Ross Mayfield's Weblog

The Edge of the Organization in Turbulent Times

  flap your wings 
  Originally uploaded by hanssolo

Yesterday I was talking about the US recession with my boss, Eugene Lee.  Our best customers are looking at the downturn as an opportunity.  A chance to optimize, innovate, adapt and seize new opportunities.  But this isn't the case for most of corporate America.  Eugene shared an interesting insight about the role of the edge of and organization and how its at risk in turbulent times.

The edge of the organization is the source of innovation and growth.  Its also where an organization can sense and respond to change.  Ironically, during a downturn, organizations often shave the edge of vital people and resources.  And the strains to do more with less hampers communication between the edge and the center, just when the center is making its most vital decisions.

JSB and John Hagel noted the edge is the only source of sustainable innovation, and the edge is becoming the core. On the same day I came across a post by JP Rangaswami, sparked by an article in BusinessWeek that crossed his social news feed.  Here's a big excerpt:

They make a number of points really well, points that I have written about before, but without the crispness and coherence they bring to the table:

• Innovation happens at edges
• Youth shouldn’t be discounted, their demographic group has edges as well, edges where innovation takes place
• We need to build platforms that sustain many open edges in order to foster innovation
• When building the platforms, we need to ensure that the time/money costs of edge innovation are kept low

The “lessons” piece at the end, while succinct, is really worthwhile. Don’t dismiss it lightly just because you may have come across variants before:

• Create more edges
• Provide better ways to connect at the edge
• Demographic edges are fertile grounds for business innovation
• Experiment and iterate rapidly
• Social, technologic[al] and economic are inextricably intertwined

And, of course, the paragraph at the end.

“Social interaction often precedes economic activity.”

Otherwise known as cluetrain. Markets are conversations. Relationship before conversation before transaction.

Just as new solutions are emerging to enable effectiveness for the edge, it may be more critical than ever.

The Wikinomics Playbook

UPDATE: An interesting related project by Penguin Books is A Million Penguins, letting anyone edit a book to be published.  The wiki is down at the moment, but PaidContent notes it began with “It had snowed, and was now raining. Gritty slush covered the pavement. Sharp crystals of snow decorated grass.”  Reuters notes the challenge is finding “believable fictional voice” within the mass collaboration.  This was a big challenge for group editing of the Wired Wiki story.

The last chapter of Don Tapscott's new book, Wikinomics, invites readers to write it: “Join us in peer producing the definitive guide to the twenty-first-century corporation on www.wikinomics.com.”  Today we launched a Socialtext wiki for the Wikinomics Playbook, where people can not only learn about the power of mass collaboration, but participate in it.  The book is already one of the fastest selling business titles and is an excellent primer on how models of collaboration are unfolding from open source to blogging to wikis in the enterprise to enable people to participate in the economy like never before.

The second to last chapter is about enterprise wikis.  Half of it discusses how Best Buy is using a wiki knowledge-base for the Geek Squad.  The other half is an interview with yours truly and shares some of Socialtext's success stories. The first chapter is available online as a pdf.

 

This is a great example of how a book can be augmented with a wiki, as most books are out of date by the time they are published, never quite finished and have the potential for participation. Last month we helped Larry Lessig share the entire Code 2.0 book in a wiki.  I expect that soon such commons-peer production, a wiki for every book, will be common.

SuiteTwo Launched: Enterprise 2.0 in a Box

A small dream of mine came true today.  We've been preaching an ecosystem of tools for some time now.  We've helped customers stitch them together in interesting ways.  In fact, Andrew McAfee's original article on Enterprise 2.0 was borne from observing what was happening in one of our customers and projecting into the future.  Well, future happens fast.

Looking back, look what I blogged just before the first Web 2.0 conference:

I'm providing a workshop on Enterprise Social Software with Socialtext Customer Mike Pusateri from Disney.  You might recall his great presentation at the at the O'Reilly Emerging Technology Confererence in February. Mike and his team are leading the way with how they are using lightweight web-native tools as a platform for productivity. Not just how they use Socialtext for project communication, but how they stitch it together Moveable Type and Newsgator for an ecosystem of tools with RSS.

That was then, this is now. This morning I provided a workship on Enterprise 2.0.

Today we announced SuiteTwo, The Enterprise 2.0 Suite powered by Intel.  Intel is distributing the Best of Breed wiki (Socialtext), blog (Six Apart), Feed Aggregation (Newsgator) and Feed Publishing (SimpleFeed), supported by Spikesource, through its channels including Dell, NEC, Ingram, Novell and Red Hat.

This fulfills Andrew McAfee's vision of Enterprise 2.0.  In a box.  Made simple for Small-to-Mid-sized Enterprises.  Extensible because we've all supported open APIs.  Enterprise 2.0 is freeform social software adapted for organizations.  SuiteTwo is the first offering to realize the SLATES paradigm:

SLATES = Search | Links | Authorship | Tags | Extensions | Signals

In the latest issue of the Harvard Business Review, McAfee went further to distinguish this Network IT (NIT) from Functional IT and Enterprise IT:

As the DrKW example illustrates, NIT’s principal capabilities include the following:

? Facilitating collaboration. Network technologies allow employees to work together but don’t define who should work with whom or what projects employees should work on. At DrKW, ad hoc teams have formed because employees read one another’s blogs. These teams have used the wiki to accomplish tasks, and they have disbanded without orders from senior executives.

? Allowing expressions of judgment. NITs are egalitarian technologies that let people express opinions. DrKW employees use blogs to voice their views about everything from open-source software to interest rate movements.

? Fostering emergence. “Emergence” is the appearance of high-level patterns or information because of low-level interactions. These patterns are useful because they allow managers to compare how work is done with how it’s supposed to be done. Emergence is also valuable for users. For instance, employees can easily search and navigate DrKW’s blogs and wiki for trends and data even though nobody is in charge of making them easy to use.

...Employees exploit older NITs such as e-mail and instant messaging on their own, but business leaders have a role to play in exploiting newer technologies like blogs and wikis. They can help sustain and increase the use of complements to make the technology continually more effective, primarily by guiding users. Darren Leonard, a managing director in the global equity derivatives business at Dresdner Kleinwort, recalls how he got his colleagues to use the company’s wiki: “First, if a wiki has no structure, it’s perceived not as an opportunity but as anarchy, and our people have no time for anarchy. I went back to my initial pages and rewrote them to be a lot more directive. For example, I made a page with the agenda for an upcoming meeting and asked people to add to it. Second, wikis have to be clearly better than other ways of collaborating. There have to be uses [for them] that demonstrate their power. One of these uses came prior to a special senior management meeting where we could bring questions from our groups and get them answered. I put up a page…asking my [team members] what questions they wanted me to ask on their behalf. People used the page to post questions, edit them, and discuss which ones were the most important and why. That really accelerated wiki use. Finally, old habits are hard to break. The tendency is for people to keep using e-mail because that’s what they know....I have to [tell them], ‘I’m not reading e-mails on this topic. Use the wiki’ or ‘Everyone’s assignments are on this page―use the same page to report on progress.’”

Lead users and enterprises already work this way today.  Only they do so without usable efficiency.  Integrated single sign-on, search and tag cloud are just the beginning.  One click subscription to a page, blog post, search query, report, weblog and wiki make feeds usable (unlike today's user experience, when they click on an orange icon and think their browser is broken).  Rapidly form groups, draft together on a wiki page, publish to a blog and track results. 

Beyond making such tasks efficient, the benefits to productivity, discovering emergent intelligence and high-engagement marketing are significant.  Very soon a user will wake up in the morning, log in to SuiteTwo, immediately recognize something emerging.  With the top blog posts telling her what the company is talking about, the top wiki pages showing her what people are working on, top posts from the outside that her company is subscribed to and the feedback from what they are publishing
-- something will emerge.  She recognizes the opportunity, pulls on the social fabric and easily forms a diverse group of experts.  They follow new feeds and generates others while working with a little productive friction.  They develop a plan and draft a new offering in the wiki.  They publish to a public blog and track where it goes. The feedback loops continue, she goes home for the day and the organization is bound to adapt again.

This isn't your Dad's enterprise, but one you will be working with soon.

The World is Spiky

John Hagel has a great account of a spike heading for your aggregator:

Tom in his best-selling new book says “The World Is Flat” and Richard in a new article in the October 2005 issue of Atlantic Monthly asserts “The World Is Spiky”...Richard focuses on one particular quote from Tom’s book: “In a flat world you can innovate without having to emigrate.”  Richard responds that location still matters and that, by a variety of measures, the world is extremely spiky ? meaning that activity is very concentrated in a relatively few locations.

Let me play Harry and introduce a frothy market proof point from today's Boston Globe (I'm also quoted in it on the bottom-up aspect of Web 2.0):

Web 2.0 companies seem to be concentrated in Silicon Valley, not Boston. Mike Hirshland, a general partner at Polaris Venture Partners in Waltham, told me he has been doing a lot of prospecting for deals on the West Coast and expects to finalize an investment in a Web 2.0-type company soon.

''You don't hear the term Web 2.0 much in New England," he said. The lone local company that was demonstrating its technology at the conference was Brightcove Networks, a Cambridge firm that is building a system to enable anyone to publish video on the Web and then make money when it's viewed, either by inserting ads or charging on a pay-per-view or subscription basis.

Now this may be one VC positioning himself for dealflow, but location matters for some things.  The In the Valley, the difference is that open source and easy group forming has combined to foster a salon of code atmosphere that harkens back to the days of homebrew yore.  There is a culture of sharing that underpins today's commercial spike.

The end of John Markoff's book pits hobbyists (Homebrew) vs. commercialization (Microsoft) as the conflict of our industry for years to come. A balance has been struck with commercial open source that supports both freedom and profit/

Wikimaniacs or Wikirealists?

Wiki maniacs were in full attendance at Wikimania last week.  Not just the participants in the Wikipedia community, but users and developers of open source wiki.  Seventy of 400 attendees were members of the press, which served to amplify the impact of the event, but also highlight the changing of the guard. 

Jimmy Wales was busy doing more than putting a face on a community with back to back interviews throughout the conference.  One interview with a German daily, Sueddeutsche Zeitung, was poorly translated into a Reuters story that ran with the false lead that Wikipedia was going to tighten editorial controls and consequently Slashdotted.  Really, Jimmy was talking about Wikipedia 1.0, an effort to develop a print version.  Refutations here and here.  When we were laughing about the episode, Jimmy said, "why would we *ever* do that, it's not like a document is ever finished!"  If only the story broke on Wikinews.

Back in the trenches, real progress was made.  This was the first time much of the virtual community came together face-to-face.  The experience was more than meeting someone whose' blog you have read -- but someone you have worked with.  Eugene Kim's blog will give you a sense of all the micro-meetings that took place. When you gather enough wiki developers around a table, something good is bound to happen, such as a anti-spam initiative.  The event was extremely diverse and full of surprises like none other than Mitch Kapor:

"I've seen things like this happen once or twice before," observed Mitch Kapor, software pioneer and head of the Open Source Foundation. "We're at the Big Bang of the next information revolution."

Mitch isn't overstating it.  Wikipedia founder Jimmy Wales gave his keynote on 10 Things that Will be Free, perhaps because once you have realized freedom, it extends itself:

1. Free the Encyclopedia!
2. Free the Dictionary!
3. Free the Curriculum!
4. Free the Music!
5. Free the Art!
6. Free the File Formats!
7. Free the Maps!
8. Free the Product Identifiers!
9. Free the TV Listings!
10. Free the Communities!

I focused my keynote on enterprise wiki case studies, but noted what should be an obvious extension -- the freedom to share will be free, as in beer.  Stay with me on this... 

Recall that commons-based peer production provides a framework for understanding the difference between production models driven by price (market), contract (firm) or sharing (commons). Philip Evans provides a hint at why production may be shifting from markets to the commons:

One of the simplest arguments I've used to get people out of a traditional mindset is to point out a statistic -- the cost of transactions in the U.S. More than 50% of the non-government GDP in the U.S. is based on transaction costs.

Supposedly, price should be an efficient signal for communicating what to produce.  However, when you have price, so to follows a panoply of middlemen from accountants to lawyers.  When you take price out of the equation, particularly in small groups and with network distribution, you reduce market friction.  Wikipedia is demonstrating a model of content production based upon open licensing with collaboration at scale.  Whereas open source software development pioneered this model, they are scaling it even further, if for no other reason than content does not have the interdependency that constrains the development of code.  When you look at Jimmy's list, note that each are ripe for models of scaled open production. 

Our freedom to share is clearly under attack by prior property regimes and new ones such as DRM.  As producers, we have discovered our own power to share under new regimes such as Creative Commons licensing or production and distribution models such as open source and open content.  As consumers, most of us have yet to recognize the limitations we face or the new ones being constructed around us.  As either a consumer or producer, the shift from markets to commons is one of freedom -- and economic benefit.

If you wonder if there is a business in all this, let me make a simple argument.  The disruption of open models of production is the greatest arbitrage opportunity in modern industry.  We do not yet know what value will remain from the 50% of GDP that is transaction costs. Steven Weber noted that unlike transaction cost analysis to inform buy vs. build decisions -- we do not have a framework for when to open property, but many companies are taking the risk. Craigslist, for example, generated $10 million in revenue while cannibalizing $50-65 million from Bay Area newspapers.  This is not just because the net decreased distribution and search costs to unlock latent demand in long tail-esque fashion.  Strangers are trusting one another to build a common resource and community -- with a network enabled structure that has decreased coordination costs and greater social incentives. The chasm of the long tail is peer production, and we are just beginning to understand it.  We are driving transaction costs out of the equation so we can reinvest and create higher order value.

Hopefully that help clarify the shift from markets to commons, but what about the shift from firms to the commons?  Again, transaction costs come into play, but beyond Coase's argument that decreased transaction costs lead to vertical disintegration of the firm.  Thomas Malone has argued the trend of decentralization as an inevitability because decreasing transaction and coordination costs make it possible while providing greater social incentives for employees and better decision making at scale.  John Seely Brown and John Hagel also point to the increasingly distributed nature of business, but they make a more profound argument for the value of social networks within the enterprise to provide a sustainable edge through innovation.  Enterprises have sought to drive down costs through business process automation and outsourcing as a competitive advantage.  But only putting people back in the process to handle exceptions with the freedom to innovate provides a sustainable advancement.    The only thing is, to unleash the creative capability of employees requires sharing control.

Which brings me back to sharing will be free, as in beer.  Under the construct of a firm, employees are contracted to produce and the firm gains property.  They largely have the freedom to share ideas and they have the right to break the contract at-will in many jurisdictions.  But while under contract, they do not have the right to share, that is owned by the employer for the purpose of exclusive sharing with the firm itself. 

But what happens when an employee wishes to contribute to the commons?  Contribute to an open source project? Or blog?  Or contribute to Wikipedia?  In many companies the employee does not have the right to engage in external productive communities without pre-approval.  So they do so anonymously, or on their own time, without support from their firm.  My suggestion, is that as companies open they will learn that they are loosing value by not letting employees own the right to share. 

The right to share is different from the freedom to share, because when you own the right you can contribute property to the commons at your best discretion.  When a developer has a great idea at two in the morning for an open source project, having to seek permission from an employer before engaging hinders the creative process.  When you look at commercial open source companies, you may see new frameworks arise that grant this right to employees.   

The frontier of decentralized organization is granting employees the right to decide how to share, not just the freedom to share in condoned mechanisms, in areas they are not paid to do so.  I think we just beginning to understand how to enable self-organization so we can innovate at scale.  I'm sharing this thought in hopes we might learn where we are going.

Open Source Innovation

In the event I can't get all this off my chest on my panel at OSBC on Open Source Innovation, here are my thoughts on a couple of levels.

While we picture the inventor as a solitary, if not asocial genius --  this stereotype is not often the case or on the topic of innovation.  Invention is a disruptive breakthrough from pure research, that provides a platform for others innovate.  Innovation is implementing something new, largely an incremental process of improvement at the margin.

Innovation springs from diverse groups with specialized expertise.  The greatest breakthrough for open source, IMHO, is applying collaborative methodologies for development.  Inherent in collaborative practices is a greater opportunity for innovation than competitive practices. 

Some norms such as the right to fork, open participation and self-organizing contribution strengthen this opportunity and provide models for consideration beyond software development.  When a project can be forked, it provides a balance against poor management (albeit at a cost) and fosters a leadership style that lets other express ideas and have them be heard.  Leadership forms the core of a social network of innovation, being an arbiter of information and quality outcomes.  Open participation is essential to innovation, to bring in new people with new ideas.  By self-organizing I don't mean some high falutin' emergence, but the simple freedom for people to choose where to contribute based on their expertise and personal motivation.

One body of work I suggest you follow is John Hagel and John Seely Brown leading up to the release of their book next week, The Only Sustainable Edge.  In their recent HBR article, they suggest that innovation is the only source of sustainable competitive advantage.  Most of the opportunities to compete on the basis of efficiency (automating transactions) are gone.  Now the opportunity is managing exceptions with groups of diverse specialization under constraints, particularly across organizational boundaries -- where productive friction occurs, a source of innovation.  They emphasize the use of a reference model and rapid prototyping.  While their approach to sustainable competitive advantage emphasizes continual process innovation, my understanding of this model is very similar to open source methodologies.

Open source practices are proliferating outside software development, most noticeably in open or free content communities such as Wikipedia.  This is the topic of a larger post, and in fact my contribution to an O'Reilly book on open source, but I wish to emphasize what might be the core issue of open source innovation. 

Part of how Wikipedia is able to enable collaboration at unprecedented scale is not just how there are less dependencies than with developing software.  Having a reference model for what an Encyclopedia should be provides an organizing framework, design benchmark while reducing coordination risks and moderation costs.

Consider for a moment the most successful open source projects.  Linux, Apache, MySQL, JBoss and even Firefox -- all have established reference models.  Further, there is an almost competitive drive to outperform against proprietary incumbent products.

You may think this means that open source is not innovating when building substitutes.  But behind the curtain there is a remarkable level of innovation in community process.  In fact, a third model of production, commons-based peer.  I'm writing part of this while sitting in an Open Source Initiative meeting, watching this process at work (Just overheard in a debate about licensing, Nelson's Maxim: There are no such things as problems, there are only unmet business opportunities).  The initial innovation is perceived as driving cost while pooling risk in production processes.  Geoffrey Moore suggests an increasing focus on mission critical software that is context, not core to business.  But this isn't how many people think of innovation.

As Larry Augustin points out, the next wave in open source may be in applications.  I would suggest areas where existing reference models are well established are under the greatest threat.  Applications are more visible than Infrastructure (BitTorrent which accounts for half of the net's traffic, but how well is this innovation known?), and the story of product innovation within open source may very well come out.

Innovation does work hand in hand with journalism.  Innovation is implementing something new, journalism covers what is new, readers learn what is new and perhaps use or talk about what's new.  The point is that some of the best innovation occurs in the substrate of what is otherwise infrastructure or process, but marketing shapes our understanding of innovation and validates what is new.

But let's bring this back to the individual developer.  What is truly new is their ability to freely contribute.  For companies, they have wonderful opportunities not only to drive down cost and pool risk -- but to tap into the social incentives that drive people to produce.  The problem is these cooperative opportunities require enterprises to give up some control.

At Socialtext the interesting open source innovation isn't our support for Kwiki, the hybrid open source business model or how users of our tools employee open source practices.  It is how we encourage our employees to participate in communities outside the organization.  About 20% of our development time goes back into our open source product.  There are times where a certain feature may not be ripe for commercialization.  But giving them the freedom to experiment with creating open source plugins may lead to something that directly benefits the business.  Community participation goes beyond coding, to blogging, volunteering with non-profit organizations to political activism.  All of which not only helps work-life balance, but refreshes creativity and builds relationships across boundaries. 

I would suggest that open source could improve management practices, if we can get past treating our employees as competitors.  Through sharing, innovation proliferates.

Innovation as a Keyword for News

Stopping by the Second Innovation Journalism conference, defined as journalism dedicated to the coverage of innovation.  Here are some notes from last year.  Heading to OSBC later, so can only share some notes...

Notes from a presentation by Johan Bostr?m, Reporter and Editor, G?teborgsposten on Innovation as a Keyword for News.

One problem with covering innovation is there is no keyword for monitoring it.  When he met Tim Berners Lee in 1997, he said Meta data "is essential to unleash the full potential of the web."  He didn't believe people who authored sites would categorize them, but with increasing anarchy we would need indexing.  He didn't forsee Google, but did see the need for a meta data system.  Most pages today have meta tags.

Innovation is a complex term, almost always used as "implementing something new," but copywriters and others use it differently.  Shows poorly categorized content  People will find their news sources, even if they are not properly labeled, but categorization will help grow the discipline.   The thrust of his argument is that news sites should have a separate category, section and news feed for innovation.

Describes a hierarchical taxonomy, highlighting "04 003 009" which is wireless technology.  Google thinks otherwise, offering a product search including Zoids and a Cricket Collection; and this result from the Bible 04:003:009 And thou shalt give the Levites unto Aaron and to his sons: they are wholly given unto him out of the children of Israel. IDG News Service uses 18 categories, but they are using a more complex multilevel system in response to their customers.

This presentation seemed slightly odd to me, not just because we have tagging and folksonomies.  But innovation is one area that couldn't possibly conform to a top-down taxonomy.  Change is the only constant and I know innovation when I see it.

Guy from Reuters: DMOZ is an initiative where the users classify, and they have an innovation category.  They could use innovation as a category, but there is an established process that would be a barrier to getting it up.  Does see demand for innovation as a category. 

Marc Ferranti from IDG is dubious on using it as a story category.  You can drill down from headlines to stories, can do searches (great if you know what you are looking for) and look by topic.  Our editors told us that our categories were too broad.  Ideally we want our writers to help define what the impact is of anything they cover, so innovation should be a topic for every story.  Over time that might change with economics and globalization.  As Estonian programmers (sic) move up the chain you will see more of a need for the US to be innovative and a demand for understanding the process of innovation.  Talking about 65% of CIOs say that bringing innovative ideas to the table a is a significant, something that will only grow.

I had to ask about tagging (one suggestion for using the keyword innovation is this, or this, I suppose), which the panel hadn't heard of, but they expressed promise in organization being driven from the bottom up.  Google already categorized innovation as a keyword for commercial purposes.  More of open source practices will be included media ventures.