Innovation & Design

Executives Remain Wary of Web 2.0


Wikis and blogs may be all the rage in the business press, but a new survey indicates that companies are hedging their bets

Companies may talk about embracing Web 2.0, but they're slow to invest in blogs, wikis, and many of the other new collaborative technologies that are generating headlines. Instead, they're putting their resources behind technologies that enable automation and networking, according to a Mar. 22 McKinsey Global Survey, "How businesses are using Web 2.0."

During January, 2007, 2,847 executives from global companies, 44% of whom were C-level or above, were asked to provide insight into which of nine Web 2.0 technologies they were currently investing in—and how their use of these technologies has evolved over the past five years.

Web services, including software that enables systems to communicate with each other, attracted the largest investments, with 80% of executives reporting that they use or plan to use them. These services might be used, for example, when a retailer and a supplier communicate over the Internet to automatically update each other's inventory systems. Collective intelligence, which attempts to tap the wisdom of crowds to make decisions, was the second-largest draw, with 48% of executives reporting investments. Peer-to-peer networking, a technique for efficiently sharing music, video, or text files, also attracted attention, with 47% of executives reporting investments.

Crowd Control

Meanwhile, companies have been reluctant to invest in some of the more mainstream Web 2.0 technologies. Just 37% of executives were using or planned to use social networking, best known for commercial applications like MySpace and Facebook. RSS, the shorthand for the Really Simple Syndication services that let people subscribe to online distribution of news and information, and podcasts each had just 35% of executives reporting investments. And wikis, the publishing systems that allow many authors to contribute, captured the investments of just 33% of executives. Just 32% of executives reported sinking dollars into blogs, while mash-ups, the aggregation of online content to create new services, brought up the rear, with just 21% of executives reporting investments.

These results surprised one of the study's authors, Jacques Bughin, who's a director in McKinsey's Brussels office. Following the study, he interviewed a number of the respondents. "The reason why blogs and wikis, in particular, aren't well used is that companies are still afraid," he posits. "How do you basically regulate how to contribute?" He also thinks the wisdom of crowds isn't always sharp and that companies are worried about getting bad information on a collaborative document, such as a wiki.

Another barrier to embracing blogs and wikis: Bughin points out that in a knowledge economy where companies remain hierarchical in structure, knowledge is power. If workers put their most precious information in a wiki, their status within their organization could be threatened. "The problem is that people with heavy knowledge tend to keep that for themselves, because that's the way they define their job," says Bughin. "Put it in a wiki and everyone has it." If he's right, companies serious about embracing these collaborative technologies will need to find a new incentive system for employees.

New Wave of Workers

Bughin also notes that technology adoption is becoming decentralized. A decade ago, the IT department drove investments in most new technologies. Now, these tools are just as likely to bubble up from other departments. "Corporate strategy can define technology strategy," says Bughin.

Executives report three main uses for Web 2.0 technologies: Seventy percent of companies rely on them to talk with customers. Fifty-one percent use them to talk with suppliers and business partners. And 75% use them to manage internal collaboration. Many of these folks say they rely on Web 2.0 for tools to design and develop products. An example: setting up systems to gather and share ideas.

It's likely company usage will evolve as employees age. Baby boomers, who still make up the majority of the workforce, are used to picking up the phone. That will change as millennials, the youngest workers who are now in their teens and early 20s and schooled in instant messaging and blogging, become a growing force. "There's still a generation gap," says Bughin.

A small core of early adopters is betting that staying a step ahead of millennials will translate into a competitive advantage. While the survey didn't give a sense of return on investment from any of the technologies, and it assessed each of the nine trends separately, Bughin reports that 5% of the respondents reported investments in seven of the nine technologies. "They see advantage in the opening of boundaries to suppliers and customers," he says.

Hempel is BusinessWeek's Innovation editor in New York.

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