Don Tapscott is chief executive of New Paradigm, a technology and business think tank, and the author of 11 books about information technology in business and society, including Paradigm Shift, The Digital Economy, and Growing Up Digital. His recent book Wikinomics: How Mass Collaboration Changes Everything is a New York Times bestseller. Anthony D. Williams is an author, researcher and former lecturer at the London School of Economics. He is vice-president and executive editor at New Paradigm and co-author of Wikinomics. In receiver, they argue that self-organized collaboration is a major source of innovation. They explain how to create value collaboratively on a large scale – in a world where value creation is fast, fluid and persistently disruptive.

http://www.newparadigm.com
New Paradigm

http://anthonydwilliams.com/
Anthony Williams' site

Artwork for this article by Alex Nijathaworn

The late nineteenth century chemist and microbiologist Louis Pasteur famously said that chance favors the prepared mind. The same could be said of innovation. Companies face tough dilemmas every day for which there is, somewhere, a uniquely prepared mind – someone with the right combination of expertise and experience to solve the problem. Conventional wisdom says firms should find those people, hire them, and retain them by way of money or perks.

But today, a growing marketplace for ideas, innovations, and uniquely qualified minds is changing the long-standing rules of innovation and talent management. Companies seeking solutions to seemingly insoluble problems can tap the insights of hundreds of thousands of enterprising scientists without having to employ everybody full-time. This shift is changing the way companies invent and develop products and services, including something as mundane as toothpaste.

Take Colgate-Palmolive. The company was recently seeking a more efficient method for getting its toothpaste into the tube – a seemingly straightforward problem. When its internal army of R&D professionals came up empty handed, the company posted the specs on InnoCentive – one of many new marketplaces that link problems with problem-solvers. A Canadian engineer named Ed Melcarek proposed putting a positive charge on fluoride powder, then grounding the tube. It was an effective application of elementary physics, but not one that Colgate-Palmolive's team of chemists had ever contemplated. Melcarek was paid $25,000 for a few hours work.

Today some 120,000 scientists like Melcarek have registered with InnoCentive and hundreds of companies pay annual fees of roughly $80,000 to tap the talents of a global, scientific community. It is an example of what we call an "ideagora". Launched as an e-business venture by US pharmaceutical giant Eli Lily in 2001, InnoCentive now provides on-demand solutions to innovation-hungry titans such as Boeing, Dow, DuPont, P&G, and Novartis.

Though today's nascent ideagoras have yet to reach eBay-like proportions, companies such as InnoCentive, yet2.com, Nine Sigma, and YourEncore have planted the seeds for a sea change in innovation. They could arguably spur even more profound changes if services such as InnoCentive looked and behaved a little bit more like the open source software community.

For the time being, InnoCentive solvers do not naturally coalesce into large groups focused on collaborating to solve a single problem. Nor does InnoCentive offer the openness and transparency of open source software. Seeker firms can cloak their identities, and solvers may never get personal credit for their contributions.

innocentive

InnoCentive's new CEO Dwayne Spradlin, however, is keen to increase contributor activity and loyalty by addressing these issues. Spradlin's getting started with a plan to encourage more "viral" behavior among seekers and solvers by expanding the tools available to users to manage rights, communicate with other registered users, and self-organize into ad hoc freelance organizations. "Think 'government research retirees' or 'Chinese nanotechnologists' or 'ABC Corp's contract research partners,'" says Spradlin. "Then envision engaging those groups in specific challenges of interest to them."

Mass collaboration in the workplace

Companies' turning to external ideagoras for innovations doesn't mean traditional employees are taking a back seat in the creative process. New social computing tools such as wikis and blogs put unprecedented communications power in the hands of employees. While some companies worry about the risks of uncontrolled communications leaking sensitive information, a growing number of firms believe the benefits of new collaboration tools far outweigh the risks. These tools stimulate innovation and growth, by helping employees connect with more people, in more regions of the world, with less hassle and more enjoyment, than earlier generations of workplace technology.

North American electronic retailer Best Buy calls its team of computer service technicians the "Geek Squad". Thousands of Geeks use a growing suite of collaboration technologies to brainstorm new products and services, manage projects, swap service tips, and socialize with their peers. Best Buy CEO Brad Anderson says empowering employees to collaborate in unorthodox ways is all about "unleashing the power of human capital." As the retailer continues to crush its competition, it would seem that Anderson is onto something. Already North America's largest consumer electronics retailer, the profitable company plans to open more than 100 new stores this year, while ailing competitors such as Circuit City are closing locations.
Much of this success is due to a younger generation of workers who embrace Web-based tools in a way that often confounds older workers. Nourished on instant messaging, blogs, wikis, chat groups, playlists, peer-to-peer file sharing, and online multiplayer video games, the Net Generation will increasingly bring a heightened comfort with technology, creativity, social connectivity, fun, and diversity to the companies they work for, and increasingly, to the companies they found themselves.

More and more companies find that internal blogs and wikis help stimulate creative thinking and capture knowledge. One example: typically, high-level strategy documents are formulated by a handful of people atop the corporate hierarchy. At Xerox, chief technology officer Sophie Vandebroek turned the process inside out by setting up a wiki that would allow researchers in the R&D group to collaboratively define the company's technology strategy. Vandebroek expects a more robust technology roadmap and a much stronger competitive strategy section as a result. "We'll get more content and knowledge in all of our areas of expertise," she says, "including everything from material science to the latest document services and solutions."
Another trailblazer is IBM, which in September 2006, invited employees in more than 160 countries – along with their clients, business partners, and even family members – to join in a massive, wide-open brainstorming session it called the InnovationJam. More than one hundred thousand participants took part in a series of moderated online discussions taking place in two 72-hour sessions. IBM expects the insights gleaned will transform industries, improve human health, and help protect the environment. CEO Sam Palmisano believes so strongly in the concept that he's committed up to $100 million to develop the ideas with the most social and economic potential.

Get your mass collaboration roadmap ready

What should business managers be asking themselves as they contemplate how to harness mass collaboration?

First, think about how self-organized collaborations can change the way we invent, build, market, and distribute products and services – and build scenarios for your industry. Remember that its greatest impact today is in the production of information goods – and its initial effects are most visible in the production of software, media, entertainment and culture – but peer production won't stop there. We already see it at work in mutual funds (www.marketocracy.com), peer-to-peer lending systems (www.zopa.com), designer t-shirts (www.threadless.com), and to an increasing degree, in the production of complex physical goods such as cars, motorcycles, and airplanes (check out Boeing's 787 Dreamliner).

www.zopa.com

Second, remind the doubters that open-source doesn't mean "no profits" – it means that the profits are migrating to new offerings, and increasingly these offerings are big business. So while Linux may be free, Gartner estimates that sales of complementary hardware, software, and services will reach $37 billion annually by 2008. Follow IBM's example and look for opportunities to nurture ecosystems that can contribute to innovation and growth in your sector.

Third, abide by community norms. When IBM engaged with the Linux community it not only accepted open source software products and processes but also accepted its philosophy, which is to spur quality and fast growth rather than just profits based on proprietary ownership of intellectual property. Giving up so much control is unconventional to say the least, but the rewards for doing so have been handsome. If the Linux community puts in $1 billion of effort, and even half of that is useful to IBM customers, the company gets $500 million of software development for an investment of $100 million.

Fourth, remember that to reap, you must sow. When firms join a peer production community, sharing is the continued price of admission to the community from which the firm derives various benefits. This is why firms like IBM, Sun, Nokia, and others are granting open source communities royalty-free access to their software patents. In exchange, they obtain a "license to operate" in the community – a form of tacit permission to harvest some of the value created in collaboration with community members.

It's time to get your collaboration roadmap ready. Barriers to entry are vanishing and the trade-offs that individuals make when deciding to contribute voluntarily to projects and organizations are changing, creating opportunities to reconfigure the way we produce and exchange information, knowledge, and culture. Companies that recognize, address, and learn to tap peer production will benefit, while those that ignore and resist this new means of creating goods and services will miss important opportunities for innovation and cost reduction, and may even go out of business.

This article was written for receiver

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