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books - business 2008

Wikinomics

Wikinomics
How Mass Collaboration Changes Everything

by Don Tapscott and Anthony D. Williams

from page 64 – an excerpt that captures the book’s summary… We call it the world of “wikinomics” – in which the perfect storm of technology, demographics, and global economics is an unrelenting force for change and innovation.

my flags…

pg 18 Whether designing an airplane, assembling a motorcycle, or analyzing the human genome, the ability to integrate the talents of dispersed individuals and organizations is becoming the defining competency for managers and firms. And in the years to come, this new mode of peer production will displace traditional corporation hierarchies as the key engine of wealth creation in the economy.

pg 20 Conventional wisdom says companies innovate, differentiate, and compete by doing certain things right: by having superior human capital; protecting their intellectual property fiercely; focusing on customers; thinking globally but acting locally; and by executing well (i.e. having good management and controls). But the new business world is rendering each of these principles insufficient, and in some cases, completely inappropriate. The new art and science of wikinomics is based on four powerful new ideas: openness, peering, sharing, and acting globally.

pg 38 The result is that today’s most exciting and successful Web companies and communities are stitching together their own services from shared databanks and Lego-style pieces of Web software. Rather than define the user experience and publish information for people to observe, they use Web services to create platforms for people to cocreate their own services, communities, and experiences. And when they built it, people came – usually by the tens of millions. In fact, 2006 was the year when the programmable Web eclipsed the static Web every time: flickr beat webshots; Wikipedia beat Britannica; Blogger beat CNN; Epinions beat Consumer –Reports; Upcoming beat evite; Google Maps beat MapQuest; Myspace beat friendster; and craigslist beat monster.

What was the difference? The losers launched Web sites. The winners launched vibrant communities. The losers built walled gardens. The winners built public squares. The losers innovated internally. The winners innovated with their losers. The losers jealously guarded their data and software interfaces. The winners shared them with everyone.

pg 45 It’s all based on a principle the new generation of Web start-ups learned from the open source software community: There are always more smart people outside your enterprise boundaries than there are inside.

pg 49 The key point is that online social networking is uniquely attuned to the Net-Gen’s (1977 to 1996) cultural habits and will be part of the social fabric going forward. It signals how young people today are predisposed to connect and collaborate with peers to achieve their goals.

pg 50 TakingITGlobal is one of the world’s best examples of how N-Geners are using digital technologies to transform the world around them. Cofounder Jennifer Corriero calls TakingITGlobal “a platform to support collaboration among young people in developing projects, in understanding and grappling with issues, and influencing the decision-making processes, especially around those issues that are directly affecting young people.”

pg 68 So, how can loose networks of peers possibly assemble goods and services that compete head-to-head with those of a large, deep-pocketed company? For one, peering taps into voluntary motivations in a way that helps assign the right person to the right task more effectively than traditional firms. The reason is self-selection. When people voluntarily self-select for creative, knowledge-intensive tasks they are more likely than managers to choose tasks for which they are uniquely qualified. Who, after all, is more likely to know the full range of tasks you are best qualified to perform – you or your manager?

pg 80 “One of the things we learned early on,” says Frye, “is that people participating in open source communities as individuals. You are not employee X of company Y. You are a lone human being. The company you work for doesn’t impress the programmers in the community. And each of these communities is different, so every time you want to work on something new, you have to learn about that community in order to join it and be effective.”

pg 98 Werner Mueller and the story of InnoCentive points to a deep change in the way companies innovate. Companies can tap emerging global marketplaces to find uniquely qualified minds and discover and develop new products and services faster and much more efficiently than they have in the past. We call these marketplaces Ideagoras, much like the bustling agoras that sprung up in the heart of ancient Athens. Modern-day ideagoras such as InnoCentive serve a more specific purpose: They make ideas, inventions, and scientific expertise around the planet accessible to innovation-hungry companies.

pg 102 As P&G CEO A.G. Lafley put it, “Someone outside your organization today knows how to answer your specific question, solve your specific problem, or take advantage of your current opportunity better than you do. You need to find them, and find a way to work collaboratively and productively with them.” That’s what ideagoras are for.

pg 142 Of course, democratization is a scary word for those accustomed to ironclad control over the creation and distribution of music. “But at some point,” says Jim Griffin, the former head of technology of Griffin Records, “the music industry must come to a realization that they can hold a great deal more in an open hand than they can in a closed fist.” … Rather than build a bold new business models around digital entertainment the industry has built a business model around suing its customers. … The music industry – and all industries for that matter – must resist the temptation to impose their will on consumers as a matter of convenience, or worse, as a result of a lack of ingenuity and agility. Rather, music labels should develop Internet business models and offerings with the right combination of “free” goods, consumer control, versioning, and ancillary products and services. This includes new platforms for fan remixes and other forms of customer participation in music creation and distribution.

pg 145 Perhaps it’s because the mainstream media just don’t get it yet. Jarvis says mainstream news editors look at sites like dig and worry that second-rate stories will make it onto the front page. But are editors really in a position to best the collective judgement of their audience? Maybe they’re worried it will go a step further. We’ll let journalists post their stories directly and let the community decide which stories are newsworthy and important. After all, if the community is the best arbiter of relevance, do we really need editors?

In truth, serious news organizations will always require great reporters, writers, and editors to deliver top-notch content. Above all, they need individuals with the skills and experience to ferret out great stories and editors with the accuracy to uphold standards of independence, professionalism, and accuracy. Digg and Slashdot have the easy job by comparison – they aggregate, rate, and comment on the news, they don’t do the hard-core reporting.

pg 154 But in today’s networked economy, proprietary knowledge creates a vacuum. Companies that don’t share are finding themselves ever more isolated – bypassed by the networks that are sharing, adapting, and updating knowledge to create value. Conversely, evidence is mounting that sharing and collaborating, if done right, creates opportunities to hitch a ride on public goods and lift all boats in the industry.

pg 161 Scientists involved in OpenWetWare, an MIT project designed to share expertise, information, and ideas in biology, are heralding the arrival of science 2.0. Twenty labs at different institutions around the world already use the wiki-based site to swap data, standardize research protocols, and even share materials and equipment. Researchers speculate that the site could provide a hub for experimenting with more dynamic ways to publish and evaluate scientific work. Labs plan to generate RSS feeds that stream results as they happen, and use wikis to collaboratively author/modify reports. Others have suggested adopting an Amazon-style reader review function that would make the peer review process quicker and more transparent. (Amanda’s notes – ideas for ID here?)

pg 187 (about the PeopleFinder project / Hurricane Katrina) By Monday evening 50,000 entries had been processed, and the number continued to increase significantly, eventually reaching 650,000. Meanwhile, people looking for friends or relatives could enter a name, a zip code or an address into a search tool hosted on www.katrinalist.net to get an instant list of names matching their query. Over 1 million such searches were conducted in the immediate aftermath of the hurricane.

Tales of heroic volunteer efforts are not particularly unusual. Disasters of this magnitude tend to bring out humanities finer traits. What is remarkable is that the PeopleFinder project might have taken a government agency with loads of money a year or more to execute. Yet the PeopleFinder group rallied to pull it together in four days with absolutely no cost to the taxpayer. Mass collaboration at its finest.

pg 188 The notion that innovation proceeds through the recombination or existing ideas to form something new is not unique to the Web, or even the last century. In fact, it was Isaac Newton who famously said in a letter dated February 5, 1675, “If I have seen a little further it is by standing on the shoulders of giants.” His modest explanation for how he achieved such incredible insight into natural phenomenon has come to represent the idea that all innovations are ultimately cumulative, with each generation of advances resting on the previous.

pg 217 We and our colleagues have argued for years that companies should treat their various functions and operations as component pieces that they can pull apart and recombine as necessary. Palmisano warns that, “these decisions are not about simply a matter of off-loading noncore activities, nor are they mere labour arbitrage. They are about actively managing different operations, expertise, and capabilities so as to open the enterprise up in multiple ways, allowing it to connect intimately with partners, suppliers, and customers.” In other words, companies should base their boundary decisions on strategic judgements about which operations they want to excel at and which they think are best suited to partners, suppliers, and customers. In recent years this new imperative has yielded some interesting new developments.

pg 224 Some companies think and act globally by playing the mergers and acquisitions game (M&A) – they buy up companies with the capabilities they require and manage much of their innovation internally. Even the best-laid M&A plans, however, come with well-known integration problems and considerable costs to day-to-day operations.

Other companies, like Boeing, are moving in the opposite direction: shedding noncore assets and choosing instead to collaborate across global and loosely coupled value webs. Rather than old hierarchical producer-supplier relationship, lead companies (prime systems integrators, in technical jargon) and their partners share the costs and risks of large development projects across the life cycle of new products and collaborate on everything from design to manufacturing, and even to long-term maintenance and support. The collaborative approach allows companies to tap best-in-class capabilities without the headaches accompanying the need to manage a full-blown merger or acquisition. Lead companies engage in less and less manufacturing and concentrate instead on designing systems and processes and orchestrating collaboration. (Amanda’s note: Is this Dr. T’s vision for Coast U? ID? Think of his ideas around resourcing…our value add… etc).

pg 226 Deepening supplier involvement has significantly boosted the efficiency of the design process. Bair explains that when Boeing sent the specifications to the electronic supplier for the 777 (the predecessor to the 787) the document was twenty-five hundred pages long. “There wasn’t a lot left to their imagination,” he said. “We told them exactly what we wanted in excruciating detail.” The equivalent specification document for the 787 is a mere twenty pages long.

pg 227 Altogether, it’s a massive technological and human challenge to bring together such a diverse and globally distributed team of designers and manufacturers into a highly complex and structured development project. Underlying this complex network is a real-time collaboration system created by Boeing and Dassult Systemes called the Global Collaborative Environment. This cutting edge system links all of the various partners to a platform of product life-cycle management tools and a shared pool of design data. No more need to send engineering drawings back and forth between engineering and design teams. Any member of the team, anywhere in the world, at any time, can access, review, and revise the same drawings and simulations while the software tracks the revisions. Nonengineering managers can get in on the action too. Lightweight viewers enable everyone from marketing execs to cost accountants to review and comment on the plans as they progress, ensuring that the final design comes to fruition in the broadest possible context.

pg 236 If you’re in the aerospace industry, you’ll find that controlling costs and decreasing the time required to get large-scale projects to market is more important than owning all of the requisite capabilities and engineering knowledge that contribute to the end product. Regardless of the industry, however, a new golden rule is emerging: Always strive to be the best at what your customers value most and partner for everything else. (Amanda’s note: what do Coast U’s customer’s value most? Insight into what skills we can partner with…)

pg 245 Now that the “agent culture” has taken root, Stephens says there is no telling where it will go. One thing is certain, however. When it comes to orchestrating employee collaboration, Stephens has a new rule: First observe, and then implement. “I’m deathly afraid of wasting time and energy trying to get people to do something they don’t want to do. So next time, before I build that shiny new playground, I’m going to think about who Geek Squad agents are already organizing – it’s just much more efficient that way.” (Amanda’s note: LMS insights here? How else are people already collaborating around learning in the organization?)

pg 251 Some business thinkers claim that the bottom-up approach to collaboration and innovation is often counterproductive. They warn that “letting a thousand flowers bloom” ends up giving companies a lot of weeds, diluting their focus on the few big ideas that are going to “move the needle” in multibillion dollar companies. But Anderson (from BestBuy) counters that without these systematic, cross-company forums much valuable knowledge inside the organization would go unutilized. “Getting other points of view and other pieces of knowledge into our learning system that might otherwise have escaped is key to our success as an organization,” said Anderson. (Amanda’s note: think of some that you know that hold this view!)

pg 251 BestBuy demonstrates how drilling holes through the hierarchy of an organization can produce great results. But what happens when you mesh Brad Anderson’s philosophy with a powerful new infrastructure for collaboration that includes wikis, blogs, and RSS? To find some answers, we talked to Ross Mayfield, CEO and founder of Socialtext, one of a growing number of startups that have emerged to supply social computing technologies (especially wikis) to enterprises.

pg 253 This “in the backdoor” approach t o technology adoption is not particularly new in the workplace. It happened with email, and especially with instant messaging – a technology that many organizations found threatening at first. Now email and instant messaging are workplace standards, and the same thing is happening with wikis. According to Tim Bray at Sun Microsystems, this is a lesson we ought to have learned by now. “The technologies that come along and change the world are simple, unplanned ones that emerge from the grassroots rather than the ones that come out of corner offices of the corporate strategists,” he says.

pg 253 When DKW CIO JP Rangaswami learned of the process, he was intrigued by the technology’s versatility. The company went ahead with more pilots, and after just six months of usage, the traffic on the internal wiki exceeded that on the entire DKW intranet. Today the wiki has more than two thousand pages, and is used by more than a quarter of the company’s workforce. Lead users have decreased email volume by 75% and cut the company’s meeting times in half. Rangaswami says, “We recognized early on that these” tools would allow us to collaborate more effectively than existing technologies.

pg 254 Many wiki users and aficionados say the benefits are linked to the ease and efficiency which collaboration takes place. Tantek Celik, Technorati’s chief technologist, uses wikis for everything – his work, his social life, his volunteer activities, and for staying in touch with friends and family. He says wikis distribute the burden of organization across a collaborative network instead of making an individual project manager a choke point. “Now everyone can make incremental progress without having to wait for everyone else,” he said. “It’s like a parallel processing for people rather than computers.” Celik goes so far as to suggest, “The ability to use wikis will be a required job skill in five years. (Amanda’s note: big ideas for ID here!!)

pg 256 In a traditional workplace, this decentralized approach to problem solving might be worked out in the lunchroom, while leaning over a colleague’s cubicle, over a pint after work, or increasingly though a long thread of emails. The problem is that this casual approach to problem solving leaves no organizational memory of the event, with the risk that only the people involved in creating the solution walk away with any new insights. Problems can persist like a bad cold, and solutions will be reinvented every time the problem reoccurs. … “You release early and often,” says Mayfield, citing the open source dictum. “When you come across a bug in the workplace, you have an ethic of fixing it right then and there so you have these tight little iteration cycles. Wikis compel teams to engage in a constant state of rapid prototyping.” … “In the end, nothing is in an end state,” says Mayfield. “Even with Wikipedia, the best you could say today is that it’s better that it was yesterday, and tomorrow it’s going to be even better. The project is never going to end.”

pg 260 If you work at Google, what are you required to do with 20 percent of your time? Goof off! The company directs employees to dedicate 20 percent of their time to personal projects – projects that interest employees but needn’t slot neatly into Google’s predefined product roadmaps. In keeping with its belief in collaboration and encouraging self-organization, the company tracks the pet projects that employees conjure up.

Company officials reason that although Google employees are only a small fraction of the programming talent in the world, they are among the brightest programmers in the world. So in addition to leveraging the insights of external developers, Google allows its employees to pursue their own interests. This not only makes them happy, it boosts creativity and can surface unplanned innovations that may one day evolve into successful business ventures.

Google CEO Eric Schmidt told us he hadn’t had a product idea in years. “Virtually all of the product ideas in Google,” he says, “come from the twenty percent of the time employees work on their own projects.” One such innovation is Orkut, a social-networking service named after its inventor Orkut Buyukkokten, a Google software engineer who developed the project during his allotment of personal time.

pg 262 Sun Microsystems CEO Jonathon Schwarz has been blogging for years. He may even be one of the first corporate executives anywhere to engage regularly in online conversations with employees, partners, shareholders, and customers. When we asked Schwarz why he blogs he gave us an unexpected answer. He wasn’t blogging for PR or to impress customers, or even to stroke his own ego. No. Blogging was just a more effective, more personable, and more transparent way of communicating with employees than sending an all-Sun-emails. … Not everyone is comfortable with the new dynamic, networked forms of communication. “It is definitely alienating the old guard,” said Schwatz. “They would like to believe that their groupwide email is the exclusive vehicle for communicating direction.” At the same time, Schwatz says blogging is definitely attracting a new guard at Sun. “It’s yielding pace and transparency into our decisions and it’s helping dissolve the boundaries between what Sun is and what is the market. And this in turn brings more and more people into Sun’s ecosystem.”

pg 263 If an army marching in lockstep to tightly arranged military music is a metaphor for yesterday’s workplace, the workplace of the future will be more like a jazz ensemble, where musicians improvise creatively around an agreed key, melody, and tempo. Employees are developing their own self-organized interconnections and forming cross-functional teams capable of interacting as a global, real-time workforce.

pg 264 Is there a danger that too much openness and self-organization in the workplace could lead to disorganization, confusion, and lack of focus and direction? Google CEO Eric Schmidt admits, “If you have worked in a traditional company, a place like Google doesn’t feel right, it doesn’t feel like you have the kind of control over the way in which decisions are made that you might have had in a traditional environment.” And yet, Schmidt is convinced that self-organization is better. “You talk about the strategy, you get people excited, you tell people what the company’s priorities are, and somehow it works out,” he says.

pg 277 The starting point for any manager is personal use of the new collaborative technologies, preferably in conjunction with a Net Generation youngster. Ask your college son or daughter to show you Facebook. Join Myspace. Edit a page in Wikipedia. Create a video clip for You Tube. Get a taste for how these open communities work.

The next step is to start a planning process with a comprehensive map of your innovation ecosystem that positions your value creation and assesses the interdependencies that will determine the flow of benefits and your ability to capture a share of them. This is not a traditional competitive landscape or value-chain analysis, but an analysis of the participants creating knowledge pertinent to your existing and future business. While this includes business partners and competitors, it extends to academia, public research institutes, think tanks, creative communities or communities of practice, and contract research organizations. The map needs to be global and cover all relevant disciplines that intersect with your strategy. (Amanda’s note: wow! This is the roadmap for networking/collaboration ideas for ID!)

pg 280 Any company seeking to open source a product or participate in peer-production communities must devise control points and collaborative processes for weeding out poor contributions and assembling end products.

pg 286 So how should leaders go about applying the principles of wikinomics in their businesses? Knowledge management theorist David Snowden says you should throw away some of your detailed plans. He thinks effective leaders manage chaos the way a kindergarten teacher managers her students. “Experienced teachers allow a degree of freedom at the start of a session, then intervene to stabilize desirable patterns and destabilize undesirable ones,” he says. “And when you are very clever, they seed the space so that the patterns they want are more likely to emerge.”

… there are several additional design principles that are common to most if not all of them.
– taking cues from your lead users
– building critical mass
– supplying an infrastructure for collaboration
– take your time to get the structures and governance right
– make sure all participants can harvest some value
– abide by community norms
– let the process evolve
– hone your collaborative mind (learning new skill sets that emphasize building trust, honouring commitments, changing dynamically, and sharing decision making with peers)

pg 290 Winning companies today have open and porous boundaries and compete by reaching outside their walls to harness external knowledge, resources, and capabilities They’re like a hub for innovation and a magnet for uniquely qualified minds. They focus their internal staff on value integration and orchestration and treat the world as their R&D department. All of this adds up to a new kind of collaborative enterprise – an ecosystem of peers that is constantly shaping and reshaping clusters of knowledge and capability to compete on a global basis.

www.wikinomics.com

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