Shattering the Myths About Enterprise 2.0

by Andrew P. McAfee

DIGITAL COLLABORATION IS ALL the rage in the world of business. Companies in every industry are adopting collaborative software platforms that enable employees to generate more and better output. A May 2009 Forrester Research study found that almost 50% of companies in the U.S. use some kind of social software, and a July 2009 Prescient Digital Media survey revealed that 47% of respondents were using wikis, 45% blogs, and 46% internal discussion forums.

Underpinning this trend is Web 2.0, a term coined in 2004 to describe the internet’s capability to allow everyone, even non-techies, to connect with other people and contribute content. Facebook, Twitter, YouTube, and Wikipedia are the best-known examples of this trend, and they have become some of the Web’s most popular resources. Three years ago, I coined the term Enterprise 2.0 to highlight the fact that smart companies are embracing Web 2.0 technologies, as well as the underlying approach to collaboration and creation of content.

Enterprise 2.0, which I sometimes call E2.0, refers to how an organization uses emergent social software platforms, or ESSPs, to pursue its goals (see the sidebar “What Is Enterprise 2.0?”). This definition emphasizes the most striking feature of the new technologies: They don’t impose predetermined workflows, roles and responsibilities, or interdependencies among people, but instead allow them to emerge. This is a profound shift. Most companies use applications like ERP and CRM software, which create cross-functional business processes and specify—in detail and with little flexibility—exactly who does what and when, and who gets to make which decisions. E2.0, in contrast, requires companies to take the opposite approach: to let people create and refine content as equals and with no, or few, preconditions. Using ESSPs enables patterns and structures to take shape over time.

There are several benefits of ESSPs. The tools help people find information and guidance quickly—and reduce duplication of work. They open up innovation processes to more people, which is an advantage because, as open source software advocate Eric Raymond put it, “with enough eyeballs, all bugs are shallow.” They harness collective intelligence and the wisdom of crowds to obtain accurate answers to tough questions. They let people build, maintain, and profit from large social networks. They allow executives to realize the dream of creating an up-to-the-minute repository of everything an organization knows. Underlying all these benefits is a style of interaction and collaboration that isn’t defined by hierarchy and is relatively unconstrained by it.

However, E2.0 hasn’t delivered results or even gotten off the ground everywhere. Many companies refuse to take the plunge because the possible drawbacks—the misuse of blogs or the possibility of information theft, for instance—seem concrete and immediate, whereas the benefits appear nebulous and distant. In addition, many corporations have walked away from their E2.0 initiatives, for three reasons. One, doubts persist about the value of these collaboration tools even when they are being actively used. Two, ESSPs often seem unimpressive initially. Pages in corporate wikis read like documents in a binder; blog posts look like newsletters; and personal pages look like Facebook profiles. Three, many projects simply never took off. Employees didn’t flock to use the new technologies, and sponsors wound up with digital wastelands instead of the rainforests they had expected. In fact, a 2008 McKinsey survey showed that only 21% of companies were entirely satisfied with their E2.0 initiatives and that 22% were entirely dissatisfied.

I have been studying E2.0 projects, both successful and unsuccessful, since companies started deploying these technologies in earnest four years ago. My research shows that, despite the failures, there have been striking successes—and that more big successes are possible if only companies would learn to use these tools well. Most initiatives fail because of five widely held beliefs: reasonable attitudes held by well-meaning people, not the handiwork of saboteurs. Nonetheless, data, research, and case studies show that the beliefs are wrong; they’re the myths of Enterprise 2.0. In the following pages, I’ll refute them, starting with two that crop up before an E2.0 initiative is launched and finishing with three that can take hold after deployment.

Myth 1: E2.0’s Risks Greatly Outweigh the Rewards

When CEOs first hear about how Enterprise 2.0 works, many become queasy about allowing people to contribute freely to the company’s content platforms. They voice a consistent set of concerns: What if someone posts hate speech or pornography? Can’t an employee use the forum to denigrate the company, air dirty laundry, or criticize its leadership and strategy? Don’t these technologies make it easy for valuable information to seep out of the company and be sold to the highest bidder? If we use these tools, how can we avoid breaking agreements with partners about information sharing? What if rivals use customer-facing websites to air grievances or malign our products and service? Are we liable if people give incorrect information or bad advice on the forums we host? Won’t employees use the collaboration software to plan social events instead of work-related activities?

Those risks all exist in theory—but rarely in practice. Over the last four years, I’ve asked every company I’ve worked with about the worst things that have happened on their ESSPs. My collection of horror stories is nearly empty. I have yet to come across a single episode that has made me wonder whether companies shouldn’t invest in E2.0 technologies. One conversation I had was particularly telling. In late 2007, when I was teaching a group of senior HR executives, one of them said that leaders at her company, which employed many young people, became concerned about how employees represented it online. When her team poked around on Facebook, MySpace, and other sites, it found that employees almost always talked about the company in appropriate ways. The worst thing the team discovered was a photograph of a training session in which some account numbers were dimly visible on a blackboard. When alerted, the employee who posted it immediately apologized and took the photograph down. Even that wasn’t necessary; it turned out that the numbers were dummies.

Four factors work together to make E2.0 horror stories so rare. One, although anonymity is the default on the internet, on company intranets attribution is the norm. Users are circumspect and unlikely to “flame” colleagues. If workers do misbehave, companies can identify, counsel, educate, and, if necessary, discipline them. Two, participants usually feel a sense of community and react quickly if they feel that someone is violating the norms. Counterproductive contributions usually meet with a flurry of responses that articulate why the content is out of bounds, reiterate the implicit rules, and offer correction. Three, in addition to an organization’s formal leaders, community leaders form a counterbalance. They exert a great deal of influence and shape fellow employees’ behavior online. Four, the internet has been in wide use for more than a decade, so most people know how to behave appropriately in online contexts.

If corporations don’t believe that these factors provide sufficient protection, they can easily set up a moderation process whereby executives vet contributions before they appear. This precaution is common on customer-facing sites, where spammers and vandals can wreak havoc, but companies can use it internally too. Don’t forget, e-mail and text messages are invisible to everyone except senders and receivers, but ESSPs make content visible and thereby turn the entire workforce into compliance monitors. It’s a myth that E2.0 is risky; if anything, it lowers companies’ risk profiles.

Myth 2: The ROI of E2.0 Must Be Calculated in Monetary Terms

The one aspect of Enterprise 2.0 that I’m asked about more than the risks is the business case for it. E2.0 initiatives, like all IT projects, appear similar to other investment opportunities in that a company spends money to acquire assets (such as, in this case, servers and software CDs). But that’s a surface-level matter; the company’s deeper goal is to develop its intangible assets—notably its human, organizational, and information capital.

The value of intangible assets can’t be measured independently, as several experts have noted; it stems from the assets’ ability to help the organization implement its strategy. “Intangible assets, such as knowledge and technology, seldom have a direct impact on financial outcomes such as increased revenues, lowered costs, and higher profits,” state HBS professor Robert Kaplan and David Norton unequivocally in their book Strategy Maps. Therefore, it’s tough to create a business case for E2.0 projects by estimating the monetary return on investment. I have never met leaders of healthy E2.0 initiatives who wished that they had calculated an ROI figure, but I have spoken with many who described ROI exercises as a waste of time and energy.

Companies that are launching Enterprise 2.0 initiatives would do better to focus on three elements other than ROI:

• Expected cost and timeline. By now, managers know how to break down the cost of IT projects. They should also estimate how long the E2.0 effort will take, work out the implementation stages, and lay out the milestones.

• Possible benefits. The expected benefits from E2.0 must be stated, although descriptions needn’t be as detailed as those for the features of a piece of software or as grandiose as the promised results from ERP and CRM implementations such as “organizational transformation” or “customer intimacy.” (See the sidebar “Enterprise 2.0’s Benefits.”)

• Expected footprint. Managers should detail the geographic, divisional, and functional reach of the E2.0 projects they are planning.

These three parameters are usually sufficient to allow executives to make decisions about whether it’s worth investing in E2.0 projects. Most have little trouble answering questions such as “Is it worth spending $50,000 over the next six months to build a broadcast search system for the company?” The answer won’t be an ROI number, but managers can nonetheless address it adeptly. Walking away from the classic business case doesn’t mean abandoning clear thinking or planning. However, it’s time to replace the myth that E2.0 requires an ROI calculation with the fact that tangible assets can deliver intangible benefits.

Myth 3: If We Build It, They Will Come

Given the popularity of Wikipedia, Facebook, and Twitter, many executives assume that their companies’ collaboration platforms will also attract masses of people. They adopt a passive rollout strategy, introduce a few ESSPs, and formally notify people that the forums exist. They then wait for the benefits to accrue—and are shocked when nothing happens.

Popular as large Web 2.0 communities like Facebook are, they still attract only a tiny percentage of internet users. The main task that E2.0 champions face is to draw in a greater fraction of their target audience. That’s difficult for two reasons. One, people are busy. Few knowledge workers feel they have the time to take on an additional responsibility, especially one with ill-defined goals and expectations. Two, employees don’t know how top management will view their participation in ESSPs. Will senior executives value employees who contribute, or will they assume that those workers aren’t interested in their “real” jobs? When the answer isn’t clear, an unfortunate sequence of events unfolds. A few people start using the new tools out of curiosity or enthusiasm. They soon perceive that they’re talking only to each other or, worse, to no one. Shouting into a void loses its appeal quickly, so they stop. The project is then considered a failure.

To avoid this outcome, I advocate the use of explicit recognition programs, incentives, and other types of top-down support for E2.0 projects. That’s how the formal organization can show that it values employees’ contributions. Leaders also should use ESSPs themselves. When senior executives allow their blog posts to receive comments and then respond to the feedback, or use social networking software to create a profile and connect with others in the organization, they’re demonstrating their belief in E2.0. Similarly, when a company recognizes those who answer others’ questions, it asserts that this type of work is valid and valuable. That E2.0 will automatically lure people is a myth; only when people know they’re being heard by those who matter will E2.0 become mainstream.

Myth 4: E2.0 Delivers Value Mainly by Helping Close Colleagues Work Better

Most companies currently use ESSPs to support people who are already collaborating. The Prescient Digital Media survey cited earlier, for example, found that E2.0’s most popular uses are employee collaboration (77% of respondents) and knowledge management (71%). When those are the goals, a typical scenario is for the organization to establish group-editing environments for all the units—such as labs, workgroups, business units, client teams, and so on—that want them, or to let the entities set them up for themselves. In most cases, these environments are closed: Nobody outside the predefined group can see or edit the content.

However, this approach has shortcomings. Consider the types of interpersonal ties of a typical knowledge worker. She has a small group of close collaborators with whom she has strong professional relationships. There’s also a large set of people to whom she has weak ties: coworkers she interacts with periodically, colleagues she knows through coworkers, and other professional acquaintances. Next is another, even larger set of employees who may be valuable to her if only she knew about them. They could keep her from reinventing the wheel on her next project, answer pressing questions, tell her about a good vendor or consultant, let her know that they’re working on similar problems, and so on. Finally are the people who wouldn’t become colleagues of the knowledge worker even if she had ties to them.

Picture a bull’s-eye with four rings; it can represent these four kinds of ties. When an E2.0 initiative consists of closed editing environments, it ignores the benefits that the three outer rings can deliver. Network formation often happens in the second ring. Authoring and broadcast search convert potential ties into actual ones, so they extend to people in the third ring. And collective intelligence works across all four rings; even strangers can trade with one another in prediction markets and generate accurate forecasts. In short, the benefits of E2.0 technologies manifest themselves in all four rings. It’s a myth that companies should focus on group editing among close colleagues; the reality is that Enterprise 2.0 is valuable at every level of interpersonal ties.

Myth 5: E2.0 Should Be Judged by the Information It Generates

It’s commonly believed that the value of E2.0 can be assessed by looking at the information it yields. Popular Web 2.0 resources reinforce this idea: Wikipedia is a huge collection of articles, Flickr of pictures, and del.icio.us of web bookmarks. All of them deliver value to users mainly because they’re comprehensive and of reasonable quality. It seems logical, then, to judge an organization’s collaborative software platforms with one eye on quality and the other on comprehensiveness. This isn’t unfair, but it is incomplete. First, ESSPs often capture work in progress rather than polished deliverables. Wiki pages and blog posts will look rough because they’re essentially drafts. They’re meant to present raw ideas—not refined ones. People should be encouraged to air first-cut concepts in order to show what they’re planning to work on, what they’re interested in, and what they know. Second, content points to people. Imperfect or incomplete information is valuable when organizations can identify who posted it. The social connection is often the real benefit that E2.0 delivers.

In 2008, for example, Don Burke, one of the evangelists for the U.S. intelligence community’s Intellipedia wiki, posted some questions on my behalf on his internal blog. The first was “What, if anything, do Enterprise 2.0 tools let you do that you simply couldn’t do before? In other words, have these tools incrementally changed your ability to do your job, or have they more fundamentally changed what your job is and how you do it?” Most respondents stressed the value of the platform’s ability to convert potential ties into actual ones. Here are comments from a few of them:

• From a Defense Intelligence Agency analyst: “These tools have immensely improved my ability to interact with people that I would never have met otherwise . . . People that would never have been visible before now have a voice.”

• From a National Security Agency analyst: “Earlier, contacting other agencies was done cautiously and only through official channels. After nearly two years of Intellipedia, this has changed. Using it has become part of my work process, and I have made connections with a variety of analysts outside the intelligence community. I don’t know everything, but I do know who I can go to when I need to find out something.”

• From a National Security Agency engineer: “There’s now a place I can go to for answers as opposed to data. By using that data and all the links to people associated with that data, I can find people who are interested in helping me understand the subject matter . . . Their helpful attitude makes me want to help them (and others) in return.”

• From a Central Intelligence Agency analyst: “The first aspect that comes to mind is the ease of sharing ideas and working collaboratively with intelligence professionals around the world . . . I am actively involved in an early-stage project that would be impossible without these tools.”

These responses may not represent the views of the entire intelligence community, but they clearly illustrate that Enterprise 2.0 lets people find new colleagues by converting potential ties into actual ties. The new connections result from content posted on platforms but are invisible in the content itself. E2.0 doesn’t only generate information; that’s a myth. It also helps connect people.

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Nelson Mandela wrote in his autobiography about a leadership lesson he learned from a tribal chief in South Africa: “A leader . . . is like a shepherd. He stays behind the flock, letting the most nimble go out ahead, whereupon the others follow, not realizing that all along they are being directed from behind.” Similarly, E2.0 reveals the domains in which people are adept, allows some to show the way, and gets others to follow them when it’s in the company’s best interest. Enlightened business leaders will use these technologies to lead from behind; the rest will be held back by the fears that stem from believing in myths.

Originally published in November 2009. Reprint W0911A