The rise of the web 3.0 company, by Mr. Jacques Bughin

• 1. Web 3.0Jacques Bughin,Director, McKinsey & CompanyVlerick Alumni ReunionDecember 13th, 2011

2. The web is everywherePercentage of online population 2011 Categories Weekly usageInform/search91Socialize 82Communicate68Transact64Entertain55 6 4 5 5SOURCE: Comscore, Scott Adams, McKinseyMcKinsey & Company | 1 3. The Internet time line First two wavesCrash!Wave 2 Internet videoEnd of Wave 1 (consumers)reaches 50% of Internet trafficThe Thepastpresent199019952000 2001 2005 20082010 2011Wave 1: FirstFirst commercialRecovery: Market More data thancommercial dial up broadband cap of top 5 voice on mobile;(access) internet cos highervideo streaming than in bubble timesurpasses P2PWeb 1.0 Web 2.0SOURCE: Morgan Stanley, McKinsey McKinsey & Company | 2 4. The Internet time line: wave 3 (the intelligent enterprise) The rise of theTwitter predicts New business extended enterprise: stock market index models in flux: 30% of innovations atvolatility at more - cloud P&G is done via thethan 80%; the web-open source Develop and Connecta key driver of BI competition platform-insights/analytics The present Future?Cloud computingEnterprise 2.0 Google is Development of Wireless dataadoption reaching majority of nowcasting thewireless natural traffic will exceedmomentum userseconomy;search interface fixed data trafficRecorded Future as per MITsdescribes futures Sixth sense McKinsey & Company | 3 5. Happy Christmas Good news Internet has brought success Good news This will continue along with web 3.0McKinsey & Company | 4 6. New Year Hang over? Good news Internet has brought successGood news This will continue along with web 3.0 Bad news They will be winners and losersBad and good news You have to stand up McKinsey & Company | 5 7. Messages Good news Internet has brought success Good news This will continue along with web 3.0 Bad news They will be winners and losers Bad and good news You have to stand upMcKinsey & Company | 6 8. Internet has contributed to societyMaterialHigh social Accreditive tocontribution capital impact employmentto GDPStrong Arab consumerrevolutionssurplusMcKinsey & Company | 7 9. Internet has become a strong contributor to economic activity1995-2004Contribution to GDP growth 2004-2009PercentUKFrance Norway Belgium3325 23181764 6 2004-2007- 2009 2010Canada4 10US 6 15Italy GermanyKorea 2416 2 12 10 2 McKinsey & Company | 8 10. The internet economic contribution has built social capital Social capital, 2008 Percent 100Sweden90US80CanadaUnited Kingdom70 Germany60 Belgium50 South Korea40 ItalyFrance30201000 5 10 1520 25 30 35 40Internet contribution to GDP, 2004-2009PercentSOURCE: Legatum institute, McKinsey Global Institute and analysis McKinsey & Company | 9 11. and led to employment Ratio of internet jobs created/reduced, last 3 years 3,5Sweden 3,0 2,5 Belgium 2,0 Canada South KoreaGermany 1,5 France 1,0USItaly 0,5 0 0 5101520 25 303540 Internet contribution to GDP, 2004-2009 PercentSOURCE: McKinsey Global Institute and analysis McKinsey & Company | 10 12. Messages Good news Internet has brought success Good news This will continue along with web 3.0 Bad news They will be winners and losers Bad and good news You have to stand upMcKinsey & Company | 11 13. The new firm Up to nowWeb 3.01 Closed system and IP rules1 Open system and open source:the extended enterprise2 Social media relatively hermetic to 2 Social media reaching scalecompanies within enterprise and becomingembedded in processes3 Strategic planning process; 3 Real time business intelligencediscretionary business intelligence through big data4 Capabilities defined by functions 4 New hierarchy, new businessand work responsibilities bymodels, new markets (e.g., crowdhierarchy working)5 In-source or outsource5 Elastic sourcing (cloud) McKinsey & Company | 12 14. Open system and open source: ExamplesConsumer Cos-MediaCarMobile HealthGoodsmeticsHandsets1990 1995 20002005 2010 Operating WebMotor- CarsEncyclo- Drug Pros-Text- systems serverscycles pedias design theticsbooksOpenLinux Apache prosthetics projectSOURCE: Literature search, McKinsey McKinsey & Company | 13 15. Social media reaching scale within enterprisePercentage of Companies, n=3103 Social Micro-PredictionBlogs Wikis, networking bloggingmarketsn = 1,322 n = 809Dimensions Total n = 1,728n = 654 n = 190Scanning external 7540299135environmentFinding new ideas 73362912 134Managing projects 5519121752Developing strategic plan43 16118 54Allocating resources30105 4 22Matching employees to tasks 29114 5 31Assessing employee26 74 3 21performanceDetermining compensation 2064 2 11SOURCE: McKinsey web 2.0 survey, 2011, McKinsey QuarterlyMcKinsey & Company | 14 16. Big data featuresMassive amountversus Limited, one-shotfor experimentationReal-time versus LaggingSometimes aheadversus Laggingof timeEasy mash-upversus Separate sets of non inter-operable dataBehavioral andversus Statedintent basedData in nodes versus Separate McKinsey & Company | 15 17. Massive amount: Big data (brother?) is watching you 1 billion 800 million- Facebook- Google searches active users worldwide, conductedof which 10% ofa day worldwide conversationsby 2010 involving a brand 15 billion 19%information codified by proportion of Twitter Recorded Future comments referring to a brandSOURCE: Literature search, Recorded Future blog, Jansen et alii (2009)McKinsey & Company | 16 18. Massive amount: Big data (brother?) is watching you1.5 Billion - Google searchesLeading to salestransaction monthly BillionsNielsenmonthly points ofsales transactionSOURCE: Google, Nielsen analysts presentation, McKinseyMcKinsey & Company | 17 19. Big data nowcasting: CPG product launch and search SalesIndex; normalized 100 at launch date Online searches PresalesIntensityPercent14012010080604020 0 One week 1st week 2nd week 3th week 4th week5th week beforeLaunch afterafterafterafter after launch launch launch launch launchlaunchSOURCE: Google insights, McKinseyMcKinsey & Company | 18 20. Big data nowcasting: car sales and searchMonthly sales vs. Google search trends at second week of each month, USSOURCE: Automotive News Data Center; Google McKinsey & Company | 19 21. Big data nowcasting: DTV subscription and SearchESTIMATESQuarterly sales/total vs. Google search trends 6 weeks in advance, Europe1296Regression fit3Y = 2,1 + 0,21.X 0 R = 0.78 02040 6080 100 P = 0.00 Search queriesSOURCE: Telecom sales report, Google search for insights, McKinsey analysisMcKinsey & Company | 20 22. Giants are taking data seriously"[I] can imagine [data] being morevaluable than a brand."Bob McDonald, CEO of P&Ghttps://www.mckinseyquarterly.com/Inside_ PGs_digital_revolution_2893 McKinsey & Company | 21 23. Big data nowcasting: movie box office and social mediaBox office index vs. social mentions 2 weeks in advance, worldwide Box office index1.00.80.60.40.2 Regression fit0 Y = 0.18 + 5.5.X00.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16R = 0.88 Retweet rate P = 0.00 PercentSOURCE: Huberman et alii (2010), First Monday, Google, McKinseyMcKinsey & Company | 22 24. Messages Good news Internet has brought success Good news This will continue along with web 3.0 Bad news They will be winners and losers Bad and good news You have to stand upMcKinsey & Company | 23 25. Revenue increase linked to the use of internetHigh 5.3 8.5 8.8 WebMiddle 4.4 4.8 6.5 intensityRevenue impacthigh-low: 2.3x 3.8 4.6 5.4Low Low MiddleHigh Extended enterpriseSOURCE: McKinsey SMB survey, MGIMcKinsey & Company | 24 26. Extended enterprise The tail of two companiesCosmetics MotorcycleSouth Korean cosmetics market share Vietnamese motorcycle market share 40 Missha7570Loncin 35 and other65Chinese60co-creators 30 5550 254540 203530 1525HondaLaNeige 20and 10Ettudeaffiliates1510Other5 5Suzuki00 2002 03042005199899 2000012002McKinsey & Company | 25 27. Big Data companies seem to outperform peers Big data leaders1999-2009 (10-year CAGR); Percent Other competitorsRevenue EBITDA Online retailers24 22-1 7 Casinos9 125 1 Insurance914 8 5SOURCE: Bloomberg and Datastream; annual reports; McKinsey CPAT tool; McKinsey analysisMcKinsey & Company | 26 28. Messages Good news Internet has brought success Good news This will continue along with web 3.0 Bad news They will be winners and losers Bad and good news You have to stand upMcKinsey & Company | 27 29. Companies are slowly recognizing the new gameLikeliest organizational changes in next 3 years, worldwidePercentage of respondents; N = 4,261 Companies with majorityAverageof web technology usage Extended enterprise3568 Self-organization32 61 Data driven decision3272 and intelligence Informal and agile 2749 hierarchy Financial transparency 1939SOURCEMcKinsey web 2.0 survey, the extended enterpriseMcKinsey & Company | 28 30. Implications for organization leaders 1 Build new massive capabilities in web 3.0 2 Design open-based organization Accept multi-personae: customer as buyer, participant, 3 buzzer, etc. Redefine information cloud strategy to implement 4 technology 5 Experiment fast McKinsey & Company | 29 31. Thank you