Internet Company 2.0

We have been talking a lot about Web 2.0, or the socializing of the internet and letting them take more control. I do believe that besides the technical changes that are currently underway there are also going to be tons of social changesin the way the users interact with those companies but there is also going to be ‘major’ internal organizational structure changes in these companies.
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Internet Travel Company 2.0 - Digg for Hotels

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In order to create the new generation of an Internet Travel company we must closely look at the social revolution that is currently happening on the internet. The social networks, the social search, the reviews, the RSS, etc, etc, etc, and start thinking about giving the users more power for choosing which hotels or travel companies to patronize, kind of a Digg.com for hotels, where the users make this or that hotel more popular and it is not the travel companies deciding which hotels to sell. This company will also allow user comments and reviews on its website, similar to what is TripAdvisor today, but with the difference that these ratings will push hotel properties up or down. In this new world the company will only play the role of platform governor or administrator and will not be the king, the customer will reign. It will be kind of a Democratic company where users get to pick and push what they like and what they want.

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Companies and their managers like to be in control. They like to control their products (e.g. six sigma), they like to control communications & brand (e.g. press releases & PR stunts), they like to control which customers they address (e.g. high networth individuals), they like to control the channels through which their products are distributed (e.g. DVD country codes) and they like to control processes.

Forget that! It’s a thing of the past. I believe that the most thriving companies of the coming years will be those that are able to successfully lose control. This doesn’t mean that they will let things get totally out of hand, but they will replace control with governance in order to create space for creativity. The reason? This new openness will allow people to live out their full potential, they will be able to focus on what they like and do best and they will have space to implement their best ideas. Openness will also allow people to install collaboration beyond traditional roles such as customer, marketer or engineer.

Uncontrollable Value Propositions

The value proposition of many striving Internet companies lies in the content its customers create and provide. While they might control the platform (governance) they don’t control the actual product (content). Flickr gets its value from the photos its users upload and the communities formed, Google’s Adsense gives advertisers targeted visibility but heavily relies on the quality of its members’ websites and eBay has to hope that offer and demand match on their platform. None of them is truely in control.
Out: product design
In: enabling solutions and value co-creation

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Unpredictable Customers

Isn’t the customer best suited to know what his needs are? It has been said over and over again that we have moved from a mass-market push economy to an environment of very informed and knowledgeable customers that carefully research product information on the Internet, especially in the travel sector. But many managers are still not realizing how to best cope with this fact. Take the music industry. The major record companies are still building on a business model that banks on pushing/creating hits for specific customer segments: step 1 identify potential stars, step 2 market them with big bucks through all possible channels, step 3 materialize on the few hits and flip the flops. But platforms like MySpace are giving the majors increasing headaches. On MySpace stars and fan communities alike emerge out of nowhere around different styles and bands of music. The platform has been hugely successful in giving unknown artists visibility and music fans choice.
Out: customer segmentation
In: matching offer and demand

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Unguardable Communication Borders

Communication departments think they have to control every message that goes out of the company. That doesn’t work anymore. In the era of blogs companies have to let their employees directly communicate with customers, employees of competitors and stakeholders. Company frontiers will become much more porous. IBM leads the way and has fully embraced blogging,as well as Google, Microsoft and eBay. By letting employees directly interact with the “outside world” companies get a much more human touch and feel. And that is important in a world where a a group of uncontrollable customer bloggers can potentially create a lot of negative publicity.
Out: controlled communications & company borders
In: from speaking to listening: permeability and customer collaboration

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Liberalize Distribution Channels

Selling is difficult. What could be better than getting others to sell for you? Rather than trying to manage & control your distribution channels it makes sense to capitalize on the entrepreneurial capacities of others to get your value proposition to the market. Amazon.com has long ago made the affiliation model popular by mobilizing thousands of small, specialized and often personal websites to market Amazon books. Grameen Phone of Bangladesh uses microcredits and entrepreneurial village women to sell their phone services. This so-called trend of minipreneureurship is one of the strongest flavors of the day.
Out: direct-to-customer
In: minipreneurship
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Adaptive Diversity

Innovation is hard to spark and even harder to manage. Nokia tries to foster innovation around its telecom products by running The Nokia Ventures Organization that invests money in promising ideas. But this almost seems outdated when thinking of how Google brings home innovation: By opening up their application programming interface (API) to the world they allowed thousands of programmers around the globe to access to their database and content. These developers then tinker with innovative applications built around google search, which the company picks-up on as soon as one strikes success. It’s innovation at zero and gives google access to talentend and innovative programmers around the world… At zero cost (read more about this trend). It’s sort of a shift from venture capital to open innovation platforms.
Out: deciding and allocating
In: prototyping & adaptive diversity

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In the future the most successful organizations will be those that are able to design business models that successfully build on participation, involvement and an enabling environment - but it will almost definitely be at the price of control.
Out: reigning
In: governance