A Value-Chain based approach to Web 2.0 Applications for the Enterprises Apuarv Sethi, Manager Marketing April 2009

Six Step Process Step 1: Identify web 2.0 opportunities across value-chain Step 2: Identify & resolve complexities and ripple effect Step 3: Rate the need for implementation & benefits Step 4: Identify impact-zones & priority areas Step 5: Identify right web 2.0 technology Step 6: Setting the stage for implementation The Above Is Key For Each Step Of Lead Generation And Sales Process

Step 1: Identify web 2.0 opportunities across value-chain

Step 2: Identify & resolve complexities and ripple effect

Step 3: Rate the need for implementation & benefits

Step 4: Identify impact-zones & priority areas

Step 5: Identify right web 2.0 technology

Step 6: Setting the stage for implementation

Introduction The simplicity of a web 2.0 concept and tools has made them an often overemphasized and fix-everything wizards promoted by consultants. Web 2.0 implementation approach should be different for each enterprise Accommodate its challenges and opportunities. In this article we will focus on a Value Chain based Implementation Approach to Web 2.0 and focus on overall value – implementation. Organizations face four major challenges Managing top line Increasing bottom line, Identifying and mitigating risks Initiating business growth. Web 2.0 provides three foundational attributes (See “Value in Web 2.0”) which can be leveraged across the value chain towards these business challenges.

The simplicity of a web 2.0 concept and tools has made them an often overemphasized and fix-everything wizards promoted by consultants.

Web 2.0 implementation approach should be different for each enterprise

Accommodate its challenges and opportunities.

In this article we will focus on a Value Chain based Implementation Approach to Web 2.0 and focus on overall value – implementation.

Organizations face four major challenges

Managing top line

Increasing bottom line,

Identifying and mitigating risks

Initiating business growth.

Web 2.0 provides three foundational attributes (See “Value in Web 2.0”) which can be leveraged across the value chain towards these business challenges.

Web 2.0 provides Three Foundational Attributes User Contribute Value ( UCV ) One of the many definitions of Web 2.0 – all applications where primary content is created by the community is the next generation web. UCV as a concept can be implemented where the user is the primary driver of knowledge, sharing and coordination. The Long-Tail (LT) Distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually "tails off" [1]. Simply put long tail is the power to utilize low volumes demands over a large period of time. While most of us can relate to the Market Long Tail a new aspects of this is Partner Long Tail. As organizations grow there are a significantly high number of business partners, suppliers, agencies and employees spread across geographies and time zone. There is a treasure of expertise, market knowledge spread across a long tail. Web 2.0 can help you harvest and mine this spread to business advantage like never before. Network Effect (NE) Web 2.0 facilitates is a larger connection and interactivity between people. A network in itself is an evaluation point. Considerable research has been done to understand organizations and foster innovation on network effects. Read: The McKinsey Quarterly Q3 2006- Mapping the Value of Employee collaboration

User Contribute Value ( UCV )

One of the many definitions of Web 2.0 – all applications where primary content is created by the community is the next generation web.

UCV as a concept can be implemented where the user is the primary driver of knowledge, sharing and coordination.

The Long-Tail (LT)

Distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually "tails off" [1].

Simply put long tail is the power to utilize low volumes demands over a large period of time.

While most of us can relate to the Market Long Tail a new aspects of this is Partner Long Tail.

As organizations grow there are a significantly high number of business partners, suppliers, agencies and employees spread across geographies and time zone.

There is a treasure of expertise, market knowledge spread across a long tail.

Web 2.0 can help you harvest and mine this spread to business advantage like never before.

Network Effect (NE)

Web 2.0 facilitates is a larger connection and interactivity between people.

A network in itself is an evaluation point. Considerable research has been done to understand organizations and foster innovation on network effects.

Read: The McKinsey Quarterly Q3 2006- Mapping the Value of Employee collaboration

Web 2.0 Building Blocks Foundational attributes can be associated with a set of activities or what we call – Building Blocks . These can be directly mapped to Web 2.0 Tools. For example, The User Contribute Value, attribute can mean we want people to help innovate, find problems, and suggest solutions. We might also want the user to inform us about the market realities and changes, to increase our market sensitivity. Table 1 identifies a set of building blocks. This is not an exhaustive list but can be augmented based on specific industries. 21. Network Optimization 20. Network Value Identification 19. Innovation Validation 18. Knowledge Sharing 17. Network utilization 16. Relationship Building 15. Co- invention 14. Co-creation 13. Personalization 12. Partner Branding 11. Employer Branding 10. Decentralization 9. Feedback – Dialogue 8. Information Sharing 7. Consumer – Product Experience 6. Beat Low- Demand Paradigm 5. Failure Identification 4. Increase Market Sensitivity 3. Value Enhancement 2. Problem-Solution identification 1. Innovation A. Users Contribute Value (UCV) B. The Long Tail (LT) 1. Market Phenomenon 2. Partner Phenomenon C. Network Effect (NE) Building Blocks Foundational Attributes Table 1: Building Blocks

Foundational attributes can be associated with a set of activities or what we call – Building Blocks .

These can be directly mapped to Web 2.0 Tools.

For example, The User Contribute Value, attribute can mean we want people to help innovate, find problems, and suggest solutions. We might also want the user to inform us about the market realities and changes, to increase our market sensitivity.

Table 1 identifies a set of building blocks. This is not an exhaustive list but can be augmented based on specific industries.

Step 1: Identify Web2.0 Opportunities across the Value Chain In the first step is to understand the foundational attributes and map the building blocks to phases where they add business value. For example, a large automobile manufacturer struggling to reduce costs might want to explore the “User Contribute Value” concept at the ‘Procurement and Supplier Management’ phase of the value chain. Similarly, a lot of other opportunities can be identified across the value chain from HR to Marketing. In our auto example, ‘problem-solution identification’ (Building block - 2 from Slide 5) could be identified as a valid building block that we want to leverage towards reducing costs. In a similar way, identify all opportunities possible. Web 2.0 - implementation can give rise to two phenomena – Complexity and Ripple effect. Identifying and finding correlation between them is the next step. Building Block Code

In the first step is to understand the foundational attributes and map the building blocks to phases where they add business value.

For example, a large automobile manufacturer struggling to reduce costs might want to explore the “User Contribute Value” concept at the ‘Procurement and Supplier Management’ phase of the value chain.

Similarly, a lot of other opportunities can be identified across the value chain from HR to Marketing.

In our auto example, ‘problem-solution identification’ (Building block - 2 from Slide 5) could be identified as a valid building block that we want to leverage towards reducing costs.

In a similar way, identify all opportunities possible.

Web 2.0 - implementation can give rise to two phenomena – Complexity and Ripple effect. Identifying and finding correlation between them is the next step.

Step 2: Identify and Resolve Complexities and Ripple Effect Web 2.0 affect the people, processes and mindsets and a lot of complexities arise because of the change in behavior and ripple effect caused by various linkages. To continue with the automobile example; Problem-identification from suppliers alone cannot solve the problem; this information has to be shared and evaluated. That forces us to include the product design team and plant mangers to be part of the discussion. While this is a general information sharing problem, this will also require a network of people to validate, share Knowledge and co-invention. This is a right opportunity to map Risk mitigation and Network Effect. Thus, we see a single opportunity explode to create a complexity with six building blocks. Once we are ready with a plot it is clear that all connected activities will somehow relate to similar systems or direct toward valid dependencies. A few building blocks can be dropped at this stage to account for negative correlations etc. In the next phase we rate the possible impact of the opportunities identified Identified Complexities

Web 2.0 affect the people, processes and mindsets and a lot of complexities arise because of the change in behavior and ripple effect caused by various linkages.

To continue with the automobile example; Problem-identification from suppliers alone cannot solve the problem; this information has to be shared and evaluated. That forces us to include the product design team and plant mangers to be part of the discussion. While this is a general information sharing problem, this will also require a network of people to validate, share Knowledge and co-invention. This is a right opportunity to map Risk mitigation and Network Effect. Thus, we see a single opportunity explode to create a complexity with six building blocks.

Once we are ready with a plot it is clear that all connected activities will somehow relate to similar systems or direct toward valid dependencies.

A few building blocks can be dropped at this stage to account for negative correlations etc.

In the next phase we rate the possible impact of the opportunities identified

Step 3: Rate the Need for Implementation and Benefits Like all strategic options, not all planned building blocks may be viable. A deep dive into the possibilities at this stage will help clear clutter and focus our efforts and resources. A due diligence with issues related to user interaction, time availability and organization objectives and priority etc. will help you pinpoint the relative benefit. Also, some value chain elements will have a natural inclination towards certain web 2.0 settings. Rate options on scale on 1 -5 (5 Max Benefit) Benefit Scale

Like all strategic options, not all planned building blocks may be viable.

A deep dive into the possibilities at this stage will help clear clutter and focus our efforts and resources.

A due diligence with issues related to user interaction, time availability and organization objectives and priority etc. will help you pinpoint the relative benefit.

Also, some value chain elements will have a natural inclination towards certain web 2.0 settings. Rate options on scale on 1 -5 (5 Max Benefit)

Impact Paths are complexity paths with maximum ratings. (Red Line) Priority Area is the value chain phase with maximum ratings. (Red Band) A distinction at this stage is relevant to micro mange and start program development. This step will be helpful when dealing with a huge wish-list with limited funds. An ‘Impact path’ should always be given priority as it will significantly add value to organization objectives.

Impact Paths are complexity paths with maximum ratings. (Red Line)

Priority Area is the value chain phase with maximum ratings. (Red Band)

A distinction at this stage is relevant to micro mange and start program development.

This step will be helpful when dealing with a huge wish-list with limited funds.

An ‘Impact path’ should always be given priority as it will significantly add value to organization objectives.

Step 5: Identify the right Web 2.0 Technology Almost all building blocks have multiple web 2.0 technologies associated with them. A quick glance across the technology grid ( Table 2 ) will help put things in context. Selecting a right technology is a task in itself; one must consider the end-user involvement, technology exposure, usage scenarios, funds available and above all the ‘users drive’ to interact with the application. Lastly, have data mining and business intelligence in mind – remember there is great value in understanding how people interact and use these systems - sometimes more than the outcome of usage itself. At the end of this stage you would have identified what tools you want to deploy for the selected building blocks. o o o 20. Network Optimization o o o 19. Network Value Identification o o 18. Innovation Validation o o 17. Knowledge Sharing o o o o 16. Network utilization o o o o 15. Relationship Building o o o 14. Co- invention o o o o 13. Co-creation o o o o o 12. Partner Branding o o o o 11. Employer Branding o o o 10. Decentralization o o 9. Feedback – Dialogue o o o 8. Information Sharing o o o o 7. Consumer – Product Experience o o o 6. Beat Low- Demand Paradigm o o o 5. Failure Identification o o o o 4. Increase Market Sensitivity o o 3. Value Enhancement o o o o 2. Problem-Solution Identification o o o 1. Innovation P2P networking Social Networking Mashups Podcast Wiki Blogs Web 2.0 Intent Table 2: Technology Grid

Almost all building blocks have multiple web 2.0 technologies associated with them.

A quick glance across the technology grid ( Table 2 ) will help put things in context.

Selecting a right technology is a task in itself; one must consider the end-user involvement, technology exposure, usage scenarios, funds available and above all the ‘users drive’ to interact with the application.

Lastly, have data mining and business intelligence in mind – remember there is great value in understanding how people interact and use these systems - sometimes more than the outcome of usage itself.

At the end of this stage you would have identified what tools you want to deploy for the selected building blocks.

Step 6: Setting the Stage for Implementation Now that the big picture is clear, two main tasks remain: building the web 2.0 story and selecting the right technology partner. Web 2.0 is in some aspects like marketing. One must sell it to the users and have enough usage drivers in place - take into account user personality, demographics etc. - to build a whole ecosystem of social relevance for success. The success of the program will depend on the acceptance and active participation from the users. Contribution is the key: Build reward programs to facilitate usage and habit. Ideally a right partner will interact with you from day one, providing valuable insights; give emphasis to domain understanding and technology expertise, emphasize on frameworks.

Now that the big picture is clear, two main tasks remain: building the web 2.0 story and selecting the right technology partner.

Web 2.0 is in some aspects like marketing. One must sell it to the users and have enough usage drivers in place - take into account user personality, demographics etc. - to build a whole ecosystem of social relevance for success. The success of the program will depend on the acceptance and active participation from the users. Contribution is the key: Build reward programs to facilitate usage and habit.

Ideally a right partner will interact with you from day one, providing valuable insights; give emphasis to domain understanding and technology expertise, emphasize on frameworks.