The following is a shorter version of McKinsey Quarterly’s latest write-up highlighting what I consider to be the nitty-gritty of the piece.  Indeed Web 2.0 promises great benefits to the enterprise, albeit, with the caveat of having everyone (or at least the right people) buying-into it to the max.  As these new collaborative methods of operation become more and more commonplace, I am a true believer that their success rate will rise.  More importantly, as the newer generations of what we now call ‘kids’ grow up, they will bring with them a new way of thinking into the enterprise - one that will be wired to look for answers/solutions via the collaboration of others.  Why? Well, because they will have grown up relying on social collaboration of this sort all throughout their lives.  From solutions to everyday problems to input into dating, their reliance on P2P (peer-to-peer) collaboration, which is already being fueled by the proliferation of social networks, will surely be engrained in their DNA by the time they become part of the enterprise.

Without further ado, enjoy the highlights below.  To access the full report click here.

As the popularity of Web 2.0 has grown, companies have noted the intense consumer engagement and creativity surrounding these technologies. Many organizations, keen to harness Web 2.0 internally, are experimenting with the tools or deploying them on a trial basis.

Over the past two years, McKinsey has studied more than 50 early adopters to garner insights into successful efforts to use Web 2.0 as a way of unlocking participation. We have surveyed, independently, a range of executives on Web 2.0 adoption. Our work suggests the challenges that lie ahead. To date, as many survey respondents are dissatisfied with their use of Web 2.0 technologies as are satisfied.

We have found that, unless a number of success factors are present, Web 2.0 efforts often fail to launch or to reach expected heights of usage. Executives who are suspicious or uncomfortable with perceived changes or risks often call off these efforts. Others fail because managers simply don’t know how to encourage the type of participation that will produce meaningful results.

The latest Web tools have a strong bottom-up element and engage a broad base of workers. They also demand a mind-set different from that of earlier IT programs, which were instituted primarily by edicts from senior managers.

Earlier technologies often required expensive and lengthy technical implementations, as well as the realignment of formal business processes. With such memories still fresh, some executives naturally remain wary of Web 2.0. But the new tools are different. While they are inherently disruptive and often challenge an organization and its culture, they are not technically complex to implement. Rather, they are a relatively lightweight overlay to the existing infrastructure and do not necessarily require complex technology integration.

Clay Shirky, an adjunct professor at New York University, calls the underused human potential at companies an immense “cognitive surplus” and one that could be tapped by participatory tools.

Research by our colleagues shows how differences in collaboration are correlated with large differences in corporate performance. Our most recent Web 2.0 survey demonstrates that despite early frustrations, a growing number of companies remain committed to capturing the collaborative benefits of Web 2.0. Since we first polled global executives two years ago, the adoption of these tools has continued. Spending on them is now a relatively modest $1 billion, but the level of investment is expected to grow by more than 15 percent annually over the next five years, despite the current recession.

Management imperatives for unlocking participation

To help companies navigate the Web 2.0 landscape, we have identified six critical factors that determine the outcome of efforts to implement these technologies.

1.The transformation to a bottom-up culture needs help from the top.

2.The best uses come from users—but they require help to scale. (Efforts go awry when organizations try to dictate their preferred uses of the technologies—a strategy that fits applications designed specifically to improve the performance of known processes—rather than observing what works and then scaling it up.)

3.What’s in the workflow is what gets used. (Participatory technologies have the highest chance of success when incorporated into a user’s daily workflow.)

4.Appeal to the participants’ egos and needs—not just their wallets. (A more effective approach - as opposed to measuring contribution against objectives, as well as standardized bonus pay or individual - plays to the Web’s ethos and the participants’ desire for recognition: bolstering the reputation of participants in relevant communities, rewarding enthusiasm, or acknowledging the quality and usefulness of contributions)

5.The right solution comes from the right participants. (Targeting users who can create a critical mass for participation as well as add value.  To select users who will help drive a self-sustaining effort - often enthusiastic early technology adopters who have rich personal networks and will thus share knowledge and exchange ideas - a thoughtful approach is required.)

6.Balance the top-down and self-management of risk. (Prudent managers should work with the legal, HR, and IT security functions to establish reasonable policies, such as prohibiting anonymous posting. Fears are often overblown, however, and the social norms enforced by users in the participating communities can be very effective at policing user exchanges and thus mitigating risks. Ultimately, however, companies must recognize that successful participation means engaging in authentic conversations with participants.)