By Tom Davenport
In early November, I spoke at a conference sponsored by Forbes on “America the Innovator.” It addressed a variety of ways in which American firms are innovating, including disruptive innovations in industries (in the person of Clay Christensen), analytics (my contribution), and social networks (a panel of Web 2.0 and new media experts). Rich Karlgaard, the publisher of Forbes (and the editor of the late, lamented Forbes ASAP) said, as he introduced the social networks panel, that he thought they were going to have deep and pervasive impacts on how organizations managed themselves.
In a conversation after the panel, he told me that he thought they had the potential to greatly diminish hierarchy, credentialism, and other means by which companies have traditionally been controlled -- in short, the established social order within the business world.
Now I generally think Rich is a pretty smart fellow, as is the other partisan of Enterprise 2.0, Andy McAfee, as I've noted previously in this space. So once again I thought it would be worth thinking and writing about whether Internet-based social technologies (blogs, wikis, tagging, prediction markets, etc.) will overturn the established corporate social order. Let me say first that I am no great fan of how companies are managed today; I think they concentrate power too much, confuse innovative capability with position in the hierarchy, and ignore the potential for great ideas from many employees.
Let me say second that I agree that these technologies are revolutionizing information-based industries. There is a good reason why News Corp. bought MySpace and Microsoft overinvested in a piece of Facebook and why TV networks are freaking out over YouTube. Power has definitely moved toward the consumer in media and other industries.
Why is the consumer gaining power? Consumers pay companies for goods, and have many choices. Some have argued that consumers were already gaining power well before Web 2.0 came along. As Jack Leslie, a panelist at the conference and the Chairman of PR agency Weber Shandwick pointed out, consumers no longer believe that the government, the media, or big companies are the most trusted sources of information; instead, they think that other consumers have the best answers. Since consumers control the content in Web 2.0, their power has naturally increased.
But are there analogous trends within companies? I don’t see them. Since employers pay employees, that gives them a certain power to start with. And while employees may trust other employees more than their senior management bosses, they are usually reluctant to say so publicly. Employees don’t even fully control the content in their own emails (with widespread email surveillance and those embarrassing brand signatures many employees are forced to use), much less the overall messages that their companies send out into the world. In general, I wouldn’t say the power held by employees has increased much in recent times, and with the decline of unions, the rise of the imperial CEO, etc., it would be easier to argue the opposite position.
In short, I’m still pulling for social networks to revolutionize companies, but I still don’t think that they will.
The transformation of enterprises by Enterprise 2.0 is a romantic notion, but not a very likely one.
For a contrasting viewpoint, read "Why Your Company Should be on Facebook"
