McKinsey released some research that sheds light on the concept of the networked enterprise. But, does this research corroborate the reports we have been covering on the business impact of collaboration?
McKinsey released some interesting research recently. They surveyed over 3,200 executives to find out how Web 2.0 technologies were being used within the enterprise. Sixty-six percent of the respondents stated that they do use Web 2.0 technologies within their organizations. What's more interesting is that a good portion of those surveyed also said they are seeing a measurable business benefit.
A report I wrote about last month showed that adoption numbers around these "Enterprise 2.0" initiatives are still fairly low, so when I read the findings from the McKinsey report I was a bit surprised. However, the fact that so many are reporting measurable benefits was not surprising at all as this corroborates the findings from a another previous report conducted by Frost & Sullivan which showed that collaboration impacts business performance.
The Business Benefits
The business benefits that the respondents saw were broken down into three categories: internal purposes, customer-related purposes and working with external partners/suppliers. You can see the breakdown in the image below.
One thing to notice about this graphic is that "increasing revenue" is by far at the bottom of the list. This is interesting because to me it signifies that companies may be moving beyond just revenue as both a business goal and a measure of success.
Remember the phrase that McKinsey used was "measurable business benefits," yet these business benefits are coming across as:
- Increasing speed of access to knowledge
- Reducing communication costs
- Increasing customer satisfaction
- Reducing support costs
- Reducing travel costs
- Increasing speed of access to internal experts
- And many others
Types of Networked Organizations
Now, perhaps these organizations are just unable to tie some of these measurable benefits directly to "increasing revenue," but I think the fact remains that organizations are still making investments in collaborative technologies even though many are not seeing an increase in revenue.
McKinsey also took a similar approach to Frost & Sullivan by breaking down results based on the type of networked organization and they also found that the more networked an organization is, the greater the benefits.
In the last report I reviewed I missed something crucial which thankfully Hyoun Park from Aberdeen noticed (and I will discuss his report on collaboration in the future here as well). Here is a snippet of the comment Hyoun left me:
"One of the things I still don't fully understand about the Frost report is the assertion that “advanced collaboration” is defined by technologies. To me, a combination of business pressures, strategies, processes, organizational support and structure, performance management, defined business goals and tactical deployments to multiple departments is necessary to truly define “advanced collaboration”.
Hyoun makes a great point and he is absolutely correct. In the reports that we have covered here so far there is very little, if any, mention of strategy, process, culture and change management. It seems that the use of technology is all that is required to necessitate an organization to be "networked" or "collaborative." I'm not saying that the organizations above didn't develop strategies and address cultural challenges, but the reports just don't address those issues which is a big oversight.
Web 2.0 Tools & Performance
Finally, McKinsey takes a look at the correlation of Web 2.0 tools and corporate performance metrics, but again, the focus is on tools.
Based on the above chart, the conclusion is that the use of Web 2.0 tools play a strong role in the success of an organization. However, I'm wondering if the correlations are a bit too weak. After all, correlation does not imply causation. What if it's the change management and culture that is driving these organizations to adopt these new Web 2.0 tools? Then, success comes from not as a result of the tools but as a result of a changed culture -- these insights are not apparent here. There are many factors that can affect market share gains or operating margins.
All the reports we have been seeing do a great job of assessing and evaluating organizations based on their technologies but I think that should be a tertiary, not a primary goal. The primary goal should be to understand why those tools were implemented, what changes had to occur internally to make the use of those tools successful and how organizations developed strategies around those tools.
I highly recommend that you read the full McKinsey report.
I'm curious to hear your thoughts here, what did you think of the report? Did I miss anything?