Web 2.0: A Strategy Guide
Amy Shuen
O’Reilly Media, 266 pp.
ISBN: 978-0596529963
Reviewed by Brandon Ching

Some say that imitation is the sincerest form of flattery. If that is indeed the case, then Amy Shuen has written an informative guideline for all of us to flatter the likes of Google, Flickr, Amazon, and Facebook. In Web 2.0: A Strategy Guide, Shuen analyzes the Web 2.0 movement by deconstructing the strategies used by successful web companies large and small; then explains the how and why of their success through Web 2.0 principles.

Shuen details, in six chapters of highly informative analysis, how companies can adopt Web 2.0 ideas to enhance profitability and expand their businesses. Shuen does this through a detailed analysis of many successful Web 2.0 companies and many of the strategies they used to add value and profitability to the services they offer. According to Shuen, of primary importance to Web 2.0 business strategies, as outlined in their respective chapters, are to: build on collective user value, activate network effects, work through social networks, dynamically syndicate competence, and recombine innovations.

Shuen begins with analyzing the collective user value concept by scrutinizing the strategies of Flickr and Netflix. The user value concept is the idea that users, not the companies themselves, are the main contributors of value. By allowing users to add, share, organize, and promote their own content, businesses need only provide a context through which users can interact. While this may sound easy, balancing user demands while ensuring profits and adding value to services is, as Shuen points out, difficult to attain.

Building upon the collective user value concept is the network effect. “Positive network effects increase the value of a good or service as more people use or adopt it” (p. 41). In this chapter, Shuen breaks down how Google’s pay-per-click keyword advertising has used a variety of positive network effects to generate sustainable profitability ($8 billion per quarter, p. 44). With coverage of five different types of positive network effects, Shuen provides a solid overview of ways your business can capitalize on this core Web 2.0 principle.

Perhaps one of the most visible Web 2.0 strategies is that of social networking. Chapter three delves into the understanding of this effect and covers topics such as Malcolm Gladwell’s tipping point theory, the Rogers adoption curve, and the Bass diffusion curve. These more theoretical explanations for social networking effects are culminated by Shuen through an analysis of Facebook and LinkedIn; analyzing the rise in membership, participation, and success of both services.

Every business has a set of core competencies that it does well. Chapter four analyzes IBM, SalesForce.com, and Amazon and shows how each company used their core competencies in dynamic ways to expand service offerings and increase profits. In the case of Amazon, the decision to open up their online book-selling service to third party sellers in 2001 resulted in additional billions of dollars in sales. Later, capitalizing on their experience of running a large, multi-million user system, Amazon began offering back-office competencies through web services such as the Simple Storage Service (S3) and the Elastic Compute Cloud (EC2).

Finally, Shuen covers the recombining innovation aspect of the Web 2.0 movement by addressing how businesses can expand upon existing services utilizing different modes of innovation including: democratized, crowdsourcing, ecosystem, platform, and recombinant innovation. The most prominent example Shuen addresses here is that of Apple’s iPod and iTunes application capitalizing on platform innovation through iPod assembly, creative software, accessories, and user-provided music data.

The final chapter is a short how-to consisting of five steps on how to incorporate Web 2.0 strategies into your business. Essentially a summary of the previous five chapters, it also provides general business ideas and strategies on getting started with your newly acquired Web 2.0 knowledge. Weighing in at only 15 pages, you won’t find all your answers here, but after reading the previous chapters, it does give you a good push in the right direction.

Shuen’s book is an exceptional analysis of many processes and strategies used by successful Web 2.0 companies. At the end of each chapter are a valuable series of strategic and tactical questions that can be asked by business owners and executives which directly relate the principles in the chapter to Web and IT based organizations.

Web 2.0: A Strategy Guide should be considered required reading for business executives and students, entrepreneurs, and information technology investors. While approachable, the book does contain a good amount of business and economic principles and terminology which may leave some skimming a few pages here and there. Yet, overall this was a very good, and relatively concise, source of valuable information on the business strategies and principles of successful Web 2.0 businesses.

Tags: Book Review, social networking, strategy, web 2.0