Web2.0 for marketers: History and what Web2.0 is NOT
links for 2007-05-16

Web2.0 for marketers: This isn't your grandfather's business model

The number 2Yesterday I told you the history of Web2.0 and what it is not. If you didn't have a chance to read that, click here and catch up. For the rest of you, let's get going. We have a lot to cover today.

Web2.0 is all about innovation, innovation that drives value to the end user. When you think about how businesses operated even 10 years ago, it's markedly different than the way they operate today. Most of the changes that have taken place are the result of technology. Operations has benefited from automated, real-time inventory tracking and ERP systems. Accounting knows what's sitting in the warehouse and when it'll be shipped and invoiced. But these are not the innovations in business that I am talking about. I'm talking about the consumer-side shift that has happened.

Technology is an enabler first and foremost. It has enabled businesses to innovate on business models that, at one point in time, were considered untouchable. Let's look at some Web2.0 examples to get a clearer picture:

    paypal_logo-1.jpgPayPal: Western Union was at one point in history an extremely powerful financial institution. They transfered money all over the world by wire with trust and reliability. Somewhere along the way, however, they did not see the signals. They were lost in the noise. I'm sure somebody internally was saying something like "People don't trust the Internet to send money, it's too unproven". Enter PayPal. PayPal is an early example of Web2.0 thinking. They saw that people were looking for a way to transfer money quickly and reliably. They focused on security and had the right timing. PayPal was focused on giving people the value that they were looking for through innovating a hundred year old business model. By the time Western Union saw what was happening it was too late.

    netflixlogo.jpgNetflix: Netflix is a prime example of Web2.0 thinking. A couple of years ago if you wanted to rent a movie you had to go to a BlockBuster. There were other small chains around, but they never really lasted too long. When you went to the store you were locked into the current inventory on hand, if you returned it late they charged you, plus you had to drive to the store. BlockBuster obviously thought this was a good model, Netflix thought differently. They used the Internet to create an easy way for people to sign up, search through an emormous inventory of movies, keep those movies as long as they like and then used a pre-paid envelope to send it back. BlockBuster has had to scramble to keep up as I'm sure they saw huge amounts of customers switch over to Netflix.

    150px-Wikipedia-logo-en-big.pngWikipedia: If you think back to your childhood (and you are old enough to remember it) you may recall the encyclopedia salesman. This, I am sure, was a great job up until the late 90s. He basically went door-to-door selling the current year's encyclopedia volumes. He had samples for you to look at and flip through to show the high quality of the printing and binding process. The problem? It was outdated the second it hit the presses. Wikipedia came along and created a model where everyday people as well as experts are able to use Wiki technology and update the information as it changes. This uses one of the core ideas of Web2.0, the value provided by the community is greater than that of the individual.

iStock_000003209009XSmall.jpgIn each of these cases there is a winner and loser. The loser stuck their head in the sand and pretended nothing was happening. The winner came out of left field, hit a chord with people, used technology to enable change and innovated to add more value. Each of the new contenders knew less than the incumbent, but used technology to test, change and refresh ideas to make sure users were happy.

Great technology, as I've said before, is technology that disappears to the users. In this regard, Web2.0 is the Houdini of technology. The new generation is faster, more seamless and fluid than ever before. The technology is allowing communities of individuals to pop up easily and create their own conversations around companies and ideas. It's 24x7, less expensive and global. You're just as likely to talk with somebody in Dubai as you are in the town next door.

24x7, global conversation

Crowdsourcing sites (a community of product loyalists join together to generate ideas and design their implementation) are popping up all over the place. Dell's IdeaStorm is a successful implementation of this new model. The users on the site suggest ideas and then the other users vote for it if they like it. This site led Dell to offer a Linux operating system as an option on new computers. Had they not listened and actively participated that opportunity would have passed by.

Here are some ideas I would like you to take away from this post. We're going to build on this tomorrow when we continue with part three "Who let the tech out?".

  • Innovation done for innovations sake is a waste. Innovation needs to add value to your customers.
  • Technology is relatively cheap, timelines are shrinking and testing is a great thing.
  • Old models are all about short term results, new models focus on long term loyalty through value creation.
  • How are you looking for the next thing? Are you using your customers to help you?
  • Anything you can dream up is possible. Don't let technology (or technologists) intimidate you into being silent. Speak up marketers!

If you have questions, or would like to add anything to this, please leave a comment. Talk to you tomorrow.

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