Enterprise 2.0 and the Trough of Disillusionment

There is currently a business and marketing fashion wave for collaboration as the miracle cure for all that ails business which isn’t helpful in differentiating good from bad ideas.

Oliver Marks, ZDNet, When Internal Collaboration Is Bad for Your Company…

It feels like I’m seeing more posts describing the challenges that Enterprise 2.0 faces. I’m not alone, Dion Hinchcliffe noted a similar trend yesterday as well on ZDNet. Of course, these concerns have always been there, as they are for any technology innovations (just look Twitter coverage in 2007). But I’ve been impressed with the frequency of critiques recently.

All of which is right on schedule.

Are you familiar with something called the “hype cycle”? It’s a fascinating framework used by the analyst firm Gartner. It describes five phases that technologies go through on their to becoming mainstream and beneficial to companies:

1. “Technology Trigger”
The first phase of a Hype Cycle is the “technology trigger” or breakthrough, product launch or other event that generates significant press and interest.

2. “Peak of Inflated Expectations”
In the next phase, a frenzy of publicity typically generates over-enthusiasm and unrealistic expectations. There may be some successful applications of a technology, but there are typically more failures.

3. “Trough of Disillusionment”
Technologies enter the “trough of disillusionment” because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic and the technology.

4. “Slope of Enlightenment”
Although the press may have stopped covering the technology, some businesses continue through the “slope of enlightenment” and experiment to understand the benefits and practical application of the technology.

5. “Plateau of Productivity”
A technology reaches the “plateau of productivity” as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only a niche market.

The hype cycle is a useful framework, providing a reasonable explanation of the business phases of technology. Let’s look at how Gartner specifically characterized Enterprise 2.0 in its recent hype cycle report.

Enterprise 2.0: Staring into the Abyss

In August 2008, Gartner released Hype Cycle for Emerging Technologies, 2008. The report analyzed the different stages of 27 different emerging technologies. Included in the report were technologies related to Enterprise 2.0:

See Social Computing Platforms in the chart above, of which Gartner notes the following: “Following the phenomenal success of consumer-oriented social networking sites, such as MySpace and Facebook, companies are examining the role that these sites, or their enterprise-grade equivalents, will play in future collaboration environments.”

Future collaboration environments. What did Oliver Marks say? That Enterprise 2.0 has experienced a “fashion wave for collaboration as the miracle cure for all that ails business”.

So in his statement, Marks both describes unrealistic expectations of Enterprise 2.0, and his view that the hype about its potential needs to be taken down several notches. Last August, Gartner had put social computing platforms right at the cusp of falling into the Trough of Disillusionment. Eight months later, we’re seeing the first signs that Enterprise 2.0 may be falling into that trough.

To which I say…good. Let’s get on with it.

Collaboration is a Means, Not an End

One thing I find odd is that collaboration is touted as a benefit of social software. Collaboration is an activity. There is no ROI in collaboration itself. What enhanced collaboration produces is the benefit.

And that’s where it’s been tough in the enterprise 2.0 world. A lot of vendors offer tools with wide open use cases. They can be used for any purpose inside an organization, with an eye toward better collaboration. It makes sense, and yet it is challenging  to identify specific ROI-grounded use cases.

Here’s what I mean. Say you offer an application that let’s people easily share what they’re working on. They can send public messages to one another. They have spaces where you can upload, share and work together on docs. Free form spaces where employees share their thoughts. RSS feeds of activities.

Now I’m a believer in these tools, and I personally benefit from their utility every single day. But the challenge is specify what those tools will deliver to organizations’ bottom lines. Is it…

• An increase in paying customers?
• A reduction in customer churn?
• The ability to stop paying for another more costly application?
• Increased average unit sales for new products?
• Hiring of new employees who have higher average ratings and lower rates of quitting?
• A reduction in supply chain costs?

I could go on, but you see the point. What pain point inside companies does an enterprise app, social or otherwise, address? An answer of “any pain point” is unfortunately too broad, and makes it tough for executives to visualize exactly how the software helps. As Dion Hinchcliffe writes in Determining the ROI of Enterprise 2.0:

However, a key aspect of the ROI issue is that the strategic capabilities represented by Enterprise 2.0 are primarily emergent in nature, instead of carefully aimed at and unleashed at specific problems.

This isn’t to say that companies aren’t buying social software. Apparently, roughly a third of companies have some form of Enterprise 2.0 tools. But the actual usage and impact doesn’t match that adoption statistic.

So what happens to an industry when it enters the Trough of Disillusionment?

Less Attention, Fewer Competitors, Focused Solutions

Keep in mind what the overall Hype Cycle measures – level of attention on an industry. It doesn’t say the fundamental value of the technology changed.

It’s more like a hangover after the inflated expectations.

But of course, the hangover and reduced attention does have some effects. More skeptical articles appear. VCs rationalize the field. Enterprises no longer feel rushed to adopt the technology.

Sounds pretty rough, eh?

So what comes out of the Trough is a gritty determination to see it through. Companies persist in developing their products and marketing to customers. Indeed, a focus on what works becomes more important than ever.

For the Enterprise 2.0 industry, the Trough means this: focus on solving specific problems with social software. If you can talk pain points of enterprises, you will win. They’re not talking about failures to collaborate enough. Here are some examples of what I mean.

My own company Spigit is seeing some strong enterprise sales. Strongest I’ve seen in my 14 months of being the sector. I attribute much of that success to its singular focus on using social software to better collect, assess and select employees’ ideas. Product functionality goes toward helping companies build their innovation pipeline.

Helpstream is another Enterprise 2.0 company with a specific focus. It combines a well-covered field – customer service – with a unique integration of customer communities. Helpstream isn’t about better search, or replacing companies’ intranets. The company’s philosophy is nicely summed up in a blog post:

You have to deliver specific product functionality to specific business functions in order to extract all the value from Social Media in business. Most Social Software for Business makes claims of value for specific business functions, but nowhere can you find actual software modules targeted at those functions.

Even Jive Software, which recently released its wide-ranging Social Business Software 3.0, has started talking about specific solutions: Employee Engagement, Marketing & Sales, Innovation, Customer Support.

Fewer, leaner companies with products targeting specific problems. That’s what the Trough looks like.

Remember, Enlightenment Is Around the Corner

Photo credit: Jake Keup

Keep in mind that the Hype Cycle is just that…a cycle. The rush of jubilation followed by the disappointment that a technology cannot, in fact, change all that needs improvement. But that doesn’t mean the technology doesn’t have value. It just means the hard work of addressing more specific tangible problems becomes the focus.

What gives me comfort is that the Hype Cycle provides a fairly well-known model for how technology ultimately becomes core to the way businesses do work. So let the analysis show that Enterprise 2.0 cannot, in fact, solve every problem that companies have.

That’s just a sign that things are progressing nicely.