[mckinsey quarterly] Every new technology has its skeptics. In the 1980s, many observers doubted that the broad use of information technologies such as enterprise resource planning (ERP) to remake processes would pay off in productivity improvements—indeed, the economist Robert Solow famously remarked, “You can see the computer age everywhere but in the productivity statistics.” Today, that sentiment has gravitated to Web 2.0 technologies. Management is trying to understand if they are a passing fad or an enduring trend that will underwrite a new era of better corporate performance.
New McKinsey research shows that a payday could be arriving faster than expected. A new class of company is emerging—one that uses collaborative Web 2.0 technologies intensively to connect the internal efforts of employees and to extend the organization’s reach to customers, partners, and suppliers. We call this new kind of company the networked enterprise. Results from our analysis of proprietary survey data show that the Web 2.0 use of these companies is significantly improving their reported performance. In fact, our data show that fully networked enterprises are not only more likely to be market leaders or to be gaining market share but also use management practices that lead to margins higher than those of companies using the Web in more limited ways.
The rise of the networked enterprise: Web 2.0 finds its payday