The corporation is where Web 2.0 tools hold the most promise to transform social organization, but it's also where there has been the most resistance to change. Although Web 2.0 tools can have a tremendous upside for businesses, the reality is that, inside many companies, reactions to online social networking have been fixated on the downside.
The following excerpt from Matthew Fraser's and Soumitra Duttra's book, "Throwing Sheep In The Boardroom," is presented by bMighty courtesy of John Wiley & Sons, Inc. Throwing sheep is how people get one another's attention on MySpace (smiley) and Facebook (poking someone). The title of Fraser's and Duttra's book merges the image of throwing sheep from the world of virtual social interaction with the staid corporate hierarchy of the boardroom. The collision of these two spheres and its potential to revolutionize business.
BOOK EXCERPT: "Throwing Sheep In The Boardroom" -- Chapter 14: Enterprise 2.0: Wiki While You Work
The Web 2.0 revolution has been frustrated by a powerful irony. The one place where Web 2.0 tools hold out the most promise to transform social organization is precisely the location where there has been the most resistance to change. That place is the corporation. Social media, as we have seen, are revolutionizing the way we interact with others, build social capital, even achieve fame and riches. Yet when Web 2.0 social tools permeate corporate bureaucracies, they are often resisted as invasive and potentially threatening. If there is widespread agreement that Web 2.0 tools can have a tremendous upside for businesses, the reality is that, inside many companies, reactions to online social networking have been fixated on the downside.
This should not be surprising. Social networking is essentially a horizontal dynamic. The human need to connect socially is powerful, irrepressible and indispensible for getting things done. Markets, in like manner, operate according to inexorable laws that connect sellers and buyers. Market dynamics relentlessly seek to maximize efficiency to create surplus value. Markets work best when they are free, open, unfettered, unencumbered by monopolies, oligopolies, conspiracies and obnoxious practices. The classic design of corporate bureaucracies, by contrast, is based on the opposite dynamic. Traditionally, the social architecture of corporations has been vertical and closed. Corporate cultures are shaped by rigid hierarchies and ascriptive values of position, title and rank. Corporations are managed as top-down organizations that wield tremendous powers of compensatory coercion over their employees. Office environments are not cocktail parties; nor are they Greenwich Village streetscapes.
Let's face it, most employees working in corporate bureaucracies are, at present, not invited to engage in collaborative projects, contribute to company blogs and wikis or network online with colleagues and customers. The idea of "Facebook Fridays" for employees would be a non-starter in most corporate environments. Indeed some employees, as we have seen, are getting sacked when caught logged onto social networking sites at the office. The centralizing power of Philippe le Bel casts a long shadow over the executive suites at most modern corporations.
Despite the obstacle of status quo organizational cultures, Web 2.0 evangelists persist in their belief that an imminent social revolution is about to transform corporate bureaucracies. The buzzwords employed to describe this eruption are numerous: mass collaboration, self-organization, open innovation, distributed co-creation, bottom-up management, networked organization, virtual corporation. When Web 2.0 adoption reaches a tipping point, the major impact in corporations will be a diffusion of power towards employees and consumers. And corporate executives who don't exit the echo chamber to listen to what their staffs and customers are saying will suffer the consequences. Capitalism is no longer about the production and provision of goods and services. Capitalism, say Web 2.0 evangelists, is now a "conversation".
C.K. Prahalad, arguably the world's most prominent management guru, wrote a decade ago about this New Economy power shift towards consumers. "Thanks largely to the Internet, consumers have been increasingly engaging themselves in an active and explicit dialogue with manufacturers of products and services," wrote Prahalad in the Harvard Business Review. "What's more, that dialogue is no longer being controlled by corporations. Individual consumers can address and learn about businesses either on their own or through the collective knowledge of other customers. Consumers can now initiate the dialogue; they have moved out of the audience and onto the stage."
We saw in the last chapter, with our music industry case study, how this power shift erupted a multi-billion-dollar business in only a few years. In pop music, the audience literally took control of the stage and created a dialogue among themselves, as artists and fans, while cutting out traditional gatekeepers. The lesson for corporations is that market dynamics have been fundamentally transformed by this power shift. Consumers are not only seeking value as customers, they are now creating and competing for value. Corporations, argues Prahalad, should see consumers as a new source of "competence."
The companies that understand the basic dynamics of this market eruption, and are adapting their organizational behaviour accordingly, are frequently called "Enterprise 2.0" firms. The generally accepted definition of Enterprise 2.0 is a corporation that—thanks to Web 2.0 software tools like wikis and blogs—encourages horizontal collaboration and harnesses the power of collective intelligence to boost productivity, foster innovation and create enhanced value. That's a strictly organizational definition of Enterprise 2.0. In its broader definition, Enterprise 2.0 encompasses a vision advocating new modes of capitalist production and social organization.
Charles Leadbeater, an associate at the UK-based think tank Demos, is a notable thought leader for this broader vision of social transformation. "The developed world in the 20th century was preoccupied by organizing and reorganizing the mass-production system, its factories, industrial relations systems, working practices, supply chains," notes Leadbeater in his book/blog We-think. "Our preoccupation in the century to come will be how to create and sustain a mass innovation economy in which the central issue will be how more people can collaborate more effectively in creating new ideas."
Living at the dawn of a new social order is an exhilarating prospect. For corporate executives, however, it signifies an urgent necessity to profoundly rethink how they structure, organize and manage their companies. And for many executives, that challenge is potentially too destabilizing, not to mention threatening.
Many CEOs, it is true, are intrigued by the business case for Enterprise 2.0. Surveys conducted by consulting firms like McKinsey and Forrester Research reveal that executives are showing more openness to Web-based collaboration and social networking tools. Until recently, however, companies had invested mainly in "back-end" technologies that enable Web-based automation, while remaining paranoid about losing control if social networking tools like wikis and blogs become standard work tools. Forrester nonetheless forecasts robust corporate spending on Web 2.0 software—including blogs, mashups, podcasts, RSS, widgets and wikis. It projects consolidated Web 2.0 spending growth at 43% annually—from $ 764 million in 2008 to $ 4.6 billion in 2013. Still, it can hardly be claimed that Fortune 500 companies—with the exception of a small clutch of leading-edge giants like IBM—are stampeding to join a Web 2.0 juggernaut. Moreover, while $ 4.6 billion looks like a big number, it's only a tiny fraction—less than 1%—of global corporate spending on enterprise software. That's not an Enterprise 2.0 revolution. At best, it's cautious evolution.
How can we explain the lag between the bold ambition of the Enterprise 2.0 vision and the slow pace of its adoption by corporations? Dennis Howlett, a corporate software specialist who writes about Enterprise 2.0, puts the same question this way: "CEOs instinctively know that internal collaboration, whether through rudimentary technologies like blogs and wikis, hold significant efficiency promise. They know the technology is relatively inexpensive compared to other types of enterprise technology and that implementation can be rapid. They also get that, in the longer term, these technologies could hold incredible promise for business effectiveness across their entire value chain in releasing huge amounts of resource back into the business. None of that is disputed. What is disputed are two things: social media and social networking as applied internally. Why?" Good question. Let's try to answer it.
. We've got a management crisis right now, and we've also got an engagement crisis. Could the two be linked? Tune in for the next installment of IT Life Radio, Wednesday May 20th at 3PM ET to find out.