Will “Web 2.0” go through predictable stages of market
adoption? Or, is it just another bit of
techno-babble hyped-up by vendors and analysts in order to differentiate in a
commoditizing software business?
When I
first started reading the Web 2.0 blogs and visiting Enterprise 2.0-themed
conferences my initial reaction was that both “Enterprise 2.0” and “Web 2.0”
[2.0] were nothing more than a nice way to express that “web applications now
actually work the way we told you they would back in 1999 - really!” Yet a deeper look suggests that thinking of
2.0 as a technology category could be quite useful, and may predict how the
market and suppliers will likely evolve.
If you are not familiar with Web 2.0 or Enterprise 2.0, click here
for a quick definition and referral sources.
People like to keep an eye out for the “next big things” in
tech because new categories can drive dramatic industry growth. When something
new comes along that has broad appeal, pundits give the trend a name – for
example “Web 2.0 / Enterprise 2.0.” Then, a great number of private
debates begin, fueled today by newsletter and blogs, IT analysts, et.
al. “What is it?” “Why should we
care?” “Who’s using it?”
As the newly named trends gets publicized you begin hearing phrases like: “as soon as
we get by the early adopter phase, mainstream buyers will start deploying
in-volume.” In short-order, new trends
get classified into one of two buckets: those which are (1) promising but still not very widely used, or (2) proven
and “just about” to explode in popularity, changing the world along the way. Succumbing to this kind of heard mentality can be dangerous for both entrepreneurs and investors looking to ride new trends.
Intuitively, technology company executives know that buyers
behave differently at each stage of market growth. A number of well-known books also use this
premise as a foundation, including
Crossing the Chasm by Geoffrey Moore, The
Diffusion of Innovation by Everett Rogers and
The Innovator’s Solution by Clayton Christensen.
The notion is that buyers reward different kinds of vendor
behaviors at each stage of market development, and that these behaviors can be
defined explicitly through market
development strategy. The required strategy
at any one stage of market development may actually be the opposite of
what buyers reward at the stage just prior. So getting this right can provide major
insight into what tactics will be the most effective for bringing new
businesses, products or services to market. (See the links below for a more detailed
description):
Evaluating the Adoption Cycle
Since market development models can be idealized by stage of
market adoption, judging the “placement” of a category – in this case 2.0 – on
the technology
adoption life cycle(TALC) becomes a fundamental
decision. Unfortunately, it is a decision
that cannot be quantitatively deduced from a set of facts.
TALC measures the number of first-time buyers over
time. It does not measure total category sales
per se. This difference is often
misunderstood. In-fact, if you look at graph
of total category sales with the TALC super-imposed upon it, you will immediately see
that market maturity typically occurs quite early in the life of a new product
or productized service. With this in
mind, you can begin to get a handle on just where any category is in its market
development by asking two simple questions:
1. In the business-to-business world,
does the benefit gained by implementing the technology change the competitive
playing field of the buyer? Or, does it more
typically enable incremental, evolutionary benefits? For consumer products, does the consumer gain
a level of positive utility that changes his or her life, or is the experience
simply a “better version” of something else already being used?
2. Can users take advantage of the
new category/technology without making significant improvements to either their
delivery infrastructure or skill-set? Alternatively, how much system-wide, cross-functional, or processes
change is required?
Carefully considering these questions will allow you to evaluate the level of market and system discontinuity that is likely to occur in each case. this in-turn provides a framework for identifying vendor
strategies that will likely be rewarded and punished by the market. Consider each “2.0-based” class
of service as its own technology category, evaluate where it is in its
adoption cycle, and then consider how new innovations at a similar stage have been
rewarded in history as a cue to buyer behavior.
What Does the Adoption Cycle Say about Web 2.0?
Because 2.0 is not defined by a specific technology per se,
generalizing 2.0 into a technology category without first considering specific
applications can be extremely misleading. For example, this past August 2006, The
Gartner Group announced a revision to their Emerging
Technology Hype Cycle and placed “Web 2.0” at the peak of the hype cycle
- just before the “trough of
disillusionment” (a.k.a. “the Chasm” as defined by Geoffrey Moore in the book
Crossing the Chasm way back in 1992). Using this crossing the chasm approach, and
based on the idea that Web 2.0 is an early market category at the peak of its
hype-cycle, vendors would be prescribed to focus on whole domain-specific
product solutions, driving share in a set of prioritized market segments to
stimulate adoption. A generalization of
this sort is, in my opinion, extremely wrong-headed and will likely result in
the same kind of conclusions that were drawn by various experts in 2000 and
2001 about categories such as e_Procurement, B2B Marketplaces and others.
Consider just one characteristic of 2.0: that end-users can
easily add-to or extend their application with their own content or
functionality. An example here is Wikipedia. In the context of question number 2 above, an existing web user can use
Wikipedia as an encyclopedia without training or acquiring new skills. The user benefit can be largely an incremental
improvement over using another on-line tool, and tags or content added by the
user gets purposed by other users without any disruptive changes to
infrastructure or process flow. Within
the existing community of web users, productized services such as Wikipedia,
or Gmail
that are often listed as 2.0 applications are product innovations -
improved web versions of known applications that are currently at a mature
stage. Hence, the Mature
Market Strategy template might be a far better framework to start thinking
about driving adoption than an early market template.
Yedda is an
intriguing example. At first glance,
Yedda looks like a search engine. You type in questions and Yedda
gives you answers. But, look again. Unlike a search engine, Yedda is incredibly
social. End-users are both users and solution providers. Other Yedda users who bring their expertise
and benefit from exposure as a domain expert provide answers to your questions. According to Avichay Nissenbaum, Yedda’s CEO,
"capturing content in the form of questions and answers rather than keywords has
the advantage of creating a context-sensitive knowledge base." Like Google or Yahoo, Yedda can be syndicated
directly into a web-site.
For Yedda, asking the two framing questions above yields
interesting results:
1. Does the benefit gained by
implementing the technology change the competitive playing field of the
buyer? Possibly,
particularly if the company chose to market into vertical B2B application areas – for
example CRM. For consumer
products, does the consumer gain a level of positive utility that changes his
or her life, or is the experience simply a better version of something else? Yedda appears to
be a new and improved way of getting answers to questions. The obvious comparison is a search
engine. But rather than just key-word
results, Yedda’s goal is to serve-up knowledge without forcing users to do make major behavioral changes.
2. Can users take advantage of
the new category/technology without making significant improvements to either
their delivery infrastructure or skill-set? Yes. Alternatively, how much system-wide,
cross-functional, or processes change is required? Seemingly, none whatsoever.
Example 3: consider JackBe, a company that markets rich
enterprise application (REA) development tools. JackBe clearly is a 2.0 offering, but if you
ask the same questions about the REA category you get very different answers
than those above:
1. In the business-to-business
world, does the benefit gained by implementing Rapid Enterprise Application
development change the competitive playing field of the buyer? This is
certainly arguable, but I suspect the advantages are more productivity focused.
2. Can users take advantage of
the new category/technology without making significant improvements to delivery
infrastructure or skill-set? How much
system-wide, cross-functional, or processes change is required? RAD tools have
been used by software developers for years, but REA as defined by JackBe
includes domain-specific Situational Software that is extensible by business
users. Even if their software is a significant improvement over the status quo,
there may still non-trivial customization required by IT, or training and
internal process changes involved to understand this new world.
As a final example,
consider Itensil, a company that has
received positive reviews after
launching Teamlines, a productized service that the company asserts is a new category
of “WikiFlow.” While Wiki’s allow end-users to
collaborate and create ad hoc extensions to content, according to Itensil’s CEO
Keith Patterson, “WikiFlow lets users put their content into context by allowing
end-users to create simple workflows on-the-fly.”
1. In the business-to-business world,
does the benefit gained by implementing WikiFlow change the competitive playing
field of the buyer? Again, this will vary depending upon the specific use case. In an aging demographic, for example, is there value in end-users being able to
create both content and process best practices on the fly during
collaboration? Think engineering
processes, Sarbanes-Oxley, marketing,… etc.
2. Can users take advantage of
the new category/technology without making significant improvements to delivery
infrastructure or skill-set? How much
system-wide, cross-functional, or processes change is required? According to
Itensil, Teamlines can be used for collaboration and workflow definition
virtually immediately by end-users. Again,
I suspect the devil is in the details. Workflow – the old fashioned kind, never really hit broad market hyper
growth. It remains a category that remains in the niche-stage of adoption and at
various levels of maturity within each niche. If Itensil and its competitors can crack the
code on usability so that the promise of Web 2.0 situational software becomes
reality, then end-user adoption could very well drive market development from
the bottom up similar to what has happened with WikiPedia, or Del.icio.us. Until then, market growth will likely occur in
a sequence of niche segments, with market leaders establishing beach-heads in
each segment.
