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Enterprise 2.0 = Enterprise of the Future?

IBM conducted a Global CEO Study early this year (2008), interviewing more than 1,000 CEOs worldwide (1,130 CEOs, 45 countries, 32 industries) about how they see the future of companies and business environment in general As a part of their research, they "sought to understand differences between the responses of financial outperformers and those of underperformers ... Companies that performed above average on a particular financial benchmark were tagged as outperformers, and those below the average were labeled as underperformers." This created a tangible baseline, to which responses of the different managers could be contrasted.
IBM's study concludes in its executive summary that:

  • Organizations are bombarded by change, and many are struggling to keep up.
  • CEOs view more demanding customers not as a threat, but as an opportunity to differentiate.
  • Nearly all CEOs are adapting their business models
    • Two-thirds are implementing extensive innovations.
    • More than 40 percent are changing their enterprise models to be more collaborative
  • CEOs are moving aggressively toward global business designs, deeply changing capabilities and partnering more extensively
  • Financial outperformers are making bolder plays
    • These companies anticipate more change, and manage it better. They are also more global in their business designs, partner more extensively and choose more disruptive forms of business model innovation.

Based on these findings, the study concludes that the Enterprise of the Future is:

  • Hungry for change
    • Capable of changing quickly and successfully. Instead of merely responding to trends, it shapes and leads them. Market and industry shifts are a chance to move ahead of the competition.
  • Innovative beyond customer imagination
    • Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful
  • Globally integrated
    • Takes advantage of today's global economy. Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world
  • Disruptive by nature
    • Radically challenges its business models, disrupting the basis of competition. As soon as opportunities arise, it reinvents itself and its entire industry.
  • Genuine, not just generous
    • It goes beyond philanthropy and compliance and reflects genuine concern for society in all actions and decisions.

Of course most of these points have been valid throughout the history of business, but what sets todays and the futures trends apart from what used to be, is that everything is greatly emphasized. For instance, Dennis Jönsson, CEO of Tetra Pak, notes that "The rate of change has increased dramatically. Customers are demanding radical change in product innovation. Our company will need to greatly increase its capabilities to deal with these demands." Constant change is certainly nothing new, but it seems that companies are increasingly struggling with its accelerating pace. As one U.S. CEO commented in the study: "We are successful, but slow." What do you think, will this company be successful in the long run? Business has entered a "white-water world".
What does this increasing pace of change mean business model-wise? The IBM CEO Study states that "Outperformers manage change better". Successful companies accept change as a state of being and embrace it. Enterprise of the Future "hires, positions and rewards innovators and change leaders" and "operates like a venture capitalist", establishing processes and structures that promote innovation and transformation. The question here is: "Could Enterprise 2.0 provide valuable tools to manage change and promote innovation? Key to transformation is communication. Key to successful transformation is collaboration.

Changing business models and organizational structures is ultimately about changing what people do and think - changing the people themselves. Management books and 'common wisdom' both tell us that people don't want change, they hate it. However, Michael Kanazawa, author of Big Ideas to Big Results, points out in his new book "People Don't Hate Change", that people, on the contrary to popular belief, love change - they just hate how you're trying to change them. One of the key ideas Kanazawa presents on managing change is that there is no such thing as "buy-in". Employees can't be bought into new programs presented to them by a leadership team, outside consultants or a project group, who are "selling" them their plans. At first employees might seem enthusiastic, but in the end, it's not their plan. Conversely, employees should be brought in from the start. Management should rely on their practical experience and expertise, and incorporate their ideas into the plan. Now, there is no need for a "buy-in" - it is already their plan.

Enterprise 2.0 promotes collaboration between different groups in organizations. Wikis, Blogs, RSS feeds, and Other Social Software provide powerful tools for communication and cooperation between and within groups. Change can more easily be brought closer to the everyday work of all employees, arming them with channels and platforms where they can keep track of where the projects are going and also communicate their personal ideas and concerns. Of course just providing employees with ways to express their opinions isn't enough, management also has to establish a culture of openness, that actually allows and encourages contradicting views to be voiced. When used correctly, Enterprise 2.0 can be a valuable part of a company's change strategy, creating new ways of measuring the impacts of change and empowering change agents to influence a wider range of people more easily and rapidly.

"Innovative beyond customer imagination" - "Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful." The study also states that the Enterprise of the Future "Connects everyone to the customer: Employees at all levels - from designers to warehouse employees - connect with customers through realtime information, online interaction or, where possible, in person ... It uses emerging technologies, such as virtual worlds, to gain insights in new ways."

Sounds familiar? As CIO Magazine put it in ABC: An Introduction to Enterprise 2.0: "Enterprise 2.0 also provides new avenues to open up a conversation with partners, suppliers or customers. Communication flows both ways, enabling you to share information and ideas. With these technologies, you could ask customers for pictures or videos using your products in interesting ways (and thus build brand equity with your customer base). Or you could share information with partners who are working on a project with your company. You can easily start a blog or wiki for a specific product category, enabling a small niche of your market to communicate, a process that would have been much more difficult and expensive using earlier Web tools." The best thing about Enterprise 2.0, when it comes to innovation, is that the structure of Emergence ensures that the best ideas get filtered to the top, or to the people in charge.

How about: "Globally integrated" - "Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world." Enterprise 2.0 specifically stresses the importance of easy information access and findability. The social aspect of the tools eases the process of finding relevant information and experts on particular subjects. The technologies enable employees to establish "Weak Ties" with their colleagues, even if they are on the other side of the world (see McAfee: The Ties that Find). McAfee gives a short summary of Mark Granovetter's hugely popular theory of "The Strength of Weak Ties", which concludes that

"Strong ties are unlikely to be bridges between networks, while weak ties are good bridges. Bridges help solve problems, gather information, and unfamiliar ideas. They help get work done quicker and better. The ideal network for a knowledge worker probably consists of a core of strong ties and a large periphery of weak ones ... Facebook and its peers should be highly valuable for businesses because they're tools for increasing the density of weak ties withing a company, as well as outside it ... I also think that employees who blog behind the firewall are establishing something like weak ties with all of their colleagues. If decent search exists, any employee can find out if their blogging peers have sought-after knowledge or expertise." (See Other Social Software for more information and examples of e.g. corporate applications for Facebook)

The Global CEO Study also notes that when going global, the Enterprise of the Future capitalizes on global integration opportunities, for example, by Finding and eliminating integration barriers and by Recognizing the importance of social connections within and across organizations. "Social networking and realtime collaboration tools improve communication and close the distance between people in different locations. Good ideas develop and spread quicker, and problems are solved faster."

Is this Enterprise 2.0 they are talking about?

See also