Summary of McKinsey Survey of Web 2.0 Use

The McKinsey Quarterly has published an interesting survey of about 1,000 respondents' use of Web 2.0 techniques. To be sure, the sample is somewhat self selecting (ie Web 2.0 laggards are less likely to participate) but in a way that makes it more interesting as its what the front runners are doing and what they find works. The chart above shows what people are doing (I'd slightly retranslate it to "are trying" though, I'd doubt that much of this is deeply embedded based on our experience). Results so far are:

The median level of gains derived from internal Web 2.0 use ranged from a 10 percent improvement in operational costs to a 30 percent increase in the speed at which employees are able to tap outside experts.

The results are to an extent an indication of where most technologies have been tried to date - in the overall Marcomms areas rather than deeper in the operations of the business, and as such report the reduced transaction costs and lead times of information flow. The 30% number is interesting - the problem with information flow today is it is hard to put a direct economic benefit to it. Although everyone knows it helps maximise the utility of a business's assets, its often hard to cost justify in a stand alone way (just ask the Knowledge Management industry). I recall many years back when Japanese companies started using Just-In-Time methods, western companies found it very hard to justify as they didn't have the economic/accounting techniques to correctly value it until they started to cost low quality, inventory and opportunity costs correctly (and fully). This strikes me as a similar issue today - we just don't have the metrics for the white collar / knowledge economy equivalents yet. This is borne out later in the report, where of the most deployed types of Web 2.0 technology - in order of benefit Videos, Blogs, RSS, Social Nets, Wikis, Podcasts all glean over 1/3rd of users claiming some benefit - of these only Video, Wikis and Podcasting report substantial differences between those finding some benefit and those finding none (Social networking seems to be effective in customer handling but little benefit elsewhere - which surprises me a bit, as we have seen success in post sale support as well - but then I think we are rare in that nearly all our Web 2.0 work in non-Marcomms and I know we are in a minority there)

Other highlights from the report are:

Comparing respondents’ industries, those at high-technology companies are most likely to report measurable benefits from Web 2.0 across the board, followed by those at companies offering business, legal, and professional services. Companies with revenues exceeding $1 billion—along with business-to-business organizations—are more likely to report benefits than are smaller companies or consumer companies. Among functions, respondents in information technology, business development, and sales and marketing are more likely to report seeing benefits at various levels than are those in finance or purchasing. IT executives, in general, are more focused on using Web tools to achieve internal improvements, while business development and sales functions often rely on the technologies to deliver better insights into markets or to interact with consumers.

Regionally, respondents in North America and India are most likely to claim that they are reaping benefits from their companies’ use of Web 2.0. These respondents also report higher levels of technology usage in general. Respondents in North America and China report the highest customer benefits.

Which makes me wonder about us Europeans - are we more Luddite, or just less inclined to bullsh*t? If I look at where the hype comes from, I am tempted to assume quite a bit is from the latter...... tangible benefits I would subscribe to are:

Respondents reporting measurable benefits say their companies, on average, have Web 2.0 interactions with 35 percent of their customers. These companies forged similar Web ties to 48 percent of their suppliers, partners, and outside experts.

In addition, nearly all respondents say that their global penetration has gone up (this being a 2 edged sword if your competitors are also in the game of course). It is easy to be sceptical on these fairly nebulous early results. Those of us who play with these technologies know how powerful they can potentially be, but it is clear that deployment is non trivial.

Many companies experiment with Web 2.0 technologies, but creating an environment with a critical mass of committed users is more difficult. The survey results confirm that successful adoption requires that the use of these tools be integrated into the flow of users’ work. Furthermore, encouraging continuing use requires approaches other than the traditional financial or performance incentives deployed as motivational tools.

But, if we are looking for radical performance improvement, it is going to come from this overall area of information networking and management - replicating technology is relatively easy, replicating the workflow is non trivial but possible - these can be seen and copied. But for a competitor to see the information flow, meme transfer etc is very hard. (An aside - we are doing a workpiece on "Radical Innovation" and looked at wartime as a time when it is literally Innovate or Die to see what lessons can be learned. If I may generalise, whenever you see a radical difference in kill ratios between opponents with roughly similar weaponry, and once both sides are experiened veterans, the 80/20 difference is almost always in information flow. We would suggest that the same is true for enterprises)