Tag Archives: economic downturn

Is your organisation designed to innovate?

Many organisations are recognising the need to innovate their futures; however they are designed to maintain the status quo.

In the 1990’s when large organisations were trying to take the fat out of their processes, they worked out how to do things more efficiently by standardising and automating their processes. This may have cut costs and instilled the governances required to mitigate risk, but it came at the cost of agility. This thinking was driven as a response to competition. The assumption was that if you could do the same thing, more efficiently or effectively, you could compete more effectively. With the introduction of ISO 9000 and many other governing structures into hierarchically designed organisations, command and control became the order to the day.

With globalisation, it was not only the local market that changed, but global supply and demand. The expansion of the Internet, technological advances and more demanding and sophisticated consumers has further transformed the competitive landscape. Competition now comes from the most unexpected places, new opportunities abound and standardisation has led to unintended consequences. Business models, rigid processes and organisational designs that responded to the way things were, are now simply irrelevant.

Organisations now employ Knowledge Workers and need to relook the way that they harness these collective brains to exploit these opportunities. Unfortunately many of them are so involved with operational issues which are entrenched in the ways organisations are designed, that Innovation is rarely afforded the attention it requires.

Lots of organisations are discussing the importance of Innovation, but they are simply not set up to be Innovative. For example, what does an employee, who serves customers, do with a great idea about how to improve the service? Do you know whether there are universal aggravations in service delivery, which could be solved by a service delivery technician’s bright idea? Is the next great product idea on the mind of an employee, employed in another division, who is also a customer of your business and uses your products every day? Do you have a culture which fosters and stimulates Innovative thinking? Do you have the tools to enable them to collaborate with each other to come up with and develop ideas?

Many companies have Innovation managers and programmes designed around getting ideas from their employees, but these are often an add-on to the already over loaded job descriptions. They are not integrated into the way employees work. A prize or acknowledgement of an idea once a year, or 5% of KPA’s might generate a lot of ideas, but are they quality ideas or just popular, poorly thought through rehashes of old ideas?

Innovation is not just about great ideas; it is about the successful implementation of those ideas. Is your organisation able to respond holistically to those ideas? Are your financial systems set up to be able to accommodate new business models? Are your sales teams equipped to sell into new markets? Can your HR team identify the new skills that you require and adjust the remuneration for them accordingly? Do you attract the brightest minds available?

Innovation and agility need to become part of the way the modern organisation conducts business or its days will be numbered.

About Digital Bridges

Digital Bridges creates high performance organisations by unlocking the business value of the innovation and technology. We create digital strategies, user requirement and functional specifications for Intranets, websites and web applications. We also develop and implement social media strategies and create powerful digital brands using eMarketing and Communication.

Digital Bridges has recognised the changes to the enterprise environment, brought about by enterprise technologies like social media and SharePoint 2010 and is focussed on this. We partner with great technology companies in order to ensure that our solutions are fit for purpose and deliver on organisational strategy.

We have also partnered with Innocentrix to bring Spigit Innovation software into this country. We offer Innovation services to grow organisations and equip them for change. This includes Innovation strategies, culture interventions, measurement tools and campaign development to release the power of Innovation.

Digital Bridges relies heavily on rigorous academic thinking as well as business experience. It is headed up by Kate Elphick who has a Law degree and an MBA from GIBS. Kate has spent the last fifteen years of her career on the business side of the IT industry with companies such as Datatec, Didata, Business ConneXion and Primedia. Her skills include innovation and growth through marketing, communication, collaboration, knowledge management, human capital, performance management, process engineering and BI.

Digital Bridges has a broad range of experience working with significant, successful clients in the Financial, Gaming, Tourism, Pharmaceutical, ICT, Legal, Airline, Professional Services, Media and Public Sectors.

To find out more about Digital Bridges, please visit www.digitalbridges.co.za or contact Kate Elphick on katee@digitalbridges.co.za.

 

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Filed under Collaboration, Crowdsourcing, Innovation

Interaction for Innovation Success

Here is another guest blog from Henra Mayer at Innocentrix

65% of the over 700 senior executives that were surveyed in a McKinsey Quaterly report entitled: “Competitive Advantage From Better Interactions” stated that they are disappointed with their enterprise’s ability to stimulate innovation.

Organisations are increasingly realising that innovation is not something that only needs to be mentioned in vision statements. It is a reality that needs to be implemented. Recent indications of another global recession is emphasising the importance of innovation once again. The market does not wait for those who are still trying to figure out the what and how of innovation management – but what are organisations doing to stay relevant, be sustainable?

Truth is, once the innovation strategy is written, the awareness creation plan approved and the idea management platform is procured, people tend to sit back and wait for the magic to happen. An ideation platform and strategic innovation planning alone are not going to deliver innovation results. People will, strategic planning for execution and focusing innovation efforts and direction will. But herein lays the challenge. The following issues or lack thereof are often stated as (at least some) of the reasons for innovation failure:

  • Soliciting quality ideas;
  • Engaging the organisation enough to ensure that the idea management platform deliver the desired results;
  • Finding the experts and resources to take new ideas through to implementation;
  • Effectively managing the stage gate process to speed up idea implementation – avoiding countless evaluation committees and board decisions for ideas to progress;
  • Addressing innovation reward and recognition effectively
  • Demonstrating progress, value and success (measurement);
  • Addressing collaboration and interaction
  • Successfully tracking ROI and project implementation
  • Leadership and alignment of innovation focus with organisational goals

Some of the above issues are being addressed lately by means of crowdsourcing – it assists with surfacing good ideas and it solicits collaboration. Gamification is another concept that is being exploited in the context of innovation management. It is used to engage people to participate in innovation efforts, while it supports the integration of the organisation’s innovation eco-system in order to capitalise upon the knowledge of customers, suppliers, industry bodies and the like. Still, are interaction and co-creation valued in the innovation process? Some of the findings published in the report by McKinsey I referred to above state that:

  • Wherever groups of people collaborate to solve problems—in the field, the supply chain, operations, marketing—innovations are more likely to occur at the front lines of interaction than at the corporate center;
  • A company can boost the number and quality of the interactions likely to promote innovation if it creates the conditions that allow them to emerge;
  • Successful companies include mechanisms and approaches that allow a portfolio of initiatives to emerge from internal and external interactions;
  • To encourage more interaction, innovation, and collaboration, companies must become more porous by continuing to break down barriers to interactions—barriers such as hierarchies and organisational silos;
  • Technologies and tools will promote the collaborative and dynamic pursuit, capture, and sharing of knowledge and will allow for more video, audio, and graphics to facilitate remote interactions and broader access to scarce expertise.

Have you thought about how you interact  in support of innovation lately?

About Digital Bridges

Digital Bridges creates high performance organisations by unlocking the business value of the web. We create digital strategies, user requirement and functional specifications for Intranets, websites and web applications. We also develop and implement social media strategies and create powerful digital brands using eMarketing and Communication.

Digital Bridges has recognised the changes to the enterprise environment, brought about by enterprise technologies like social media and SharePoint 2010 and is focussed on this. We partner with great technology companies in order to ensure that our solutions are fit for purpose and deliver on organisational strategy.

We have also partnered with Innocentrix to bring Spigit Innovation software into this country.

Digital Bridges approaches the web from a management consulting position and relies heavily on rigorous academic thinking as well as business experience. It is headed up by Kate Elphick who has a Law degree and an MBA from GIBS. Kate has spent the last fifteen years of her career on the business side of the IT industry with companies such as Datatec, Didata, Business ConneXion and Primedia. Her skills include innovation and growth through marketing, communication, collaboration, knowledge management, human capital, performance management, process engineering and BI.

Digital Bridges has a broad range of experience working with significant, successful clients in the Financial, Gaming, Tourism, Pharmaceutical, ICT, Legal, Airline, Professional Services, Media and Public Sectors.

To find out more about Digital Bridges, please visit www.digitalbridges.co.za or contact Kate Elphick on katee@digitalbridges.co.za.

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Filed under Business, Collaboration, Crowdsourcing, Innovation

Knowledge Management on the Intranet

The success of organisations depends as much on their ability to manage knowledge as it does on the other competitive differentiators such as the strength of its brand, the skills of its employees and depth of customer relationships.

When a knowledge management strategy that delivers on specific business objectives is built into the Intranet, it makes an important contribution to realising organisational value.

Knowledge Management is more than the classification of all the documentation that resides on hard drives, Outlook in-boxes and filing cabinets. It includes the strategies and processes of identifying, capturing, creating, surfacing and leveraging knowledge. Knowledge management also includes strategies to foster a culture of information sharing, collaboration and the implementation of tools that make it easier for employees to share what they learn and, in turn, to learn from each other.

In the past, Intranets have been information repositories, that were not appreciated nor used effectively by employees. Corporate Intranets are gaining new prominence in many organisations, and many companies are revisiting the opportunities provided by knowledge management.

As organisations recover from the economic downturn by consolidating their operations, revisiting their product road-maps and positioning themselves as being more customer-centric, they will start looking to their company Intranets as the backbone for delivery on their business objectives and operational strategies.

Organisations are also discovering that investing in a robust, functioning Intranet is a resource intensive endeavour and that they must look for other benefits when making the business case for an enterprise-wide intranet.

KM initiatives are intellectual capital investments and should be aligned with specific, long-term business goals, as part of the Intranet Strategy.

Communities of interest are groups of people within the organisation who have common interests, work functions or strategic objectives. They share their insights, experiences, learning and knowledge amongst each other for mutual benefit. They are typically loosely structured, decentralised, fluid and built on personal relationships. Communities of Interest are perfectly positioned to support knowledge management projects.

Collaborative environments such as enterprise Intranets force employees to be focused, thoughtful and careful in their contributions. Knowing that what is published may potentially be viewed by the whole organisation, or that other users may have the ability to rate the article, forces the participants to be more disciplined in their contributions. The collaborative, real-time feedback environments of a company Intranet encourage self-policing and more strategic information sharing. The downside is that it can also discourage participants from sharing any information whatsoever.

Well-planned Intranets make perfect platforms for knowledge management initiatives. But most Intranets aren’t deliberately planned; they start out as divisional efforts that are leveraged across the whole organisation. Many of these Intranets hold valuable information but are so decentralised and unstructured that they do not support the organisational requirements.

Knowledge management is becoming immensely important in today’s business environment. Teams that share knowledge perform better. By approaching knowledge management in a simple, tactical fashion where the emphasis is placed on the application of knowledge is the key. Identifying the organisation’s priorities, focussing the communities of Interest on these priorities and upgrading the Intranet to be a more of a knowledge platform will help develop a relevant, meaningful and beneficial knowledge management initiatives.

About Digital Bridges

Digital Bridges creates high performance organisations by unlocking the business value of the web. We create digital strategies, user requirement and functional specifications for Intranets, websites and web applications. We also develop and implement social media strategies and create powerful digital brands using eMarketing and Communication.

Digital Bridges is technology agnostic and partners with great technology companies in order to ensure that our solutions are fit for purpose and deliver on organisational strategy.

Digital Bridges approaches the web from a management consulting position and relies heavily on rigorous academic thinking as well as business experience. It is headed up by Kate Elphick who has a Law degree and an MBA from GIBS. Kate has spent the last fifteen years of her career on the business side of the IT industry with companies such as Datatec, Didata, Business ConneXion and Primedia. Her skills include innovation and growth through marketing, communication, collaboration, knowledge management, human capital, performance management, process engineering and BI.

Digital Bridges has a broad range of experience working with significant, successful clients in the Financial, Gaming, Tourism, Pharmaceutical, ICT, Legal, Airline, Professional Services, Media and Public Sectors.

To find out more about Digital Bridges, please visit www.digitalbridges.co.za or contact Kate Elphick on katee@digitalbridges.co.za.

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Filed under Enterprise 2.0, HR Intranet, Interactive Intranets, Web 2.0

Can South African Banks regain their Reputations after the Economic Crisis?

The financial crisis of 2008 spawned not just a deep recession but a structurally different business environment globally. This restructured economic order, requires some new thinking, particularly for retail banks.

Many retail banks responded instinctively to the recession, without giving any thought to the aftermath of their actions, and there is a growing perception they have violated their ‘social’ contract with their customers.

In the heady days of courtship, when banks are acquiring customers, they make promises of service and understanding to clients. They position themselves as suitable partners for the long term, especially when it came to buying the major assets in peoples’ lives, houses and cars. Customers commit themselves to the relationship by signing up for twenty year bonds.

Up until mid 2008 it was rational to assume that a customer who didn’t pay back a loan was unwilling to, or incapable of doing so in the very short term, through incompetence or poor planning. It was also perfectly reasonable for a bank to divorce a client that wasn’t committed to the mutually beneficial aspects of the relationship.

When the crisis loomed, many people were retrenched and entrepreneurs, who had been successfully trading for years, suddenly hit a brick wall, where money just stopped coming in regardless of what they did.

Banks responded in a pre-crisis manner, based on the  economic assumptions that non payers were the bad guys. They came down harshly on offenders, foreclosing, handing over to debt collection agencies who are used to dealing with recalcitrant bad guys, harassed and heckled already devastated clients, who’s only fault was not to have foreseen a recession when even the economists didn’t see it coming. Their way of helping customers was to offer quick sells of customer’s homes before handing them over to the courts. They reported gleefully of moving more inventory through the system.

What they effectively did was to kick their customers while they were down, and then grind them into the ground. Banks should have looked at this as a relationship-building opportunity and demonstrated that customer loyalty was not misplaced. Instead they alienated a captive audience, who though they might not have been happy, were unlikely to have migrated in droves away from their respective banks.

Had the banks taken a long term view on their client relationships and their financial position, they could have operationalised a single view of customer strategy and considered the customer as the complex entity he or she really is. This would have enabled them to rationalise their exposure to the customer’s risk and facilitated the renegotiation of the terms of their relationships so that the customer would retain their lifetime value to the bank, instead of squeezing them for the present value in a recession.

Take for example, a regularly paying bondholder who has been with the bank for ten years, he hits a problem in the global recession. Judging by his history and paying behaviour, he is likely to get back on his feet in the next twelve months and resume repaying any loans regularly. His house is still worth more than the bond, mitigating the risk that the bank will not be able to recoup its money in future. Surely it makes sense to arrange for a 12 month payment holiday and raise his interest rates by 2%, for the rest of the bond period, thus retaining his Life Time Value to the bank, rather than selling his house off at auction at 50% of its value, alienating the customer, even when he has been rehabilitated and incurring the cost of acquiring an unknown customer from another bank which has similarly disenfranchised their relationship?

The banks add insult to injury by managing their collection processes so badly, that once they have collected their debts in full (and some blood, just for good measure), their alienated and bruised customer keeps receiving SMS’s from the lawyers threatening judgements if they don’t pay up.

Many banks do not understand their customer’s footprint across their financial institutions. In fact some banks are set up on the Owner-Entrepreneur model, because in good times this facilitates the accountability and entrepreneurial behaviour that agile companies need to succeed.

In the past this was a risky practise because it meant that the bank would miss out of cross and up-sell opportunities. Today the risk is much higher. Many banks who noticed a change in consumer behaviour when the economy turned, panicked. They exacerbated the problem at every client interface, by freezing overdrafts and making them due immediately, or by freezing access bonds, so that the customers who could have made payments on most of the accounts or were at risk of falling marginally short on payments, (for example meeting 90% of their commitments to the bank) were tipped into the emotional and financial abyss of bankruptcy. Where they could have had the car repossessed and saved the house, they lost everything.

The banks did not consider that the inventory that they were “flushing” through their system, was the life and heart of their customer, their home, the place where they loved and celebrated, brought up children and created a lifetime of memories. Customers are not going to be so quick to forgive banks, the cost of acquisition and creating loyalty amongst customers has just escalated through the roof.

The breadth and depth of today’s reputational challenge is a consequence not just of the retail bank’s instinctive responses to the speed, severity and unexpectedness of recent economic events but also of underlying shifts in the importance of Web-based participatory media, or web 2.0.

The Modern Internet and the era of Social Media are promoting wider, faster scrutiny of banks and rendering traditional public-relations tools less effective in addressing reputational challenges.

It will be transparent, decisive action that builds strong reputations in the future. Doing so effectively means stepping up both the sophistication and the internal coordination of reputation efforts. Some companies, for example, not only use cutting-edge attitudinal-segmentation techniques to understand the concerns of customers better but also mobilise cross-functional teams to gather intelligence and respond quickly to far-flung reputational threats.

One key is to cut through organisational barriers that impede such efforts through committed senior leadership who have an opportunity to differentiate their companies by demonstrating real statesmanship. An energised, enlightened and empowered public will expect nothing else.

The proliferation of Web-based platforms, has given individuals and organisations new tools they use to subject banks to greater and faster scrutiny. This communication revolution also means that certain issues (such as poor customer service) can be picked up by “citizen journalists” or bloggers and generate outrage on a much larger scale.

As a result, what formerly were operational risks resulting from failed or inadequate processes, people, or systems now often manifest themselves as reputational risks whose costs far exceed those of the original missteps.

In this dispersed and multifaceted environment, banks must collect information about reputational threats across the organisation, analyse that information in sophisticated ways, and address problems by taking action to mitigate them. This requires significant collaboration, coordination, commitment and an ability to act quickly.

Many retail banks are structured around centralised corporate-affairs departments that can’t monitor or examine diverse reputational threats with sufficient sophistication. Moreover, traditional PR can’t deal with many concerns, which must often be addressed by changing business operations and conducting two-way conversations. Managers of business units such as home loans or credit cards, have a better position for spotting potential challenges but often fail to recognise their reputational significance. This is often an unintentioned consequence of remuneration systems designed by financial managers, not being aligned to marketing strategies. Internal communication about reputational risks may be inhibited by the absence of consistent methodologies for tracking and quantifying those risks. Accountability for managing problems is often blurred.

As a result, responses to reputational issues can be short term, ad hoc, and defensive, and therein lies a problem that companies must solve quickly: even as reputational challenges boost the importance of good PR, companies will struggle if they rely on PR alone, with little insight into the thinking and operational root causes of their reputational problems.

A logical starting point for companies seeking to raise their game is to put in place an effective early-warning system to make executives aware of reputational problems quickly. Most companies are quite good at tracking press mentions, and many are beginning to monitor the multitude of Web-based voices whose power is beginning to rival the mainstream media’s. However, doing these things effectively, while an important prerequisite for stepping up engagement with stakeholders, isn’t the toughest task facing organisations.

To prepare for and respond to reputational threats, we suggest that retail banks should emphasise these priorities.

  • First, they need to assemble enough facts to gain a rich understanding of their customer base as it manifests itself across the entire organisation, not only their product preferences but also the psychographic profiles of segments of customers including propensity for risk, social media adoption and behaviours etc.
  • Secondly, they must conduct a two way dialogue with their customer (segments).

Banks are still the heart of the South African economy. They pump the funds on which productive human enterprise depends. Banks must perform this role well, with all the diligence we would expect of any expert or custodian of an essential task.

They must refocus on those fundamentals that are unchanged by the financial crisis — their core purpose, customer needs, and capabilities — while recognising that profound market changes have occurred and will affect how these capabilities need to be delivered. Those leaders whose banks can respond to the times and enhance their capabilities will be to­morrow’s winners.

About Digital Bridges

Digital Bridges creates high performance organisations by unlocking the business value of the web. We create digital strategies, user requirement and functional specifications for Intranets, websites and web applications. We also develop and implement social media strategies and create powerful digital brands using eMarketing and Communication.

Digital Bridges is technology agnostic and partners with great technology companies in order to ensure that our solutions are fit for purpose and deliver on organisational strategy.

Digital Bridges approaches the web from a management consulting position and relies heavily on rigorous academic thinking as well as business experience. It is headed up by Kate Elphick who has a Law degree and an MBA from GIBS. Kate has spent the last fifteen years of her career on the business side of the IT industry with companies such as Datatec, Didata, Business ConneXion and Primedia. Her skills include innovation and growth through marketing, communication, collaboration, knowledge management, human capital, performance management, process engineering and BI.

Digital Bridges has a broad range of experience working with significant, successful clients in the Financial, Gaming, Tourism, Pharmaceutical, ICT, Legal, Airline, Professional Services, Media and Public Sectors.

To find out more about Digital Bridges, please visit www.digitalbridges.co.za or contact Kate Elphick on katee@digitalbridges.co.za.

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Filed under eMarketing, Enterprise 2.0, Web 2.0

Mitigating the economic downturn by unlocking the power of the web

Web 2.0 offers an unparalleled opportunity for businesses to compete and thrive in a time of mounting economic difficulty – yet incredibly many have little idea of what 2.0 means. Far too often, it is dismissed as a buzzword – but it could hold the key to the survival of many businesses as the slowdown kicks in.

Today businesses are challenged by a global slowdown in the economy, rising inflation, severe talent shortages, cheap imports from the East, the rise of the knowledge worker and a new tech savvy generation Y entering the economic landscape. Also, for the first time, user driven web 2.0 technologies are changing the balance of power between the corporate and its stakeholders, be they consumers, employees or the public.

The last few years have seen the launch and successful rise of creative online businesses offering clients faster and cheaper solutions that they would have previously looked to traditional outlets for. Sector after sector is benefiting from the speed, efficiency and cost-effectiveness of online services, and increasingly, crowd-sourcing and collaboration enabling innovation in new categories and market sectors.

The initial reaction of many big businesses was to batten down the hatches and prepare themselves to ride out this “Facebook craze” which was wasting employees’ time.  Now, the recession looms large in the minds of marketers, the industry is experiencing a noticeable shift in attitudes towards web 2.0 and the new business models it enables.

The “network effect” is becoming ever more important in that for every additional member of a community; the greater the value to each of the community members, and this is fundamentally changing the business models. No longer are communities just “eyeballs” to be advertised to they are now dynamic and demanding sources of revenue.

Businesses are reaching out to online communities to deliver efficient, effective and economical solutions. Perhaps most notable is the range of industries that are embracing such alternatives. All evidence is pointing to web 2.0 being an even more remarkable opportunity than even the most fervent of supporters may have thought.

This is a fascinating time to be in marketing. As we grapple to find ways to do more with less, the smart decision makers are expanding their horizons to include more creative and resourceful solutions to their business challenges. In a broad sense, this means that digital and PR solutions are being implemented to a greater degree than ever before, even replacing some pricey traditional executions. From a sourcing standpoint, marketers are engaging with open-source models, where they’re finding increased return on their investment, as well as global input on their brand.

It will be interesting to see what kinds of businesses are born out of this increased willingness to explore non-traditional models. What other industries will change because necessity, does, in fact, breed creativity?

As businesses continue to adopt these tools, decision-makers looking to leapfrog the competition need to move fast. Web 2.0 tools are being adopted in companies across all industries, and any business which fails to recognise that runs the risk of being left behind.

Consumer Web 2.0 technology is a real force that is changing how business is getting done, and any company looking to improve performance should be taking a closer look at how it can benefit from driving business the Web 2.0 way.

Social media and networking sites provide the platform for companies to collaborate, share information and expertise and market their goods. In fact, all over the web, communities of like-minded firms are supporting each other with advice, swapping internet links and trading together.

The interactivity of Web 2.0 also allows an authentic and direct line of communication between a company and its customers – invaluable any time, but essential in the light of the challenging business environment.

The tools of Web 2.0 – blogging, podcasting, photo and video sharing – have been adopted by millions of consumers because they are simple and powerful communication methods. For that reason, they are ideal for businesses to use in their marketing strategies.

A company that is prepared to engage in an open, honest dialogue, whether it be through a blog or video, with its customers, is being sensible and shrewd. These days very few consumers are prepared to just listen to announcements and one-way broadcasts without being able to give their feedback.

However, there are still far too many companies which have not tapped into the rich potential arising from web 2.0 because they either are not aware of it or feel it is irrelevant or too complicated or they underestimate its power.

This reticence may be in part explained by existing attitudes to the internet generally. Many businesses are not seeing a measurable return from their websites or online marketing and sales.

There are good reasons for this. Running a website can be a costly, complex business that often requires the support of third parties to build, maintain and market. Many organisations regard their website as a brochure for the organisation and have not contextualised in the business strategy as a whole. Larger businesses to use paid search and display ads supported by a comprehensive Search Engine Optimisation strategy to ensure a good Google rating.

If we put the problems of traditional online marketing alongside the growing importance of the internet as a research and purchasing medium for consumers, it becomes apparent that we desperately need to find a better way to promote ourselves online. This is where Web 2.0 is vital.

To attract customers, it is necessary to participate in online “communities” relevant to your business. That also means engaging in an ongoing, meaningful dialogue with customers on interactive networking sites about products, prices and service.

The social web has changed the landscape of e-commerce forever. Audiences are fragmented and this means customers are harder to reach but they are surfing the web for information about goods in ever-growing numbers before buying. If these trends continue, then any company wishing to succeed has to embrace the interaction encapsulated by Web 2.0 to build strong, trusting relationships with its customers.

Businesses can benefit from the power of social networking precisely because the tools of Web 2.0 are well suited to the personal and conversational marketing style that already works to their benefit offline.

Firms large and small have started to take part in social networks and internet communities but the results are mixed. Some are successfully attracting customers and boosting the bottom line, others are not. Of greater concern is that most have not taken the plunge at all with many approaching the internet in general with apprehension.

These businesses should realise that Web 2.0 offers relevant and powerful tools for them to promote themselves and build an oniline brand. They should stop hiding – and start using it to their advantage.

About Digital Bridges

Digital Bridges creates high performance organisations by unlocking the business value of the web. We create digital strategies, user requirement and functional specifications for Intranets, websites and web applications. We also develop and implement social media strategies and create powerful digital brands using eMarketing and Communication.

Digital Bridges is technology agnostic and partners with great technology companies in order to ensure that our solutions are fit for purpose and deliver on organisational strategy.

Digital Bridges approaches the web from a management consulting position and relies heavily on rigorous academic thinking as well as business experience. It is headed up by Kate Elphick who has a Law degree and an MBA from GIBS. Kate has spent the last fifteen years of her career on the business side of the IT industry with companies such as Datatec, Didata, Business ConneXion and Primedia. Her skills include innovation and growth through marketing, communication, collaboration, knowledge management, human capital, performance management, process engineering and BI.

Digital Bridges has a broad range of experience working with significant, successful clients in the Financial, Gaming, Tourism, Pharmaceutical, ICT, Legal, Airline, Professional Services, Media and Public Sectors.

To find out more about Digital Bridges, please visit www.digitalbridges.co.za or contact Kate Elphick on katee@digitalbridges.co.za.

5 Comments

Filed under Enterprise 2.0, Macroeconomics 2.0

Systems Theory and The Network Effect – Could the Internet solve the Global Economic Crisis?

We stare in abject fascination at the economic world falling apart. It is not unlike when we watched aghast as two passenger planes flew into the twin towers over and over again. This time it is a different building crashing to the ground each time with different metaphorical jumpers, there goes Lehman Bros, now RBS, KPMG next GM?

The world economy looks set to be in a more severe and protracted down-swing than anything since World War 2. Analysts are starting to factor the risk of a global depression into their scenario planning and the emerging consensus is that we are in for a long period of global stagnation. This means several years of less than 3% global growth. SA is likely to achieve no more than a 0,6% economic growth this year.

However, this is the first recession that we have faced in the Internet Age.

The Internet has changed the way we do business and the way that we think about communication. It is also one of the most transparent manifestations of Systems Theory and the Network Effect in action. Could this new economy be harnessed to mitigate the effect of the economic Bin Laden?

Systems Theory

Systems theory is an interdisciplinary field of science and the study of the nature of complex systems. It is a framework by which one can analyse and describe any group of objects that work in concert to produce a result.

Macroeconomic Theory

Adam Smith believed that the ideal economy is a self-regulating market system that automatically satisfies the economic needs of the people. He described the market mechanism as an “invisible hand” that leads all individuals, in pursuit of their own self-interests, to produce the greatest benefit for society as a whole, and believed that fiscal policy would ensure economic growth.

Keynes argued that markets were not self correcting and that if the economy was in a crisis of confidence and downward spiral, it was necessary for government to use spending to stimulate the economy. It would pay the money back later. Otherwise a general deficit of effective demand would lead to a very long slump.

A crisis in confidence could send stock markets plummeting, meaning companies go out of business, more redundancies and fewer people with jobs, people would have less money to spend, businesses will have fewer customers, therefore more companies go out of business, sound familiar?.

Milton Friedman, on the other hand, argued that the Great Depression was result of a contraction of the money supply, controlled by the Federal Reserve, and not by the lack of investment as Keynes had argued. Ben Bernanke, current Chairman of the Federal Reserve, generally accepts Friedman’s analysis of the causes of the Great Depression.

So, can we use the Internet to stimulate demand, or is it really up to the central Banks to implement a more expansive monetary policy?

The economic implications of wikis, blogs, social-networking, open-source, open-content, file-sharing, peer-production, etc. is starting to gain attention. What are the implications Web 2.0 has for the principles underlying the economy of the modern Internet?

Mass Collaboration

Tapscott and Williams argue in their book Wikinomics: How Mass Collaboration Changes Everything that the economy of “the new web” depends on mass collaboration. They regard it as important for companies to find ways of how to make profit with the help of Web 2.0. The prospective Internet-based economy that they term “Wikinomics” depends on the principles of openness, peering, sharing, and acting globally.

Organisations can prosper with the help of Web 2.0: Companies can design and assemble products in collaboration with their customers, the traditionally passive buyers of editorial and advertising can take active, participatory roles in value creation.

Tapscott and Williams suggest that modern business strategies are “models where masses of consumers, employees, suppliers, business partners and even competitors co-create value in the absence of direct managerial control.They see the outcome as an economic democracy.

Others in the debate agree that value-creation increasingly depends on harnessing open source, user content generation, networking, sharing and peering, but disagree that this will result in an economic democracy, predicting a subtle form and deepening of exploitation, in which Internet-based global outsourcing reduces labour-costs by transferring jobs from workers in wealthy nations to workers in poorer nations.

In such a view, the economic implications of the new web might include on the one hand the emergence of new business-models based on global outsourcing, whereas on the other hand non-commercial online platforms could undermine profit-making and anticipate a co-operative economy.

The Network Effect

In economics and business, a network effect is the effect that one user of a service has on the value of that service to other people.

Mobile phones are an example; the more people own mobiles, the more valuable the phone is to each owner because he can call additional people. This creates a positive externality because a user does not purchase their phone intending to create value for other users, but does so in any case.

Network effects become significant after a certain critical has been achieved. At the point of critical mass, the value obtained from the good or service is greater than or equal to the price paid for the good or service. As the value of the good is determined by the user base, this implies that after a certain number of people have subscribed to the service or purchased the good, that additional people will subscribe to the service or purchase the good due to the positive usefulness : price ratio.

A key business concern, if we are to create macroeconomic growth using the network effect, must then be how to attract users prior to reaching critical mass. One way is to rely on extrinsic motivation, such as payment, free use, or a request for friends to sign up. A more natural strategy is to build a system that has enough value without network effects, at least to early adopters. Then, as the number of users increases, the system becomes even more valuable and is able to attract a wider user base.

It is possible that the dynamics of the new economy could create robust networks, through the complex systems made possible by web 2.0, working in collaboration to create macroeconomic growth in a very different economic order than we have seen in the past, only history will tell.

About Digital Bridges

Digital Bridges creates high performance organisations by unlocking the business value of the web. We create digital strategies, user requirement and functional specifications for Intranets, websites and web applications. We also develop and implement social media strategies and create powerful digital brands using eMarketing and Communication.

Digital Bridges is technology agnostic and partners with great technology companies in order to ensure that our solutions are fit for purpose and deliver on organisational strategy.

Digital Bridges approaches the web from a management consulting position and relies heavily on rigorous academic thinking as well as business experience. It is headed up by Kate Elphick who has a Law degree and an MBA from GIBS. Kate has spent the last fifteen years of her career on the business side of the IT industry with companies such as Datatec, Didata, Business ConneXion and Primedia. Her skills include innovation and growth through marketing, communication, collaboration, knowledge management, human capital, performance management, process engineering and BI.

Digital Bridges has a broad range of experience working with significant, successful clients in the Financial, Gaming, Tourism, Pharmaceutical, ICT, Legal, Airline, Professional Services, Media and Public Sectors.

To find out more about Digital Bridges, please visit www.digitalbridges.co.za or contact Kate Elphick on katee@digitalbridges.co.za.

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Filed under Enterprise 2.0, Macroeconomics 2.0, Semantics, Web 2.0

Winning the economic war while fighting the battles

Decisions and actions taken during times of crisis, uncertainty and change can have a disproportionate impact on our future success. With the global economic turn down, many businesses are battening down the hatches, reducing costs and focusing on core business, others are poised to take advantage of unusual opportunities — acquire troubled assets, attack weak competitors and create new relationships.

This recession will be more severe than those in the recent past because it was triggered by a deep, systemic banking and financial crisis. At the same time as we are dealing with an economic crisis there are some fundamental structural shifts on the horizon, caused by the developments in the Internet. These developments also promise dramatic discontinuities in the global economy.

Businesses find themselves adapting to a new and very different economic order as a result, one that demands different strategies, relationships, and capabilities.

The disruptive power of the new Internet has only just begun, and it will continue to transform successful businesses at an accelerating pace. eMarketing, eCommerce, virtualisation and outsourcing, crowd-sourcing, social networks, consumer empowerment and transparency are challenging business and organisational models, while simultaneously generating new opportunities and capabilities.

This combination of a recession with new Internet driven opportunities, creates the need to win battles on two fronts; businesses must focus on exploiting what they already have and at the same time explore what they can discover and create. The first drives revenues and incremental growth in existing markets; the second drives renewal and the expansion of opportunity for transformational growth. Both are critical to a business’ survival.

On the one front, the pressures of the recession leads companies to the adoption of command and control; “return to basics”; cut costs, eliminate risks, slow down and delay investments, especially in employees and client relationships. On the other, the structural discontinuities that are reshaping the world demand a more expansive and exploratory approach, as new geographies, relationships, customers, network economy rules and players, value creation systems and capabilities increasingly determine future success.

Organisations must take actions to win the battle in the short term and act to position themselves to triumph in the war over the longer term. Finding the right solutions demands hard work and thoughtful analysis, and there are no easy short-cuts. However, there are some core capabilities that will underpin successful navigation of this complex and uncertain environment.

In order to compete to win the war organisations must have a superior understanding of the structural dynamics reshaping the global economy, how they impact their industry, the new opportunities, challenges and imperatives they pose. Courageous and proactive moves require a deeper exploration and understanding of the systemic shifts under way, and a clear positioning to win in the emergent order.

Sophisticated competitive strategies that take advantage of the power of the new Internet are critical because today, most markets are in a zero-sum or negative game where share must be won from competitors as overall growth slows. The competitive landscape has changed significantly and will continue to do so, probably faster and at a greater magnitude.

Traditional, linear value chains are increasingly becoming more co-creative “eco-systems,” in which competitors are also partners, customers are part of the value creation process, suppliers are often fellow-innovators and channels to market are blurring as the borders between companies erode. This demands an increasingly sophisticated approach to the formulation of winning competitive and co-creative strategy.

The winners will have superior decision-making capabilities. Today, businesses must also be able to contend with increased uncertainty, this demands a capacity for systems thinking and simulation to optimise the robustness of key decisions and their execution to create a sustainable enterprise.

Digital Bridges has tailored many of our most powerful methodologies and offerings specifically to address the multitude of challenges now present in most organisations, we are committed to helping our clients achieve superior results, especially in this extraordinary period.

About Digital Bridges

Digital Bridges creates high performance organisations by unlocking the business value of the web. We create digital strategies, user requirement and functional specifications for Intranets, websites and web applications. We also develop and implement social media strategies and create powerful digital brands using eMarketing and Communication.

Digital Bridges is technology agnostic and partners with great technology companies in order to ensure that our solutions are fit for purpose and deliver on organisational strategy.

Digital Bridges approaches the web from a management consulting position and relies heavily on rigorous academic thinking as well as business experience. It is headed up by Kate Elphick who has a Law degree and an MBA from GIBS. Kate has spent the last fifteen years of her career on the business side of the IT industry with companies such as Datatec, Didata, Business ConneXion and Primedia. Her skills include innovation and growth through marketing, communication, collaboration, knowledge management, human capital, performance management, process engineering and BI.

Digital Bridges has a broad range of experience working with significant, successful clients in the Financial, Gaming, Tourism, Pharmaceutical, ICT, Legal, Airline, Professional Services, Media and Public Sectors.

To find out more about Digital Bridges, please visit www.digitalbridges.co.za or contact Kate Elphick on katee@digitalbridges.co.za.

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Filed under Enterprise 2.0, Interactive Intranets, Macroeconomics 2.0, Web 2.0