From the silo enterprise to the networked enterprise

Burroughs ILLIAC IV-014-Edit-2.jpg
(photo : Mark Richards) – (Version française)

When an innovation emerges, there always are two steps. The first one consists in integrating the innovation in the way we work. The second one consists in transforming the way we work thanks to the innovation. Thus, people develop new skills and their role start to evolve. (Serge Soudoplatoff)

In the 2000’s, enterprises have used internet technologies to optimise the operational dimension of the organisations. Hence, the advent of new enterprise systems organised around processes and structured data : ERP, CRM, PLM, SCM, KM …

The result : organisations as we knew it, based on hierarchies and structured as silos, have been rationalised and optimised : that was the time of operational efficiency. We have used new technologies to streamline the way we worked, without changing it.

In the 2010’s, another lever of internet technologies will be used by organisations : the aptitude to create value out of their internal and external networks. This is the raison d’être of the web.

In order to meet these objectives and to leverage the genuine benefit from these technologies, a deep mutation is required : from the silo enterprise to the networked enterprise

Which value ?

The two subjects that internet prosecutors carefully avoid are Wikipedia and open source software. The reason is : these are irrefutable evidences that complex projects bringing a considerable value to the knowledge economy can be carried out successfully by teams that happen to be distributed, volunteer, passionate, with minimum hierarchy and a reticular structure.

With respectively +500M et +100M registered users, one can argue that Facebook and Twitter are not just a craze for techno addicts and geeks. Goldman & Sachs share this point of view as they made a whopping $US 50 billions evaluation for Facebook while Twitter has a $US 3 Billion valuation.

If these Social Software applications enjoy such a success it could well be because they solve a user problem : centralising in one place the continuous flow of information generated by their friends, acquaintances and people with which they share some subjects of interest.

Their adoption have been massive because these tools satisfy this need with a minimum of technological friction : it’s simple and easy to use. We have entered the time where disruptive Apple products have hidden the technology behind the usability in the innovation definition. Usability no longer is a luxury but a life or death issue for companies offering software solutions or services.

Services and platform

This usability has been extended to the Application Programming Interfaces (APIs) exposed by these web applications. It is very easy, for any developer to use these APIs and develop new services. Facebook thus became a platform as early as June 2007, and this has soon proved to be a market differentiator compared to Myspace the competitor. The software integration of these platforms is a walk in the park, especially compared to enterprise systems integration which is one of the worst nightmare of the CTO’s in the 00s..

Besides, the open platform allows to delegate the development of new innovative services to other people or organisations while providing a clear and harnessed canvas. The platform provider is then able to rip the benefits from the newly created eco-system. A strategy that was soon to be adopted by Apple with the AppStore, there again with a massive success.


In the 20th century economy, the more a good is shared, the less it has value – a chocolate cake has less value if it is shared by 10 or 4 people. In the knowledge economy it’s the exact the opposite : the more an information, an image, a document is shared, the more it acquires value. (Serge Soudoplatoff)

In the real economy, money is the agent that allows exchanges and wealth transfer. Money accumulation awards power. In the knowledge economy this role is achieved by the hypertext link. Incoming links accumulation awards influence.

The main reason behind Twitter success : the ability to aggregate and share links within a couple of clicks. In about 3 seconds anyone is able to share an information with all her followers. This piece of information can then, in turn, be propagated by the followers to their followers in another 3 seconds.

Twitter is at the very heart of the value creation on the internet.

Problems of the silo enterprise

In the silo enterprise, managers spend about 20% of their time looking for data and only half of the data that was found is usable.(Accenture study, 1000 managers US/UK).

Only 44% of knowledge workers find what they are looking for on the their intranet.

The average Intel employee spend a day a week looking for information or expertise (Laurie Buczek, Social Networks Project Manager, Intel – 2008).

Between a quarter and a half of the knowledge workers are engaged in tacit collaboration (i.e. information that is neither captured on the IT systems nor searchable). In other words, about half of knowledge worker main material (knowledge) is just wandering around.

From the silo enterprise to the networked enterprise

With Google, one can find a relevant information in less than 600 ms. In 86% of the cases, one finds what she is looking for.

With Twitter I am able to localise the best national experts on a given topic in a couple of hours.

This is the target of the networked enterprise. It needs to fully assimilate the main paradigms of the knowledge economy. The network structure allows for the agility and the flexibility required to immerse into that economy that also happens to be networks based.

This Networked Enterprise presents many characteristics : it is fluid, interconnected, transparent, collaborative. It fosters a subsidiarity type of management. It works with simple principles, applied by leaders and managers that are accessible and concerned with exemplarity.


  1. Thanks for sharing this with the Social Media in Organizations (SMinOrgs) Community, Cecil. You provide compelling arguments and facts to support the idea that organizations need to think about how 2.0 technologies can enable them to better pursue and achieve their goals and objectives by enabling a transformation in how work gets done. And I love the quotes from Serge Soudoplatoff!

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