Highlights from McKinsey’s Global Study on How Companies are Benefiting from Web 2.0

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The management consulting firm of McKinsey & Company has been tracking and analyzing the adoption of Web 2.0 technologies for the last three years.  In this year’s study, they wanted to determine if companies were getting measurable business benefits from their investments in Web 2.0 technologies.

The short answer is YES as noted in this excerpt from the executive summary:

69 percent of respondents report that their companies have gained measurable business benefits, including more innovative products and services, more effective marketing, better access to knowledge, lower cost of doing business, and higher revenues.

As part of the study, they released an an interactive tool that lets users explore and customize three years of survey results.  For example, two areas where I have an interest – blogging and social media – have shown significant increases from 2007 to 2009.  In 2007, only 17% of companies maintained a blog and that grew to 46% in 2009.  Similarly, social media usage at the survey companies has grown from 19% in 2007 to 42% in 2009.

Another great insight is how companies are achieving measurable gains for Internal Purposes, Customer-related Purposes and Working with External Partners/Suppliers.  For example, 52% of companies say that they have increased their marketing effectiveness and the two most important technologies for this segment are blogs and social networks:

McKinsey Global Web 2.0 Study - Excerpt from Exhibit 1

McKinsey Global Web 2.0 Study – Excerpt from Exhibit 1

The Survey also suggested 2 additional points of good news for us involved in social media and Web 2.0 initiatives:

  1. More than 1/2 of the companies in this year’s survey plan to increase their investment and 1/4 expect their investments to stay the same
  2. Among companies who have gained measureable benefits, the current economic downturn has only increased their interest

Here is the link to the complete survey results along with some other suggested links with some great information – you may have to register for a free account at McKinsey, but it’s definitely worth it:

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Eight Business Technology Trends to Watch From McKinsey

Three consultants from McKinsey & Co. collaborated on an article in the January issue of McKinsey Quarterly discussing eight emerging trends in business and technology.

I have summarized and paraphrased the trends here, and you can follow the links below to the complete article and podcast.

1.  Distributing cocreation

Distributing cocreation is letting customers, suppliers, independent contractors and others create new products.  While this approach to innovation is not widely accepted yet, the impact could be substantial.  McKinsey estimates that 12% of all labor activity could be transformed by more distributed and networked innovation.

2.  Using consumers as innovators

This is an interesting trend and one that many companies are exploring.  Dell lets consumers suggest new product ideas and vote on them in their IdeaStorm website.  On the B2B front, Salesforce.com uses a similar application for users to make suggestions to improve their CRM software.  In fact, the top ideas from Salesforce.com receive executive-level visibility.  Later this month, iRise will roll out their own Ideas application in the iRise Users section of the Catalyze Community – drop me a note at thumbarger@irise.com if you are interested in learning more.

3.  Tapping into a world of talent

This trend is about finding the best talent for an activity, regardless of where the person is based.  Software and internet technologies make it easier and less expensive to integrate and manage a distributed workforce.

4.  Extracting more value from interactions

As more manufacturing and clerical activites are being off-shored, the resulting work becomes more collaboration and knowledge-based.  This will require companies to invest in technology tools that promote collaboration such as communities, wikis, virtual team collaboration and videoconferencing.

5.  Expanding the frontiers of automation

There is still more progress to make in automating repetitive tasks, especially in sectors and regions where IT moves a slower pace.  Automation is a good investment “only if it lowers costs and helps users get what they want more quickly and easily”.

6.  Unbundling production from delivery

More and more companies are unbundling their business models, services, infrastructure and assets to become more nimble, to increase capacity, to scale up businesses and to make the use of certain assets more attractive to their financial statements.  For example, Amazon is unbundling their infrastructure and offering it’s logistics and technology services to 3rd parties.  Fractional jets, data centers, office buildings and networks are doing the same in the physical world.

7.  Putting more science into management

Technology is helping managers exploit greater amounts of data to make smarter decisions and develop insights.  Deep customer insights will lead to a richer understanding of a customer’s needs which will enable more segmentation and increased mass customization.

8.  Making businesses from information

Businesses are routinely capturing vast pools of data that could be used to create new information-based businesses.  Smart companies will aggregate and exploit these data ‘by-products’, but need to watch out for increasing levels of transparency that could out-aggregate these companies.

The original article was written by James Manyika, Roger Roberts and Kara Sprague and is available from McKinsey Quarterly which requires you to register to read it.  Registration is free and the quarterly newsletters usually have at least one article that is worth reading in depth.

The companion podcast is available here.