New research from McKinsey & Co. ‘The rise of the networked enterprise: Web 2.0 finds its payday‘ says that Web 2.0 technologies will be used to intensively connect what goes on inside a company with the external world, namely customers, business partners and suppliers. McKinsey calls this new kind of company the networked enterprise, which for business is probably a much more appropriate term than social networking, and it says companies employing this approach use management practices that lead to higher margins than companies that are less aggressive about using the Web.
What’s interesting here is that the Web was almost entirely an IT initiative when it was rolled out in the early 1990s. It has now reached far beyond the technology itself to the point where the chief concern is the application of that technology. And there is plenty of know-how inside of corporations about how exactly that technology should be applied, in part because people have had time to assess its strengths and weaknesses and in part because they now have buy-in from all parts of the organization.
The McKinsey survey showed that half of the 27% of respondents reporting both market share gains against competitors and higher profit margins used Web 2.0 for a variety of purposes. It’s likely that will grow significantly as we emerge from the downturn because one of the big concerns remains growing the top line revenue while reducing costs. Information is a key piece of that equation, and targeted information is even more effective.
A new McKinsey report, The rise of the networked enterprise: Web 2.0 finds its payday, suggests that there are many benefits to be derived from using Collaborative Web 2.0 technologies, aka enterprise 2.0.
The results from the analysis of their proprietary survey data show that using these technologies is significantly improving reported company performance. The authors state that “our data show that fully networked enterprises are not only more likely to be market leaders or to be gaining market share but also use management practices that lead to margins higher than those of companies using the Web in more limited ways”.