Since you can’t make a case for Enterprise 2.0 using ROI calculations, it’s tempting to rely on anecdotal evidence instead. Once the storytelling begins, it usually doesn’t take long before social networking sites like Wikipedia, LinkedIn or Facebook come up. But there’s great danger in using these sites as justification for Enterprise 2.0 investment.

The Internet is not your intranet

Consider Wikipedia. Looking at Wikipedia’s statistics and Alexa’s Internet traffic data, we find that out of the entire online population less than 10 percent visit Wikipedia during the course of a year. And that includes all visitors — the rates for people that contribute content to Wikipedia is a mere fraction of that.

The numbers for other large websites are equally depressing. Using social network statistics from Jeremiah Owyang of Forester from earlier this year, MySpace and Facebook have 8 percent and 4 percent of the online audience respectively. What gives? Aren’t these the leading lights of Web 2.0?

What makes these sites work is massive scale. You can take a “build it and they will come” approach if the population of potential users is large enough. In the case of the world wide web, we’re talking about 1.4 billion people according to Internet World Stats.

But in an organization of 100 people, you’d be fortunate to get 10 people using the system and extremely lucky to have 3 people contributing information. Would a user adoption rate of less than 10 percent qualify as success in your business? I don’t think so.

If you want your Enterprise 2.0 deployment to work, you have to focus on user adoption.

Play to your audience

The hard truth is that if you want an Enterprise 2.0 application to succeed, you must be prepared to sacrifice everything to delight your customers. And these sacrifices will include treasured organizational imperatives. You’ll have to do things like:

• Annoy the corporate counsel by emphasizing sharing, not security
• Irritate senior management by stressing flexibility over process
• Anger “low badge numbers” by promoting expertise over length of service
• Frustrate the IT department by favoring ease of use rather than ease of deployment

You’ll find yourself in the midst of turf wars and political infighting. There will be squabbles over budget and resources. Change management and training will consume months, if not years, of your time.

Sure, you can duck these issues, and take a “build it and they will come” attitude. And if you are fantastically lucky, you might just achieve the same adoption rate as LinkedIn: 3 percent.

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Jack Vinson argued recently that success for E2.0 can’t be measured by ROI. It reminded me of Sam Lawrence’s 10 ROI charts you can’t live without, a tongue-in-cheek collection of graphs without a single hard number on them.

Return on investment is a big issue for companies investigating Enterprise 2.0 solutions. But the bigger issue is using return on investment as a yardstick in the first place.

Where’s the Data?

Corporate metrics for Enterprise 2.0 implementations are extremely hard to come by. There are many reasons for this. One is simply that the technology is new. Another is that many organizations simply don’t gather them. A third reason is that companies tend to keep successes under wraps. After all, the last thing they want is to give away their new-found competitive advantage to the competition. And if successes are kept quiet, you can only image what lengths organizations will go to to hide project failures.

Don’t bother looking for numbers. The statistics just aren’t there. If you even think of framing E2.0 success in terms of ROI, you’re doomed to failure. You have to rely on other measures of success.

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Many bloggers have weighed in on the Enterprise 2.0 vibe, its relation to Web 2.0 and social media, and its much-maligned predecessor, Knowledge Management. Rightly or wrongly, KM initiatives were often associated with failed corporate portals, stale company intranets, lackluster training programs, and cumbersome Document Management, Records Management, and Content Management tools.

Gordon and I have deliberately avoided mentioning Knowledge Management on our website. We think the term is poison, as are most of the other industry acronym-fads ending in “M”.

So it surprised us when the Burton Group’s Mike Gotta announced the publication of a new document dealing with Enterprise 2.0 called Collaboration and Knowledge Management Renaissance. The summary he gives on his blog is intriguing, and no doubt the document would make an interesting read (if you can afford it.) But is E2.0 just a rehash of previously failed “M” stuff?

John Tropea talks about E2.0 being Knowledge Management 2.0 with a greater emphasis on corporate culture. Lawrence Hart thinks knowledge management is marching along. Bex Huff says forget knowledge management, we need context management. Venkatesh Rao writes that the terms social media and knowledge management reflect a generational divide. It’s a long, detailed article that provoked strong reactions.

These are just a few of the items we’ve read over the past few months. I’m sure you could find many, many more blog posts that fall within the “Oh no, here we go again!” to “This time, it’ll be different!” spectrum. (Please feel free to list any of your favorites in the comments section below.)

I think it’s good that the debate over these large-scale systems is simmering away. There’s a widespread perception that most of these tools didn’t deliver what they promised, but I haven’t seen much analysis of what went wrong. Most industry analysts simply latched on to the next catch-phrase, E2.0. I suppose we’re guilty of that, too.

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It’s odd that it’s taken so long for social software to make inroads in the business world. Social networking has a natural home in the enterprise because the relationships there have a purpose.

Gordon uses Facebook. My wife hung out on MySpace for a while. I never joined any particular network, because I just didn’t see the point. It’s just a bunch of folks hanging out, after all. I’d much rather do that in person.

I eventually signed up for LinkedIn, because it was a good way of staying in touch with former coworkers. It’s also a great resource for finding a new job, and it sure beats carrying around a stack of paper resumes. But I only check in occasionally.

I think it’s inside the firewall that the social networks really come into their own. Rands explains the importance of the corporate social network by contrasting the official organization chart with the culture chart. The boxes and arrows on the org chart barely scratch the surface of what’s going on within most companies. Knowing who’s connected with whom, what they do and how they do it… now that’s valuable insight.

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Ross Mayfield, co-founder of SocialText, and Stowe Boyd, a leading social software consultant, have been discussing whether the focus of Enterprise 2.0 is the individual or the group. You can read Ross’ latest thoughts in his groups and networks post. We’ve weighed in on the topic, too. Gordon wrote that there is no enterprise — it’s made of people.

So what is Enterprise 2.0, anyway?

Unfortunately, Enterprise 2.0 means different things to different people. But it does imply a change in priorities and a different way of doing business. You’ll find those two concepts present in most definitions of Enterprise 2.0.

For the last century or so, we’ve structured the corporate engines of the economy to handle problems of scale. We’ve seen major revolutions in manufacturing, logistics, and transportation as a result. Mass production and mass distribution have changed the way we live and work and vastly improved our standard of living.

But not every business problem is a problem of scale. The same managerial techniques and organizational structures that make today’s cars and computers won’t work well for producing television dramas or delivering health care. Yet if you skimmed the business and economics section of your local bookstore, you wouldn’t find much good advice for in running those sorts of enterprises. Nor would you find many off-the-shelf software applications to help you run those businesses — until E2.0 came along.

Other sectors of the economy haven’t seen the dramatic productivity gains that manufacturing and distribution have. And most of those companies don’t follow the rigid corporate hierarchy lampooned in Dilbert. Law firms, medical practices, and consultancies often run on a partner model. In entertainment or design it’s not uncommon for the highest paid individual to be a member of the staff rather than the managers or directors. Where’s the Michael Porter for these companies?

That’s what Enterprise 2.0 is about. It’s about adapting some of the successful tools and communications technologies found on the open web to solve problems faced by people working in creative, knowledge-based industries.

The priorities have shifted from problems of scale to problems of innovation.

It’s about individuals in groups

Ross Mayfield is right when he says that “the fundamental unit of collaboration is the group.” Whether you’re managing a small team or large division, you’ll likely find dozens of products that can improve group dynamics or productivity. These range from old-school solutions, like hiring an information architect to redesign the internal web portal, to state-of-the-art E2.0 products from folks like SocialText, MindTouch or Jive Software.

But Stowe Boyd is also right. The primary difference between 1.0 and 2.0 solutions is the focus on individual users. Tim O’Reilly, who coined the phrase Web 2.0, famously summed the Web. 2.0 vibe by saying, “users add value.” Individuals can and should contribute directly to the content of sites they visit and the organizations to which they belong. If the fundamental unit of collaboration is the group, then the fundamental unit of knowledge work is the individual.

The challenge of enterprise social software is to make tools that work for both the individual and the group. It’s devilishly hard to do, and there’s no shortage of failed attempts, from custom IT projects that fail to high-flying dot.com companies that go bust. Getting ad hoc groups of intelligent, creative people to work together in harmony is an art.

But people thought the coordinated, mechanized dance of the assembly line was an art, too, before management science made it routine.

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