This article is from Michael Idinopulos, Vice-President, Professional Services and Customer Success at Socialtext:

There’s a legendary story in the consulting trade about McKinsey & Company’s greatest commercial failure: its disastrous undersizing of the mobile phone market.

The year was 1980 and the client was pre-breakup telephony juggernaut AT&T. AT&T’s labs had invented a technology which enabled telephony without a wire–an early version of wireless phone service. The technology was promising, but it also required significant up-front investment to install radio towers. AT&T wasn’t weren’t sure how big the return on investment (ROI) would be, so they hired prestige consultancy (and my former employer) McKinsey to come in and tell them.

McKinsey looked at the chunky handsets, the high cost of infrastructure and operation, and the narrow bandwidth and concluded that the market was restricted to the wealthy and the high-end corporate market. They estimated a total market size of under 1 million subscribers by the year 2000.

AT&T declined to ramp up its investment in cellular.

The rest, as they say, is history. The McKinsey analysis low-balled the market by two orders of magnitude. After the Bell System break-up, the Baby Bells turned on Ma and invested heavily in cellular. By the time AT&T realized its mistake, it was playing catch-up. In a final stroke of disgrace, it was acquired by lowly SBC Communications, not so much for its customers or technology as for its brand.

McKinsey had good reason to be skeptical of the ROI. In 1980, handsets were bulky and expensive, and wireless bandwidth was constrained. In that environment, it’s no wonder McKinsey projected a small market size. But by 2000, the world looked completely different. Handsets were small and cheap, and wireless bandwidth plentiful. The market was huge, and AT&T had missed out.

When AT&T commissioned the McKinsey study, it held two valuable assets: first, the value of the mobile telephony market under the current set of conditions (high cost, bulky handsets, limited bandwidth); second, the option on a much larger market if those conditions should improve. McKinsey’s analysis factored in the first, but not the second. AT&T let the option expire. By the time the value of the option was clear, it belonged to the competition.

Let’s not make the same mistake with Enterprise 2.0.

Like the mobile phone market, the demand for social software within a company takes time to grow. Social software return requires shifts in attitudes, behaviors, and workflows. That doesn’t happen the moment you throw the switch on a new piece of software. People have to try it, get comfortable with it, experiment with it, and find the ways that it integrates with their workflow in value-added ways. It won’t take 20 years for the market to fully arrive, but within any given company it could take a year or two.

If you just look near-term at social software, the ROI argument may seem hard to make. Aren’t we really just talking about a fraction of the company? Is email really so inefficient? How do you quantify the value of information access, or better collaboration? Will people really use it for serious work?

When you implement social software, you’re buying your company two assets: first, the near-term value your company derives from the tools today; second, the option for your company to have first-mover advantage if and when wikis, micromessaging, and social networking go truly mainstream.

The chances look good that the option is going to be valuable. Web 2.0 has gutted the newspaper and commercial music industries. Film, television, and books are showing signs of fundamental change. If you’re in one of these industries, you’re already playing catch-up, trying to figure out how your company can play in a world where everyone talks to everyone. What will the impact be on financial services, or pharma, or manufacturing, or energy? I don’t know, but I’m confident that something will happen there too. If you wait until you know exactly what it is, you might be the next AT&T.