Foremost among them is the Internet, which I have been closely involved with ever since becoming general manager of IBM’s Internet Division in December of 1995. The Internet, and all the social media platforms and applications in its wake have been one of the major enablers of collaborative innovation the world has ever known.
Then there is my work with Linux, which started around this time ten years ago when we finalized the decision to launch a company-wide Linux initiative. In January of 2000 we then announced that IBM was going to support Linux in all its products and services, and that I was responsible for forming a new organization to coordinate our Linux efforts across the company.
In those pre-Web 2.0 days, the community concept behind Linux and open source in general was mystifying to many. They were surprised that IBM had so strongly embraced Linux and were wondering what its relevance would be to the world of business. We spent a lot of time explaining that we were supporting Linux because it was an excellent operating system that ran on every single hardware platforms regardless of vendor or architecture, and would thus facilitate the integration of systems, applications and information over the Internet.
A number of companies were also concerned about using software developed by an open, distributed community, as opposed to a single vendor, as was typically the case. So, we further explained that the open community developing Linux included some of the top programmers and computer scientists around the world. A number of IBM employees were already involved with this community, and several more would now be joining it as part of our new IBM Linux Technology Center. In any event, IBM and its partners would provide support for the Linux-based offerings we sold regardless of how they were developed.At the time, many were baffled as to why people would work on open source projects while not getting paid for their efforts. They had trouble understanding the motives of individuals who would work hard on something that did not include direct monetary rewards.
One of the best explanations for the economic and social foundations underlying open source communities was given by Yochai Benkler. Since 2007, Professor Benkler has been a member of the faculty at the Harvard Law School, as well as being faculty co-director of its Berkman Center for Internet and Society. In 2002, he published a seminal essay, “Coase’s Penguin, or Linux and the Nature of the Firm,” which became the basis for his book “The Wealth of Networks: How Social Production Transforms Markets and Freedom,” published in 2006.
In Coase’s Penguin, Professor Benkler explained that for decades we have lived with two major ways in which individuals organize economic production: as employees in firms, following the directions of managers, or as individuals in markets, following price signals. What we are now seeing, he wrote, “is the broad and deep emergence of a new, third mode of production in the digitally networked environment. I call this mode commons-based peer-production, to distinguish it from the property- and contract-based models of firms and markets. Its central characteristic is that groups of individuals successfully collaborate on large-scale projects following a diverse cluster of motivational drives and social signals, rather than either market prices or managerial commands.”
These new, collective approaches are viable business models that can coexist in a fruitful economic way with more traditional business models. They have arisen because the Internet and related technologies and standards now permit large numbers of individuals to more easily organize themselves for productive work, in a decentralized, non-market way. “The result is a flourishing non- market sector of information, knowledge, and cultural production, based in the networked environment, and applied to anything that the many individuals connected to it can imagine. Its outputs, in turn, are not treated as exclusive property. They are instead subject to an increasingly robust ethic of open sharing, open for all others to build on, extend, and make their own.”Given the well publicized success of Linux, Wikipedia and other community-based offerings, such efforts are now much better understood, and their value is well accepted in business. But in the last few years, their role has evolved beyond that of self-organizing communities that freely share their contributions. Collaborative innovation is increasingly viewed as a critical business process that companies need to embrace in order to better keep up with the accelerating changes in technologies and markets.
In the industrial economy that dominated the 20th century, companies were generally centrally organized, with a hierarchic approach to management where authority, information and even new ideas flowed down from small groups of executives in headquarters. This model worked well when things changed slowly. But as technology, market changes and global competition accelerated, corporations have had to become more flexible and adaptable, which has led them them to embrace a more distributed organizational style.
Companies have begun to recognize that the real expertise is not in headquarters, but out there where the rubber meets the road, - with their employees involved in development, manufacturing, sales and customer service. To capture such expertise, they need to implement a more collaborative approach to governance, where employees at every level of the organization become much more involved in all aspects of the company, including operational improvements, strategy formulation and innovations across products, services, processes and business models.
Earlier this decade IBM started to embrace such a distributed, collaborative management style. The company has been experimenting with a number of platforms and tools to facilitate collaboration among all its employees around the world, including Jams, a kind of global, Internet-based town meeting, and Thinkplace, an online platform where anyone in the company can suggest new ideas, as well as comment, support, critique or help refine them.
A number of companies around the world have established similar employee innovation efforts. But, that is only the first step in treating collaborative innovation as a truly transformative business process.
One of the key findings in IBM’s 2006 Global CEO Study was the link between external collaboration and innovation. Over 75% of the 765 CEOs interviewed in the study ranked business partners and customer collaborations as top sources for new ideas. This is very different from previous organizational models that assumed that innovation was too critical to involve outsiders.
The CEOs mentioned employees as major sources for innovation 41% of the time, but surprisingly, only one sixth mentioned their own R&D departments as a top source of innovative ideas. The results of this survey are further evidence that in today’s environment, innovation is increasingly occurring in the marketplace, not just within the boundaries of the business.
Given the fast changes and intensifying competition all around us, companies need to constantly replenish their stocks of ideas by participating in broader and more diverse knowledge flows, rather than focusing primarily on protecting their rapidly aging stocks of knowledge. I strongly believe that mass collaboration will turn out to be to our new innovation economy what mass production was to the industrial economy, and companies that successfully embrace the technologies, processes and culture of collaborative innovation will emerge as leaders in the 21st century.