Tag Archives: opportunity

The value companies have realized from their Web 2.0 deployments

McKinsey Quarterly conducted a survey in June 2009 and received nearly 1,700 executives from around the world, across a range of industries and functional areas. The survey focused on the value they have realized from their Web 2.0 deployments in three main areas: within their organizations; externally, in their relations with customers; and in their dealings with suppliers, partners, and outside experts.

Their responses suggest why Web 2.0 remains of high interest: 69% of respondents report that their companies have gained measurable business benefits, including more innovative products and services, more effective marketing, better access to knowledge, lower cost of doing business, and higher revenues. Companies that made greater use of the technologies, the results show, report even greater benefits. The survey also looked closely at the factors driving these improvements—for example, the types of technologies companies are using, management practices that produce benefits, and any organizational and cultural characteristics that may contribute to the gains. The results show that successful companies not only tightly integrate Web 2.0 technologies with the work flows of their employees but also create a “networked company,” linking themselves with customers and suppliers through the use of Web 2.0 tools. Despite the current recession, respondents overwhelmingly say that they will continue to invest in Web 2.0.

What benefits do Web 2.0 deployments bring to a company?

This year’s survey turned up strong evidence that these advantages are translating into measurable business gains: greater ability to share ideas; improved access to knowledge experts; and reduced costs of communications, travel, and operations. Many respondents also say Web 2.0 tools have decreased the time to market for products and have had the effect of improving employee satisfaction.

Looking beyond company borders, significant benefits have stemmed from better interactions with organizations and customers. The ability to forge closer ties has increased customers’ awareness and consideration of companies’ products and has improved customer satisfaction. Some respondents report that these customer interactions have resulted in measurable increases in revenues.

Respondents cite similar gains resulting from better ties to suppliers and partners: the ability to gain access to expertise outside company walls more quickly, lower costs of communication with business partners and lower travel costs.

How do companies use Web 2.0?

Among respondents who report seeing benefits within their companies, many cite blogs, RSS, and social networks as important means of exchanging knowledge. These networks often help companies coalesce affinity groups internally. Finally, respondents report using Web videos more frequently since the previous survey; technology improvements have made videos easier to produce and disseminate within organizations.

Respondents who report that Web technologies have strengthened their companies’ links to customers also cite blogs and social networks as important. Both allow companies to distribute product information more readily and, perhaps more critically, they invite customer feedback and even participation in the creation of products.

What’s next?

• Over half of the companies in this year’s survey plan to increase their investments in Web 2.0 technologies, while another quarter expect to maintain investments at current levels.
• The current downturn has increased interest in the technologies, presumably because companies count on extending their gains.
• About 1/3 of respondents have not yet achieved business benefits, either because they aren’t using Web 2.0 for one of the three major usage categories (internal, customer, and partner/supplier) or because they have yet to learn how to achieve measurable benefits with the tools they are using.

For a closer look at how companies are using Web 2.0 and their benefits, see the articles “Business and Web 2.0: An interactive feature,” and “How companies are benefiting from Web 2.0” on www.mckinseyquarterly.com

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Reforming the public sector in a crisis: Göran Persson’s views on the Swedish Great Depression and crisis opportunities

NYC: National Debt Clock
Image by wallyg via Flickr

In the early 1990s, Sweden suffered its deepest recession since the Great Depression. Although the Swedish crisis was homegrown, its causes and effects resemble the events unfolding in the world today. After years of strong domestic growth driven by easy credit and high leverage, a real-estate bubble burst, leading to the collapse and partial nationalization of the banking sector. Domestic demand plunged as the household savings ratio soared by 13%. In three years, public debt doubled, unemployment tripled, and the government budget deficit increased tenfold, to more than 10% of GDP, the largest in any OECD country at the time.

Göran Persson was appointed finance minister after the 1994 elections, and became prime minister two years later. In order to regain the confidence of international lenders (and so pave the way for stability and sustainable growth) he knew that Sweden had to reduce its budget deficit dramatically. It took four years for the Swedish government to balance its budget. By 2006 the country had almost halved its public debt.

Persson recently spoke about what it takes to improve the way the public sector works and here are some of the lessons learned that he shared with McKinsey Quarterly:

  • First, as Persson says, you must make it clear that you are responsible for the process and that you are prepared to put your position at stake.
  • Second, the consolidation program must be designed so that the burdens are shared fairly. Public support for tough policies would quickly deteriorate if they were not perceived as fair.
  • Third, the consolidation program has to be designed as a comprehensive package: by presenting the measures together, it becomes clear to all interest groups that they are not the only ones being asked to make sacrifices. Also, by starting with the most difficult measures, you demonstrate your resolve and increase the chances of achieving the early results, which will be important for getting the continued support that is critical for sustaining the effort.
  • Transparency is the fourth lesson: never play down the effects of the program’s measures, be completely honest when you communicate with financial markets, clarify assumptions and calculations.

When talking about crisis opportunities, Persson admitted that the cuts in government consumption became a driver of improved efficiency, since public authorities were forced to do the same job on unchanged or reduced budgets and he mentions three of the strategies pursued:

1) One strategy aiming to improve productivity, service quality, and freedom of choice involved the liberalization of telecommunications, mail, railways, and other infrastructure industries. It also involved allowing privately run providers to compete with public ones in providing tax-financed services for the school system, health care, child care, and care for the elderly.

2) Another measure was to introduce information technology to broad layers of the population through a tax-deduction scheme that allowed workers to obtain a home computer under a favorable leasing agreement with their employers. The penetration of IT in Sweden during these years outpaced every other country in the world, which made it possible for authorities like the Tax Agency to go online at an early stage. More and more of the communication between Swedish public agencies and citizens now takes place on the Web, and many Swedes do their annual tax submissions over the Internet, allowing for a very efficient processing of taxes.

3) A third strategy was to give people with basic schooling the chance to complete a secondary education that would qualify them for university studies. More than 10% of the workforce seized this opportunity between 1997 and 2002. When the business cycle turned up again, they became a very good resource on the labor market, not least in the public sector. This education scheme served a dual purpose: it eased the pain of unemployment and increased Sweden’s long-term competitiveness by lifting the average competence level of the workforce.

Göran Persson also commented on his experience with trying to get the civil servants on board and making them partners in the initiative, changes in the way government worked and the way it developed and delivered its services, and influencing change at ministries that were not making good on their efficiency targets.

Global opportunities of crisis

“Crisis is a blessing for countries and people for it magnetizes progress. Crisis is a trigger for great inventions and strategies. Whoever overcomes crisis, overcomes himself.”
Albert Einstein, The Saturday Evening Post, 26 October 1929

Anyone who went through a crisis sometime in his/her life, regardless of its nature, can emphasise Einstein’s words above. Even Plato, in “The Republic,” made this now familiar statement: “Necessity is the mother of invention.” So, let’s take a look at what necessities resulting from this financial crisis might concretize into global opportunities:

  • Humanity is moving towards greater humility, recognising their inter-dependence within the global community;
  • Small to medium size businesses have an opportunity in their ability to reinvent processes in all kinds of economic conditions;
  • For some particular businesses, asset acquisition becomes affordable and tending towards value-for-money over time;
  • The use of advanced technologies may reduce costs and the innovators of these technologies will benefit from the present global crisis in the years ahead;
  • The American, European and Russian crises may be an opportunity to Japan, China and India to improve their global significance. China and India may also remain preferred destinations for capital at the expense of other emerging nations;
  • The ongoing financial crisis may show that the US and US dollar are going to remain significant but they are not going to be the only preferred destination and currency. There is a great opportunity for the Japanese Yen, among others.

Of course, this is just a glimpse on a global perspective of opportunities; the list is endless if we tend to be exhaustive. In future articles, we’ll also take a look at some opportunities closer to particular businesses.