CEOs grapple with Web 2.0

CEOs grapple with Web 2.0

Blogs, social networking, and other Web 2.0 features are expected to have a big impact on business in the coming years, but CEOs are unsure how to harness them

By James Niccolai, IDG News Service
March 14, 2007

Company leaders are being urged to embrace blogs and other Web 2.0 technologies to improve their business, but some executives say it's easier said than done.

Peter Sondergaard, global head of research for Gartner, told CEOs at Cebit on Wednesday that blogs and online communities like MySpace may have started in the consumer realm, but they'll have a big impact on businesses in the coming years.


Many executives already use blogs to talk with customers, and companies like Microsoft and IBM are offering tools to let employees work on projects using blogs and wikis. In the virtual world, companies like BMW and Adidas are doing marketing in the online community Second Life.

It's part of a shift in which products and services for consumers are creeping increasingly into the world of business, Sondergaard said.

"This is the next major shift in technology. It will last 15 years — but it's the next five years that will decide which enterprises will thrive and take advantage of the new tools," he said at the CEO Vision Forum, an event on the sidelines of the Cebit show in Hanover, Germany.

Some executives at the forum agreed the technologies are important but saw challenges in putting them in action.

"He's a consultant, and I'm a CEO. He doesn't have to worry that if you have a community network in your organization and you disclose financial information, you go to jail," said Ben Verwaayen, CEO of BT Group.

Sondergaarden is right in principle, Verwaayen said, and executives must be open to new things, but a leader's job is to decide when the time is right, and to have "the ability to resist what is fashionable," he said.

Manfred Reif, a managing director at HSH Nordbank, a credit investment bank in Luxembourg, asked his IT department a few months ago to create a blog where the company's 130 employees can discuss how the bank is run.

Submissions to the blog will be anonymous, he said, because it's important to get honest and unfiltered feedback. Labor laws in Luxembourg have required him to go to the employees' union for approval before the blogging can begin, however.

Financial services companies have more barriers than most to Web 2.0 because of strict compliance regulations and the need for tight security. But Reif said he must think about ways to innovate first and consider the compliance implications second. "If you think first about regulations, you'll never do anything," he said.

A top executive with a management consulting company in Germany said his clients, which include traditional manufacturing companies, are not using Web 2.0 technologies today. Manufacturers don't have the right mindset, he said, because they are too focused on products rather than services.

"It will be at least 10 years before they are ready," said the executive, who preferred not to be identified.

His company may look for new business by providing Web 2.0 consulting to telecommunications companies, which will be more open to the idea, he said.

Most CEOs today are "digital immigrants," according to Sondergaard, struggling to understand consumer technologies that are being popularized by the young and creeping into business.

"The digital natives are the 16-year-olds, your sons and daughters," he said.

Companies need to experiment with Web 2.0 technologies internally today, he said, because in a few years, they will determine which companies those digital natives want to work for and do business with.


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