The best ideas for your business might come from someone who doesn’t even work for you. That’s the contention made by author and consultant Don Tapscott in his newest book, Wikinomics: How Mass Collaboration Changes Everything. Tapscott, along with coauthor Anthony D. Williams (who teaches at the London School of Economics), believes that the pervasiveness of the Internet will usher in an era where companies will lower their proprietary barriers and collaborate to foster greater innovation. As people employ instant messaging, blogs, wikis and other Web-based applications to communicate and develop ideas, Tapscott believes the Internet will become a platform on which companies will be forced to seek external talent in order to solve their greatest challenges.
With its focus on the Internet as a business development platform, Wikinomics adds to the growing discussion about the value and process of mass collaboration. There is, for instance, Wikipedia, the online encyclopedia launched in 2001, from which the book draws its name. Wikipedia allows its users to post and edit data on a variety of topics, but the resource-and its susceptibility to vandalism and tampering-has stirred objections from academics and media critics who question its accuracy. The idea that the collective experience of large groups can trump that of individual experts became popularized by James Surowiecki’s 2004 best-seller, The Wisdom of Crowds. Meanwhile, in October 2006, MIT launched its Center for Collective Intelligence in order to study the dynamics of collaboration and the tools to facilitate it. (The center’s advisers include Wikipedia founder Jimmy Wales and Alph Bingham, founder of Innocentive, a website that allows companies to post R&D problems and reward anyone who posts a winning solution.)
Tapscott stopped by CIO’s Framingham, Mass., office to discuss his theory of Wikinomics and what it means for the IT and business strategy.
CIO: Can you tell us what you mean by Wikinomics as a business theory? And what would be a good example of Wikinomics at work in the business world?
Don Tapscott: Wikinomics is the theory and practice of harnessing mass collaboration for growth and for innovation. All of this isn’t going to happen outside the boundaries of the corporation. Let me tell you a story to make the point.
I know this guy named Rob McEwen. He’s my neighbor. He ran a gold mine for several years and was ready to shut the whole company down because his geologists could not tell him if there was gold on the company’s property, and where it was, or how much there was.
But he’s a curious guy and he’s a member of the Young Presidents’ Organization. And he goes to a YPO meeting at MIT and learns about this thing called the Linux operating system [and about open-source development]. He comes back from that meeting and wonders, If my guys don’t know where the gold is, maybe somebody else does.
Rob does a radical thing. He publishes his geological data on the Web, which is unheard of in any mineral mining related industry. In the gold mining industry, your most secret resource is your geological data. It’s kept in safes and high-security computer systems. Rob holds a contest called The Gold Corp. Challenge, with half a million dollars in prize money.
He gets 77 submissions from around the world, using techniques that he’s never heard of. And it’s not just geologists. You’ve got computer scientists and mathematicians and computer graphics people. It’s a half a million dollar investment and he finds over $3 billion dollars’ worth of gold. His market value goes from $90 million dollars to $10 billion dollars, and he’s a happy camper.
So there’s a clear example of where opening up sensitive company information had demonstrable ROI. But will that always be the case? What about protecting intellectual property?
If the choice is protecting IP versus innovation, you’ve got to default to innovation. You can’t win by living off your morals in this new global economy. Rob McEwen went with innovation. You’ve got to innovate or die. And that means you need to think differently about intellectual property. I’m not suggesting you open up the kimono on everything. But increasingly, if you’re going to peer produce things and mass collaborate, if you’re going to get more deeply involved in collaborating on precompetitive research, then you need a portfolio of IP-some that you own and some that you share.
How do companies and their leaders decide when it is and when it isn’t appropriate to harness external talent?
Smart companies will treat the world as their R&D department and use the Net to seek out ideas, innovations and uniquely qualified minds on a global basis. If you look at the procedure followed by Procter & Gamble, that’s a good model. As the 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.”
The first thing P&G does is they identify a need for something-say, a new molecule. Then they ask, “Do we already have that within our boundaries?” Next, they ask, “Is this something that we have the capability to do very quickly ourselves?” And if the answer to both of those questions is no, then they’ll say, “Is this something that exists outside our boundaries?” And then if the answer to that is yes, they’ll put out an RFP.
In the book we quote Larry Huston, P&G’s former vice president for innovation and knowledge. He says the traditional ways of doing business, through alliances and joint ventures, are simply too rigid-and not scalable enough-to drive growth and innovation at a level that will make companies truly competitive.
Yet you say there is a crisis of leadership in the business world when it comes to engaging in mass collaboration. What’s an example?
On the whole, industries are being shaken. Who would have predicted that a key competitor for AT&T would be Google? Google is moving to provide Wi-Fi networks in urban centers (such as San Francisco), and this positions them to become a telecommunications company.
Who would have predicted that the Achilles’ heel of Microsoft might be a self-organizing alliance of digital Rotarians creating an operating system that nobody owns? Mass collaboration ran counter to Microsoft’s culture. Microsoft even argued that the manner in which Linux was developed made it an inherently less reliable product and that open-source software was some kind of socialism that denies companies the legitimate right to make a profit. But there are signs of change.
IBM embracing Linux is another great example. IBM was insular and vertically integrated 15 years ago, and now it partners extensively with the open-source community and is considered a positive force for collaboration and openness. But the conversion wasn’t easy. The decision affected everything from internal communication protocols to resource allocations to the competitive landscape of the industry
How does mass collaboration affect the CIO? Is this an opportunity, or more of a headache?
I think Wikinomics has huge implications for the CIO and the IT function. As these new principles about how you orchestrate capability and create goods and services get applied to the enterprise, CIOs and IT managers can be leaders in making that happen. But they can also apply these ideas to the IT function itself, in terms of how IT innovates and creates value for its clients.
The old IT department model was, We’re IT, we build infrastructures and applications and deliver them to users to meet their needs. And a new model might be, We harness the power of mass collaboration within our enterprise and outside, to create platforms whereby both internal and external users can coinnovate capability and value.
You have written about the new group of workers-the Net Generation or N-Geners-who have grown up with digital tools at their fingertips. What do they mean to the CIO?
N-Geners today are from 11 to 30 years old. This generation has grown up bathed in bits. Rather than being like their parents and being passive recipients of mass consumer culture, they spend time searching, reading, scrutinizing, authenticating, collaborating and organizing (everything from their MP3 files to protest demonstrations.) The Internet makes life an ongoing, massive collaboration.
They typically can’t imagine a life where citizens didn’t have the tools to constantly exchange views, challenge, authenticate, verify or debunk. Blogs, wikis, chat rooms, peer-to-peer networks and personal broadcasting are putting unprecedented power in the hands of individual workers to communicate and collaborate more productively. Young workers are embracing Web-based tools in a way that often confounds older generations but promises real advantages for companies that adapt to their style of working.
Of course, companies need to protect the integrity of their systems. They need to protect security. But companies that are able to adapt to the new demands of N-Gen now will gain a tremendous source of competitive advantage and innovation. Those that don’t will be left on the sidelines and unable to refresh their workforces as the N-Geners flow to other opportunities.
Ideas for Collaboration
Futurists Don Tapscott and Anthony D. Williams write about how P&G harvests ideas from outsiders in Wikinomics: How Mass Collaboration Changes Everything. Read an excerpt from the book about Procter & Gamble’s innovation efforts.