The Enterprise Edge Matrix

Developing a strategy to drive viral adoption and executable monetization of new user-centric applications is the holy grail in the emerging enterprise applications market. 

The marketing strategies and business models of yesterday’s industrial information economy and optimized by today’s enterprise core players are not as efficient when compared to the viral adoption models emerging in the networked information economy (see Wealth of Networks for more on this).   

Creating new value for users – and therefore new revenue growth opportunities – at the “edge of the enterprise” will require new viral application strategies and networked business models that create and monetize value from data found in networks, markets and communities of enterprise end users.

It seems an important question is: Who will be able to drive and monetize a viral enterprise application first?  Today’s enterprise “core” leaders or the emerging enterprise “edge” visionaries?

One way to visualize this is represented in the Enterprise Edge Matrix that I’ve sketched out:

Enterprise_edge_matrix_4

I realize this isn’t exactly right and needs some work… and I’ll continue to refine the matrix (with your help).  My rough mapping of today’s enterprise (core) players and emerging (edge) players came about after reading a couple of interesting articles.  They are worth a read. 

First on Viral adoption, check out Slide PM Yen Lee’s post at FrameThink where he outlines the 4 objectives for any Viral Application strategy:

The Four Viral App Objectives

  1. Increase the percentage of “active hosts” who actively make contact with uninfected people
  2. Increase the contact rate for each active host (average number of contacts per time period)
  3. Increase the duration of each active host’s infectious time period
  4. Increase the likelihood that contacts turn into infections (i.e., infection conversion)

Yen Lee then goes on to describe how best to define measureable viral metrics to track adoption and benchmarks against today’s leading viral applications.   

Second, on the monetization of viral applications, Bernard Lunn at RWW has an interesting take on Viral + Monetizable = Start-Up Magic Quadrant:

“The more viral it is, the harder it is to monetize”.

The Three Streams of the Internet

  1. Communication. This is perfect for viral. Think Hotmail, Twitter, Skype and Facebook. The viral property is built into the service.
  2. Entertainment. Think You Tube or Second Life or any online game. I tell people about a really entertaining video. The viral property is weaker as it depends on a stream of loss-leader hits.
  3. Research. Google got viral adoption because the alternatives were weak and it was a major problem faced by millions every day. As it was free and dead simple to use, there was no barrier to adoption; but the viral spread was only possible because it was such a big problem and it was so much better than the alternatives. This happens very rarely.

Only Communication is a sure fire viral success. It only works when it is a genuinely new form of communication (webmail, social networking, microblogging). You cannot launch a web mail or social networking site today and expect viral adoption. But when it is a genuinely new form of communication, the viral adoption is stunning in its speed. I can see one new form of communication out there today that could get mass viral adoption, which is video conversations as exemplified by Seesmic.

When you look at the three streams of Internet services – Communication, Entertainment and Research from a point of view of monetization, the order is reversed:

Research is simple to monetize. It leads to a database of intentions and that leads to any number of advertising models that have a) proven returns to advertisers b) proven use for searchers.

Entertaiment can be monetized through advertising and “freemium”. We are used to the idea of ads to get free entertainment on TV/Radio and used to paying to go to the Movies or rent DVDs.

Communication is really tough to monetize through advertising. It has to be free to be viral (and it can be free because the marginal cost is close to zero). So the only way to make money is some form of advertising. It is just really, really hard to find a good way to offer advertising around a communication service that works for both the user of the service and the advertiser.

….the question remains.

Who will be able to drive and monetize a viral enterprise application first?  Today’s enterprise “core” leaders or the emerging enterprise “edge” visionaries?

I need to work on this a bit more and could use some help.  What do you think?

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