Virtual Organizations

From Throwingsheep

Not too long ago it seemed like science fiction, but the transformation of modern corporations into virtual worlds is increasingly an every day reality.

Many Fortune 500 companies and major head-hunting firms are using online 3-D worlds like Second Life to interview candidates who show up not dressed in suitable business attire, are morphed into virtual avatars – trolls, angels, witches, dragons, monsters, you name it. Virtual job interviewing has several advantages for both employers and applicants. Traditional barriers are removed in a more relaxed setting unburdened by the stress and awkwardness imposed by bureaucratic values. Also, top executives who would not normally have time, or are travelling abroad on a business trip, can drop into a virtual setting in avatar form and discreetly take part.

Professional recruiters say that a simulated meeting between employer and job seeker often opens up the dialogue and brings out the candidate’s potential more quickly. Virtual interviews also lower the cost of recruitment, as companies no longer have to fly dozens of candidates into the city where the head office is located. Virtual interviews are a cost-free way of whittling down to a short list.

In 2007, the global recruitment firm TMP Worldwide held a job fair on Second Life that connected some 800 applicants with a blue-chip roster of employers including Microsoft, eBay, Hewlett Packard, and Verizon. True, these are the kind of companies that are looking for tech-savvy people whose Second Life navigational skills provide a reliable indicator of their suitability to work creatively in the high-tech sector. It’s expected however that, as the younger generation move into the work force – Gen Y today, Gen V tomorrow -- virtual interviews will be standard HR practice.

Some have criticized virtual worlds as a gimmicky fad that corporations – from IBM and Coca-Cola to Adidas and Ben & Jerry’s -- exploit mainly for marketing and PR purposes to create the optics of being hip, leading-edge companies. Still, there is a burgeoning virtual economy whose value can be measured in hard currency. Forecasts for online virtual worlds are generally robust. According to the Gartner consultancy, 80% of active Internet users will have a virtual identity by 2011. And while 3-D environments present significant risks to businesses – including security, confidentiality, and brand reputation – Gartner predicts that 20% of major retailers will have a marketing presence in virtual sites and online games by 2010.

Virtual worlds can also be online platforms for altruism, education, and social wellbeing.

Thanks to virtual reality, charities now sponsor virtual “walks” to raise money for breast cancer. There are virtual animal shelters that help find loving homes for abandoned animals. Some of the world’s top MBA schools, such as INSEAD, are using virtual environments to teach team-building and innovation skills while other universities offer virtual courses through e-learning programs.

In health care, virtual interaction has not only changed the nature of doctor-patient consultations but is transforming the way professionals conceive, and manage, private and state-funded health systems. In early 2008, a new publicly-financed hospital in San Diego, California – Palomar West Medical Center -- had its virtual opening on Second Life three years before its official opening in the real world. In Britain, real hospitals are using e-health technology to offer virtual health care using Cisco’s HeathPresence system.

Meanwhile, some are predicting a shakeup in the virtual reality space. With unclear visibility about future moves by major players, management consultancies like Forrester are cautioning business clients against betting heavily on any single site like Second Life.

According to Forrester, new players with big pockets, facing virtual-world start-up costs of only $75 million and potential monthly revenues of $90 million for successful sites, can be expected to move into the space. Sony, which owns the online game EverQuest, is well-positioned to construct a new virtual world. Google, too, is expected to launch its own virtual world MyWorld, which would merge Google Earth, Google Maps, and Google SketchUp. A Google-owned virtual world could be a powerful competitor to Second Life. Some argue that Second Life, though it has enjoyed a great deal of media attention in Western countries, is hardly the best virtual-world model. A better place to look is South Korea, a country with 100% broadband penetration and a massively popular mobile device culture And, most importantly, a leading-edge virtual reality site, Cyworld.

The growing use of virtual worlds as management tools provides many lessons about the upside and downside. We need to learn more about how companies are using virtual worlds to recruit, manage employees, extend their brand, bring customers into the dialogue, and deliver products and services. Examples from a variety of sectors will be useful in building solid, experience-based case studies that provide insights into the success, or failure, of virtual worlds in the corporate setting.