Recession 2.0, Meet Enterprise 2.0

This week, the National Bureau of Economic Research declared that the US economy had been in a recession since December 2007. In light of that bit of news, it seems appropriate to run a couple of pieces I had posted over the past year.

I don’t intend to join the gloom-and-doom crowd, because I believe the economy is very diverse and resilient. However, it is an inescapable fact that business growth moves in cycles — up and down.

In the event of a downturn, let’s ponder the role of our hyper-networked space in managing through tougher times. We may have not seen anything like it.

Let me start with this thought: It’s not 1975 anymore. In the recession that stormed through the 1974-75 period, there were massive layoffs. Workers were dismissed from plants and offices, and were lined up at unemployment offices. They were powerless, and cut off from information relevant to their industry, coworkers, and new opportunities. Nor for that matter is it 1981, when the ugly cycle repeated itself, or 1991 and 2001, when more powerless white-collar workers joined the unemployment lines.

In those times, it often didn’t matter how much value employees provided to their organizations, when it came time to slash, they were cast out to the street. Of course, many were hired back within a couple of years as things get better. But in the meantime, there were anxious months — and afterwards, the constant fear of future layoffs.

Workers are no longer those powerless pawns, locked into 9-to-5 routines, subject to the whims of their employers. Instead, they carry around portable skills, portable resources, and portable networks that can be quickly applied and adapted to new environments and situations. As we frequently discuss here at FastForward, the balance of power in organizations has shifted to the end-user.

If the organization thinks it can no longer afford the services and expertise an employee provides, that employee may be able to rapidly shift that expertise and services to another organization.

Now, employees remain connected in real time not only to their co-workers from organizations past and present, but also networks of professionals in their areas of expertise. Opportunities and new ideas for generating opportunities can be quickly shared and acted upon. Blogs, wikis, search engines and the like have transformed our workspaces into one single gigantic virtual workplace. We no longer depend on our coworkers down the hall; we now leverage resources from across the globe.

Many employees simply may not even need a full-time employer anymore. In 1975, the idea of going the entrepreneurial route was not a realistic option for most workers. It took plenty of seed money and visibility to get a new operation going and profitable.
Now, it’s possible to start an innovative new business with virtually little or no investment, employing Web-based resources.

It’s now possible to run an entire business on Web 2.0-based services — from infrastructure to databases to business intelligence and analytics. Many are free, the rest only charge on an incremental per-use basis.

There’s the example of GigaVox Media, a podcasting support company, that invested a grand total of $80 for its first two months in the kind of same robust IT infrastructure that would be available to GM. All the computing power you need is available right from the Web — no investment required. Web 2.0 and Software as a Service may give rise to thousands of new businesses.

Unlike previous economic downturns, many of today’s workers and professionals will not resign themselves to the powerlessness of the unemployment line. Any economic downturn has the potential to be reversed or mitigated by empowered employees or entrepreneurs who will be able to collaborate, share information and knowledge, and quickly respond to and act on new opportunities, thanks to our networked economy.

New technologies and online services may help empower people to forge through lean times with new opportunities, versus becoming victims of the economy — as has been the case in times gone by.

Rob Paterson posted an account of a Yahoo employee who was Twittering his way out the door after being laid off. What better way to communicate your situation — and availability for new opportunities — to the world? Truly astounding, and an incredible , empowering resource.
Enterprise and Web 2.0 approaches may provide new avenues to businesses as well. Forrester’s Josh Bernoff has weighed in with some of his thoughts on how Web 2.0 would prevail through a down economy. “Things are different this time,” he opines. For example, we won’t a repeat of the devastation of the 2001 recession, because this is “not a tech bubble” as it was in 2000-2001. “Technology spending is not irrational,” he points out. Agreed.

Josh adds that social networking platforms will flourish in a down economy, however. While advertising may get cut, marketers will see greater value in blogs and social networks. And the best part is that social applications “can be nearly free (think blogs, Ning.com, facebook pages) and even more sophisticated communities are typically $30K to $200K — a lot cheaper than a significant sized ad campaign.” Plus, being all digital and all, social network-based responses are extremely measurable.

So the social networking platforms will do just fine in the event the economy were to go south for a while — and in fact, may even receive a boost from companies seeking inexpensive channels to their customers. And, as I mentioned previously, end users will have that power in their hands as well.

This past week has provided quite a lesson in the functioning of credit markets, and potential impacts on the economy at large. Will the credit crisis broaden into a deeper recession? Who knows. But, as I’ve said in previous posts, the next economic downturn will be different than ones in the past, thanks to Web 2.0 and Enterprise 2.0.

For one, companies looking to trim expenditures will find Enterprise 2.0-style tools to be compelling solutions. eWeek’s Clint Boulton just explored some of the scenarios we may see in “Recession 2.0,” if it were to come to pass.

For example, there could be more Web conferencing instead of business travel. This was a shift first seen in the 2001 post-dot-bomb downturn.

There would also be more interest in collaborative and cloud computing. “Organizations that are looking to move into new technologies, normally a project that would be put on hold when budgets are tight, can still do small implementations with SAAS, including blogs, wikis and social-networking tools to lower costs.”

One more observation on this. Even if the economy suddenly broke into a growth surge, and money started flowing from all directions, we’ll still see growth in collaborative and cloud applications. Companies recognize that the growing capabilities now offered by Enterprise 2.0 and cloud applications offer a huge competitive advantage, not only because they are low cost, but also because they are flexible, and even more important, open up the information flow between teams, departments, partners, and customers.

We have seen the future, and it is online, it is collaborative, and it is wide open — no matter what the state of the economy.

by Joe McKendrick