The Rise of the Networked Enterprise

Whilst organisations continue to  invest in the internal adoption of social technologies, it is becoming clear that, so far, only a few have worked out how to make the most of these new opportunities. McKinsey’s latest survey into the use of web 2.0 tools within organisations has identified the emergence of this new class of company – ‘The Networked Enterprise’.

Almost two-thirds of the businesses surveyed by McKinsey are now using social technologies to some degree, benefiting from quicker access to knowledge and internal experts, greater communication and operational efficiencies, increased employee satisfaction and greater levels of speed to market and subsequent success for product/service innovations.

However, as with any new technology, the rate of adoption and the ability to generate significant improvements varies enormously. McKinsey’s report identifies four major types of organisation –

Developing –The vast majority (79%) of organisations are still learning how best to deploy the new technologies. They are realising only modest improvements in business performance and have yet to develop significant usage or integrate tools into daily work flows, as a result they see little change in levels of communication, collaboration or information sharing.

Internally Networked Organisations – Some organisations (13%) focus primarily on using social tools within their company, resulting in higher levels of employee participation and greater integration into work-flows. The major benefits come from significantly more flexible internal processes; information shared more easily and less hierarchically, greater collaboration across silos and a more project-based approach to tasks.

Externally Networked Organisations – These companies (5%) achieve substantial benefits from using web 2.0 tools to connect with customers and business partners. They see benefits in marketing effectiveness and revenues but much less improvement in operational efficiencies and internal sharing and collaboration.

Fully Networked Enterprises – These are the elite organisations (just 3%) that are successfully integrating web 2.0 technologies throughout their operations; connecting the internal efforts of their employees and extending the company’s reach out to customers, partners and suppliers. As a result these organisations are seeing both sales growth through increased market share and higher margins through increased operational efficiency.

The benefits of the fully networked approach not only deliver competitive advantages now but provide the means for businesses to extend that advantage; lessons learned in one market, region or function can be quickly shared and adopted throughout the organisation, leading to faster innovation, greater organisational effectiveness and better products/services.

Key Steps to Becoming Fully Networked

The creation of effective networks, both internal and external, is quickly becoming an organisational necessity. If they aren’t already, senior managers everywhere need to be thinking about how they can enable their business…

  • Integrate the use of Web 2.0 into employees’ day-to-day work activities
  • Drive up levels of adoption and usage
  • Break down barriers to organisational change
  • Apply Web 2.0 technologies to interactions with customers, business partners and employees.

The ‘Networked Enterprises’ already have an advantage, the key is to join them quickly or risk being left behind.

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