practices and techniques will be a core activity in a 2.0 transformation and will be hard to achieve quickly enough due to the Innovator's Dilemma.

5. Avoiding external disruption is hard but managing self-imposed risk caused by 2.0 is easier. The great fear than many businesses have is facing a fast-growth competitor that takes these ideas and either wrests away market share rapidly and aggressively or cuts them off at the pass with entirely new products. YouTube did this to the broadcast and cable industry, which responded with Hulu. Apple did this with iTunes to the recording industry and the blogosphere did the same to the newspaper industry. Other industries are next likely including the financial services industry, real estate, and others. Internally, however, risk management is still a challenge but is much more manageable. The big implication for this is that starting internally first with things like Enterprise 2.0 initiatives and prediction markets to learn the ropes on how to deal with unexpected outcomes and results can help organizations climb the maturity curve.

6. Incubators and pilots projects can help create initial environments for success with 2.0 efforts. Too much contact with the traditional support environment of an existing, primarily 1.0 organization makes it hard for 2.0 efforts to succeed; everything gets done in the traditional way instead of the new ways that are required. The traditional tools, processes, and skills just aren't there or are just too slow and burdened with unnecessary overhead. Creating dedicated incubators that are designed to use the strengths of the organization while being isolated from its weaknesses can help. Incubators are at risk of becoming too isolated however, and won't inform or change the greater organization unless care is taken to roll the lessons and capability back in.

7. Irreversible decisions around 2.0 around topics such as brand, reputation, and corporate strategy can be delayed quite a while, and sometime forever. Most organizations get paralysis around change and transformation because of concerns around decisions that can't be reversed. Concern over damaging the company's brand is one of the top issues I run into and it's a valid concern. The good news is that many organizations are discovering they can safely leverage the advantages of their organization (such as their extensive customer base to drive initial growth of 2.0 engagement and adoption of new products and services) without dragging their brand into it whatsoever. New 2.0 products from major companies are now often released under new brands entirely. This enables serious experimentation with 2.0 while taking little risk to the organization.

8. The technology competence organizations have today are inadequate for moving to 2.0. This is key if you're a CTO or CIO today; your organization is almost certainly not ready to handle the development, management, scalability, identity, governance, and openness issues around 2.0. If you're not sure, just ask your IT staff. Examples include cloud computing, open APIs, mashups, rich user experiences, Web-Oriented-Architecture, community platforms, Enterprise 2.0, 2.0-era computing stacks like Rails and Django, are all disciplines that are considerable in their own right, of rapidly growing importance to organizations in the 2.0 era. These are all likely to be things your staff needs to come up the learning curve on in significant ways and with the rate of change on the network what it is presently, falling behind is too easy to do. Note: The existing technology landscape of most organizations will have to change as well which is where Web-Oriented Architecture (WOA) is getting quite a bit of attention today. And the Web products themselves have moved far beyond the model of the Web page and most enterprises are very far behind.

9. The business side requires 2.0 competence as well. This includes how to design, build, launch, market, support, and maintain 2.0 products and services as well as the ways that workers should use the tools and concepts to work together. I recently suggested that learning how to be effective in working within and directing communities of workers/users/partners to accomplish large-scale outcomes will be a vital skill in the very near future. All of this requires both a new perspective as well as a hard-headed effort at skill building and a re-orientation of existing work habits and processes.

10. Start small, think big. We have discovered that the leverage the network can give us is almost unlimited. It's ability to scale ideas, products, and communities of users as fast as they are able to is one of the aspects that makes it so attractive to business. 2.0 products tends to be very simple at heart, and though there is certainly challenges and complications growing, small ideas can become big very, very quickly. Getting to the right solutions, not-overinvesting (which leads to complication and heavyweight management and processes) and letting customers and partners take the seeds of great ideas and run with them is what makes sudden success turn into a large-scale success. On the Web, starting small, and thinking big can take you a long, long way. Read more about network effects driven by architectures of participation .

1 comment:

steve said...

Nice informative & very useful blog.
Web 2.0 is transforming the Internet into an even more powerful tool for businesses seeking to leverage technology to drive revenue.In order to effectively compete and meet the growing demands of today's more sophisticated customer, businesses are fanatically seeking to upgrade their web sites with features that enhance the user experience and deliver a measurable ROI from their marketing dollars. Businesses will focus on shifting their web sites from isolated, static information based destinations to highly functional platforms serving powerful web applications to end users that emphasize online collaboration, sharing, interaction and learning.
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