Before I start digging into project management transformation due to Web 2.0 technologies, I would like to share some thoughts on the basic impacts of Enterprise 2.0 on companies’ structure and corporate culture.

One of the most important impacts of Enterprise 2.0, as I mentioned in my previous post is changing the management pattern inside an organization.

Professor Andrew MacAfee of the Harvard Business School, who coined the term “Enterprise 2.0” in 2006, believes that new generation technologies, while penetrating into companies, will be able to empower employees and decentralize decisions, thus liberalizing management. This means hierarchical structures, employed in many organizations, will eventually be modified into flatter management patterns.

Hierarchy is indeed a long-criticized management pattern. Experts believe, it prevents companies from fast development and rapid response to market changes due to bureaucracy. Another reason - horizontal communication can be poor, which leads to misunderstanding between different departments within a company and causes deterioration of the common work results.

On the contrary, flat organizations are favored for a number of advantages for enterprises. Flat structure makes communication between management and workers more efficient and improves team spirit in the company. At the same time, it reduces bureaucracy and facilitates decision-making. Flat organization structure has fewer levels of management, which also implies benefits, such as lower payroll costs, as managers are generally paid more than workers.

However, flat organizations can turn into chaos without appropriate corporate culture and successful management. Enterprise 2.0 technologies help to control this chaos by applying emergent structures. These structures are based on people’s interactions and are more agile than traditional imposed hierarchies. They are less sluggish and provide a more flexible and productive working environment.

The question is whether Enterprise 2.0 technologies can change hierarchy in organizations into more efficient structure. And what the final result would be?

Analysts agree on the fact that the great changes won’t be immediate. There are several reasons for that. One of them is that a considerable part of the staff in any company is composed of people who prefer to be lead and choose to be given instructions, instead of being proactive. They prefer to “delegate upwards” and are comfortable with hierarchy.

However, some “smaller” changes, brought by Enterprise 2.0 technologies already affect the work of companies. I’ll try to give you an example.

There is a construction company with, say, 5 offices in different countries, so teams are separated by thousands of miles, but they are doing similar job in different environments. Let’s say Team 1 is situated in London and has already tried the new technique of building offices. Team 2 placed in Los Angeles is getting ready to do it. But to avoid possible mistakes while employing the new technique they need to get some information from the Team 1.

There are two ways of doing that:

First, the Team 2 leader goes to his manager and asks for connections in the London office. The manager doesn’t have them, so he has to go to his chief, and ask if he has a peer in the UK. This will go on until they find the right person who will be able to connect them to somebody in London. What happens next? This London representative has to descend the hierarchical stairs to look for the very team the L.A. office needed. The whole process takes a lot of time and effort, and with no direct incentives, good will is always buried in red tape. That means, not everyone will be willing to help; many people will consider the matter to be of low importance.

Another way is the use of Enterprise 2.0 social software, which can to connect two teams separated by huge distances by navigating in tags and user profiles. Two team leaders will quickly find each other, and it will be done in less than 15 minutes. Then London team leader will plug L.A. team leader into his wiki so they can share their knowledge. He will also use a collaborative planning application to share their typical construction plan. There will be no need to scramble through the hierarchical pyramid and bother upper management.

The new-generation technologies are advantageous for the middle management and the company as a whole, as people become more productive thanks to efficient communication. And this is only one of Enterprise 2.0 impacts on an organization.

The reason why more and more organizations embrace Enterprise 2.0 is that it’s capable of increasing productivity and efficiency based on social networking. Toyota is a well-known example of such networking within a huge corporation. Introduction of technologies that improved communication was most certainly one of the reasons Toyota has recently become the No.1 automotive manufacturer in the world. It started to use Enterprise 2.0 in 2002 in both sales and development, and the solution increased the productivity of dealers by nearly 70%, according to InformationWeek.

So, my conclusion would be that hierarchy in organizations is not threatened by Enterprise 2.0. Rather, hierarchy is gradually modified into a more agile structure, with new connections. Collective intelligence empowered by software helps to keep it under control. Collaboration is a key part in this trend. The transformation becomes easy and cheap with Enterprise 2.0.