Thursday, November 6, 2008

Web 2.0: A Strategy Guide

Weighty analysis may make the pages slow to turn, but it’s worth the heavy lifting.

A sky’s-the-limit azure book jacket on Web 2.0: A Strategy Guide promised to “transform [my] business by looking at specific practices for integrating Web 2.0 into what [we] do. I flipped through the pages and saw that the book closely examined sites like Flickr, Facebook, Amazon, and Google. On the whole, I was hoping to gain a better understanding of the phenomenon and how exactly I could use Web 2.0 thinking to build an online marketing strategy for a startup manufacturing company in Colorado Springs.

O’Reilly Media, publisher of this and other computing manuals, is the creation of Tim O’Reilly, a strong advocate of open source software. He is also the man who coined the phrase “Web 2.0” in 2004. The foreword by O’Reilly describes his vision of Web 2.0 as the phase in which the internet realizes its true potential through technology’s “transformative power” based on “harnessing network effects and the collective intelligence of users to build applications that literally get better the more people use them.” Sitting on the Barnes and Nobel carpet with this book in my hands, I was inspired and intrigued.

Shuen’s formidable grasp of Web 2.0 as an economic phenomenon is apparent in her deep analysis of network effects. This book is written for business people who are trying to get their arms around what Web 2.0 is and how to incorporate network effects into innovative business models. The challenge for readers with limited economics experience is to keep up with the torrent of financial models and terms.

As a trend, Web 2.0 is dynamic, exciting, and interactive, but at times, Shuen’s thick analysis threatens to choke the life out of it. Web 2.0: A Strategy Guide is targeted toward those readers who are still not quite convinced that the commerce of collaboration is something they can use. For my part, I was looking for more concrete strategy, and less proof that Web 2.0 is a good idea in the first place. Still, chapter six (more value added here with a link to Shuen's blog) offers a solid 5-step program for making Web 2.0 work for business.

It took quite a bit of slugging my way through dense explanation, web economics curves, and the network effect, but I found the strategy guidelines to be helpful:

1. Build on Collective User Value – Allow users to collaborate and collect information to share. In analyzing how to do this, take into account cash flows and explore the possibility of modifying cost structure to reward top contributors and monetize their contributed value as quickly as possible.

2. Activate Network Effects – Even “tippy” markets may not be a zero sum game. Proliferation of online businesses and consumers continue to add value and critical mass.

3. Work Through Social Networks – Systematically identify ways to increase viral, interactive, or social influence/referral factors of your business. Know how to make use of social network’s structure, even if you’re not contributing a new platform to it.

4. Dynamically Syndicate Competence – Use mashups (like this one from or viral distribution of protected intellectual properties. In other words, make information available to competitors, ecosystem partners, users, and others to share what you do well.

5. Recombine Innovations – There are opportunities (such as those with Build-A-Bear) for online-offline cooperation partnerships and collaborations that add value for all parties involved. Find them. Explore ways to fashion “recombinant” tried and true business models with new models.

On the whole, A Strategy Guide is well-crafted with dense, deeply analytical explanations of Web 2.0 models and strategy, but fails to capture the dynamic drive of Web 2.0 itself. It is, after all, a business text—not a blog post. I recommend it, but this book's slim size belies the weight of its analysis.

The book's cover price is $24.99. You can buy the book electronically from the publisher for $19.99.

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