McKinsey's 'Business and Web 2.0' Report and the new Consulting Landscape

McKinsey, the venerable management consulting company, has produced their second piece of 'Web 2.0 in business' research this year. This is arguably a sign of the rapid maturation of the 2.0 technology and associated (and I'd argue more important) change management sector: the pricey consulting company presumably smells money given their focus for their prospects and customers with this free (with login) information.

It's a solid and useful report, albeit a little definitively written given that it is essentially the results of an online survey they ran in June of this year which sixteen hundred and ninety five people responded to - not really a big effort given McKinsey's ubiquity worldwide...

More on the report in a moment, but first my thoughts on the 'Business and Web 2.0' consulting landscape. In the last couple of weeks two of the smartest Forrester analysts (Jeremiah Owyang and Ray Wang) left that company to join former Forrester analyst Charlene Li at the Altimeter Group, and the still-in-stealth-mode Dachis Group purchased UK and Australia based Headshift.

McKinsey have a long history in the management consulting world ('the industry and practice of helping organizations improve their performance, primarily through the analysis of existing business problems and development of plans for improvement' - wikipedia). Most of Enron's top management were McKinsey alumni and some blame the industry for aspects of the current economic crisis. This is one of the challenges of being a major player - you leave a trail through history.

Given the heft of large players like McKinsey, and to be fair also their historical global competitors, it is relatively easy for them to consume the innovation in the Enterprise 2.0/'Web 2.0 in Business' space and roll it up into their offerings.

There's a sea change in the way capitalism is emerging from the financial conflagration which is asking serious questions about the way things we got into the mess in the first place.

A new generation of informed and agile consulting is coalescing around the new technologies; these new companies aspire to break the old order and lead the way on how to extract value from rapid cultural and technological change for their clients.

Like Microsoft Sharepoint ('the Chrysler Sebring of software' as someone tweeted today), there's nothing disastrously (usually) wrong with the old order: plenty of people will pay handsomely for guidance from trusted software vendors and consultants going forward.

The bigger question - and the challenge for the new generation consultant community of which I am a part - is differentiating from these more conservative players to demonstrate greater business value. The DNA of older firms like McKinsey have 'old school' written large throughout, but the new game of identifying and delivering business value in specific 'Web 2.0 in business' context is rapidly changing what businesses seeking competitive advantage are looking for.

Having said this, the McKinsey 'Web 2.0 in business' report, which to be fair is their third yearly offering (In 2008, the survey received 1,988 responses; in 2007 it received 2,847 responses) is a solid, middle of the road effort, not unlike the Chrysler Sebring. In employee appraisal terms it 'meets expectations'...

Hitting the McKinsey report highlights, their findings

...demonstrate that success follows a “power curve distribution”—in other words, a small group of users accounts for the largest portion of the gains. According to our research, the 20 percent of users reporting the greatest satisfaction received 80 percent of the benefits. Drilling a bit deeper, we found that this 20 percent included 68 percent of the companies reporting the highest adoption rates for a range of Web 2.0 tools, 58 percent of the companies where use by employees was most widespread, and 82 percent of the respondents who claimed the highest levels of satisfaction from Web 2.0 use at their companies.

...While the evidence suggests that focused management improves Web 2.0 performance, there’s still a way to go before users become as satisfied with these technologies as they are with others. The top 20 percent of companies reached a performance score of only 35 percent (the score increased to 44 percent in the 2009 survey). When the same score methodology is applied to technologies that corporations had previously adopted, Web 2.0’s score is below the 57 percent for traditional corporate IT services, such as e-mail, and the 80 percent for mobile-communications services.

'Increasing speed of access to knowledge' for internal purposes, and also when working with external partners/suppliers tops the 'measurable gains' charts, while for customer related purposes (the social CRM space) increasing effectiveness of marketing leads in the third category.

Video sharing, then blogs lead the measurable benefit from using a given web 2.0 technology in the same categories. Rather than regurgitate the report in this truncated format I suggest digesting the six pages of tables and findings. They are broad but you may find them to be of value to your specific context in some cases...