One important reason for this is that although the next generation may be more obviously associated with Web 2.0, other generations are already appreciating its value and will demand that companies do too. Web 2.0 tools have gained critical mass in the mainstream and even across age ranges, according to a study by Booz Allen released in January 2007. According to the report, 42 percent of MySpace users and 41 percent of YouTube users are over the age of 35. Web 2.0 seems to cut across age and gender and—more importantly to businesses—it influences purchase decisions. The study's conclusion: "The need to evolve existing business models by integrating the Web 2.0 environment is urgent."

Companies need to engage in Web 2.0 discussions and understand evolving customer behavior, says the study. It points to such things as customer interactivity, improved development, and shorter innovation cycles as opportunities (and realities) in an increasingly Web 2.0 world. In fact, those opportunities get to the very definition of Web 2.0.

The Challenge of Web 2.0

"Web 2.0 technologies, as a generalization, are focused on connecting people around applications that get better as more people use them," says Hagel. For example, Web 2.0 is internal wikis that create a place for global employees to collaborate and brainstorm. It's blogs that allow a software development team to stay informed without multiple e-mail threads and attachments. And it's a website that harnesses customers' opinions for improved products and sales.

Marino puts it this way: "Web 2.0 is both a philosophy and technology. And at its heart is user-generated content.

It's that philosophy that so many executives may find difficult.

Web 2.0 challenges the core assumptions about information in the corporation—who gets it, who owns it, and who has power because they have it. And that's a really scary thing for people used to controlling it. "Part of the job of a CIO is to create policies that prevent artificial pockets of power based on secrets and individuals exploiting power and not sharing it," says JP Rangaswami CIO of Global Services at British Telecom, a passionate supporter of Web 2.0 and open source. "Personally I want to see those pockets of power destroyed."

Web 2.0 is about the ability to engage and then collaborate, says Alistair Behenna, CIO of Harvey Nash, a global recruitment consultancy and IT outsourcing provider. "I think many people are afraid of that. They're afraid of corporate blogs, for example. They're afraid of their own voice. They're afraid of too much collaboration."