One of the most important changes in today’s digitized economy is the unprecedented opportunity for creativity and entrepreneurism for small- and medium-sized businesses. The growing accessibility of the tools required to collaborate, create value and compete enable individuals and smaller companies to participate in innovation and wealth creation within every sector of the economy.
New low-cost business infrastructures (from free Internet telephony to global outsourcing platforms) allow thousands upon thousands of small- and medium-sized producers to create products, access markets and delight customers in ways that only large corporations could manage in the past.
Processes that were once completely contained within the boundaries of large corporations are being broken down into bite-sized pieces and farmed out to small companies around the world. These small and young companies aren’t hampered by bureaucracies and legacy systems. The opportunities are rampant and rewards are flowing to the nimble.
We are entering a world where knowledge, power and productive capability will be more dispersed than at any time in our history — a world where value creation will be fast, fluid and persistently disruptive; a world where only the connected will survive.
A power shift is under way and a tough new business rule is emerging: Collaborate or perish. Those who fail to grasp this will find themselves ever more isolated — cut off from the networks that are sharing, adapting and updating knowledge to create value.
If you’re a retired, unemployed or aspiring chemist, Procter and Gamble needs your help. The pace of innovation has doubled in its industry in the past five years alone and now its army of 7,500 researchers is no longer enough to sustain its lead. Rather than hire more researchers, CEO A.G. Lafley instructed business unit leaders to source 50 percent of their new product and service ideas from outside the company.
So now you can work for P&G without being on their payroll. Just register on the InnoCentive network where you and more than 100,000 other scientists around the world help solve tough R&D problems for a cash reward.
InnoCentive is only one of many revolutionary marketplaces matching scientists to R&D challenges presented by companies in search of innovation. P&G and thousands of other companies look to these marketplaces for ideas, inventions, and uniquely qualified minds.
Conversely, large corporations are making their managerial muscle available to fledgling businesses. Want to start a niche bookstore but worried you can’t compete with Amazon and its hyper-efficient order fulfillment system? Then hire Amazon to work for you.
HikingOutpost.com was founded by a group of hikers frustrated by the lack of a one-stop shop for hiking books and Web resources. They set out to develop a store that would pair the best books with the best Web resources covering all the major United States regions.
The company partnered with Amazon.com to handle all the credit card processing, order shipping and returns for products sold on this site. The company explains that “This allows us to offer an extremely high level of service and more competitive pricing.”
Today, a fundamental change is occurring in the way companies orchestrate capability to innovate and create value. Smart multi-billion-dollar firms recognize that innovation often begins at the fringes.
Increasingly, these hierarchical enterprises are turning to collaborative business models where masses of consumers, employees, suppliers, business partners, and even competitors co-create value in the absence of direct managerial control. Why is this happening? It’s all about the declining cost of collaborating brought about by digital technologies.
This is what Wikinomics, my most recent book, is all about. Wikinomics is the new art and science of mass collaboration via the Internet that demands that business leaders, regardless of the size of their company, think differently about how to compete and be profitable.
This is more than open source, social networking, so-called crowd-sourcing, smart mobs, crowd wisdom, or other ideas that touch upon the subject. Rather, we are talking about deep changes in the structure and modus operandi of the corporation and our economy.
Wikinomics is important because in today’s global economy, competition can come from anyone and anywhere. Rapid scientific and technological advances are among the key reasons why openness is surfacing as a new imperative for managers.
Most businesses can barely manage to research the fundamental disciplines that contribute to their products, let alone retain the field’s most talented people within their boundaries. So to ensure they remain at the forefront of their industries, companies must increasingly open their doors to the global talent pool that thrives outside their walls. No industry will be left untouched.
Don Tapscott is Chairman of the nGenera Innovation Network and the author of 11 books, most recently “Wikinomics: How Mass Collaboration Changes Everything.” His upcoming book (November 2008) is “Grown Up Digital: How the Net Generation is Changing Your World.”
