Friday, June 29, 2007

Update: Problem definition and research objectives

This research tries to give first answers to problems that are argued: Our first problem from a theoretical approach is that theory on value creation in e-Business is relatively scarce. This is related to a more practical problem that companies could make incorrect decisions, because of scarce theory. With the upcoming of new developments of Web 2.0 a second problem arises and results in the fact that extending theory on value drivers in e-Business becomes even more relevant: Previous theory on value creation in e-Business might not be applicable anymore. Amit and Zott (Amit and Zott 2001) research value drivers in e-Business companies before 2001. With new aspects of Web 2.0 these results might not be up to date anymore. Therefore the objective of this research is to further develop Entrepreneurship and Strategic Management Theory on value creation in e-Business, by providing first insights in value drivers in e-business companies that use Web 2.0. To reach this goal this research tries to give first answers to the central research question, if value drivers associated with Web 2.0 are different from known value drivers in e-business?

The objective of this research is to further develop Entrepreneurship and Strategic Management Theory on Value Creation in e-Business, by providing first insights in Value Drivers in e-Business 2.0

General Research Question

Are the value drivers associated with e-Business 2.0 different from the known value drivers in e-Business?

Research sub-questions

  1. How is value created and how is value captured as a competitive advantage?
  2. What are the value drivers in e-Business?
  3. What are differences between e-Business and e-Business 2.0?

Tuesday, June 5, 2007

Web 2.0, Enterprise 2.0 and E-Business 2.0 Definitions

The definitions of relatively new concepts of Web 2.0, E-Business 2.0 and Enterprise 2.0 will be given in this Research:

Web 2.0

In the simplest terms Web 2.0 is the phrase being applied to 'the second coming' of the internet. The 2.0 name is a clear allusion to the naming convention of software updates; this is the internet version 2.0 (Sturgeon 2006). Two or three years ago there was a feeling that innovation online had failed to emerge from the doldrums of the dot-com boom and bust cycle and had hit something of a dead end, but now innovation is arguably at its most frenetic level ever (Sturgeon 2006). The bursting of the dot-com bubble in the Fall of 2001 marked a turning point for the web. Many people concluded that the web was over hyped, when in fact bubbles and consequent shakeouts appear to be a common feature of all technological revolutions (Perez 2002). Shakeouts typically mark the point at which an ascendant technology is ready to take its place at Center stage. The pretenders are given the bum's rush, the real success stories show their strength, and there begins to be an understanding of what separates one from the other (O'Reilly 2005).

Looking back at the beginning of Web 2.0, a core of theories and aspects, are mentioned by O’Reilly, which he calls the seven principles of Web 2.0 (O'Reilly 2005):

1. The Web as a Platform

  • Software as a Service (SaaS)

Web 2.0 service is a combination of software and data. Individual, the software and the databases are of limited value, but together they create a new type of service. In this context, the value of software lies in being able to manage the (vast amounts of) data. The better it can do, the more valuable the software becomes.

  • Harnessing the Long Tail

The Long Tail refers to the vast number of small sites that make up the Web as apposed to the few ‘important’ sites (Jaokar 2006).

2. Harnessing Collective Intelligence

This principle deals with the metadata/content created by users that collectively adds value to the. To understand Collective Intelligence one should understand three aspects:

  • Peer Production

Is defined as a new model of economic production, different from both markets and firms, in which the creative energy of large numbers of people is coordinated (usually with the aid of the Internet) into large, meaningful projects, largely without traditional hierarchical organizational or financial compensation (Benkler 2002). An Example are reviews on Amazon: Collectively, these small contributions lay the foundation for the ‘Intelligence’ of Web 2.0 also called the ‘wisdom of crowds’

  • The Wisdom of crowds

Large groups of people are smarter than an elite few, now matter how brilliant the elite few may be. The wisdom of crowds is better at solving problems, fostering innovation, coming to wise decisions, and even predicting the future (Surowiecki 2005).

  • Network effects from user contributions

The ability for users to add value (knowledge) easily and then the ability for their contributions to flow seamlessly across the whole community, thereby enriching the whole body of knowledge

Data is the Next Intel Inside

Data is the key differentiator between a Web 2.0 service and a non-Web 2.0 service. A Web 2.0 service always combines function (software) and data (which is managed by the software). Database management is a core competency of Web 2.0 companies. While data is valuable, the company needs not necessarily own the data. Although in most cases, the company serving the data also ‘owns’ the data (e.g.Google Maps, Google does not own the data, which are maps and information. Web 2.0 website are often a combination of data from two or more sources into one experience, this is called a mashup. According to O’Reilly (2005) the race is on to own certain classes of core data.

4. End of Software Release Cycle

  • Operations must become a core competency

The shift from software as artefact to software as service causes that the software will cease to perform unless it is maintained on a daily basis.

  • Users must be treated as co-developers

The open source dictum, "release early and release often" has morphed into an even more radical position, "the perpetual beta," in which the product is developed in the open, with new features slipstreamed in on a regular basis.

5. Lightweight programming models

Simpler technologies like RSS and Ajax are the driving force behind Web 2.0 services. Because lightweight programming models are oriented towards syndicating data, they are contrary to the traditional mindset of controlling access data. They are also designed for reuse. As a result of this architecture, innovation is given a boost because a new service can be created using existing services through mashups. This is one other important aspect of Web 2.0, called Innovation in assembly: When commodity components are abundant, you can create value simply by assembling them in novel or effective ways. Web 2.0 will provide opportunities for companies to beat the competition by getting better at harnessing and integrating services provided by others.

6. Software above the Level of a Single Device

One other feature of Web 2.0 is the fact that it is no longer limited to the PC platform. This principle is not new but rather a fuller realization of the true potential of the web platform, this phrase gives key insight into how to design applications and services for the new platform. iTunes is the best exemplar of this principle. This application seamlessly reaches from the handheld device to a massive web back-end (platform), with the PC acting as a control station. There have been many previous attempts to bring web content to portable devices, but the iPod/iTunes combination is one of the first such applications designed from the ground up to span multiple devices. O’Reillly (2005) expects to see some of the greatest change in this area of Web 2.0, as more and more devices are connected to the new platform. Real time traffic monitoring, flash mobs, and citizen journalism are only a few of the early warning signs of the capabilities of the new platform.

7. Rich User Experience

The competitive opportunity for new entrants is to fully embrace the potential of Web 2.0. Companies that succeed will create applications that learn from their users, using an architecture of participation to build a commanding advantage not just in the software interface, but in the richness of the shared data.

In exploring the seven principles, O’Reily (2005) highlighted some of the principal features of Web 2.0: Services, not packaged software, with cost-effective scalability; Control over unique, hard-to-recreate data sources that get richer as more people use them; Trusting users as co-developers; Harnessing collective intelligence; Leveraging the long tail through customer self-service; Software above the level of a single device; Lightweight user interfaces, development models, and business models.

In October 2005 one definition of Web 2.0 is given (O'Reilly 2005): It is the network as platform, spanning all connected devices; Web 2.0 applications are those that make the most of the intrinsic advantages of that platform: delivering software as a continually-updated service that gets better the more people use it, consuming and remixing data from multiple sources, including individual users, while providing their own data and services in a form that allows remixing by others, creating network effects through an "architecture of participation," and going beyond the page metaphor of Web 1.0 to deliver rich user experiences.

Joakar and Fish (2006) state a ‘unified view’ of Web 2.0 based on the seven principles of Web 2.0 by O’Reilly (2005) by which the second principle (harnessing collective intelligence) encompasses the other six. Web 1.0 was hijacked by the marketers, advertisers and the people who wanted to push content into the market. The dot com bubble was the end of many who took this approach of the broadcast content. What is left is the Web as it was originally meant to be a global means of communication. The intelligence attributed to the Web (Web 2.0) arises from us (i.e. the collective/people) as we begin to communicate. This approach focuses on the ‘Intelligent Web’ or ‘Harnessing Collective Intelligence’ and deals with the principle of ‘wisdom of crowds’ (Surowiecki 2005). A more simple definition from MacManus (2005) explains Web 2.0 as Platform. For corporate people, the Web is a platform for business. For marketers, the Web is a platform for communications. For journalists, the Web is a platform for new media. For geeks, the Web is a platform for software development.

According to Hinchcliffe (Hinchcliffe 2006a) the Web itself has become a vast landscape of information services that can be wired together to reuse and take advantage of aggregated data and functionality. The hallmarks of these online applications are their pervasive availability, interactivity, social immersion, user-driven organization, community contribution, and particularly their reusable, remixable services. Web 2.0 also refers to the creation of far greater levels of interactivity, not just between users, or between users and the internet but between complementary online services through mash-ups and web services (Sturgeon 2006).

Web 2.0 is either a collaborative web where the content is created by the users ( this aspect is often called the social layer of Web 2.0), or a web where the network is the platform or web that uses funky technologies such as Ajax or ruby on Rails (this one is called the technical layer of Web 2.0) (van der Vlist, Vernet et al. 2007). The focus in this thesis is on the social layer of Web 2.0 and the technical layer can be seen as an enabler for the social side of Web 2.0.

Before the burst of new ideas that we call Web 2.0, the web seemed to have reached a stage where its growth would slowly start declining. The production of web content seemed deemed to be increasingly controlled by traditional media producers, and the alliance between AOL and Time Warner was showing that the web industry had started its consolidation phase.

Socially, the Web had become a read-only medium where most of the content was published and broadcast pretty much like in conventional media. This hadn’t always been the case: the Web was originally designed as a medium where scientist could easily share their documents.

This was still the case in the early 1990’s, when the Web was largely composed of home pages and link pages edited and published by web users from the benefit of other web users. This was possible because the technology was simple, and because the target audience was able and willing to edit web pages without much tool support. During the next iterations of web technologies more difficult tools where used and the audience expanded beyond the small circle of people willing to learn these technologies to publish their own content. As a result, the web became for most of its users a read only web, rather than the cooperative venture it had been originally.

The social layer of Web 2.0 is about making the Web a read/write web again. For some, this goal is motivated by philanthropic or political reasons: everyone should be able to express his or her ideas. For others, the motivation is financial: if the growth of the number of web readers is deemed to slow down, the growth of the web can only be fuelled by the growth of the number of people that create content on the web.

The technical layer is a consequence of the social layer: the ability to write on the web that has been limited by the growing complexity of the web technology can only be given back to web users by using more technology. In other words, the flurry of Ajax, JavaScript, and XML technologies that characterize most of Web 2.0 applications are needed to lower the barrier to entry in the circle of web publisher that web 2.0 applications try to enlarge.

It is important to note that content here is meant to be content at large. Many web 2.0 sites do not rely on their users for creating all their content but only to enrich their content. A significant example is Of course, the main content on the web sites comes from the company’s own database, however, what makes the difference between the site and other similar sites is how it integrates content from partners and users. Users are not only welcome to publish reviews, they contribute to the site each time they buy a new item and even by browsing the site: the simple actions are analyzed and they are used to publish tips such as the ‘What do customers ultimately buy after viewing items like this?’ that is currently displayed if you browse the description of this book on This is perhaps the most convincing example if a low entry barriers to

contributing to a site’s content! (van der Vlist, Vernet et al. 2007)

This research adopts Forrester’s definition of Web 2.0 (Koplowitz and Oliver Young 2007), since it clearly defines the enabler aspect of Web 2.0 and the social shift:

A set of technologies and applications that enable efficient interaction among people, content, and data in support of collectively fostering new businesses, technology offerings, and social structures.

There are three lenses through which to look at Web 2.0:

  1. Enabling technologies

Enabling technologies provide the infrastructure and building blocks for Web 2.0 applications. These supporting technologies are often taken for granted by marketers, by a lack of knowledge of techniques like AJAX and XML (Derksen 2007).

  1. Core applications and features

Core applications and features enable people to efficiently interact with other people, as well

as content and data. Forrester (Koplowitz and Oliver Young 2007) calls this social computing:

Easy connections brought about by cheap devices, modular content, and shared computing resources are having a profound impact on our global economy and social structure. Individuals increasingly take cues from one another rather than from institutional sources like corporations, media outlets, religions, and political bodies. To thrive in an era of Social Computing, companies must abandon top-down management and communication tactics, weave communities into their products and services, use employees and partners as marketers, and become part of a living fabric of brand loyalists (Charron, Favier et al. 2006).

Dion Hinchcliffe rather talks about social media: Social media describes the online tools and platforms that people use to share opinions, insights, experiences, and perspectives with each other. Social media can take many different forms, including text, images, audio, and video. Popular social mediums include blogs, message boards, podcasts, wikis, and vlogs (Hinchcliffe 2007). Some ground rules of social media are (Hinchcliffe 2007):

  1. Communication in the form of conversation, not monologue. This implies that social media must facilitate two-way discussion, discourse, and debate with little or no moderation or censorship. In other words, the increasingly ubiquitious comments section of your local blog or media sharing site is NOT optional and must be open to everyone.
  2. Participants in social media are people, not organizations. Third-person voice is discouraged and the source of ideas and participation is clearly identified and associated with the individuals that contributed them. Anonymity is also discouraged but permissible in some very limited situations.
  3. Honesty and transparency are core values. Spin and attempting to control, manipulate, or even spam the conversation are thoroughly discouraged. Social media is an often painfully candid forum and traditional organizations -- which aren't part of the conversation other than through their people -- will often have a hard time adjusting to this.
  4. It's all about pull, not push. Like McKinsey & Company noted a year ago or so , push-based systems, of which one-way marketing and advertising and command-and-control management are typical examples are no where near as efficient as pull systems where people bring to them the content and relationships that they want, instead of having them forced on themselves. Far from being a management theory, much of what we see in Web 2.0 shows the power of pull-based systems with extremely large audiences. As you shape a social media community, understanding how to make embrace pull instead of push is one of the core techniques. In social media, people are in control of their conversations, not the pushers.
  5. Distribution instead of centralization. One often overlooked aspect of social media is the fact that the interlocutors are so many and varied. Gone are the biases that inevitably creep into information when only a few organizations control the creation and distribution of information. Social media is highly distributed and made up of tens of millions of voices making it far more textured, rich, and heterogeneous than old media could ever be (or want to be). Encouraging conversations on the vast edges of our networks, rather than in the middle, is what this point is all about.

  1. Behavioral shifts

Core applications and features are fostering new social behaviour, business models, and cultures.

Enterprise 2.0

Professor McAfee at Harvard (2006) argues there is a new wave of business communication tools including blogs, wikis and group messaging. There are new digital platforms for generating, sharing and refining information that are already popular on the Internet, where they are collectively labelled Web 2.0 technologies. The term “Enterprise 2.0” focus only on those platforms that companies can buy or build in order to make visible the practices and outputs of their knowledge workers. Enterprise 2.0 is all about Web 2.0 technologies and practices within organisations and businesses. Andrew McAfee provides a clear, clean explanation of Enterprise 2.0; the emerging use of Web 2.0 technologies like blogs and wikis within the Intranet (McAfee 2007). He has introduced his "SLATES" mnemonic to help guide those creating or acquiring Enterprise 2.0 software. SLATES describes the combined use of effective enterprise search and discovery, using links to connect information together into a meaningful information ecosystem using the model of the Web, providing low-barrier social tools for public authorship of enterprise content, tags to let users create emergent organizational structure, extensions to spontaneously provide intelligent content suggestions similar to Amazon's recommendation system, and signals to let users know when enterprise information they care about has been published or updated, such as when a corporate RSS feed of interest changes (McAfee 2006). As in previous innovation cycles, whenever multiple point capabilities converge – such as wireless, pervasive broadband, and online collaboration – many new applications become possible. In these cases, consumers tend to adopt the new services and products before the enterprise, but in the end the enterprise market is usually far larger and more profitable. In McKinsey’s and Sand Hill Group’s Software Industry Report 2006 state that the hype around “Web 2.0” for consumers – with its rapid innovation in content tools (e.g., blogs, wikis, user editing and tagging) heralds a much larger opportunity to put these innovations to work in the enterprise. Many innovations, collectively termed Web 2.0, will fully reach the enterprise – as in previous cycles, innovation developed for individual users will translate into substantial enterprise opportunities (Berryman, Jones et al. 2006).

e-Business 2.0

The focus in this research is on the companies that embrace the web 2.0 enabling technologies and core applications that cause a behaviour shift (the outmost circle of Forrester's figure). This research therefore introduces the concept e-Business 2.0, by which I mean: e-Business companies that use Web 2.0 to create and appropriate value from, for and with stakeholders.

This research will look at pure e-Business 2.0 companies with an external approach. The focus is on the customer, instead of an internal organisation (Enterprise 2.0) and the company is fully dependent on the web 2.0 technologies. Reason for this is that business-to-consumer developments occur often earlier than business-to-business developments. What is important to notice is that besides e-Business 2.0 pure players, also companies that acquire parts of e-Business 2.0 and regular e-Business (e.g. e-Commerce) companies are active. Companies can learn from these often smaller e-Business 2.0 companies (start-ups) and use it to adopt to market changes and/or to enterprise 2.0.