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Economics 2.0

Highly Effective Strategies for Putting Your
      Business on a Recession Diet
                Dion Hin...
Dion Hinchcliffe
 • ZDNet’s Enterprise Web 2.0
 • Social Computing Ma...
The Plan
• 9:00am - noon
• Break at 10:15am
• Twitter tags #w2e and #econ2
• Google Moderator
•   Exploration of new ways of doing old things

•   New economic, social, and cultural models

    •   With an e...
The Map of Opportunity
  Innovation                                                                                       ...
The major shifts
 • In who creates value (the network does)
 • How much control we have over our
 • How inte...
Avoiding “cargo cults”

 • Cargo Cult n. A
   group conducting
   rituals imitating
   behavior that they
   have observed...
Evaluating candidates
• The criteria:
 •   Cheaper: Less waste, more
     efficient, and lighter weight.

 •   Better: Fast...
The challenges
• Cultural “chasms”
• Disruption
• Cost
• Risk
• Difficulty
• Repeatability
However, it’s usually a
    people problem:

The biggest challenge is in
  changing our thinking
Rating the Economics 2.0
 Challenges                                   Repeatability

The network is a
    big place today
• All your customers
• All your competitors
• All the ideas and
• Only a...
Never before reached level of
 scale is driving new changes
Likely candidates                                                 (social media
No small system can withstand
sustained contact with a much
 larger system without being
   fundamentally changed.
The motive forces of
21st century economics
                            at we
What is a Network Effect?
• A network effect occurs when a good or service has
  more value the more that other people hav...
Building Sustainable Value

                • Even small network have large
                  potential network effects
Social Business
(aka Enterprise 2.0)
Modern Social Computing:
         Enterprise 2.0

• Concieved by Harvard Business School Professor
  Andrew McAfee
• Define...
Applying the
                         “Web 2.0 effect” at work
• Enterprise 2.0
Perceived Benefits Of
         Enterprise 2.0
• Increased knowledge retention
• More adoption and use of knowledge manageme...
Why is
   Enterprise 2.0
• Maturation of techniques that
  leverage how people work
• Realization o...
The Enterprise 2.0 Checklist
SLATES unboxed...
Enterprise 2.0: Richer
Push vs. Pull Based Systems
Two more important reasons
      for Enterprise 2.0

• Non-interruptive and leveragable...
      The enterprise is not the Web

• We want to replicate the positive
  aspects of Web 2.0 platforms in
Enterprise 2.0 Ecosystems
           Enterprise 2.0                                   Peer Produced
Significant Motivation Exists
          To Adopt Enterprise 2.0
• Increased levels of productivity that were inaccessible u...
Enterprise 2.0 Benefits
• Hundreds of Enterprise 2.0
 projects exist worldwide currently
 •   Based on aggregation of all known contacts and
The majority of Global 2000 firms
 are now buying Web 2.0 tools
• Early success stories emerging
 • Case studies now exist from:
   •   Bank of America, Boston College, Dresdner Kleinwor...
Enterprise 2.0:
 The bottom line
• Repeatable
• Medium Risk
• Proven Benefit                       Ready for Wide
Open Supply
  Chains also
            n as
vs.             :
The Platform Overtakes the Web Site
Example: Amazon
• 1st Gen. Product: E-commerce store
   – No differentiation
   – Scaling of a single site
   – Single sit...

Open Platform vs.
 Closed Platform
The Market Share

•   The vast majority of Internet user activity is
    elsewhere, on 3rd party Web sit...
                         Going To the Customer
                          and Open Web APIs
Platforms vs. Applications
           Distribution Models              Target Audiences
Platforms vs. Applications
Distribution Models         ...
Key API Goals
•   Leveraging existing investments as much as
    possible (reduce rework in design and architecture)
•   P...
The Distribution Opportunities
                                                        3.5 billion wireless users
Long-term future usage
   breakdown w/API
          Other Apps

                          • Reach every distribution
Reasons Developers Select

Key to initial adoption            Key to long-term adoption

•   Provides a...
“Platforming” Your

 •   Requires opening the server-side to 3rd party
     •   Allowing the...
Open Supply Chains:
 The bottom line

• Good repeatability
• Can be costly          Strategic

• Unproven in          Indu...
A Short History of
Connecting people and data
• SOA is a modular software architecture, and the modules are
  services designed to interact w...
Key Points
• Gartner has reported that Service-Oriented Architecture is
  the leading organizing principle in the enterpri...
A key Goal of Web 2.0 and SOA:
Turning Applications Into Platforms

• Openly exposing the features of software and data to...
But existing integration models
     have been challenged
• Most SOA initiatives are delivering low ROI to the business
• ...
The results of a large new
SOA effectiveness study:
    •“It has become clear to me
     that SOA is not working in
Demand for Breadth
• “48 percent of the
  CIOs we surveyed
  said that they plan to
  implement s...
And we now have real-world experience with
 traditional means of connecting to our data

• Traditional Web services
  was ...
Strange Attractors: Similarities
    between Web 2.0 and SOA

• Web 2.0                           • SOA
Enabling New
Consumption Scenarios
          • Cut-and-Paste deployment
            anywhere on the Intranet
          • C...
Definition: Mashup
• “A mashup is a Web site or Web application that
  seamlessly combines content from more than one
• Strong preference for reuse over coding
   – Innovation in assembly is the core value instead of
     ingenuity ...
What’s happening on the
      Web today
 • The growth of Web sites with highly valuable
   “portable” content and function...
Connecting to and making
    use of our data
 • Building open platforms instead of stand-alone applications
 • Forming sel...
The Global SOA has surpassed our
     enterprise IT landscape

• Some businesses have hundreds of
  thousands of users of ...
• Amazon and their highly successful Web Services Division (with
  hundreds of thousands of business consumers of...
With traditional methods, many (perhaps
    most) software solutions are too
    expensive to build or buy today
The Focus:
Rapid Business Solutions
           • Full resources of the Web and
             the Intranet
           • Ente...
Situating mashups in the

• JackBe Presto
     The bottom line

•   Excellent repeatability

•   Inexpensive               Ideal for Early
Online Community
Eliciting participation
   on the network
•   Social media: A continuous stream of shared
    (two-way) conversation and k...
The Premise

Customer engagement today
is much more than products
and their marketing
campaigns. It's a meaningful
Four levels of
Online community
 •   Lifestyle products and brands generate strong,
     highly engaged communities on their own:

What do online
communities do?
•   People find and connect with each other based
    on a common, shared idea

•   Socializ...
Marketing vs.
•   Customers and potential customers have the
    greatest resources to market and sell ...
The means and
•   Platforms:

    •   Drupal, Joomla,
        Lithium, Crowdvine

•   Community Manageme...
The Three Essential
Strategy Components
Social Media:                  Online                     Collective
The Story of KatrinaList & XM Radio
• Hurricane Katrina
   – Survivors emerged and announced
     where they were on their...
Online Community:
 The bottom line
•   Medium repeatability

•   Can be costly

•   Proven ROI

    •   Dramatically lower...
Open Business
  Open Collaboration
    Breeding New
  Business Strategies

  Open Source
Development 2.0
Open business models are
  transforming the market

• Product Development
• Marketing and Advertising
• Operations
• Cust...
• Android
• Gold Corp.
• Crowdspring
• Doritos UGC advertising
Sourcing Models

                   internally      outsour...
Open Business Models:
  The bottom line

•   Medium repeatability

•   Medium costs

•   Significant cultural       Ideal f...
2.0-era platforms and
  development tools
“My Web site is bigger
than your enterprise”
Today’s Software Applications
        Are Also Extremely
•   Highly distributed and federated

There’s A Lot To
Master Today To
Create Credible
The application
“stack” is bigger now
Recent technological
    innovations coming primarily
       from the online world
•   Cloud computing

    •   Utility/gr...
Cloud Computing is just about
    12 months old but changing the
            game quickly
• Provides enormous advantages i...
Comparing Two of the Largest
  “Platforms as a Service”
The cloud computing space today

                                   le fo n
•                                     ...
The New Dynamic
  Development Platforms
• The Web development industry has moved to a focus on
Performance of Dynamic
Languages Is An Issue Though
Ruby on Rails
• Ajax-ready but works with all RIA
• Automatic Object/Relational Mapping
• Sophisticated Mod...
• Open source Web application
  framework written in PHP
• Works with all major RIA technologies
• Modeled after t...
Groovy & Grails
• Groovy is a dynamic language for
  the Java Virtual Machine
• Has strengths of Ruby, Python, and
Changes to the processes
that create architecture

• Increasing move to assembly and integration
  over development of new...
The Web’s Version
        of Agile
Ready for Wide

   •   Shadow Apps for real-
       time feedback

   •   ...
An extremely competitive
environment: Our architectures
    must explicitly focus on
     building network effects
New Distribution Models
How do we
 re-imagine our
  products and
   services for
the 21st century?
Challenges to Transitioning to
 New Architectural Modes
• Innovator’s Dilemma
  •   “How do we disrupt ourselves
What we often see in
the marketplace today
• Too many copy-cat products
  •   Failure of imagination and courage

• New ar...
The 1.0 world is having
  its own problems

• The time is right for change now more than
  ever before
• We all have to le...
Key Lesson:
       We now have a
  fundamentally new and
better set of lenses through
which to look at leveraging
• Push to pull systems
• Web 2.0 design patterns and business
• New modes of software, platforms, and
The new Web 2.0 era distribution
                          models remain largely untapped
Number of Practitioners

It’s time to change
          our DNA
• Moving from the 20th century towards
  21st century businesses
• Deeply understand...
The rewards are
• Products and services that are sustainable
• Successful transition to a rapid evolving
Major Opportunities in 2009

• Redesign products and
  services for the 21st
• Strategically move IT
Ruby on Rails • Ajax-ready
Ruby on Rails • Ajax-ready
Ruby on Rails • Ajax-ready
Ruby on Rails • Ajax-ready
Ruby on Rails • Ajax-ready
Ruby on Rails • Ajax-ready
Ruby on Rails • Ajax-ready
Ruby on Rails • Ajax-ready
Ruby on Rails • Ajax-ready
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Ruby on Rails • Ajax-ready Economics 2.0 Web 2.0 Expo SF 2009


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Ruby on Rails
• Ajax-ready but works with all RIA
• Automatic Object/Relational Mapping
• Sophisticated Model View Controller
• Convention over configuration
• Radically-oriented around Web
development only
• Very high productivity (IBM verified
10-20x older platforms)
• Open source and free
• Runs major sites like Twitter
• One of the most popular new platforms
• Has clones in most other major languages
Ready for Wide
now. SaaS versions too:

Published in: Business, Technology