Buffering the economic meltdown using web 2.0

Submitted by Kate Elphick

Even the most removed business from the global market is starting to feel the bite of the global economic meltdown. This year is going to be a challenging year for many South African businesses. Most companies are looking at what they can do to make the best of the current economic situation, and battening down the hatches against the economic tsunami which looms ominously across both the Atlantic and Indian oceans.

Some business leaders are cutting back to the bare essentials, but others are investigating entirely new pursuits to survive and flourish. The decisions executives make now, will determine what will happen to their businesses in the future.

Despite the global downturn, the fact that the web has become a bilateral communication system (so-called web 2.0), provides many opportunities. Most businesses have a surprising number of options if they are willing to think creatively.

Web 2.0 brings with it new economic realities and abilities. We see the network effect at work, whereby, for every new member who joins a network, the value of the entire network goes up exponentially. Web 2.0 is about making the most of the intrinsic power of the network, the communication tools (wikis, blogs) and features (cloud computing, mashups, open APIs etc). These collectively represent better, more efficient and less expensive ways to attain competitive advantage. Think of the brave man who bought the first fax machine.

We also see the law of abundance entering the mainstream of business. With the internet, the investment into production is upfront and the marginal cost of every additional product is equal to the bandwidth for delivery. Amazon’s Kindle is reducing the price of books by 60% and still selling them profitably.

Web 2.0’s ability to facilitate a dialogue enhances our ability to collaborate and manage geographically unfettered projects more effectively. While some executives might believe that the social aspects of web 2.0 are inconsequential in their business environment, when it comes to the deeper implications of web 2.0 across the enterprise, many business functions are enhanced by the stakeholders’ ability to communicate, drive change and transform in these radically different business conditions.

What does this mean for creating value in an unpredictable time, how can this help cut costs while driving growth? Here are six practical ways that 2.0 can help organisations grapple with today’s economic challenges.

6 Strategic uses of web 2.0 for growth and resilience

1. Use Enterprise 2.0 to capture the employees’ collective knowledge. Enabling open, persistent, free-form collaboration amongst employees causes vast amounts of institutional knowledge to pour out into visible places on the network where that information can be studied, reused and learned by others.

When mass lay-offs take place in organisations, years of built-up expertise and capability leave the company. This knowledge resides in inaccessible places such as e-mail accounts, file servers, meeting notes and in the minds of the departing employees. An interactive intranet with blogs, wikis and other Enterprise 2.0 tools enable organisations to be elastic in terms of headcount while mitigating the erosion of corporate culture, knowledge, historical context and critical methodologies.

Many benefits of Enterprise 2.0 have been reported by early adopters including greater efficiency, more transparency and better communication. Making your intranet a strategic, vibrant, ever growing, knowledge worker-powered, interactive application is one of the best investments you can make.

2. Embrace new low-cost models for innovation and production such as crowdsourcing. There are numerous competitive and economic reasons to move to crowdsourcing models for many aspects of modern business. These include using the vast audience of people on the global network as a primary source of innovation, research, and product development as well as customer support, sales and marketing. Almost anything that you can outsource you can crowdsource for less and with more robust results, although, it has to be said, with less predictability.

Crowdsourcing is very different from traditional corporate hierarchical command-and-control, which works well in outsourcing relationships, but much less in a social computing environment. Crowdsourcing is providing increasingly impressive stories, although some organisations will still fail with it. Digitally sophisticated companies have the most success. The dramatic cost savings and leaps in innovation that can be tapped with crowdsourcing, make it one of the most potent web 2.0 business models.

3. Lower customer service costs by pro-active use of online customer communities. Many of your customers are online, are you truly engaging them, supporting them, and creating a rich community of shared interest around what you’re doing? Few large companies have created successful online communities around their products and customers have largely had to create them on their own until very recently.

Many organisations have been slow to move to using on-line customer communities. There is a skill to creating and nurturing successful online customer communities, but there are many companies who specialise in managing these communities for you.

Now is time to provide customers an entirely new and largely superior channel for communication, collaboration and working together and amongst themselves. Organisations that want to minimise customer disruption during staff turnover, lower customer service costs and retain the customers they have must look to robust online customer communities.

4. Manage employee relations though web 2.0 HR portals. Knowledge workers require a different set of management skills to motivate them to bring their passion to work. Highly engaged employees are more likely to harness their abilities in favour of the organisation they work for, particularly in difficult times.

Using Enterprise 2.0, employees can be given the ability to profile themselves, their skills and experience in the organisation. Closed communities between individuals, managers and HR can be used to share performance management dashboards.

5. Deploy a content-management strategy. Content-management strategies separate the content from the context and enable organisations to create content once and update it everywhere. This ensures brand consistency and reduces the communication and workflow gaps which are the inevitable consequence of employee churn.

6. Focus on eMarketing. As so many clients are online, eMarketing provides the perfect opportunity to engage with potential and existing clients while they are in a receptive mindset.

This entails creating a digital presence beyond your own web domain, by advertising, or writing industry blogs, commenting in forums etc. It is well to appoint a dedicated resource to do this as this is a full-time dialogue with your target audience. There are specialist companies that you can outsource this function to.

With web 2.0, there is a major shift in control, a much higher level of transparency, and an openness that many businesses can be uncomfortable with. However, organisations that are willing to overcome these largely political, cultural and mindset challenges can realise significant opportunities, often for relatively modest investment.

Web 2.0 models offer one of the most potent ways we presently have to regroup, reorganise and systematically improve what we’re doing. Right now is a very exciting time to be in business.

Elphick heads up Digital Bridges. Digital Bridges bridges the divide between people and technology. It turns business ideas into specifications for web based applications, such as interactive intranets or on-line communities of interest. It also provides digital community management, content generation and eMarketing. Kate has spent 15 years on the business side of IT with companies such as Didata, Datatec, Business Connexion and Primedia. She has an MBA from GIBS