Creating competitive differentiation with Enterprise 2.0


Implementing Enterprise 2.0 effectively is extremely challenging, as many organizations have discovered. However that is precisely why succeeding can create real and lasting competitive differentiation. In fact I believe that the ability to use collaborative technologies to enhance organizational performance will be one of the most critical competences for companies in years to come. This is not least because this ability reflects on the culture and implicit organizational structure far more than it does on technology.

Here is an excerpt from Chapter 3 of my book Implementing Enterprise 2.0, providing some of the basic arguments as to why Enterprise 2.0 is a key management issue.


Nicholas Carr’s 2003 Harvard Business Review article IT Doesn’t Matter created massive controversy and debate by affirming that information technology was now a commodity and no longer provided competitive advantage to companies.

IT Doesn’t Matter, Nicholas Carr, Harvard Business Review, May 2003

Does IT Matter? An IT Debate – Letters to the Editor, Harvard Business Review, June 2003

Since then, numerous articles and research studies have shown that the degree and effectiveness of investment in information technology does drive competitive differentiation within industries.

Investing in the IT That Makes a Competitive Difference, Andrew McAfee and Erik Brynjolfsson, Harvard Business Review, July-August 2008

It is critical to understand that technology can be applied to many facets of how a business operates.

There are certainly many aspects to an organization’s operations that are highly process-driven and effectively commoditized. In these cases, while technology is usually essential for the effective and efficient performance of these tasks, incremental investment is unlikely to provide a significantly different outcome.

However there are many things that happen in organizations that are not clearly definable business processes that can be readily replicated. These mainly have to do with people and how they interact.

Competitive differentiation occurs at the intersection of technology and culture.

A collaborative organizational culture needs to be enabled by collaborative tools. These tools by themselves cannot make a difference. However if employees use those tools well, it will absolutely enhance organizational performance.

As you will see throughout this report, there are many challenges as well as opportunities in implementing Enterprise 2.0. This is both due to cultural issues, but also because changes to processes and structures are required to tap the full potential of these approaches, and organizational change is never easy.

This means that those organizations that succeed in combining technology and culture in enabling the effective participation of their staff have created an advantage that cannot be readily replicated by their competitors. The successful implementation of Enterprise 2.0 can never be a commodity through being copied. It is central to competitive differentiation in a world in which people and technology combine to create value.

“Ultimately, taking full advantage of Web 2.0 may require… Management 2.0”

– Robert Hof, Silicon Valley Bureau Chief, BusinessWeek

  • Excellent post Ross.
    I have been pushing for a while that the tools and the culture of the business should co-evolve with each other. Management structure and style is a key part of this and your closing quote underlines a frustration I have felt for some time:
    Why are so many MBA programs still in the dark on Web2.0 being anything more than a free marketing resource?

  • Hi Ross,
    Great advice. I think most IM pros understand the need and value of Enterprise 2.0 but are lacking the tools and framework to make it work. I recently blogged on this in response to an E20 survey and would love your take on how to improve chances of success

  • I have been on a lot of client meetings lately which wholly confirm what you write about. We most certainly need a management team that appreciates that it to has to reinvent itself.