In their book Wikinomics: How Mass Collaboration Changes Everything, Don Tapscott and Anthony D. Williams describe a new business model, Business 2.0, that takes advantage of the new realities of the digital age. Their theory sits on four main principles: being open, peering, sharing and acting globally. They then use them to describe seven business strategies to harness the power of mass collaboration.

The Four Principles

The four principles are at the core of the Wikinomics theory. These ideas contrast with the principles of previous business models which promote a closed vision of business. Conventional wisdom says companies should protect their intellectual property fiercely, they should keep research and development in-house and keep control over every steps of the development cycle of their products. Wikinomics is all about enterprises opening themselves to the world and as such, stands on different principles.

The first is being open, but openness has a lot of different meanings. Openness could mean openness in research. With science and technology evolving faster than ever before, it is not possible for a single company to do everything in-house. If it wants to stay competitive, it has to open its boundaries and harness ideas from the outside. Openness could also means open standards. This is something that is common in the software world where standards like XML make it easier for companies to develop compatible products. It could also mean transparency. Disclosure of pertinent information to interested parties like shareholders or partners can only lead to improvements. This is also true with costumers, where more information can lead to better feedback and creation of new ideas via product customization.

The idea of peering severely contrast with the common idea that corporation should be highly hierarchized to be functional. Peer production community have been around for a while already. You can find them everywhere in the Open Source movement and on social networks. However, as our society evolves, this idea makes more and more sense in a business environment. Peering succeeds where hierarchical management fails by leveraging self-organization. By harnessing ideas and opinions from a wider group of people, companies open themselves to more opportunities.

Conventional wisdom says company should control and protect their assets as much as they can. However, sharing may end up being more profitable. Sharing crucial R&D information can prove profitable if it leads to the discovery of the missing piece of the puzzle. This leads to win-win interactions between companies, such as pharmaceutical companies that win from having a better knowledge of the human genome by giving away some of their discoveries in this field in return of other companies discoveries. This could also lead to the licensing of assets that are unused, but that can prove useful to someone else. This can also be extended to the field or computer science where distributed systems can share the computing load between users in order to reduce the total overload on a company’s servers.

The last principle, but not the least, is acting globally. Globalization is not new, it has been there since the end of the Second World War with the introduction of the GATT. However, the phenomenom have accelerated lately with collaboration over long distance made possible by the widespread usage of new means of communications such as the Internet. This allows company to tap into a bigger pool of human and physical resources. However, companies still tend to act locally in multiple places by opening branches that perform the same work in parallel. Acting globally means more than that. It means breaking down geographical boundaries and act as a trully global company by having global workforces that work together, by putting forward global processes that minimize redundancies between different locations and usually, by having a global IT platform that allows for easy collaboration and sharing between distant locations seamlessly.

Seven Business Strategies to Harness Mass Collaboration

Theory is always fun, but knowing how to apply it is usually better. Economics being more of an applied science than a pure one, every business models needs its share of practical strategies and processes. Here is a brief overview of seven business strategies described in details by Don Tapscott and Anthony D. Williams in their book to help enterprises harness the opportunities offered by mass collaboration.

“Peer Pioneers” or how thousands of dispersed volunteers can harness the power of peering and sharing to create fast, fluid, and innovative projects that outperform those of the largest and best-financed enterprises. Peer producers apply Open Source principles to create products usually made of bits. Good examples of this are the Linux community or the Apache project and how companies like IBM collaborate with them.

“Ideagoras” or how marketplaces for ideas, inventions, and uniquely qualified minds enable big companies such as Procter & Gamble to tap global pools of highly skilled talent more than ten times the size of their own workforce. These Ideagoras give companies access to a global marketplace that they can use to extend their problem-solving capacity. Good examples of this are InnoCentive and yet2.com.

“Prosumers” or the increasingly dynamic world of customer innovation, where a new generation of producer consumers considers the “right to hack” its birthright. These communities working around a common product can be an incredible source of innovation if companies give customers the tools they need to participate in value creation. A good example of this is LEGO and their LEGO Factory initiative.

“New Alexandrians” or how a new science of sharing will rapidly accelerate human health, turn the tide on environmental damage, advance human culture, develop breakthrough technologies, and even discover the universe all the while helping companies grow wealth for their shareholders. The New Alexandrians, scientists, researchers and enterprises from all around the world, are ushering in a new model of collaborative science that will lower the cost and accelerate the pace of technological progress in their industries. A good example of this is Intel and its industry-university collaboration program.

“Platform for Participation” or how smart companies are opening up their products and technology infrastructures to create an open stage where large communities of partners can create value, and in many cases, create new businesses. These platforms create a global stage where large communities of partners can create value and, in many cases, new businesses in a highly synergistic ecosystem. Good examples of this are Twitter and its open API or Facebook and the Facebook applications platform.

“Global Plant Floor” or how even manufacturing-intensive industries are giving rise to planetary ecosystems for designing and building physical goods, marking a new phase in the evolution of mass collaboration. The plant floors harness the power of human capital across borders and organizational boundaries to design and assemble physical things. A good example of this is Boeing and the development process of its 787 Dreamliner.

“Wiki Workplace” or how mass collaboration is taking root in the workplace and creating a new corporate meritocracy that is sweeping away the hierarchical silos in its path and connecting internal teams to a wealth of external networks. These new workplaces increase innovation and improve morale by cutting across organizational hierarchies in all kinds of unorthodox ways. A good example of this is the Geek Squad program.

Wrapping It Up

Overall, Wikinomics is a pretty good book for everyone interested in the world of business. It poses a new look on subject that evolves fast and it brings new solutions to problems that used to look impossible to solve.