Amy Shuen is an internationally recognized authority on Silicon Valley business models and innovation economics. She has taught high-tech entrepreneurship, strategy and venture finance at Wharton and Berkeley in the U.S., and is currently Professor of Management Practice at the China Europe International Business School (CEIBS) in Shanghai. Her bestselling book, Web 2.0: A Strategy Guide, explains how managers can integrate Web 2.0 practices and transform what they do according to the new business paradigm, which will improve their bottom line.
In May 2009, Shuen visited IESE Barcelona to deliver a seminar on the “upside in the downturn” based on her research of business innovation models in China and the U.S. During her visit, she was interviewed by Sandra Sieber, associate professor and chair of the Department of Information Systems, who has a particular interest in new information and communication technologies and how they are changing workplace practices. To this end, IESE is taking part in a large-scale research project with the Rochester Institute of Technology (U.S.A.), Henley Business School (U.K.) and Cisco, to discover trends and explore how organizations are using social media tools for collaborative innovation. Click here to find out more about this study and to take part.
Here begins a partial transcript of their conversation.
SANDRA SIEBER: Amy, welcome to IESE. It’s a great pleasure to have you here, since we all know that Web 2.0 is currently a very hot topic. Many people are asking if Web 2.0 might actually help us to get out of the crisis, or at least to boost efficiency, which is something that people want to do during crisis times.
Many people may know Amy from the ’90s. In the ’90s, when all these things started, I was a Ph.D. student, and I was one of those who read one of your most influential papers on dynamic capabilities [“Dynamic Capabilities and Strategic Management”]. How did you go from dynamic capabilities to what’s going on today in Web 2.0?
AMY SHUEN: Dynamic capabilities was a paper that resonated with a lot of people in the strategy field because it made two important points that, I think, everyone knew, but perhaps needed to be stated more clearly.
The first one is that competitive advantage is about organizational capabilities, not just industry structure, which was the prevailing view among strategy researchers at that time.
The second thing is that capabilities, in and of themselves, are not enough to be competitive in a turbulent, difficult, challenging or crisis environment. In fact, you really need to have dynamic capabilities – the ability to orchestrate, not only your own capabilities, but maybe the capabilities of others, in combination, to be able to meet the changing demands of a fickle and volatile world.
Those two things, put together, resonated with a lot of the people in the strategy field as the way to think about competitive advantage.
SIEBER: What you are saying is probably the bridge to Web 2.0, which is also about orchestrating and putting many little pieces together, right?
SHUEN: Exactly. You’ve pointed out the most important aspects that connect it to Web 2.0. First is this idea of innovation as not only creative destruction and new imaginative things, but also combinations of existing competences, capabilities and companies. That’s very important.
The second thing, besides that orchestration, is doing it in real time. Doing it in a way and at a time that meets the demands of the situation. In the past, it might have been very difficult to orchestrate and to pull things together. This is where, of course, Web 2.0 and our new technologies come into place; where you can, in some cases, more easily orchestrate and coordinate, using technologies. You can more quickly interact, you can more quickly experiment. In fact, some of these competences or skills can even be embedded in some ways into software or into hardware, into a digital good or experience, product or service, which then can be transferred and distributed much more quickly, easily and globally.
SIEBER: In this sense, I think your book is very exciting: You provide the different milestones that companies have to follow in order to set up a Web 2.0 strategy. Could you briefly highlight what would be, for you, the essential terms of the Web 2.0 strategy, which you develop at length in your book?
SHUEN: First, let me point out a few of the chapters that make explicit the link between dynamic capabilities and this new ability of orchestration and speedy response in a turbulent environment.
In some of my chapters, I talk about how Amazon was able to proliferate e-commerce by essentially creating many, many partners through its use of electronic storefronts that were available to anyone who wanted to become an affiliate.
Another example might be IBM, which was able to very quickly open up the system of Linux, of finding developers. They estimate maybe 15 million developers are going to appear in India and China on Linux, and make all those new applications and new developments of software available across the world.
So, it’s taking something that might, in the past, have been a local capability or a local skill, and making it available elsewhere. I think those might be two examples from my book that give some idea of some of the best practices that companies are using in getting from a more Web 1.0, or traditional way, of looking at strategy, to competing in a more global and interconnected world.
SIEBER: Another of the key concepts in your book has to do with communities. Could you develop that a bit more, so that people understand how companies that want to go Web 2.0 could think about incorporating the notion of communities, collaboration and enhanced interactivity, as you mention in the book?
SHUEN: Before I go through that, I should mention that, as part of these communities, a huge social transformation has taken place. In my book, I point out that, in my mind at least, Web 1.0, or the first generation of the Web, started around 1995. It really became visible to most people because of Netscape going public in 1995. And so, 10 years passed when the Web was mostly a kind of place where you went on line and you downloaded information and material that people or companies had put on websites. There weren’t really that many things on the Web except for ones that had been put there by companies, for example.
Then, suddenly, I guess in 2005, there was a big change. There was what we call a crossover point, because more people were uploading data to the Web than were downloading. As a result, you had a very different situation on the Web. You had people who were now givers, who were active contributors, who were publishers, who were putting their photos, their videos, all their content on the Web for others to benefit from, and not just taking away from the Web.
That kind of social transformation took place in the 2005 timeframe, and that was the date at which I say the start of Web 2.0 really was. This crossover point, when it became an interactive kind of social transformation of the Web, as a place where you shared, you gave and you contributed, improved the network experience and what you could do on line for everybody.
SIEBER: If that’s true, then a Web 2.0-enabled strategy is a pretty big jump in terms of the mindset of organizations, right?
SHUEN: Absolutely. This is not only a social transformation, but clearly a very important business and industry transformation is occurring. The very relationship and the way in which businesses need to listen to what their customers, their audiences and their partners are saying has changed dramatically as a result of this.
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