Web 2.0: the ROI case: "crowdsourcing," "wikis" and "viral branding" translate into "positive impacts on the bottom line.".

Author:Dutta, Soumitra
Position:INSIGHTS FROM INSEAD
 
FREE EXCERPT

As Barack Obama's stunning presidential victory demonstrated, Web 2.0 platforms like Face-book, You Tube and Twitter are transforming electoral politics. And yet, ironically, Web 2.0 tools are still encountering resistance in the one place where they were supposed to have the most profound impact--the corporation.

[ILLUSTRATION OMITTED]

On the surface, this resistance is not surprising. Traditionally, the architecture of corporations has been vertical and closed. Corporate cultures are characterized by rigid hierarchies managed as top-down organizations. The architecture of Web 2.0 platforms, by contrast, is essentially social and their design is open, horizontal and transparent.

There are also legitimate concerns about security breaches, legal liabilities and other downsides to Web 2.0. While buzzwords like harnessing "collective intelligence" through horizontal collaboration are compelling, there is still a tremendous fear factor about Web 2.0 in many companies.

In the current economic downturn, corporations are facing pressures to innovate and remain competitive. Pressures in favor of organizational change are coming not only from Web 2.0 consultants and software vendors, but from markets--investors, shareholders, stock prices. Against this backdrop, CEOs are increasingly showing openness to Web 2.0--especially if an "ROI" case can be made.

Surveys conducted by consulting firms like McKinsey and Forrester Research reveal that executives are showing openness to Web-based collaboration and social networking tools. Forrester 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 percent annually--from $764 million in 2008 to $4.6 billion in 2013.

Two areas where a bottom-line case can be made for Web 2.0 tools are peer production and open innovation. Peer production is a form of mass collaboration popularized by Wikipedia. Web 2.0 advocates argue that, by diffusing power downwards and outwards (even beyond the firm), managed hierarchies are no longer needed to organize production.

In the corporate world, the most widespread form of peer production is the wiki. Wikis encourage horizontal collaboration to solve problems. They are, in a word, a corporate form of 'crowdsourcing' that brings in the best expertise--even beyond the company walls--to develop new products.

Wikis are increasingly being deployed both internally and...

To continue reading

FREE SIGN UP