Media in the Online Age
Wikinomics is an important theory for this unit and an understanding of it and how will help you write with confidence in the exam when you explore how the media has changed in the online age.
The term was coined in the book, Wikinomics: How Mass Collaboration Changes Everything, by Tapscott and Williams. Wikinomics is a term that describes the effects of extensive collaboration and user-participation on the marketplace and corporate world.
According to Tapscott and Williams, these four principles are the central concepts of wikinomics in the enterprise:
- Openness, which includes not only open standards and content but also financial transparency and an open attitude towards external ideas and resources
- Peering, which replaces hierarchical models with a more collaborative forum. Tapscott and Williams cite the development of Linux as the “quintessential example of peering.”
- Sharing, which is a less proprietary approach to (among other things) products, intellectual property, bandwidth, scientific knowledge
- Acting globally, which involves embracing globalization and ignoring “physical and geographical boundaries” at both the corporate and individual level.
The title of the book derives from the concept of a wiki (Hawaiian for ‘quick’), the most notable example being Wikipedia, in which individuals participate to co-create a product. At its core, this book highlights how the internet is no longer an “information super-highway” (i.e. a way to deliver massive amounts of content and information), but rather “a giant computer that everyone can program.” This creates a mechanism for creating new business models by connecting people simultaneously in new and previously unimaginable ways to create value and to destroy old business models. The web is now a dynamic environment creating communities rather than a static tool for managing transactions.
Quotes from the book:
“There are always more smart people outside your enterprise boundaries than there is inside.”
“The most important lesson to take away for the moment is that emergent phenomena tend to win in the marketplace. Ten thousand interoperating agents can often marshal more bandwidth, more raw intelligence, and more requisite variety than the largest organization. The business challenge is to form – even to foster – symbiotic relationships with emergent structures, since the fundamental nature of self-organization is that it cannot be controlled easily, but it can be steered.
“Smart firms are thinking carefully about how to navigate the field of open versus proprietary technology … This is particularly important in areas like innovation and knowledge management …”
This term is taken from the bustling Greek marketplaces known as ‘agoras’. It is the concept of using the world as your marketplace for ideas and talent. InnoCentive is the quintessential example in this section, and Eli Lilly is highly recognized in this regard.
“The world is your R&D Department. … The deep-rooted ‘plan and push’ modality will give way to a new approach to innovation where companies engage and co-create with the best available talent, wherever it is in the world.”
“Acquisitions, alliances, joint ventures, and selective outsourcing are simply too rigid, and not scalable enough, to drive growth and innovation at a level that will make companies truly competitive.”
Perhaps one of the most striking examples in the book is that of Goldcorp, a stagnant gold mining company. They were facing less gold in their mines and higher costs to extract it. Against the advice of most internal folks, the CEO made the bold decision to open up the company’s most confidential and proprietary asset – its geologic data. This data had been analyzed incessantly by internal geologists and scientists without yielding new information about where or how to find additional gold on their property and in their mines. Within 2 weeks of the release of all the data publicly, Goldcorp received numerous analyses, models, predictions, and approaches for how to find more gold, where to drill, and how to extract it efficiently. They reviewed submissions, paid rewards for those that were most promising and pursued the best ideas. Goldcorp has gone from a $300MM company to a $3B company (10-fold growth) in about 3-4 years. It also has more gold to mine than it had ever dreamed and will be profiting from their existing mines for years to come.
Before launching an “ideagora” companies need to understand and define clear goals and guidelines for what kind of idea marketplace they want to create and how they will derive value from that marketplace. “Smart firms will build their R&D organizations around a core of question askers and outsource most of the problem solving.”
The line between consumers and producers is blurring in some areas. The most notable example in this category is Lego. A prosumer approach is not to be confused with customer centricity – where producers pay close attention to customer needs and allow customers to select from a variety of features to ‘customize’ a product. Prosumerism is allowing the customer to co-create products with you and to share them with other customers.
In 1998, Lego released a product with programmable pieces to turn its interlocking blocks into programmable robots and machines. Shortly after the release of the product, consumers starting hacking the software and creating their own programs to do much more than what Lego engineers had designed. Initially, Lego threatened to sue those who were ‘violating’ their software license, but quickly reversed their position when they realized that they had an enormous source of creativity to co-develop their toy. Lego now has a web-site (mindstorms.lego.com) where users can share software for programming Lego toys. Furthermore, Lego offers free downloadable development software so that consumers can easily make new creations and share them with other consumers. “It’s a bit like open source Lego.”
“Lego’s fusion of mass customization and peer production remains rare enough in today’s consumer products market to make the idea particularly outstanding.”
Strategically, Sony PlayStation and Apple iPod, for example, have decided not to take this path of opening up their systems for remodeling and co-creation by others. To date, they are controlling their inventions because they see more value in having a dominant proprietary approach rather than an open approach where value is gained by sharing the ‘wisdom of the crowd.’ We will see how long this last, especially since Apple failed with this approach 2 decades ago with the PC.
“Industry must come to a realization that they can hold a great deal more in an open hand than they can in a closed fist.”
Another example of prosumerism is the reader-compiled on-line news called digg. Stories are posted by the masses and readers vote on stories that are good or send them to their friends. The more activity a story gets, the more it gets promoted to the ‘front page’ of the on-line news. Presently, about 150,000 users contribute to digg. The readers are also the producers.
This comes from the early Greeks who wanted to create the greatest library that contained all the knowledge of the world – books, histories, literature, science, etc. – the fabled library at Alexandria. The most notable example of this is Google, which is compiling huge libraries of digital information. The authors state the human knowledge doubles every 5 years. [Note: I have read that human knowledge doubles approximately every 3 years, and has been doing so for as far back as anyone can evaluate. Of course, that means that 90% of everything we know today has been discovered in the last 10 years – and that statement is true at anytime in the course of history.]
The Earth System Grid (ESG) is building huge database from weather station grids documenting the Earth’s weather. There is the Human Genome Project as another open source of rich genetic information. The European Bioinformatics Institute is revolutionizing the integration of vast amounts of biological data from very different data sources – genetics, geographic distribution, taxonomy/lineage, etc. GenBank has a repository of 100 gigabytes of genetic code on 165,000 organisms, which will allow us to map entire ecosystems, not just individual organisms.
Interesting statement: “These microscopic spirals of DNA amount to something like an operating system for humans.”
Here is a 20 minute podcast on, ‘What is Wikinomics?‘