Professional Crowdsourcing: Harnessing Collective Smarts
From Throwingsheep
Perhaps the most vaunted advantage of Web 2.0 tools in organizations is their power to harness “collective smarts” through mass collaboration.
The great promise of Web 2.0 for corporations is that it fosters horizontal cooperation and thus brings an organization’s best talents to problem-solving and decision-making. Collaborative efforts not only break down organizational silos, but distribute rewards according to demonstrated talents and merit. They can also extend collaboration to a company’s customers who are encouraged to join the conversation.
Companies that understand the basic dynamics of this market e-ruption and are adapting by transforming into “Enterprise 2.0” firms. The generally accepted definition of Enterprise 2.0 is a corporation that deploys Web 2.0 software tools like wikis and blogs to enhance value through horizontal collaboration. In its broader definition, Enterprise 2.0 encompasses a vision advocating new modes of capitalist production and social organization.
Corporate executives are becoming increasingly aware that innovation should not be conceived as restricted to walled-off R&D departments, but promoted as a dynamic social process of open innovation. As a McKinsey Quarterly report published in June 2008 noted: “Executives in a number of companies are now considering the next step in this trend towards more open innovation. For one thing, they are looking at ways to delegate more of the management of innovation to networks of suppliers and independent specialists that interact with each other to co-create products and services. They also hope to get their customers in to the act.”
McKinsey cited the well-known example of LEGO, which invited its customers to come up with new product models and paid for the best ideas. General Motors, too, is a convert to Web 2.0. GM uses its internal blog, FastLane, as a corporate “focus group” that attracts some 5,000 visits daily, including from consumers. Proctor & Gamble has famously outsourced its R&D through sites like InnoCentive, which crowdsources product development and problem-solving for its clients. InnoCentive, an R&D braintrust spinoff from drug maker Eli Lilly, demonstrates that, more often than not, the best brains are somewhere outside the corporation. A.G. Lafley, P&G’s chief executive, has said he wants 50% of the company’s product development crowdsourced outside the company. Other global corporations that have integrated social networking into their organizational strategies include FedEx, Shell Oil, Motorola, General Electric, Kodak, British Telecom, Kraft Foods, McDonald’s, and Lockheed Martin.
Perhaps the best-known example of a Fortune 500 company converted to open innovation IBM. After the Big Blue chip business had lost $1 billion in 2002, the company was desperate for a new strategy. Crisis forced IBM to take drastic measures. The solution was a new “open ecosystem” that opened up its chip R&D to outside partners. And it worked. IBM’s chip division quickly turned the corner and began booming. IBM also launched its “WikiCentral” in 2005 as a vehicle for internal expertise. A year later the Big Blue organized a brainstorming platform called InnovationJam which was soon attracting more than 150,000 participants inside and outside the company to help identity emerging business opportunities.
Forrester forecasts robust corporate spending on Web 2.0 software – including blogs, mashups, podcasts, RSS, widgets and wikis. It projects consolidated Web 2.0 spending growth at 43% annually -- from $764 million in 2008 to $4.6 billion in 2013. Still, it can hardly be claimed that Fortune 500 companies – with the exception of a small clutch of leading-edge giants like IBM – are stampeding to join a Web 2.0 juggernaut. While $4.6 billion looks like a big number, it’s only a tiny fraction – less than 1% -- of global corporate spending on enterprise software.
That’s not an Enterprise 2.0 revolution. At best, it’s cautious evolution. Indeed, while surveys reveal that executives are showing more openness to Web-based collaboration and social networking tools, there is still a high level of entrenched resistance to Web 2.0 tools in many corporations. Many corporate managers find Web 2.0 threatening.
Why this “fear factor”?
One possible theory is that corporate executives simply don’t understand Enterprise 2.0. In other words, it’s fear of the unknown. Another explanation is that corporate managers consider Enterprise 2.0 to be little more than a trendy buzzword. They regard Web 2.0 tools like blogs and wikis as a distraction, if not a complete waste of time, with a downside risk of security and liability issues. In a word, Web 2.0 presents a risk management problem. Finally, a third explanation is that corporate managers understand Enterprise 2.0 only too well – and that’s precisely why they fear it. Web 2.0 tools threaten to disrupt existing status hierarchies and power relations. Managers fear Web 2.0 because they are worried about losing control.
There is evidence that resistance to Web 2.0 tools doesn’t come from top executive suites, but rather but from middle managers and IT departments. They feel particularly threatened by an Enterprise 2.0 model because Web 2.0 tools threaten their monopoly over specific functions. This may explain why IT managers often find persuasive arguments to alarm their corporate bosses about the downside risks of Web 2.0 – productivity losses, security threats, liability issues, and so forth. What they don’t say is the real reason they don’t like Web 2.0: it’s a threat to their monopoly turf inside the company.
Against this backdrop, it shouldn’t be surprising that, at many large-scale corporations, Web 2.0 is still an intriguing concept to study, not a business strategy to execute. Some argue that Enterprise 2.0 will be more enthusiastically embraced by young companies unburdened by the legacy of old hierarchical values. Enterprise 2.0 transformation isn’t likely to be embraced in established organizations with entrenched power structures and conservative corporate cultures that can easily thwart Web 2.0 adoption in order to neutralize its threat.
Web 2.0 skeptics caution against excessive optimism about the likelihood of a value-based e-ruption in corporations. They argue that Enterprise 2.0, while a noble organizational vision, fails to grasp the raw dynamics of power. Management thinker Tom Davenport makes this point while discounting the wishful-thinking of Web 2.0 evangelists. Davenport, author of Thinking for a Living, praises Enterprise 2.0 as an admirable vision founded in democratic beliefs, but argues that it’s fundamentally naïve.
“Such a utopian vision can hardly be achieved through new technology alone,” says Davenport. “The absence of participative technologies in the past is not the only reason that organizations and expertise are hierarchical. Enterprise 2.0 software and the Internet won’t make organizational hierarchy and politics go away. They won’t make the ideas of the front-line worker in corporations as influential as those of the CEO. Most of the barriers that prevent knowledge from flowing freely in organizations – power differentials, lack of trust, missing incentives, unsupportive cultures, and the general busyness of employees today – won’t be addressed or substantially changed by technology alone. For a set of technologies to bring about such changes, they would have to be truly magical, and Enterprise 2.0 tools fall short of magic.”
In sum, the Enterprise 2.0 vision has its passionate evangelists and doubting naysayers. Both sides have persuasive arguments.
The best way to get a read on the push for Web 2.0 collaboration inside firms is to collect concrete examples and case studies. We need more about examples of horizontal collaboration, peer production and open innovation to assess if they are producing desired results inside corporations. We also need to know about examples where Web 2.0 collaboration is not producing results, and indeed is backfiring or failing abjectly. And above all, we need to develop a precise understanding of the reasons for both successes and failures.
