McKinsey - 6 Lessons for making good use of Web 2.0

Once someone like McKinsey gets hold of Web 2.0, some would argue that is at the peak of its hype cycle - another way of looking at it though is that its entered the Darwninian process of culling the failed experiences and taking out of Web 2.0 the bits that are useful. That at least is the approach in this article in the McKinsey Quarterly, which sees Web 2.0 / Enterprise 2.0 software as just the next phase in business systems, from the ERP and CRM systems of the 1990's onwards - but with the difference that they come from a different starting point:

Earlier technologies often required expensive and lengthy technical implementations, as well as the realignment of formal business processes. With such memories still fresh, some executives naturally remain wary of Web 2.0. But the new tools are different. While they are inherently disruptive and often challenge an organization and its culture, they are not technically complex to implement. Rather, they are a relatively lightweight overlay to the existing infrastructure and do not necessarily require complex technology integration.

The biggest ROI they argue comes from what Clay Shirky, calls the “cognitive surplus” - underused human potential at companies - an immense resource and one that could be tapped by the Web 2.0 participatory tools. (In other words, how can your company grab the brain cycles you are currently giving voluntarily to other companies' projects )

In the article, they have 6 six critical factors that they believe determine the outcome of efforts to implement these technologies. I've expurgated them and commented below:

1. The transformation to a bottom-up culture needs help from the top.

Web 2.0 projects often are seen as grassroots experiments, and leaders sometimes believe the technologies will be adopted without management intervention—a “build it and they will come” philosophy. These business leaders are correct in thinking that participatory technologies are founded upon bottom-up involvement from frontline staffers and that this pattern is fundamentally different from the rollout of ERP systems, for example, where compliance with rules is mandatory. Successful participation, however, requires not only grassroots activity but also a different leadership approach: senior executives often become role models and lead through informal channels.

Comment - Its a truism from the days of the first rollouts of IT systems that without top management support, most systems tend to die out eventually as they are starved of resources and political support.

2. The best uses come from users—but they require help to scale.

In earlier IT campaigns, identifying and prioritizing the applications that would generate the greatest business value was relatively easy. These applications focused primarily on improving the effectiveness and efficiency of known business processes within functional silos (for example, supply-chain-management software to improve coordination across the network). By contrast, our research shows the applications that drive the most value through participatory technologies often aren’t those that management expects.

Comment - this is the corollary of point 1 in part - if management does get behind the efforts they are more likely to succeed. The other point made is that this whole area is still very early stage and what works - and doesn't - is still very unclear. McKinsey may want to look back to pre ERP days, to MRP, and before that to pre MRP systems - it was unclear then what worked, how it would work etc and took quite a few years to get the optimal approaches ironed out.

3. What’s in the workflow is what gets used.

Perhaps because of the novelty of Web 2.0 initiatives, they’re often considered separate from mainstream work. Earlier generations of technologies, by contrast, often explicitly replaced the tools employees used to accomplish tasks. Thus, using Web 2.0 and participating in online work communities often becomes just another “to do” on an already crowded list of tasks.

Participatory technologies have the highest chance of success when incorporated into a user’s daily workflow. The importance of this principle is sometimes masked by short-term success when technologies are unveiled with great fanfare; with the excitement of the launch, contributions seem to flourish. As normal daily workloads pile up, however, the energy and attention surrounding the rollout decline, as does participation.

Comment - absolutely - and what gets measured gets done. People use the stuff that solves the day by day problems and divert around that which doesn't. Any system that doesn't model the reality will be neglected. Web 2.0 systems, because thay are ground up, have the potential to be more rooted in real workflow.

4. Appeal to the participants’ egos and needs—not just their wallets.

Traditional management incentives aren’t particularly useful for encouraging participation. Earlier technology adoptions could be guided readily with techniques such as management by objectives, as well as standardized bonus pay or individual feedback. The failure of employees to use a mandated application would affect their performance metrics and reviews. These methods tend to fall short when applied to unlocking participation. In one failed attempt, a leading Web company set performance evaluation criteria that included the frequency of postings on the company’s newly launched wiki. While individuals were posting enough entries to meet the benchmarks, the contributions were generally of low quality. Similarly, a professional-services firm tried to use steady management pressure to get individuals to post on wikis. Participation increased when managers doled out frequent feedback but never reached self-sustaining levels.

Comment: Mandating user acceptance doesn't work - it was ever thus, but as they point out, applies in spades to systems that are driving their entire economic ROI from the user acceptance and participation they are supposed to facilitate. The million dollar question is how to do this, as systems that come "bottom up" are typically localised and hard to scale while they keep their local flavour.

5. The right solution comes from the right participants.

Targeting users who can create a critical mass for participation as well as add value is another key to success. With an ERP rollout, the process is straightforward: a company simply identifies the number of installations (or “seats”) it needs to buy for functions such as purchasing or finance and accounting. With participatory technologies, it’s far from obvious which individuals will be the best participants. Without the right base, efforts are often ineffective. A pharmaceutical company tried to generate new product ideas by tapping suggestions from visitors to its corporate Web site. It soon discovered that most of them had neither the skills nor the knowledge to make meaningful contributions, so the quality of the ideas was very low.

Comment: Absolutely, those people most involved with a subsystem are usually best placed to help its development along (but not always - sometimes one needs to break old workflows). But, it is fairly clear in most companies who will be on what sorts of participatory subnet from the workflow and responsibilities, but so long as the system allows communication between these subnets - so the "loose ties" and or informal networks can emerge onto the system, it will probably work. With respect to the Pharmaceutical company, you have to get the right users and empower them, as other companies have gained great benefit from user feedback.

6. Balance the top-down and self-management of risk.

A common reason for failed participation is discomfort with it, or even fear. In some cases, the lack of management control over the self-organizing nature and power of dissent is the issue. In others, it’s the potential repercussions of content—through blogs, social networks, and other venues—that is detrimental to the company. Numerous executives we interviewed said that participatory initiatives had been stalled by legal and HR concerns. These risks differ markedly from those of previous technology adoptions, where the chief downside was high costs and poor execution.

Comment: This is the crux of participatory media - it is harder to control , but not impossible, and the datamining possible makes it ultimately impossible to ignore. There are a legion of PR and Digital Marketing companies working on where the borders of control lie and where the "sweet spots" of this medium are. Its emergent, the tools are evolving and there will be errors made. So far a good rule of thumb seems to be that if one is trying to sell a spiel that is obviously false it will be found out sooner or later in this medium, as it is just far more transparent. The cynical will argue that the future will lie in "believable lies", the enthusiasts that it will be in "authentic communication". Behavioural economists, game theorists and marketeers will vote with the cynics, methinks - but don't expect them to say how they vote in public!