Forget everything you know about the way we do business. Mass collaboration is revolutionizing the corporation, the economy, and nearly every aspect of management. In this seven-part series, co-authors of Wikinomics: How Mass Collaboration Changes Everything , due out Jan. 2, explain new business models that will empower the prepared firm and destroy those that fail to adjust.
Conventional wisdom says that "being open" is rather like inviting your competitor into your home only to have them steal your lunch.
But in an economy where innovation is fast, fluid, and distributed, conventional wisdom is being challenged.
A growing number of smart companies are learning that openness is a force for growth and competitiveness. As long as you're smart about how and when, you can blow open the windows and unlock the doors to build vast business ecosystems on top of what we call "platforms for innovation."
Your company can become a stage and all the world its players.
Flickr, Amazon, eBay and Google represent a new breed of innovators that know how to make platforms for innovation work. They've opened up their applications and business infrastructures to create a global stage where hundreds of thousands of customers and partners add value and establish synergistic businesses.
Amazon, an open platform prodigy, harnesses the power of over 140,000 active software developers and gains nearly 30 per cent of its revenue from 975,000 third-party sellers that leverage its e-commerce engine.
Here's how Amazon does it: It takes a massively sophisticated online ordering, inventory, and distribution infrastructure and hands over the keys to just about anyone.
They call it Web services. In plain English this means that third parties get access to a significant proportion of Amazon's proprietary software code, and virtually all of its product data, over the Web.
This makes it easy to build compatible applications and services that will drive more traffic, more clicks, and ultimately more purchases through Amazon's online system. Third-party sellers and developers stand to make between three and seven per cent commission on the revenue they create for Amazon, so everyone walks away a winner.
Conventional wisdom says companies like Amazon should closely guard all of their proprietary tools and data, but the opposite is true today.
The new Web makes collaboration easy for people and firms. When you open up certain assets and invite people to come in, you can actually increase the speed, scope, and success of innovation.
Jeff Barr, who runs Amazon's Web services program says developers and marketplace sellers are "increasing the surface area of Amazon." They add more and more things to sell, in more and more places on the Web. All of this happens in a completely self-organizing fashion, which makes Amazon's already low overhead even lower.
Open platforms will emerge in every industry. Take automobiles. Cars are becoming, among other things, a collection of computers connected to the Internet. They are also places for work, learning and entertainment.
Expect the auto makers to open up the application programming interfaces (APIs) of these systems so that thousands of software developers will have a platform for innovating new applications to make the time driving more productive and fun.
Giving away the keys to your most prized assets is not something you should take lightly. Shai Agassi, product and technology group president of software giant SAP, says, "It's almost like you're taking down your borders and opening up for no tariffs, no tax competition. You need to know that your core assets and your skill sets allow you to continue to innovate fast enough as a corporation."
SAP would know. In a very counter-cultural move, the company just opened up 30,000 APIs to its market-leading enterprise software platforms. Agassi does worry that competitors could come in and try to eat SAP's lunch. "But our customers love it," he says. "A large pool of innovative software companies can now provide them with additional solutions with integration by design, not integration as an afterthought." SAP's platform for innovation now includes over half a million independent developers.
In an economy where growing numbers of individuals eke out a living as free agents, open platforms become all the more important. Agassi has a nice way of putting this. He says, "Most of the free electrons will gravitate toward the biggest centers of gravity." In other words, companies can harness today's global pool of free agents by creating dynamic platforms for innovation that provide opportunities for partners to share in the profits.
Don Tapscott is CEO of New Paradigm, a technology and business think tank, and the author of 10 books about information technology in business and society, including Paradigm Shift, Growing Up Digital.
Anthony D. Williams is an author and researcher with experience in the impact of new technologies on social and economic life. He is vice- president and executive editor at New Paradigm.
For more information see http://www.wikinomics.com
Don Tapscott