Enterprise 2.0 & The Economy

With the economy on everyone’s minds these days, it’s not surprising to see articles looking at the impact the economy has on usage of collaborative technologies (eg. enterprise 2.0).

I’ve found several articles interesting but not quite resonating with me. For example a recent Wikinomics article by Naumi Haque suggests that there are 2 emerging schools of thought on the subject: A) the need for productivity means greater investment in enterprise 2.0 or B) the need to focus on core takes priority over anything else. I actually don’t think it’s one or the other but both. If you could prove productivity/collaborative gains this actually enables greater focus on your core. But since it’s hard to prove, the concept of Risk/Reward needs to be considered.

In my opinion, there are 3 main variables that predict adoption of these tools: Corporate Risk Tolerance, Corporate Performance, and Perceived Risk/Benefit of collaborative technology. These variables are depicted in the visual model above.

The relationship between corporate performance (which is impacted by the economy) and risk tolerance is illustrated by the “U” curve. Basically, a corporation that is doing very poorly tends to take bigger risks as it becomes “desperate” or believes it has “nothing to lose”. Consider the example of Goldcorp that on the brink of bankruptcy decided to share it’s “top secret” data to the world in an attempt to crowdsource a solution to their pressing challenge of finding and extracting gold from it’s property. Would Goldcorp have been so eager to do this if it was doing well?

At the opposite end of the performance spectrum, those companies that are doing well can “afford” to experiment with new approaches and new opportunities while resting assured that the remainder of the business will still thrive and be able fund these initiatives. IBM’s investment in social computing and it’s World Jam for example are things IBM has been able to explore and develop while still maintaining sufficient resources in it’s other core business.

According to this model, companies that are doing “OK”, are least likely to accept corporate risk. “Why change if it ain’t broke”, and “we just simply can’t spend resources on things that aren’t proven to provide us a return”. These companies tend to be risk averse to supporting technologies which aren't core.

The curve is only part of the picture. The other variable is the concept of perceived risk. Risk in this model is loosely defined as the likelihood of an expected benefit versus the expected cost. Costs include implementation but also opportunity cost, and negative side-effects. For those corporations that view social computing investments as low risk/high reward the decision to implement social media in any economic climate is “obvious”. As perceived risk increases however, it would require the company performance to either increase substantially or decrease substantially relative to the perceived risk they place on collaborative technology.

So what does this mean when times are tough? Well, based on this model, I would speculate that corporate performance on average will decline creating a stronger likelihood for adoption of social computing initiatives even at higher perceived risk. Companies that in the past wouldn’t have tried to leverage social computing may actually be willing to “give it a try”. The success/failures of those initiatives will eventually have an impact on perceived risk as stories mount that either prove/disprove the real costs & benefits.

It’s a fairly basic exploratory model and I’d be interested to hear your thoughts. Is your organization about to implement enterprise 2.0 applications? Would they fit this model?