Synergise IT

Competitive advantage was coined by Michael Porter where he proposed that businesses are exposed to five competitive forces – threat of new entrants, rivalry between existing firms, pressures from substitute products, bargaining power of buyers and bargaining power of suppliers. Porter also devised three strategies that can combat the forces from the environment and they are – differentiation of products and services, cost reduction and focus on a particular market segment.

While there are many ways in which organisations can pursue to achieve competitive advantage, it would be futile if other organisations can replicate the same method used quickly. However, with technological advancement, competitive advantage can be replicated quickly and the first mover advantage gap is being decreased greatly. Therefore in order for an organisation to enjoy sustainable competitive advantage, it needs to continually be the first mover over a period of time. Let’s take Google as a case study.

Google has been a very innovative company with their main line of business developing search technology. Over the past few years, Google has expanded their business to many parts of the internet which ranges from desktop search engine, email services, satellite imaging, online translation, blogs, online shopping, e-books, scholarly search and many more. While many of these applications doesn’t bring in much revenue, the collection of innovative and useful products and services has attracted many more people to use it search services thus providing excellent advertising revenue.

So how can Enterprise 2.0 provide sustainable competitive advantage for organisations? If an organisation is highly adaptive to the environment and is capable of exploiting opportunities on a continuous basis then it would be able to achieve some level of sustainable competitive advantage . This can be achieved through continuous learning, experimenting and effective communication and Enterprise 2.0 provides a platform to do this. However, it doesn’t mean an organisation has the platform they would achieve sustainable competitive advantage. There must be a conducive culture, social strategy and eager employees within an organisation to effectively identify any opportunities.

Enterprise 2.0 can help to capture, store and manage the implicit and explicit knowledge within an organisation and this is highly important for larger organisations. Enterprise 2.0 can help to retain the vast amount of knowledge within the organisation. The advantage of Enterprise 2.0 over Knowledge management systems is its ability to connect people from around the organisation and effectively use employees brain power.

I would like to conclude by saying that Enterprise 2.0 does not provide an organisation sustainable competitive advantage but is an excellent enabler for organisations to identify any potential opportunities to gain competitive advantage - constantly.

Co-creation, peer production or open innovation, whatever you call it, its pretty much the same thing - Getting your customers and community to provide feedback and spend time exploring and innovating new/existing products/services for your benefit.

McKinsey & Company released a new paper on The next step in open innovation and it talks about co-creation, how organisations can win from it, what are the hurdles and discussed about many case studies like Lego, Boeing, Threadless and Peugeot.

There are three ways to win with co-creation according to McKinsey
1) Capturing value from the co-create product - Well, Lego reap much benefits by talking to and understanding their die-hard fans. Watch this video.

2) Capture value by providing complementary product or service - Red Hat sells technology services to uses of Linux. IBM also invested a substantial amount of money and time in the open source community (Linux) and installs its software on their servers and sell it as a package.

3) Benefit indirectly from the co-creation process, for example, through an enhanced brand or strategic position. McKinsey did not give any example on this but I believe this is more from the marketing perspective where people start playing around with your product and learn more about it, the brand image becomes better(??) Do I make sense here?

There are hurdles as well according to McKinsey.
1) Attracting and motivating co-creators. This is simple - you need to squeeze time out of the right people to contribute to your organisation for free or for a small price/incentive.

2) Structuring the problems for participation. I totally believe that for co-creation to happen, a big problem must be broken down into bite size portions and people can take one portion each and explore/innovate on it.

3) Governance mechanisms to facilitate co-creation - well we have rules and guidelines in almost all aspects of life. Co-creation shall be the same.

4) Maintaining quality - There are two ways to look at quality within an open environment. a) the team is only as strong as its weakest link or b) look at the quality of Linux and Wikipedia when the critical mass is achieved. I believe for the success of an open innovation program, critical mass is absolutely important. Look at Marketocracy its almost a open source mutual fund and its Marketocracy Masters 100 Fund Received 5-Star rating from Morningstar in May 2008. That’s achievable by the 55,000 strong community they have.

In Australia, baby boomers are classified as people born between 1946 and 1961, therefore, the oldest member of the baby boomers are 62 and the youngest is 47 this year. Australian Bureau of Statistics (ABS) survey also found that around 76% of men had retired before 63 and 76% of women had retired before the age of 60. If this this the case, baby boomers have started leaving the work force and the amount of knowledge and skills that they carry would be lost.

Employees, by age group. Source: ABS

With the massive skill shortage in Australia at the moment and employers need to keep whatever knowledge and skill they have even when employees leave the company. I believe this is a big problem in many large organisations in Australia and Enterprise 2.0 is needed to solve this problem NOW! I am not saying that Enterprise 2.0 once implemented, this problem would be solved but the earlier you do it, the earlier people use it, the earlier people store their knowledge, the more benefits the company reaps. Timing is of essence in this issue.

I had the luxury and pain of working in two extremely diverse projects previously.

The first one - a highly supportive, trusting and friendly environment. Enterprise 2.0 tools was implemented - wiki, collaborative project management and IMs. Everyone worked really well together and there was NO conversation like “I will send you an email to confirm what we have just spoken (so that I can document this conversation)”. People trusted each other and the Enterprise 2.0 tools flourished. People contributed, shared knowledge and discussed for the better of the program. When the client saw what we were doing, they asked to join in the “fun” and the relationship between the client and us became better as well.

The second one - a extremely cunning, slimy, scheming, competitive and politically challenging environment. Armed with a extremely good Enterprise 2.0 experience, I thought Enterprise 2.0 might reduce/soften the politically climate. I was extremely extremely wrong. I proposed E2 tools a few times and it got rejected. It never went live. I then checked out a FAQ that someone else had in another part of project. There was some information on it that I needed and a few months later, I went back and the page was missing. After some investigation, I found the guy who deleted it and asked him why. He said, “my boss didn’t want me to share such valuable information.”

Although through the above examples, I cannot generalise on the requirement for trust and friendliness as a prerequisite for the success of Enterprise 2.0 but I do believe to a certain degree this will be true. If the organisation is politically very heated, it is unlikely people would share and contribute. After all, humans are more likely to share with someone else if they trust and like the person - this is human nature.

Simple and sweet…

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I’ve been speaking to many “Normans” lately and its extremely eye opening to hear some in depth comments on what people really think of Enterprise 2.0. Sam Lawrence got it pretty spot on the different statements Normans would say. By the way, Sam just wrote a really really good post on the anatomy of the enterprise octopus. Totally recommended.

As an enthusiast and evangelist, I have been using blogs, wikis, social networking tools and countless collaboration tools (testing and reviewing them as they roll out of the factory). It has certainly improved my productivity, expanded my network of friends and increase my knowledge. This is what I showed some of the Normans I work with.

1) I started logging on to the corporate wiki and showed how people from across the world contributes and edit each others work, discussed and came to conclusion on difficult and complicated problems. No face to face meetings, possibly no conference call as well but consensus was achieved through the enterprise wiki. This Norman browsed around the Enterprise wiki (first time he was there) and found information he was looking for previously but could not find it. He saw the value straight away.

2) I opened up Twitter and my blog. My blog allowed to rant about stuff, ask questions, write about my experience and document my knowledge. There was some levels of discussion with people I have never met before who contributed to the increase of my knowledge. Some of these people even became my online twitter mates! I am building my own little knowledge empire and its growing.

I went on to explain to this Norman that if people across the world who works for different companies, have only one known common interest (enterprise 2.0), never met/spoken in their life and is exchanging and sharing information and knowledge via the very same tools they preach about. These are random people and they are helping each other to grow and learn more about Enterprise 2.0. Something must be right here and the conclusion is that the more you give, the more you get back.

Even though Wikipedia is built collaboratively but most people can’t seem to transform that idea to the enterprise. Another Norman said “Wikipedia contributors are geeks with no life and no such people exist in my company” I went on to look for three people in his company who contributed to Wikipedia who were NOT geeks and they have a pretty amazing life. That changed his perspective.

3) I showed another old Norman the Lego video and that shut him up totally. It changed his perspective of “organisations tries to create the best products they THINK its the best for them and force it down their throats” to “have a relationship with the customer, listen to them, improve on their ideas and give them what they want”

This is how I get people excited about enterprise 2.0. How do you do it?

If you like to know how social strategy can change an organisation check this video below! Its amazing! Listening to your customers can mean alot things - new revenue, increase revenue, new perspective, more fun, more loyalty and etc… Thanks Paul!

The aim of Enterprise 2.0 is the single point of truth for the whole organisation. However, we all know that large organisations have many systems and its not easy to achieve the single point of truth nirvana. As far as I can see, organisations tends to change such reference systems quickly as its cheap to do so (this is especially true for project based reference systems).

Recently, I heard a story of how a project changed the reference tool (read: knowledgebase / resource inventory) three times in 10 months. Everytime it moved over, new information was added, some were lost and it changed the way people did their work tremendously. This is disruptive.

Enterprise 2.0 is disruptive as well. It not only changes the way people execute their work on a daily basis, it also changes the culture and mindset of people. Having experience such forms of changes, I would say that an organisation can only go through it once and it must be successful.

Fixing a cultural bug is not as easy as fixing it on Java. Humans are complicated creatures.

Its the FireFox 3 Download Day today! I have never been part of a world record event and this shall be my first and a extremely simple one too - just download a file! Come and pool in your bandwidth and create a world record for the sake of open source software!

Download Day starts at 10:00 a.m. Pacific Daylight Time on Tuesday, June 17th. For local times see here.

Jay at e2oh wrote an excellent post on the need to engage Gen Y within the corporation. A good read.

I would like to extend his post and talk more about how to connect and attract the best Gen Y talents external to your organisation. Gen Y are people born in 1980 and onwards - this means that the oldest Gen Y employee is only 28 this year and heaps of younger Gen Y’s are entering the job market every year. So how can you connect the top talent in this pool? They approximately have less than 6 years work experience and many have none or just a couple of years.

So what does this pool of people need other than job satisfaction? I would say money. This pool of people are generally younger and with entry level corporate salary, it would be hard to maintain their alcohol, boyfriend/girlfriends, travel, shopping and everything else they want to buy. This pool of people also have something organisations want - their revolutionary ideas. So why not connect with the Gen Y’s through competition with cash rewards at specific professional societies, universities or clubs targeting the right pool of talents?

This has many advantages.
1) Helps an organisation identify the top talent through the deliverables they provide.
2) gain new ideas and solutions to your problems.
3) Through connection to your organisation, even if they are not interested in changing jobs, they would be able to promote your organisation through the word of mouth to their massive network of friends.
4) Offer them cash in return for them to follow your organisation on Twitter, Facebook and keep them updated with the latest development and build your organisation’s own little empire of talents without the salary and benefits package.

All these comes at a super small cost. For example, cash prize of $5000. What’s that sum of money to a large organisation? The benefits of doing this greatly outweighs the cost.