The Coming World of Collaboration - Follow up

Howard Rheingold, author of Street Mobs and invited lecturer at California’s renowned TED conference explains the phenomena of collaboration and its evolutionary effect on creating new forms of wealth and perhaps reforms to traditional economic theory. He initially notes that traditional success in both business and politics was fueled by the notion of Darwin’s biological theory of evolution; that the strongest and fiercest survive. But while this ideology has held true throughout the life of capitalism – he’s sure to emphasize that capitalism will continue to rule – the birth and growth of technology has vastly spread cooperation, collective action, and complex interdependencies. This, he notes, has forced competition to make a little room.

What Howard is really trying to get across to us is that through the cooperation, collective action, and interdependencies new forms of wealth can and are being created. In an example he gives early in his lecture he compares this collaboration to prehistoric times when small family units survived by hunting small game like rabbits and other animals. At some point however, hunters gathered together and collaborated to hunt the massive mastodon. His point being that today we can collaborate to conquer bigger “game.”

While the ideas presented could be criticized as rudimentary, it’s no farce that this level of collaboration is occurring today and is being led by some of the world’s biggest corporations. IBM, Sun Microsystems, and other leading IT firms are open-sourcing much of their software and encouraging other developers, be it graduate students or high school kids, to work and advance the available research. Toyota gives extensive training to its suppliers to help them increase their production efficiency even though many suppliers also work with their direct competitors. Even within these fierce markets, companies are opening up and welcoming collaboration. Why? Rheingold argues this is happening because it is a certain kind of sharing in self-interest.

For example, by allowing bloggers to earn money through its Adsense program, Google enriched itself by creating a new market for advertisers. Amazon.com opened its application interface to over 60,000 designers which in turn has grown the number of Amazon stores significantly while making money for virtual store owners. EBay, the auction giant, created an enormous market by creating a feedback mechanism that allows users to trust each other. All these examples reinforce how collaboration can turn a Prisoners Dilemma into an Insurance Game.

The Prisoners Dilemma, as in all game theory, states that “the only concern of each individual player is maximizing his/her own payoff, without any concern for the other player's payoff. The unique equilibrium for this game is a Pareto-suboptimal solution—that is, rational choice leads the two players to both play defect even though each player's individual reward would be greater if they both played cooperate.” The distrust players have for each other in this model is what dictates their rationale. If both could trust each other, they would be apt to work together and obtain larger rewards. This model in which trust is present between actors is known as the insurance game. This is what is beginning to happen. The most evident example of this is EBay. By establishing trust between buyers and sellers a huge new market was established where lower prices are often found for buyers and many new markets for goods that normally can’t be sold are now a click away for sellers.

These actions are all about self-interest to grow and add more to the already existent. Rene Descartes, the famous philosopher explained that we need a new way of thinking to understand absolute truth. While absolute truth would be nice, we can start by understanding the sociological and economic evolution that is the future of commerce and innovation. Globalization is shaking the foundation of traditional thought. To finish, I will leave you with the question Rheingold poses in his book Street Mobs. Are the populations of tomorrow going to be users, like the PC owners and website creators who turned technology to widespread innovation? Or will they be consumers, constrained from innovation and locked into the technology and business models of the most powerful entrenched interests? The answer seems to be getting clearer.

Sources:

TED Lecture – http://www.ted.com/talks/view/id/216

Wikipedia: Game Theory & the Prisoners Dilemma –

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The Coming World of Collaboration

Howard Rheingold talks about the coming world of collaboration, participatory media and collective action -- and how Wikipedia is really an outgrowth of our natural human instinct to work as a group. As he points out, humans have been banding together to work collectively since our days of hunting mastodons.

You can learn more about Howard Rheingold and his work by visiting his blog at http://www.rheingold.com/

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How Collaboration Can Enhance R&D

Source: http://hbswk.hbs.edu/item/5750.html

Alan MacCormarck, a professor in the Harvard School of Business, conducted research with a team on how collaboration is changing the way Research and Development takes place in today’s businesses. He explains to readers that while traditionally companies gained competitive advantages through internal research and patented intellectual property, global collaboration and partnered development is becoming a more effective means of gaining those oh-so desired competitive advantages.

MacCormack points out that one reason for collaboration is product complexity. Cars now send maintenance data to dealerships and sneakers have microchips in them. His point being that it’s just too hard for one firm to master all these technologies under one roof. From an economic perspective one can easily see that what’s going on here is specialization. Rather than trying to do everything, firms are now partnering and each focuses on what it does best. Brilliant!

While this seems like such a logical way to operate in a flattened world, businesses struggle to collaborate effectively. This stems primarily from an ideology that innovation collaboration is about lowering costs. MacCormack explains that many firms adopt what is called a “production outsourcing” mindset to collaboration. In other words, firms choose to focus on lowering costs and forgo other potential opportunities. “Production and innovation are different activities. While the former seeks to replicate an existing product at lower costs, the latter seeks to discover something entirely new and valuable.” However, if done properly, the cost benefits to innovation collaboration can be huge. Researchers were quick to note it is one of the main benefits.

There are other benefits that go beyond cost reduction. “Collaboration can help to shorten development lead times and increase capacity; it can facilitate access to skills, capabilities, and intellectual property that a firm does not possess internally; and it can allow a firm to acquire relationships and knowledge in a part of the world where it has no experience,” MacCormack says.

Innovation collaboration is a big transition for most businesses, but companies like Boeing and Microsoft are having great success at it. What you get out of innovation collaboration is efficiency and savings, but it’s important to note the irony that those most concerned with saving money often have a hard time actually doing it. Letting the cost savings come as an added benefit is the key to success at this method. It's interesting because we can see how the variables in the globalization equation are interacting. With the vast amounts of technology available, along with increasingly complicated business models and legal systems, it’s insanely difficult for a firm to develop every facet of a complex product and the world is adjusting to that by understanding we have to work together to continue to be successful.

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Globalization does my work for me!

What if I could click a button and have someone else write this post for me? Believe it or not, some people are now given this luxury in the workplace. “OOF,” which stands for Office of the Future, is the result of years of flattening and globalization and companies like Pfizer and other major corporations are taking advantage of it. many other people are focusing on globalization and their wheels are turning too.

As the result of a major financial crisis in 2005, Pfizer had to create ways to work more effectively while also reducing costs. Senior director of Organizational Effectiveness Jordan Cohen, who at the time was reading Thomas Friedman’s “The World is Flat,” decided to take advantage of globalization and convergence. After some research he found that employees were spending 20% to 40% of their time on tasks that could be done by someone else. Who did he call? The companies Friedman mentions in Chapter two of his book (The World is Flat, 2005)!

This scenario is as real as it gets when we’re talking about outsourcing and globalization. What’s more fascinating are the initial results and the struggles that occurred. At first things went poorly. Assignments were often flawed with typos or incorrectly analyzed data. The problem stemmed from both sides of the world. Pfizer employees were communicating ineffectively and Indian firms found it difficult to tackle the multi-step projects and were unorganized. As a result the process had to be reorganized and tweaked to work effectively. Office Tiger, the Indian firm working with Pfizer, decided it would create teams that would tackle certain assignments, and the work would be passed around. Speculation by Cohen and others circled management meetings as people discussed the high number of “handoffs” for outsourced projects.

Fortunately after minor adjustments the pilot took off and the program grew to two-hundred Pfizer employees. The benefits for Pfizer are huge. The amount of time to complete projects is cut close to half, while savings are huge. “Pfizer pays $15 to $35 per worker hour, far less than they would pay the McKinseys of the world, whose rates typically start at $215 per hour.”

Globalization is an unbelievably significant opportunity for businesses. This article is significant in showing how globalization can be helpful to your operations and employee effectiveness. But information outsourcing isn’t without its own flaws. The convergence of technology and collaboration has been available for years, but even in 2008 it can still be a struggle to effectively integrate these tools and processes into your business. This was clearly seen as Pfizer struggled to identify an effective process for outsourcing menial tasks. However Cohen notes that after the kinks had been worked out things we’re significantly more efficient. “It’s kind of amazing,” he said. “I wonder what [our employees] used to do.”

Source from Fast Company February 2008 Issue.

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