Wikinomics
Shaping the future together
Description
A new business model is emerging centered around mass collaboration, where companies leverage the collective intelligence of large networks of people and organizations. Enabled by technologies like social media and cloud computing, companies are opening up internal processes to input and innovations from a diverse range of outsiders. This brings fresh ideas and new competencies that create value in original ways.
One of the best examples is Wikipedia - the open, crowd-sourced online encyclopedia where anyone can edit contents. Taking inspiration from the "wiki" software behind it, this phenomenon of harnessing mass collaboration for business impact has been dubbed "Wikinomics". The principles of Wikinomics are openness, peering, sharing, and acting globally. Companies that embrace these can accelerate innovation, growth, and success. However, there are also risks like loss of control and intellectual property violations. Firms must balance open collaboration with reasonable protections. Overall, Wikinomics has the potential for major impact across industries. Harnessing collective capability and genius to spur innovation is a powerful strategy.
Table of contents
011. The four pillars of collaborative economics .
In the late 1990s, goldcorp revolutionized the mining industry by openly sharing its data, inviting global collaboration through the "goldcorp challenge," which led to significant gold discoveries. This approach, emphasizing openness, peering, sharing, and acting globally, showcases the transformative power of mass collaboration in business.
Radical transparency and openness.
Peer production refers to a decentralized model of production where individuals voluntarily cooperate as equals to achieve a shared goal. Participants self-select tasks that match their skills and interests. There is no hierarchical management structure directing activities. Peer production leverages the power of collective intelligence, allowing large, complex projects to be tackled that would not be feasible using traditional organizational models.
Successful examples of peer production include open source software projects like linux and apache http server, where global communities of developers collaborate to build and maintain the infrastructure powering much of the internet. Wikipedia is another prominent case, having been created and expanded into one of the largest encyclopedias in history entirely through the efforts of volunteers. Commons-based peer production more specifically refers to peer production focused on non-profit ends and building shareable goods.
Peer production provides opportunities to harness distributed human creativity for tackling problems. The cambia institute used public biological open source licenses to freely share their research on genetically modified crops. This allows anyone to build on their work to develop crops that can help feed people in need. Marketocracy has crowdsourced stock trading expertise by having over 70,000 virtual traders compete. The best performers guide investments for a mutual fund that regularly beats stock market benchmarks.
Peer production over hierarchy.
In the past, companies closely guarded trade secrets and intellectual property to maintain a competitive advantage. However, a new business philosophy called wikinomics is emerging that embraces openness, peering, sharing, and global collaboration. Smart companies are realizing that opening their boundaries and sharing intellectual property can actually accelerate innovation and boost revenues. Amazon, ebay, and google have pioneered this approach by providing open access to their technology platforms. This allows outside developers to build new products and services leveraging their infrastructure. For amazon, 30% of annual revenue now comes from third party sellers using its e-commerce engine.
Other success stories highlight the power of open boundaries. Facing declining sales in the early 2000s, procter & gamble initiated a program to source 50% of new product innovations from external partners. This open model generated hundreds of new products, some of which became big hits. Mit offers free access to its entire curriculum online through opencourseware, enabling aspiring students anywhere in the world to access a world-class education. Rather than hoarding knowledge, mit generously shares it to empower learning.
022. Promising models leveraging collective economics .
In the contemporary business landscape, mass collaboration is revolutionizing traditional models across various sectors. This "wikinomic" approach is not just a trend but a transformative force that is reshaping how businesses operate and compete. By embracing the collective intelligence and capabilities of a global community, companies can tap into a wealth of external knowledge, resources, and talent, fostering innovation and growth.
Peer production is a prime example of this collaborative model at work. It involves a vast network of volunteers who come together to create a shared end product. This method has proven to be incredibly effective, often surpassing the output of larger, well-funded corporate projects. Wikipedia and Linux stand out as two successful instances of peer production. Wikipedia, the largest encyclopedia with over four million articles in more than 200 languages, is maintained by a handful of paid staff and a legion of volunteers. Despite concerns about its open editing model, the community quickly corrects inaccuracies, and the platform's agility allows for rapid updates, such as the detailed coverage of the London terrorist attack in 2005 within a day.
Linux, on the other hand, is a Unix-based operating system kernel that has been developed collaboratively since its inception by Linus Torvalds in 1991. Today, major corporations like IBM and Google contribute to its development, and it generates significant revenue for companies like Motorola and Sony.
The advantages of peer production are manifold. It allows businesses to extend their talent pool beyond internal human resources, stay abreast of cutting-edge user trends, identify new opportunities for complementary offerings, and reduce product development costs through volunteer contributions. It also shifts competitive dynamics by challenging traditional revenue models, minimizes ownership disputes with shared intellectual property, and builds social capital by contributing to the community.
033. Applying collaborative economics .
In the evolving landscape of global business, a transformative approach known as Wikinomics is reshaping how companies operate and innovate. This concept, rooted in the principles of openness, peering, sharing, and acting globally, leverages the power of mass collaboration to drive growth, innovation, and success.
By embracing these principles, companies can tap into the collective capability and genius of diverse groups, leading to unprecedented levels of creativity and efficiency. The essence of Wikinomics is best illustrated through examples such as Linux, Wikipedia, and various open-source projects.
Linux, a leading operating system, was developed by a vast, sophisticated community of developers without the traditional corporate infrastructure or employee base. Wikipedia, the free online encyclopedia, allows anyone around the world to edit and contribute, harnessing the collective knowledge of millions.
Open-source projects further demonstrate the potential of mass collaboration, showing how even inert objects like cars can be innovated upon and how services such as free long-distance calls can emerge through collective effort. At the heart of Wikinomics is the idea that traditional hierarchical business models are becoming obsolete in the face of rapid change and evolving customer demands.
Companies can no longer rely solely on internal resources and must instead open up to collaborative networks, communities, and ecosystems. This shift requires embracing four key principles: First, openness encompasses open standards, content, financial transparency, and inclusive governance, allowing for broader input and access. Linux serves as a prime example with its publicly available source code and community-driven development model. Second, peering replaces hierarchical structures with collaborative, peer-based forums, as seen in the meritocratic networks that have propelled Linux's success. Third, the principle of sharing reflects a shift from guarding intellectual property to finding value in openness.
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