The phrase “Web 2.0” has become such a widespread marketing buzzword, that few have a real understanding of its meaning. An acquaintance recently called to tell me that he was happy to be moving to head up the online strategy a major consumer brand. Part of his excitement stemmed from assurances from his new employer that the website he would soon take charge of was “Web 2.0 complaint”. Questioning him, I quickly realised that he had no idea what “Web 2.0” meant.
To simplify the terminology, Web 1.0 was about e-commerce. And Web 2.0 is about people and harnessing people via the Internet to create competitive advantage. Many of the characteristics of Web 2.0 are not new. But what is new is the increasing realisation of the power of such concepts to disrupt the way things have traditionally been done.
Some of the core competencies of Web 2.0 companies:
Harness collective intelligence. Crowds are smarter than individuals. Web 2.0 companies benefit from the network effects of user contributions to create market dominance. Think Wikipedia instead of Encyclopaedia Britannica.
Leverage the “long tail”. The “long tail” refers to the tiny sub-markets that exist at the outer reaches of a bell curve that outlines all market opportunities. Web 2.0 companies leverage customer self-service and data management to create a product that is useful for everyone, not just the big markets that reside underneath the peak of a bell curve. Think of the mass retailing strategy of eBay instead of Marks & Spencer. eBay, via its vast network of sellers, has something for everyone; but delivers it without the need for salespeople.
Software is delivered as a service. Few Web 2.0 companies rely upon specific devices or packaged software. Instead, web browsers deliver their services. Think Google Apps instead of Microsoft Office. There is no software to download or update. Your files are stored on Google’s servers. You can work on a document or spreadsheet collaboratively with anyone you choose – anywhere in the world.
Data is at the core. The best Web 2.0 companies are data driven. Large databases are constantly updated and grown by customers. Sophisticated, proprietary algorithms manipulate this data to both improve and personalise the customer experience. Think Amazon, whose bibliographic data – constantly enhanced both by both customers and publishers – far surpasses the quality of any other source.
Trust users as co-developers of the product. Anyone can now develop a new application for Facebook. And over 3,000 have since the company opened their platform in May. You do not need permission from Facebook and there is no agreement to sign. Users of the platform decide what else Facebook needs and develop it for others. Allowing anybody to develop new applications both significantly accelerated Facebook’s growth and greatly enhanced the Facebook customer experience.
Successful Web 2.0 companies are fanatical about leveraging technology in smart ways to create a better customer experience. This is a lesson that can be applied to any company.