Idea 49 - Web 2.0

 Idea 49 - Web 2.0

With a few far-sighted exceptions, business is slow to wake up to the new. When it does, however, it devours it. A handful of early movers turn a new idea into a competitive advantage until everyone else catches up. Then the new becomes the norm and the field is levelled once again. That is as true for communications technology as for anything else, perhaps more so - business turned the telegraph, telephone, telex and fax machine to its purposes. Now comes the Internet and all that flows from it. But some believe (the most dangerous four words in the business vocabulary, others say) that 'this time it's different'.

 

 

Ideas about the communications possibilities of packet-switching and networking surfaced at MIT in the early 1960s, and the first network with computers communicating over a phone line was built in 1965. But it was the 1980s before business began to scent possibilities, and the first Interop trade fair showcasing the Internet was in 1988. The Internet is the underlying, enabling network, but business was more interested in the applications you could park on top of it, notably the email messaging system and the Web, which shares information by using browsers to access Web pages.

 

 

Companies quickly cottoned on to the virtues of email as a medium for communications, though its use as a marketing channel has been impaired by floods of spam. They, and their customers, were more tentative about the Web and many inaugural corporate websites were information-only. It was in the more sheltered environment of business-to-business transactions that e-commerce first began to gain traction. As consumer anxieties over security faded, and as satisfactory online purchases of books or holidays bolstered confidence, e-tail finally came into its own, spreading to every conceivable comer of the retail trade. With lower transaction costs translated into lower prices, online shopping grew by 50% in 2006 to account for 10% of all UK retail sales, though in the US its share is still around 3%. For agile manufacturers and some service providers this may simply have meant focusing on a new distribution channel.  But the media have felt the icy blast as more people choose to stay informed via blogs and social networking sites such as MySpace, instead of print and TV.

 

 

One click and they're off Web clearly isn't going to destroy bricks-and-mortar but, even in the US, many who still shop offline are effectively making their purchasing decisions online, clicking their way from site to site, comparing prices and specs. The reverse of that coin is that some shops are becoming more like showrooms, as customers come in to feel the goods, and then purchase online. 'Googling' a company or a product has become part of the language and, for many, an integral part of shopping and finding information. Companies need not only a Web presence but one that's 'sticky', or one click and they're off. The Web is the most selfish environment in the world, as they like to say at Yahoo!

The bursting of the dot. com bubble knocked the breath out of the new economy - for a short while - and seemed to vindicate those who felt the online revolution had been overhyped. Among them was the estimable Michael Porter. He dismissed the view that the Internet was a break from the past, insisting it was merely part of the ongoing evolution of IT, on a par with scanning and wireless communications. Don Tapscott, coauthor of Digital Capital, disagreed completely, arguing that Internet was already changing dramatically. He called it the new infrastructure of the 21st century - 'the mechanism by which individuals and organizations exchange money, conduct transactions, communicate facts, express insight and opinion, and collaborate to develop new knowledge'. While Porter believed that universal adoption would 'neutralize' the Internet as a source of competitive advantage, Tapscott countered that it would allow companies to create unique products, wring out waste, differentiate themselves and reach new suppliers and customers. In fact, the Web is already a very different creature from its original, relatively passive page- oriented self. They were places to visit. Today the Web is a place you go to get things done. Enter Web 2.0.

 

Participation, not publishing Tapscott was right in his assertion that the Web was becoming more than a cross between a shopping arcade and the Yellow Pages. If Web 1.0 was publishing, Web 2.0 is participation says publisher Tony O'Reilly (whose company helped articulate this phase two concept in 2004). A 'wiki' website is very Web 2.0, allowing users to add to or edit its content (wiki-wiki is Hawaiian for 'quick'). The best-known example is Wikipedia, the online encyclopedia that anyone can amend, sometimes to its detriment, but some firms are using wikis to create pre-meeting agendas OT to develop ideas. In some, wiki traffic now exceeds intranet traffic.

 

 

Mashups Web 2.0 sites have the software and the data to do things for you, instead of having to download software packages to do it yourself. The Web looks ever more web-like and linkage is key too, either by connecting people through social networking sites and blogs, or by combining different sources of content on the same site - 'mashups', A mashup was used to help New Orleans residents, displaced by Hurricane Katrina, to find jobs - they typed the kind of job they were looking for into the site, which searched over 1,000 job boards and displayed their location on a Google map. 'Viral marketing' (see box) tries to exploit social linkages to create 'word of mouth' awareness of products or services across the Web.

 

 

Web 2.0 companies such as eBay and Skype, were born on the Web. Whenever someone uses them and leaves a comment or adds a contact, they are improving the tool for themselves and for everyone else. 'Every time we go on these sites we're programming the web,' Tapscott notes. However, non-Web companies are still feeling their way around Web 2.0. A few have established a presence inside Second Life, one of the Web's digital worlds. Penguin, the publisher, has, perhaps rashly, launched a wiki novel project, called A Million Penguins, which has attracted varying levels of talent. Innovation opportunities clearly exist, though the Web community needs careful handling. But research suggests brands that succeed on the Web generate emotional ties, becoming 'owned' not only by the people who create them but also by the people who use them.