The emergence of Web 2.0 - incorporating blogs, collaboration tools, online markets and virtual worlds - could unleash a wave of innovation by allowing companies to generate ideas from their staff and customers, according to research from the London School of Economics and the PA Consulting Group. However, unlocking this pool of talent will require companies to adopt new, more collaborative approaches to management, the report finds.
According to the report, by Dr Carsten Sørensen of the London School of Economics (LSE), IT has become an enabler for innovation across whole businesses. It says that we are starting to see the forming of the 'inside-out' company, where interactions and relationships stakeholders shape strategy rather than are subject to it. The flowering of web sites such as Friends Reunited, YouTube, Second Life and eBay has shown how receptive people are to interactive communication through IT, it says.
Sørensen identifies four types of information services - computational, networking, adaptive and collaborative. He says that the traditional computational approach to IT worked well in centralised, stable businesses but did not facilitate innovation. In modern industries where change is a daily fact of life, adaptive and collaborative approaches are needed, Sørensen argues. While it may be hard for senior executives to accept, when faced with the choice between centralised bureaucracies and intimate, adaptive and collaborative organisations, customers and employees are much more likely to choose the latter, he says.
The report is based on interviews with 22 senior executives from 20 organisations. It concludes that modern, 'inside-out' organisations use IT to bring customers and staff closer together to develop strategy. The executives of such companies have realised that their role is no longer to be the primary source of ideas but to act as 'lightning conductors' for innovation in others.
Collaborate and control: the new challenge for senior executives innovating with it
Author: Dr Carsten Sørensen
The London School of Economics and PA Consulting
Reviewed by Nick Loney