Collaborative Strength of Small Business

Take Wikipedia have created an encyclopedia with a bunch of people they never met, and a million people who speak a dozen languages with a quality that’s just as good as Encyclopedia Britannica.

Linux operating systems dominates the world for medium and large computers and there are 150,000 Open source application projects around the world today. Now there is a mass collaboration effort to create a mutual fund called Marketocracy. And now mass collaboration can also help create physical goods and services. The Chinese motorcycles industry is hundreds of little companies that cooperate on the internet.

Another important factor is the changes corporations are undergoing. Vertically integrated corporation are unbundling their focus on companies that work within networks of business webs. This is called outsourcing but it’s actually much bigger than that. Rather than acting as supply chains that outsource something to their suppliers in India, companies can now act as peers. Indian companies can participate as peers in the business web of an American company. Take the Boeing 787 Dreamliner. The old Airbus approach was to create a specification of 30,000 pages and then ask supply chain to bid on them. It was a hierarchical supply chain and they tried to get the lowest cost. But Boeing treated their suppliers like peers, making important parts of the aircraft like the engine, fuselage, the electronics the interiors. So instead of giving them a 30,000 page document with specifications Boeing gives them a 30 pages document, and encourages for innovation of some critical parts of the aircraft on the internet on a global basis. The Dreamliner has huge back orders. The Airbus old way is failing and they may never come to market.

The old order: Mass collaboration is not just a better way of doing things. So what does that mean for companies like a Microsoft or an Intel? Well they all need to change. If Microsoft sticks to its old ways it will fail as a company, but Microsoft is already changing. They have embraced the Web 2.0 and have softened their attitude towards Open Source like Linux.

But what changes will organizations have to undergo to embrace mass coloration? Many people argue that will result in people getting laid off. But ever since P&G embraced this, its R&D department has become bigger. Now almost half of its innovations come from outside. We have something called the not-invented here syndrome where people fight against external innovation because they want to plan things for themselves. At P&G they call it PFE syndrome – Proudly Elsewhere. People are motivated and compensated to look for innovation outside a company. It’s a cultural change about here.