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Web 2.0
- 1. The Next Net Whatit means to your business Dvir Reznik Lotus Brand, IBM Software Group dvir@il.ibm.com http://dvirreznik.blogspot.com
- 2. People 2.0 The Architectureof Participation
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- 4. Web 1.0: themostly read-only web 45 million global users250,000 web sites Content ConsumersContent Providers User-Generated Content Published Content Partially based on Dion Hinchcliffe’s Web 2.0 blog
- 5. Web 2.0: thewildly read-write web 1 billion global users80,000,000 web sites Content ConsumersContent Providers User-Generated Content Published Content CollaboratorsFacilitators Collective Intelligence Partially based on Dion Hinchcliffe’s Web 2.0 blog
- 6. Web 2.0 andthe Net Generation Definition: Generation under 28 years of age, who grew up with computers, and the Internet. Larger than the Baby Boom generation: 40% of Israelies NetGens’ habits are having profound implications for the marketplace of products, services, ideas, political policies and jobs. NetGens value the freedom to share, customize and mix content: music, video, audio, news. They are also collaborators, enjoying interactivity and relationships with people and products. Source: “Net Generation ‘wired’ differently”,National Post, and cbs.gov.il
- 7. ✓Real • No more ofthe old marketing hype • Tell the truth • Admit your mistakes • Otherwise: Customers will ignore you ✓Relevant • You can’t interrupt people anymore • You must have what they want • Otherwise: Google will ignore you ✓Responsive • Marketing is no longer a monologue • You must answer your customers • Otherwise: Customers will flame you The 3 Rs of Marketing 2.0 Main source: Marketing 2.0 - How Web 2.0 is Changing Marketing Forever, by Mike Moran, IBM
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- 10. The Long Tail •The future of business is selling less of more • Infinite choice and lower costs to connect supply and demand is changing the nature of the market and will transform entire industries • Growth is in the long tail • Chris Anderson, “The Long Tail” amazon.com sales Amazon’s inventory: 2,300,000 books Barnes & Nobles store: 130,000 books
- 11. Competitive Advantage 2.0 Data isGold, People is Power, Fear is Not
- 13. Is Data Valuable? Onlyif you know how to use it ‣ Data visualization Make it easily consummable ‣ Data filtering Make the good float to the top ‣ Data sharing Allow others to mix and match ‣ Data integration Make difficult for others to copy you
- 14. Other people aroundthe world Other IBMers around the world Other IBMers in your country Co-Workers Friends You AlexEyal Your manager Rami’s manager Hila Yaron Yuval Eduardo Ed Muriel Peter Frequent e-mails Infrequent e-mails Web 2.0 Collaboration Social networks as a distinctive advantage
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- 16. Innovation is arisky business Not innovating is even riskier • Do’sDo’s • Watch the kids,Watch the kids, at workat work • Try it yourselfTry it yourself • Feed meFeed me • BlogBlog • Customers’Customers’ InputInput Don’tsDon’ts Putting up wallsPutting up walls Take itTake it personallypersonally Consumers onlyConsumers only Source: BusinessWeek, CIO Guide to Technology, 2006
Editor's Notes
- #2 The Next Net - what it means to your business. Welcome to this Web 2.0 session. My name is Dvir Reznik and I’m Lotus brand manager at IBM Software Group. The objective of this session is to highlight in 20 minutes the reasons why businesses should pay attention to Web 2.0. Let’s start talking about the term itself. Web 2.0 sounds very technical, very geeky, to a point that many people are led to believe that Web 2.0 is just another technology, like DB2, OS X or Office 2007. Even though Web 2.0 has certainly its technology side, it’s also important to stress two other dimensions of it: the business and the social aspects of Web 2.0.
- #4 So let’s start with the People side of it. Tim O’Reilly, who popularized the term, said that the main characteristic of a Web 2.0 application is that it becomes better as more people use it. In other words, it benefits from the network effect: the more people use it, the more value each user gets from it. So, it’s not enough, or not strictly necessary, to have a fancy AJAX or Flash interface to produce a Web 2.0 service. You have to understand and use the Architecture of Participation.
- #5 To better understand this, let’s go back to the world of about 10 to 12 years ago and look at what we now call Web 1.0. <click> Back at that time, we had about 250 thousand web sites. Note that I depicted the web site folks as business types wearing a tie. <click> Corporate websites were like company brochures, telling their visitors about how good their products or services were. They were glorified versions of magazines or newspapers, publishing whatever they thought was relevant to you. <click> There were about 45 million global users out there. Back then we thought: wow, that’s a lot of people. I depicted most of them in black & white, to show that they were not very active. Internet users were mainly passive content consumers. <click> Note I depicted one user there in color to show that even then a few users were collaborating with content, using newsgroups or sites like geocities. In summary, 10 years ago you had this very uneven dichotomy between content providers and content consumers. I represented providers with a thick yellow arrow going left to right and the very small number of users generating content with a thin green arrow going from right to left.
- #6 Fast forward 10 years now. <click> What we see now is a world that’s flatter than ever before, with relatively low technological and political barriers.<click> The Internet is much bigger: we have about 80 million web sites out there.<click> We have about 1 billion global users. Note that now I depicted all the users in colour, and all carrying a headset to show that they are not only listening: they are having their say. <click> Where in the previous slide we had two uneven arrows, we now have a hub. It goes beyond a 2-way communication now. Users are not only talking back to companies: they are talking to each other too, forming communities and making sure their voice is heard. <click> While you still have published content out there, <click> user-generated content became very important too. And the online activity of all those users form what we call <click> the collective intelligence. Where we used to have content providers and content consumers, we now have facilitators and collaborators instead. Think about Wikipedia, Facebook, Google and even Amazon: a significant portion of their content is user provided. So, to use a Unix terminology, we can say that Web 2.0 is the 777 web: The web where everybody, anybody can read, write and execute.
- #7 I know that many of you are starting to doubt all the buzz around Web 2.0. You may be among those who say: I don’t trust Wikipedia, Blogs are just a channel for bad writing, I find MySpace or Facebook annoying and I’ll never listen to podcasts. That’s very likely true. However, it’s important to understand that there’s a new generation coming. In fact, I would argue that they are no longer coming, they are already here as part of your workforce and your consumer base. The net generation is typically defined as those under 28 or 29 years of age. Computers, cell phones and the Internet is just a second nature for them. The nets are already larger than the baby boom generation in Canada, representing 30% of Canadians. Their attitude towards online sharing, personalization and collaboration is very different from the previous generations. Furthermore, 3 years from now they will represent 40% of the Canadian workforce. So, you may not like or believe in Web 2.0. But over a third of your employees and customers love it, and expect it from you.
- #8 This brings us to what Mike Moran, IBM’s Distinguished Engineer, calls the 3 Rs of Marketing 2.0, in contrast with the text book 3 Cs and 4 Ps. The old marketing strategy of saying “Look, shiny thing over here” no longer works in a world of TiVos and AdBlockers. Your marketing has to be real, relevant and responsive. If you lie to your clients, or omit the truth, or refuse acknowledging mistakes, your customers will simply ignore you and go to your competitor. If your message lack substance or relevance, search engines will ignore you, as nobody will be linking to your pages. You’ll be there, but nobody will find you. Finally, if you are not responding to the legitimate questions your customers are asking you, or if you are not listening to them, they will create their own website to flame you, or use one of the various consumer review websites out there. So, change is already here: you either ignore it and risk to become obsolete or you embrace it and re-think your business model.
- #9 This leads us to our second Web 2.0 theme: growth and the long tail. Everybody is looking for growth, but growth is hard to find. Many companies look for growth solely by acquiring competitors or cutting costs, but fail to achieve real growth. Can Web 2.0 be an answer?
- #10 Chris Anderson, editor-in-chief of the Wired magazine, wrote a best-seller book entitled “The long tail”. The concept is simple: if you get any consumer good or consumer service category in the world and order individual items in that category by market demand, you’ll see a curve like the one in the slide. The green part is known as the head, the body or the short tail. That’s where all best-sellers and blockbusters are. If we are talking about music, for example, U2, Rolling Stones, Justin Timberlake and Beyonce are all in the green part of the curve. On the other side, all songs by the obscure artists I like are in the long tail. The concept of the long tail has been known for quite some time, but it was never attractive to major businesses. It’s always been a challenge for medium and large enterprises to serve the long tail in a cost effective manner. So the typical representation of the long tail is like the one you see in this slide, where items A, B and C represent about 50% of the total sales opportunities.
- #11 Amazon, for example, already makes more money from books in the long tail than from best-sellers. Books that you don’t find at the bricks-and-mortar bookstores. And the good news for Amazon is that profit margins are way higher in those books. In comparison, best-sellers tend to have very slim margins, as the publisher detains all the bargaining power. So Chris Anderson claims that the future of business is selling less of more. This can be accomplished more by using technology to connect supply and demand and eliminate the middle man. Think about eBay and consider what Zopa and Prosper are doing in Person-to-Person Online Lending: they are cutting out the banks and providing better rates for the same risk level. So the growth you are looking for may be in the long tail. It remains to be seen if Amazon represents the new rule or is just the exception that confirms the old rule.
- #13 Finally, to conclude this presentation, let’s talk about what gives you an edge in all this Web 2.0 world. Let’s say that you create a cool AJAX interface for your website. If that is successful, your competitor can just mimic that and deliver something similar or superior in a few weeks. The same could happen for innovative services and channels. There are very few things that cannot be easily copied. From the sustainable competitive advantage perspective, your edge is in the features that only you have access to and can control and improve: your data, the complex integration of processes that make up your business, and your workforce.
- #14 Data by itself is not valuable. The potential is there, but needs to be understood, used and maximized. In the next few years, a major aspect of the Web 2.0 evolution will be in providing sophisticated data services and processes. You’ll be seeing searches that go beyond text. Contextual and semantic searches will allow you to find the information you want even when you don’t know exactly the words used in the content. You’ll be seeing more sites like Etsy.com, where you can search by color and by timelines. Data will no longer be boring: new visualization models and techniques will allow users to consume data more effectively and make more informed decisions. 3-D models, interactive data visualization and socialization of data will dramatically improve our capacity to handle large amounts of information and capture trends. Gapminder gives us a glimpse of how rich and interactive data visualization can be. Data filtering is essential in an era of information overload. Everything you need to know is already out there somewhere, but unless you can find it and make it stand out from the sea of less useful data, it does you no good. In Flickr, for example, there are plenty of bad pictures of cats. However, they provide filtering algorithms that allow the good ones float to the top. Data augmentation: as data gets created, transformed and moved around a company, a fair amount of metadata is lost in the process. Knowing where the data came from and correlating it with other events, like geographical location, date and time can be crucial in maximizing the information you derive from the data you own. Finally, about data sharing and integration: making part of your data public and programmatically accessible can pay back in formidable ways. Having others depending on your data and establishing complex integration of data sources can be one of the most difficult features for your competitors to copy.
- #15 But the utmost advantage that most companies don’t realize to the full extent is the power of their people. Your workforce is composed of unique individuals, each one capable of great contributions to innovation in products, services and processes. However, our current reliance on email and other Web 1.0 tools keeps us from really unleashing that power. If you could visualize your social network, it would probably be very similar to the one depicted in this slide. This in an IBM example, but the same is true for many other companies. You would have connections with folks in your department, with other IBMers in your country and with IBMers in other countries. Hopefully, you would also have friends who are not IBMers, adequately represented outside the blue zone in the diagram. You typically communicate with some of your closest contacts via <click> email. Occasionally, you would also send an email to <click> some contacts outside your immediate network. However, there are <click> many many people around you that you would not reach via emails - unless you are a spammer. The group depicted in white in this diagram represents what we can call the invisible majority. They could be sitting just beside you, or they could be miles away in another city or another country. They could have brilliant ideas, but you may never have an opportunity to know about them. Or you could be able to do great things together, if you knew about each other. Web 2.0 enables exactly that: it lowers barriers, shorten distances, and amplify your ability to collaborate with others in ways that were never done before. In summary, by making the most from your two most valuable assets - unique data and unique people - web 2.0 can provide the edge your company is looking for.
- #16 Even the government has caught on to the power of social networks: Earlier this year, the Central Intelligence Agency advertised employment opportunities on Facebook. In December, the Director of National Intelligence, an office established by the Intelligence Reform & Terrorism Prevention Act of 2004, will launch A-Space, a site open only to workers in the CIA and other agencies of the U.S. intelligence community. Its purpose will be to use collaborative "social software"—not all that different from features found on Facebook, Wikipedia, and social bookmarking site del.icio.us—to share intelligence reports more rapidly across agencies. It also will provide a needed bridge between intelligence collectors and intelligence analysts.
- #17 To conclude this short session, here are some closing thoughts: There’s no doubt that innovation in a risky undertaking, and, as such, it can be scary at first. However, not innovating is even riskier, as it’s likely to make your company obsolete and irrelevant. To quote Mike Moran again, being innovative may require you to change your attitude towards failure. Trying new things out will mean that you will fail more often than before. The key is to fail quickly and cheaply, and learn from the mistakes you made. I would add that is also important to fail gracefully. Make sure your innovation plan addresses failure with well-thought exit strategies. Finally, it’s very important to understand that Web 2.0 is like the French Revolution of the Web. You no longer have kings or queens out there telling you what’s right or wrong. Everybody has their say and have access to channels to say it. So, to take full advantage of Web 2.0, you will need Management 2.0. The change is happening anyway: ignoring it or fighting it is a losing cause, so you may as well embrace it. That’s my message for today. Thank you for listening and have a great day.
- #18 Please do ask questions. Equally relevant for the anyone seeing this online.. My blog is http://dvirreznik.blogspot.com