Innovation in the Age of Global Collaboration - Crowdsourcing

INNOVATION IN THE AGE OF GLOBAL COLLABORATION by SAADICK DHANSAY This thesis is submitted in fulfilment of the requirements for the degree Master of Technology: Information Technology in the Faculty of Informatics and Design at the Cape Peninsula University of Technology Supervisor: Prof. Andy Bytheway Cape Town March 2010

DECLARATION I, Saadick Dhansay, declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the Cape Peninsula University of Technology. Signed Date 2

ABSTRACT The rapid development of new technologies has given rise to new forms of collaboration. Organisations are able to collaborate on a global scale with individuals around the world, in order to conduct R&D activities as a result of Web 2.0 tools and technologies. This study focuses on three areas relating to global collaboration; people, processes and technology. The purpose of this study is to understand the motivational factors of people that partake in global collaboration, the change of process with regard to bringing to new products and services to the market and how technology has changed the way organisations collaborate to achieve this. The research was conducted in the form of case studies to analyse how products were brought to the market through the use of global collaboration. This was achieved by examining two organisations, On Point Technology and SunNight Solar, making use of global collaboration platforms, TopCoder and InnoCentive. The findings reveal that motivational factors can be classified in two categories; direct and indirect. Both play apart and are significant. The process of opening up an organisation to collaborate on a global scale differs significantly from collaborating internally within an organisation, bringing greater benefits and new risks. It was also found that Web 2.0 software tools assist these organisations collaborate on a global scale. Keywords Global Collaboration, Crowdsourcing, Open Innovation, Wikinomics, Commons-based Peer Production, Collective Invention, Web 2.0. 3

ACKNOWLEDGEMENTS I would like to thank: • My family, • My supervisor, Andy Bytheway, for his teachings and guidance, • TopCoder and On Point Technology for assisting with case study research, and • InnoCentive and SunNight Solar for assisting with case study research. 4

TABLE OF CONTENTS 1 Chapter One – Introduction .................................................................................... 10 1.1 The Social Software of Web 2.0 ............................................................................. 12 1.2 Global Collaboration - Goldcorp’s Discovery of Gold......................................... 13 1.2.1 How Goldcorp Inc. threw away the rule book...................................................... 14 1.2.2 Risks and consequences .................................................................................... 15 1.3 Research Roadmap................................................................................................. 17 1.4 Research Problem................................................................................................... 17 2 Chapter Two – Literature Review........................................................................... 19 2.1 Introduction ............................................................................................................. 19 2.2 Collective Invention ................................................................................................ 20 2.2.1 Background ......................................................................................................... 20 2.2.2 Technological and Market Uncertainty ................................................................ 23 2.2.3 Social Network Perspective ................................................................................ 24 2.2.4 Platform ............................................................................................................... 24 2.3 Commons-based peer production......................................................................... 25 2.3.1 Background ......................................................................................................... 25 2.3.2 Participation in Commons-Based Peer Production ............................................. 26 2.3.3 Incentives ............................................................................................................ 27 2.3.4 Large Scale Collaborations ................................................................................. 29 2.3.5 Governance......................................................................................................... 30 2.4 Wikinomics .............................................................................................................. 34 2.4.1 Background ......................................................................................................... 34 2.4.2 Openness ............................................................................................................ 35 2.4.3 Peering ................................................................................................................ 36 2.4.4 Sharing ................................................................................................................ 37 2.4.5 Acting Globally .................................................................................................... 37 2.5 Summary of the Literature Review ........................................................................ 41 3 Chapter Three – Research Methodology............................................................... 44 3.1 Background ............................................................................................................. 44 3.2 Approach to the research....................................................................................... 44 3.2.1 Design the Case Study ....................................................................................... 46 3.2.2 Conduct the Case Study ..................................................................................... 47 3.2.2.1 Selection of Case Studies.............................................................................. 48 5

3.2.2.2 InnoCentive and SunNight Solar Data Collection .......................................... 50 3.2.2.3 TopCoder and On Point Technology Data Collection .................................... 50 3.2.3 Analyse the case study evidence ........................................................................ 51 3.2.4 Develop the conclusions, recommendations and implications............................ 52 4 Chapter 4 - Case Studies ........................................................................................ 53 4.1 Introduction ............................................................................................................. 53 4.2 Platform Operator - TopCoder ............................................................................... 54 4.2.1 Background ......................................................................................................... 54 4.2.2 Software Development Lifecycle ......................................................................... 56 4.2.3 Client Organisation – On Point Technology ........................................................ 58 4.2.4 Case - Recover ................................................................................................... 60 4.2.5 People ................................................................................................................. 65 4.2.6 Process ............................................................................................................... 67 4.2.7 Technology.......................................................................................................... 70 4.3 Platform Operator - InnoCentive............................................................................ 71 4.3.1 Background ......................................................................................................... 71 4.3.2 InnoCentive Challenge Lifecycle ......................................................................... 72 4.3.3 Client Organisation – SunNight Solar ................................................................. 75 4.3.4 Case – Solar Powered Flashlight........................................................................ 76 4.3.5 Case - Solar Powered Mosquito Repellent ......................................................... 77 4.3.6 People ................................................................................................................. 81 4.3.7 Process ............................................................................................................... 83 4.3.8 Technology.......................................................................................................... 84 5 Chapter 5 – Case Studies Discussion ................................................................... 86 5.1 Introduction ............................................................................................................. 86 5.2 People ...................................................................................................................... 86 5.3 Process .................................................................................................................... 92 5.4 Technology .............................................................................................................. 99 6 Chapter 6 - Conclusion, Limitations and Further Work ..................................... 104 7 References ............................................................................................................. 108 6

LIST OF FIGURES Figure 1: Goldcorp Inc. model ............................................................................................... 15 Figure 2: Research roadmap ................................................................................................. 17 Figure 3: Case studies ........................................................................................................... 53 Figure 4: Role players in the TopCoder approach................................................................. 54 Figure 5: TopCoder member ratings...................................................................................... 55 Figure 6: TopCoder SDLC ..................................................................................................... 56 Figure 7: In depth ratings card ............................................................................................... 68 Figure 8: InnoCentive lifecycle............................................................................................... 72 Figure 9: BOGO Flashlight charging...................................................................................... 77 Figure 10: Mosquito nets draped over a bed ......................................................................... 78 Figure 11: A prototype design submitted by Kruer ................................................................ 79 Figure 12: Components of the design.................................................................................... 81 Figure 13: The process of innovation on a global scale ........................................................ 93 Figure 14: Multiple submissions in global collaboration......................................................... 95 Figure 15: Conceptualisation of global collaboration ........................................................... 104 7

LIST OF TABLES Table 1: Research problem and questions ............................................................................ 18 Table 2: Differences between open and closed innovation ................................................... 40 Table 3: Details of the data collection.................................................................................... 50 Table 4: Details of the data collection.................................................................................... 51 Table 5: Recover’s top 10 downloaded .NET components.................................................... 64 Table 6: Direct and indirect motivations................................................................................. 92 Table 7: A summary of organisations making use of collaboration ..................................... 102 8

GLOSSARY Terms/Acronyms/Abbreviations Definition/Explanation BOGO Buy One Get One FOSS Free Open Source Software GPL General Public License GNU Recursive acronym that stands for "GNU's Not Unix" IRC Internet Relay Chat OSS Open Source Software R&D Research and Development RFP Request for Proposal RSS Really Simple Syndication SDLC Software Development Lifecycle UML Unified Modelling Language 9

1 Chapter One – Introduction Information technology is allowing people around the world to collaborate on a global scale. Activity of this nature can be said to occur "on the Internet" and working this way significantly changes who is involved in a business process, and the ways in which they share information and ideas. Chesbrough (2003:36-37) finds that organisations such as Cisco, Nokia, Intel and Genentechare are moving from a closed, to an open approach with regard to innovation. In a closed approach to innovation organisations require control and there is an emphasis on ”self-reliance”. This means that organisations would come up with their own ideas, as well as develop, manufacture, market and distribute the product or service by themselves. In an open approach, organisations are now using external ideas together with internal ideas to create value for the organisation. Brabham (2008:75-76) finds a similar trend in the creative industry whereby organisations have progressively relied on crowdsourcing to find solutions to problems. Crowdsourcing is the act of taking a task performed by an employee or contractor and outsourcing it to a large network of people in the form of an open call. One way of embracing this open approach to innovation is through online communities. An online community is a network of community members that interact using specific media, which could potentially cross-geographical boundaries. Lakhani and Panetta (2007:97) remind us “No matter who you are, most of the smartest people work for someone else”1. With some of the most knowledgeable individuals residing outside the boundaries of an organisation, it is both a challenge and an opportunity for management to find ways to gain access to this knowledge. This problem could potentially be overcome with the emergence of communities of like- minded community members willing to contribute to solving an organisation’s problem. These communities can draw together a vast array of people from all around the world, with 1 Lakhani and Panetta are actually referring to “Joy’s Law”, attributed to Sun Microsystems’ co- founder: Bill Joy, 10

the Internet providing a platform to aid the collaboration. These communities are producing products and services in a manner, which is vastly different from the traditional, hierarchical, organisational manner and could serve as a source of opportunity. Because of the potential to access the intelligence and energy of large numbers of people, organisations are looking towards these communities, as a new and valuable resource. Rollett et al (2007:98) finds that with the emergence of Web 2.0 more sharing is occurring on the Internet via communities. Rollett et al (2007:89-96) defines Web 2.0 as a term used to sum up a group of key features that aid collaboration, information sharing and interoperability that web applications showcase. The term Web 2.0 has been used by a lot of people since the Web 2.0 Conference first took place in 2004. Rollett et al (2007:98-99) explain that at the centre of Web 2.0 are communities that facilitate dialogue whereby community members engage with fellow members and knowledge transfer takes place. New technologies have made this sharing of knowledge possible together with Web 2.0 web applications that have implemented social aspects. Lakhani and Panetta (2007:98) find that practitioners and academics did not foresee the emergence of an open approach to innovation and highlight the success of many open source projects. Software systems running critical applications are developed by online communities, which are made up of mostly volunteer software developers. More astounding is that some of the largest holders of intellectual property like IBM, Sun, Apple and Oracle have embraced open source software (OSS) communities with their own staff contributing to projects and incorporating OSS solutions into their own products and services. It is particularly interesting when a large, global business adopts this approach, especially as this is a relatively new phenomenon with uncertain risks and benefits. Brabham (2008:76) finds that this is an emerging and successful business model. This particular model is complex and requires time and effort in order reap the benefits. It is therefore important to understand this emerging business model and how organisations could reap the benefits to aid innovation. 11

1.1 The Social Software of Web 2.0 Rollett et al (2007:93) explain that the social software that makes up Web 2.0 aids collaboration amongst the webs users in order to share ideas, communicate and work together. This was possible before the emergence of Web 2.0 however this form of collaboration required technical expertise and was complex to setup. The emergence of wiki’s and blogs went a long way to solving these problems. The word wiki comes from the Hawaiian word “wiki wiki” which means “quickly”. Wiki software allows for the creation of a website using the web browser to create web pages using wiki syntax. A number of users can work together to create this website. Blogs are a self-publishing tool in the form of a website. It is a short form of the word “weblog” coined by Peter Merhoz in 1999. Blogs consist of blog entries, which are sorted by the newest first. A blog entry consists of a title, publication date, and the body text that can be assigned to categories and tags. Another feature of blogs is the ability to aggregate the blog articles for syndication using RSS (Really Simple Syndication) or Atom feeds. Feeds are made up of XML (Extensible Markup Language), which is a standard set of rules to encode documents for use electronically. This allows other software to read or use the content of the feed. Furthermore Web 2.0 is made up of other social software such as microblogging, instant messaging, social networks and online forums. Finin, et al (2007:56) find that microblogging is a new form of communication and blogging that allows its users to update their current status in a short post, which is then distributed to followers. The authors cite Twitter, Jaiku and Pownce as examples providing these services. These services allow a user to broadcast a message to multiple followers at once. Instant messaging also caters for communication but for one on one communication with contacts. Rollett et al (2007:94) explain that instant messaging provides the ability to communicate with contacts using a web browser as provided by Google using Gtalk. Lampe et al (2006:167) explain that social networks such as MySpace, Friendster, MeetUp and Facebook have been gaining popularity amongst college students in recent years. 12

Social networks assist interactions between its users. Wilson et al (2009:206) find that Facebook is the largest social network in the world and the largest photo sharing website in the world. Facebook allows its users to create a profile, which includes information such as name, birthday, relationship status and other interests. Users befriend other users on the website known as “friends” but are limited to 5000 friends. Users can then interact with friends by posting messages on a users profile “wall”, posting pictures in albums and tagging friends as well as joining groups with a shared interest. Users can also comment on pictures. Users are also provided with a feed of what their friends have been doing on Facebook. Copes and Williams (2005:73) explain that Internet forums are an online community that has its own rules, guidelines and discussion subjects. This website is a bulletin board that allows its community members to post messages. These posts form threads and other community members post their own messages within the thread in a conversation like manner. Posts are organised chronologically. Social software assists with the creation of a global collaboration platform. The platform is where the client organisation collaborates with the community and social software could be used to assist. Social software compromises a number of software systems and is not limited to the ones profiled above. Social software has become increasingly popular and could potentially be used by organisations to collaborate with online communities. It is therefore important to understand whether social software can be used to assist organisations to tap into the knowledge base of communities. 1.2 Global Collaboration - Goldcorp’s Discovery of Gold An early example of an organisation that took this approach is Goldcorp Inc. In 1999, Rob McEwen, CEO of Goldcorp Inc was about to deliver bad news to the organisation as the firm had been struggling with debts, high costs of production and strikes, all of which had caused the organisation to stop mining operations. Analysts predicted that the organisation's fifty- year old mine was dying and the outlook for Goldcorp Inc. was not good. As a result of this, 13

he handed his geologists $10 million to find gold in its mine. After weeks of drilling, rich deposits of gold were found. The problem for McEwen was that the geologists could not provide an estimate of the gold’s value and exact location (Tapscott & Williams, 2007:8). Despite mining being a secretive industry, McEwen went against the norm and decided to release all his geological data publicly, in the hope that ’global collaboration’ would solve the problem of value and location. It did solve the problem, thus ‘global collaboration’ is a phrase that we can use to identify this new phenomenon. The “Goldcorp Challenge” was launched with prize money to the value of $575,000. All information was released on Goldcorp Inc.’s website, with over 1000 people taking part and submitting a total of 110 targets, of which 50 percent had not been identified by the organisation. 80 percent of the new targets brought substantial quantities of gold. As a result, the organisation went from being worth $100 million to $9 billion (Tapscott & Williams, 2007:9). 1.2.1 How Goldcorp Inc. threw away the rule book Goldcorp Inc. provided a platform that encouraged participation by people from around the world in a single challenge – something that had rarely if ever happened before on this scale, and in such a context. The platform came in the form of a website whereby information about the potential of its mines was distributed to the public (Figure 1). Individuals analysed the information and then submitted potential gold targets on the same platform. Hence, the web played the central role in facilitating the connection of Goldcorp Inc. with the participants. Although the challenge predates Web 2.0, principles of sharing and collaborating with a community took place. 14

Figure 1: Goldcorp Inc. model As will be shown here, the role of the web in the subsequent expansion and adoption of this phenomenon is, of course, central. Without the web it simply would not have been possible. 1.2.2 Risks and consequences Goldcorp Inc. followed a new process of discovering gold, by allowing community members from around the world to participate in the exploration. Goldcorp Inc. was a successful case, as the geologists did not previously identify 50 percent of the targets subsequently identified via the Goldcorp Challenge. It was of course fortunate that 80 percent of these additional targets brought in gold, but the success rate could have been much lower. Further, the risk remains that with all this transparency of working, competitors could submit false targets in an attempt to sabotage Goldcorp’s project. Deliberate sabotage and the need to identify dubious submissions are areas that need investigation. 15

The communities involved in global collaboration are comprised of different kinds of people. They all possess knowledge that is potentially useful to the client organisations (Goldcorp Inc.), but patterns are only now being established and the casual nature of the involvement is a risk. Why do people get involved? Is it because they seek the kudos, or do they seek financial reward? Whilst tapping into the ‘knowledge base’ that they represent could be beneficial by providing innovative solutions to difficult problems, the phenomenon is affected by the changing attitudes of the ever-growing Internet user base, as more individuals from around the world recognise the opportunity and choose to get involved. It is also affected by the need for client organisations to change the way their business is conducted. The reasons why people choose to get involved, the way in which technology facilitates this involvement, and the consequences for organisational processes are all questions that need to be addressed. Brabham (2008:88) explains that we should remain critical of this model as a result of what it might do to people and this area needs more understanding. Lakhani and Panetta (2007:111) explain that this model needs to be seen as an alternative to approaching innovation and should supplement existing innovation strategies. Brabham (2008:88) finds that this model can amass talented individuals, who could make use of their talent and therefore reduce costs (as well as deliver innovative solutions) in a timely manner, so that cost and time comparisons with traditional approaches are needed. These findings need to be further quantified in order to substantiate global collaboration as a viable innovation strategy that has a complex mix of risks and potential benefits because with openness and freedom comes responsibility. The three rules of open source software (nobody owns it, everybody uses it and anybody can improve it) have proven to be great factors to innovate, but could also be its biggest downfall (Tapscott & Williams, 2007:86). A challenge facing organisations embracing global collaboration is maintaining quality in an open environment. The three rules could prove to be a hindrance to quality, as openness could cater for this. Benkler (2002:73) finds that this area provides an untapped area for research and specifically a focus on the process, the role of technology and the motivation of people. 16

1.3 Research Roadmap A general outline of how this thesis will proceed is highlighted in Figure 2. The first step is to identify the research problem, questions and sub-questions. Based on this a literature review will be completed. A research methodology will then be decided upon followed by the presentation of case studies in order to answer the research problem of the study with the final results presented. Figure 2: Research roadmap 1.4 Research Problem The research problem is that in some well-reported cases, global collaboration has been shown to be beneficial, but the general potential and risks are not yet understood. In particular, the role of people, the impact on business processes and the ongoing potential for new technologies need to be investigated. Table 1 presents the research problem and research questions. 17

Table 1: Research problem and questions Research Problem Global collaboration has been shown to be beneficial, but the general potential and the risks are not yet understood. In particular, the role of people, the impact on business processes, and the ongoing potential for new technologies needs to be investigated. Research Question How do organisations create a platform for global collaboration that encourages the participation of individuals and at the same time manages the impact on business processes and deals with the risks involved? Research sub-question Research method(s) Objectives What experiences do Literature Review. To identify what and how organisations have in opening organisations are allowing up, to provide a platform for outside individuals to others to participate in their contribute to critical operational activities? operational activities. Why do individuals partake in Investigate how global To identify what drives global collaborating projects? collaboration platforms individuals to partake in global have built up a collaboration projects. community willing to contribute. How do you attract individuals Analysis of To establish how to partake? investigation. organisations can attract individuals to partake. How does global collaboration Case Studies. To identify the process of differ from current means of global collaboration. operation? Who are the role players Analysis of literature To establish who is involved in involved in global collaboration? review and case the process of global studies. collaboration. How do organisations reach a Analysis of literature To identify the technological global community to solve review and case tools involved with global problems? studies. collaboration What are the risks involved with Analysis of corporate To identify the dangers of opening up an organisation to and individual creating a platform and how to global collaboration? responses. avoid these situations. 18

2 Chapter Two – Literature Review 2.1 Introduction In order to gather evidence for a review of the current situation, various sources were consulted, including: • Online and traditional libraries, • Academic journals, • Books, • Interviews, • Magazines, • Newspapers, and • Blogs. In the available academic literature gathered, a scan was conducted and it was found that there is early work about collaborative approaches to innovation (Allen, 1983:1-2). However, the early work gathered did not cover collaboration with the aid of technology as a medium to engage individuals on a global scale. This aspect of the phenomenon is new and emerging, with literature about the subject (for example detailed case study examples) only surfacing in more recent years (Meyer, 2003: 5-6). The emerging literature has provided an appropriate body of work to base the literature review upon. However, it was found that the academic literature focused on successful examples, with little exploration of unsuccessful examples, and little critical analysis of global collaboration as a phenomenon. The literature review also addresses the research sub question; what experiences do organisations have in opening up, to provide a platform for others to participate in their operational activities? This helps to identify the issues arising when organisations allow outside individuals to contribute to critical operational activities. 19

The academic literature revealed that different academics referred to global collaboration under different names over a period of time. Namely in chronological order: • Collective Invention, • Commons-Based Peer Production, and • Wikinomics. The three areas cite cases of use by companies and organisations, and highlight common factors garnered from the literature. They cite examples chronologically throughout the literature review. A chronological view highlights the changes in this field over a period of time, and confirms that it is still an emerging field. 2.2 Collective Invention In 1983, Robert C. Allen coined the term “collective invention” in a study of iron production in 19th Century England (Allen, 1983:1-2). Allen described collective invention as exchanging information about techniques and designs amongst firms in an industry. 2.2.1 Background Research into the area of collective invention by Meyer (2003:5) discovered an example of collective invention, the steam engine. In 1769, James Watt patented a new design for a steam engine. This design was far superior to any other steam engine at the time. Mine owners did not like the patent, as it was not licensed cheaply. As a result of this, illegal copies of Watt’s design were used by mine owners in the Cornwall region of England to pump water out of their mines. Meyer established that after the patent expired, information was shared via a publication called “Lean’s Engine Reporter”, which provided technical comparisons of steam engines. As a result, changes were legally made to Watt’s design with few filing patents, and thus, steam engines improved significantly throughout Cornwall as a result of collective invention. 20

Allen (1983:1-2) observed that research and development (R&D) was not prevalent in the early European iron industry, as governments were not funding research and universities were rarely publishing findings. R&D is an activity with the goal of discovering new knowledge and using the knowledge to develop or improve products, processes or services. Allen referred to traditional R&D in his findings whereby an organisation conducted R&D by using internal resources with no external resources being used. As a result of the lack of funding and research, technical information was publicly revealed amongst firms in the industry at meetings of professional societies from the 1850s through to the 1870s. After examining the blast furnace industry, Allen found that people were building upon each other’s findings as a result of information sharing. The fact that the efficiency of the blast furnaces improved during this period proved that collective invention was a viable alternative to traditional R&D. The sharing of information amongst competitors is what allowed collective invention to prosper. Allen (1983:21) found that since the start of the 20th century the importance of collective invention had diminished and had been replaced with traditional R&D, which could be the reason why the next case described by Meyer originated in 1975. A computer club known as “The Homebrew Computer Club” was formed at Stanford University, consisting of computer hobbyists with a keen interest in computer chips; this preceded the emergence of the personal computer industry. The club was open to anyone and had no official membership. It allowed members to meet, show and discuss the making of computers. At meetings members developing competing products would discuss them, and give each other advice on how to improve them. A newsletter was also published that provided information to members for free. One of the members, Steve Wozniak designed a computer and allowed other members to duplicate the design, as he believed in information sharing. He named the machine “Apple”, and went on to form the Apple Corporation with Steve Jobs. The Homebrew Computer Club had a free flowing culture of sharing information that supported collective invention. However, as soon as the hobbyist began manufacturing computers, attitudes of members 21

shifted, with them no longer willing to share information; this change in attitude ultimately led to the demise of the club (Meyer, 2003:12-14). A current example of collective invention investigated by Meyer is open source software (OSS) and free open source software (FOSS). In projects of this nature the source code of the project is made available publicly. With the use of development tools an executable computer program can be generated, and, by making the source code available publicly, changes can be made to the program by anyone (Meyer, 2003: 5-6). Early forms of FOSS have been traced back to the 1950s and 1960s. However, it wasn't until the 80s that FOSS began to gain momentum, when the Massachusetts Institute of Technology (MIT) researcher, Richard Stallman, founded the Free Software Foundation (FSF) in 1983, which provided the basis for the open source movement. Stallman started a community development called GNU (a recursive acronym that stands for "GNU's Not Unix"), whose aim was to develop an operating system. GNU tools and utilities provided a basis for the Linux operating system (Hars & Ou, 2001: 1-2). The Linux project began in 1991, when Linus Torvalds decided to share code that he had created for a computer operating system in the hope of getting feedback from others on how he could improve it (Elliott & Scacchi, 2008:20). Torvalds released the software under the General Public License (GPL), which allowed anyone to use it for free on the condition that changes that they made were also made available under the same terms. Raymond (2000) found that traditional software projects were “built like cathedrals, carefully crafted by individual wizards or small bands of mages working in splendid isolation, with no beta [i.e., no preliminary test version] to be released before its time.” Open source projects on the other hand “seemed to resemble a great babbling bazaar of differing agendas and approaches.” Raymond found that the Internet created a platform for the bazaar model. Carr (2007:1-3) notes that the corporate world has started to embrace the bazaar model as explained by Raymond (2000) but argues that it has its limitations. Carr finds that these projects draw upon a wide variety of individuals and, while diversity is essential, this can be a weakness if the project is large, as it would require management as a result of complexity emerging. The open source model works best when individuals participating donate their time and resources, or are rewarded for their efforts. Carr finds that a central authority does 22

exist to help manage the community. This authority has the power to make decisive decisions. As a result, Carr concludes that, in the case of Linux, the cathedral coordinates the bazaar and that the distinction made by Raymond is too incisive. These two approaches rather work together, and he states, “without the bazaar, the cathedral model moves too slowly. Without the cathedral, the bazaar model lacks focus and discipline.” Meyer’s work on collective invention (Meyer, 2003:15) revolves around three important factors, which can be considered characteristics of the phenomenon: • Technological and Market Uncertainty, • Social Network Perspective, and • Platform. The following paragraphs summarise some of his comments in the current context. 2.2.2 Technological and Market Uncertainty Meyer (2003:15-16) finds that in the cases of collective invention, participants were hopeful about the future, but were unsure on how to proceed with the development. Nobody could forecast what was going to happen in any of the cases he considered. Meyer further argues that if an industry can predict what technology they will be using, then it would not be beneficial to share information. He sees a timeline for the adoption of collective invention as follows: • An opportunity arises, which can be built upon, • A period of uncertainty occurs, • Interested parties form a social network, • Development commences, which includes hobbyists and organisations, • Other organisations see opportunities and use the technology for profit, and 23

• Once a market is established and profits occur, the uncertainty reduces and collective invention dies out. 2.2.3 Social Network Perspective Meyer (2003:17-18) notes that these cases consist of developers with links to the projects and other members and this can be seen as a social network. A social network is made up of a group of individuals whereby exchanges of information and ideas occur which could be administered by moderators. The members of these networks consist of a variety of individuals that include hobbyists, employees and organisations who all want to share. Meyer also notes that if value is to be derived from a social network the members need to have different expertise and experiences. Members of these networks share information as its deemed ethical and they have a feeling of enrichment about it. These social networks also assist with building a reputation, which could provide benefits such as entrepreneurial opportunity and prestige. 2.2.4 Platform Meyer (2003:16-17) finds that the examples of collective invention had a common platform from which participants could garner and share knowledge. The steam engine, blast furnace and Homebrew Computer Club either had meetings or used paper-based resources, such as newsletters or the Lean Engine Reporter. The Linux example made use of the Internet, whereby a wider audience could be reached, as evidenced by the increase in the number of active participants. The documented cases of collective invention are all based on a social network where information was exchanged without intellectual property restricting them (Meyer, 2003:27). These networks formed naturally as a result of a shared interest in a subject. People partake because they feel that they can make a contribution, which could give them joy, or a financial return if that is available. Because there is no established market, participants share what 24

they know, as they don’t have much to lose, but gain when others contribute to their own ideas (Meyer, 2003:17-18). The literature on collective invention highlights cases throughout time whereby collaboration has occurred in the production of products. The literature does not reveal any cases beyond open source software. 2.3 Commons-based peer production 2.3.1 Background Harvard professor Yochai Benkler examined the area of collaboration and found cases that have occurred after open source software emerged. Benkler (2002:1-2) argues that we are seeing a new mode of production emerging, defined by Benkler as “commons-based peer production”, that has been exemplified by the development of FOSS and OSS. Benkler (2002:8) defines commons-based peer production as a model of economic production in which a large group of individuals are coordinated with the aid of the web with the aim of completing projects without the traditional hierarchical organization. Benkler (2002:4) states that, unlike other products or services, FOSS projects do not rely on markets or managerial hierarchies and pose a challenge when viewed in terms of conventional organisation theory. Benkler (2002:6) explains that while there has been a focus on OSS development to illustrate production by peers, this extends into other sectors other than software development. An example of this is NASA’s use of commons-based peer production with their Clickworkers experiment. The aim of NASA Clickworkers was to see if volunteers would work for a few minutes to do scientific analysis that would, under normal circumstances, be done by a scientist or graduate student. The experiment was run by a part-time software engineer who had input from two other scientists and allowed users to scan and mark craters and honeycombs on Mars via a simple user-interface on a website. The experiment proved to be successful with over 85 000 users 25

visiting the website in the first six months and over 1.9 million entries being made. A study examining the quality showed that the quality of the work done by the Clickworkers in identifying Mars craters was identical to that of a geologist with years of experience (Benkler, 2002:16). Benkler (2002:17) concludes by stating that the experiment shows that intricate tasks that would need highly trained paid professionals can be reorganised to be completed by thousands of volunteers, for much less cost. Another example cited by Benkler (2002:23) is the Google search engine. Benkler finds Google to be the most efficient search engine, in part by the adoption of an innovative process of ranking search engine results known as PageRank. The concept of PageRank is that the more links there are to a webpage, the more useful its content is. Hence, when website owners make links to other web sites it affects the rankings of what is being displayed by Google, by associating the number of external links with relevance. PageRank therefore places a reliance on the link structure of the World Wide Web, putting the relevance of PageRank in the hands of web content owners. Benkler’s work on commons-based peer production focuses around four common factors: • Participation, • Incentives • Large Scale Collaborations, and • Governance. 2.3.2 Participation in Commons-Based Peer Production People participate in these commons-based peer production projects of their own free will, which those who doubt the reliability of the phenomena will highlight as a problem, as this 26

brings the long term sustainability of these projects in to question: people who participate don't have proprietary rights (Benkler, 2002:51). However, according to Benkler (2002:52-54) people like to create and if an opportunity arises, people will participate. After examining the OSS industry, Benkler found that there are indirect benefits for people involved with OSS, as they gain reputations and the opportunity to provide consulting and customisation services. Organisations that they work for gain their knowledge and can use it in proprietary based products. Service-type relationships account for about two thirds of revenues in the software industry and can therefore be lucrative for those offering services. Hars and Ou (2001:2) define these as external (reward) factors for participants. While participants in these projects participate for individual needs, there are external factors that could provide rewards to motivate participation. Certain participants view their time and energy spent on these projects as an investment that could yield future rewards. Organisations provide commercial support for open source projects and therefore a need arises for people with skills to provide consulting, training and support. Open source software developers increase their human capital by participating in open source projects that could lead to better job opportunities. Since software developers can choose which parts of a project they want to participate in, they can select where they want to improve. The open source community provides a platform for participants to show their capabilities and to market themselves. This provides an opportunity for commercial vendors to see whom they can employ. Participants gain peer recognition, which fulfils a desire for fame and esteem. These communities provide feedback on the quality of their work and show participants that people are using their contribution, which spurs participants to pursue perfection. 2.3.3 Incentives It has been noted that some role-players doubt the viability of commons-based peer production, because participants join of their own free will. Bringing together a group of 27

individuals who like to create, and providing them indirect benefits that they truly desire, could solve this problem. People participate for a range of different reasons that need to be understood, so as to explain (for example) why certain projects are able to attract many people while others do not. Leadbeater (2007:75) finds that a minority of participants do it for charitable motives and work in projects that do not pay them. The majority of participants do it because they enjoy the work and gain recognition amongst their peers, which gives them a sense of achievement – not quite the same thing as charity. Leadbeater, like Benkler, also finds that some do it in order to better their career prospects by gaining a reputation in the communities in which they participate. Benkler (2002:61-62) finds that providing financial incentives will not necessarily provide motivation for people to participate in peer production. There are also certain instances where financial incentive is small compared to hedonic and socio-psychological incentives. Teenagers and young adults fit into this category as they have few financial commitments and have a long time ahead of them, to earn and save money. Another category comprises those people who have enough money to serve their current and future needs, but also have a taste for hedonic and socio-psychological incentives that they could not get from financial means. Academics, along with the volunteers of Internet projects, fit into this category. People whose current needs are being met, but whose future needs demand increased financial support might take part if the socio-psychological returns do not negatively affect their reputation. The problem of motivating people can be solved if enough people can be brought together. Hars and Ou (2001:2-4) explain that people like to partake in pastimes like collecting coins or playing games; this is known as “intrinsic motivation” and participants who merely seek a sense of enjoyment display that. It was found that participants who take part in open source communities for this reason would therefore spend more time on open source projects. Another source of motivation is altruism. Altruism is defined as performing a task that benefits others. In the case of open source software developers, they are producing software for others to use by forfeiting their own time and costs. By taking part in open source projects, participants belong to a community and provide belonging. Participants with this 28

source of motivation do it to help others within the community. Hars and Ou (2001:2) classify these motivations as “internal rewards”. Hars and Ou (2001:3) go on to explain that “external rewards” also play apart in motivation with the most obvious being money. This can also be called “extrinsic motivation”. While a majority of open source software developers are not compensated, income can be earned from selling support services or increasing industry marketability as working on open source projects increase software developer’s skills. Hars and Ou (2001:7) conducted a survey whereby 389 people involved with open source projects were asked about their reasons for participation. Results from the survey found that although people participate for indirect reasons, external rewards provide a greater weight for motivational factors. Factors that promise a return on investment, such as gaining knowledge and marketing, play a part. Hars and Ou point out that a personal need for a software solution is also a key factor that has not received much attention. There are also different groups participating. People who do it for a hobby are mostly motivated by internal factors whereas salaried programmers want to sell products and services. The open source community draws upon a wide range of people who participate for different types of motivations with a large part based on external rewards. 2.3.4 Large Scale Collaborations Benkler (2002:62-64) further states “peer production is limited not by the total cost or complexity of a project, but by its modularity, granularity, and the cost of integration” Modularity is a property whereby a project can be broken up into smaller parts called modules. These modules can then be produced in parallel, following which they are integrated into one final product. This allows contributors to choose what they want to contribute to, which allows flexibility for participation in the project, but may be constrained as 29

well as facilitated by the platform that is used. Leadbeater (2008:110-111) also emphasises the importance of a modular architecture by explaining that this is a key success factor as to why people participate in global collaborative projects. This allows participants to contribute to the parts of a project that they prefer, and for which they have the right skills. Granularity relates to the size of the modules with regard to the effort and time that an individual has to put into a module in order to produce it. If the granularity of a module is relatively ”fine”, then the opportunity to contribute is fairly simple; this means that many people can contribute. If the granularity of a module is relatively ”coarse”, then the size of the potential group of contributors decreases. Integration is concerned with bringing together the different modules in order to produce a finished product. Integration can be split into two different components; a process for quality control and a process for merging the modules into a whole. Leadbeater (2007:69) finds that every innovative community begins somewhere similar to when Linus Torvalds started with the kernel for Linux. Leadbeater calls this the “core” and, in order to attract a community, this core needs to be solid and unfinished. This would mean that the core could be improved upon with opportunities for others to make changes. Carr (2007:2) agrees with Leadbeater and finds that peer production serves its best purpose when building upon the old, rather than inventing something new, and cites the case of the kernel for Linux as an example. 2.3.5 Governance Carr (2007:3) finds that the size of the community is important in solving problems, but even more vital is the diversity of the community, as like-minded individuals will look for the same things. This raises issues of governance – the make up of the community has got to be managed in some way, to some extent. 30

Leadbeater (2007:79-81) cautions that unless people participating in global collaborative projects are governed by rules agreed upon by themselves, chaos will occur. This is a challenge, as a clear hierarchy does not exist. Leadbeater explains that the solution is self- governance, and yet this is a challenge as successful communities are made up of diverse people. People with different values tend to not agree, but diversity is essential for innovation. This often leads to arguments, with differences leading to conflicts, causing the whole project to be ineffective. An example of a self-governing community would be the open-source community that produces the Linux distribution Ubuntu. The governance rules their start with the founder, Mark Shuttleworth, who is the “benevolent dictator”. Shuttleworth is the overall lead and has the right to make certain decisions. The community also includes a technical board that makes decisions regarding technical standards. Anybody can propose new policies (or changes to policies) via the technical board meeting agenda that is made available on a Wiki. The technical board meetings can be attended by anybody, but Shuttleworth and four other board members, who are selected by the community via a vote, make the final decisions. A separate council governs the creation of new projects and assigns team leads for different parts of the project. There are also teams whose goal it is to promote Ubuntu in their country. The core developers known as “The Masters of the Universe” have their own council to decide who can be allowed to enter their community. Anybody can see what is happening inside these meetings and make suggestions, but not everybody has a decision-making vote. Open-source communities provide motivation for participants to participate, as the work is interesting, with interesting people who pose interesting questions in judging the work of their peers. This approach appeals to the younger generation who want more control in what they do and receive recognition for it. These communities give people acknowledgement and a sense of belonging, which modern corporations do not (Leadbeater, 2007:110-111). 31

Benkler (2002:24-27) cites the news service Slashdot as a community governed from within, whereby users submit an article from another website. The link is accompanied by comments from the person who submits the link. Others users then submit comments about the article that often-illicit debate – some articles provoke hundreds of comments. The submission of Slashdot articles is a process whereby the relevance of the article is taken into account. When a user submits a story, paid editors then filter the content. Articles are filtered out for a variety of reasons including technical reasons, language and being obsolete. The peer review element in this example is the users of Slashdot scouring the web for articles so that others can read. Moderators are selected from registered users (volunteers) according to certain criteria, and are required to judge user comments based upon a moderation system. Every comment has a starting score and moderators decrease or increase the score by a voting process. A moderator also characterises comments, which allows users to figure the usefulness of comments such as “funny” or “off topic.” Each moderator gets five points, which can be used on 5 different comments. The 5 points expire after three days, after which they get renewed. This system ensures that many users have a small amount of power and decreases the chance of users who want to influence results out of spite or poor findings. This system allows high quality and relevant posts to be published by Slashdot. Slashdot could have employed experts to provide this function, but instead they opted for a peer production approach. Another online community that has implanted a self-governing community is Wikipedia. Wikipedia is a project run by volunteers working together to create an encyclopaedia via a Wiki. According to Wikipedia (Anonymous, 2008) all pages can be edited anonymously or with a registered account except for certain pages that incur “editorial vandalism” and are locked for editing. Only administrators can edit these pages. All entries must be encyclopaedic in nature and are deemed so if backed up by noteworthy, reliable, secondary sources. Wikipedia does not present new or original work and therefore the work must already be documented. Every article has a “History” and “Discussion” page. The History 32

page links to every revision of the article, and the discussion page is used to organise work between editors. A “bot” which is a computer program is also used to scan and remove vandalism. According to co-founder Jimmy Wales (2005), Wikipedia runs on 90 servers managed by volunteer system administrators. All changes go to a “Recent Changes” page, which is fed to IRC (Internet Relay Chat) channels, RSS feeds and e-mail notification mailing lists that are watched by subscribers. IRC is real-time Internet messaging. Wales finds that a community made up of 600-1000 people makes the vast majority of changes. If information is disputed, the community, which is more of a discussion, takes a vote and, as long as somebody can offer a suggestion from a notable source, the change is kept. Votes also follow a weighted model deemed by reputation within the community. Wales plays the role of “Monarchy” and is the overall leader of the project who has the right to change the rules. The policies of Wikipedia are followed and enforced by its members with the aim of running the project in a constructive manner. Wikipedia does not strive to write an objective view on a subject, but rather strives to present all views on a matter. During the first 18 months, 30 000 articles were produced. Wikipedia is an example of a group of individuals collaborating to create a medium to high quality encyclopaedia (Benkler, 2002: 17-18). By June 2006, Wikipedia had 4.2 million articles in 250 languages, which had been contributed to by more than 300 000 volunteers, who had made at least 10 changes each. A study by the Journal Nature found that the quality of articles in Encyclopaedia Britannica to be only slightly higher than Wikipedia (Lakhani & Panetta, 2007: 110). Terdiman (2005) reveals that Nature had experts peer review competing articles in both encyclopaedias. The experts were not told what encyclopaedia the article came from. The study revealed that Wikipedia had on average 3.86 mistakes per article, while Britannica had an average of 2.92 mistakes per article. The various cases of commons-based peer production highlighted by Benkler occur in a networked environment where the web is used to facilitate the work of large groups of individuals. Benkler’s work suggests that the uptake of collaborative approaches is now 33

affecting the way organisations work, in producing goods and delivering services. This notion has been investigated in an in-depth manner by Don Tapscott and Anthony D. Williams in their book “Wikinomics: How Mass Collaboration Changes Everything.” 2.4 Wikinomics 2.4.1 Background Tapscott and Williams (2007:1-3) consider that history shows that corporations have consisted of hierarchal lines of authority, with most people having a subordinate. While hierarchal structures still exist, changes in technology, demographics and the global economy are allowing new models of production to emerge based on community, collaboration and self-organisation. With websites appearing on the Internet that demonstrate the principles and practices of Web 2.0, strategy-consulting organisation New Paradigm conducted several multi-client investigations to understand how Web 2.0 is changing the way organisations innovate, build relationships and compete. The authors concluded from these investigations that individuals actively participate in innovation, wealth creation and social development, and that organisations that embrace these online communities are discovering the benefits of global collaboration. They believe that this affects every sector of society, with a new way of conducting business emerging that they refer to as “wikinomics.” Tapscott and Williams agree with Benkler (2002: 6) that this extends into almost every sector, and they cite Goldcorp Inc. amongst other organisations making use of wikinomics. Tapscott and Williams (2007:20) state that leaders need to embrace collaboration, which is changing the way organisations operate based on four factors: • Openness, 34

• Peering, • Sharing, and • Acting Globally. 2.4.2 Openness Organisations used to compete by holding onto their most valuable resources, believing that human capital provided a foundation to compete. This is changing with progressive organisations now allowing external individuals to participate in R&D with their ideas, and thereby outperforming other organisations that are not embracing these principles. A key driver in the emergence of openness is the rapid advancement of technology, but other factors are involved. In particular, a willingness to share information that would previously be kept secret, with partners, employees, customers and any other interested participants, is a feature of successful global collaboration. This allows others to see the true value of what is being offered. The first major insurance organisation in the world to have a website was Progressive Auto Insurance. A year after launching the website in 1995, customers could search the website for Progressive's rates and compare them with those of their competitors. Although Progressive had better rates in most cases, there are certain instances when competitors had better rates. It might not seem like a good idea to advertise your competitors’ rates from the outset; however, since implementing this feature, the organisation grew an average of 17 percent a year, with annual premiums going from $3.4 billion to $14 billion (Tapscott & Williams, 2007:20-23). Research conducted by Valerie Trits and Gerald Haubl indicates that customers are more likely to shop at organisations like Progressive, as they appear trustworthy (Goldstein et al, 2007:192:194). This research is backed up Tapscott and Williams (2007:22) as well as Goldstein et al (2007:194) who agree that sharing competitors pricing, even when they are not as good, customers respond by giving trust. 35

2.4.3 Peering As explained by Benkler, hierarchies have provided a model for wealth creation. Hierarchies have arranged people into layers of superiors and subordinates in order to fulfil objectives. However, a new horizontal organisation is emerging to create products or services, which is now known as “peering”, because of the co-operation between peers. The Linux project is an example whereby an informal organisation emerged to manage the software development process with input coming from thousands of volunteers. The project has been successful, as evidenced by its extensive use as a host operating system for web servers and databases. The ease and success with which people collaborate in such projects has begun to influence other industries. The Australian biotech institute GAMBIA, who were concerned that multinational firms were pricing out people who couldn't afford licensing fees to exploit genetically modified crops, are releasing their results under BiOS (Biological Open Source Licenses). This allows them to reach a wider audience of scientists in order to find solutions for farmers who require them. Linux and GAMBIA are examples of a new way of producing goods or services. Communities embracing peer production are moving into areas that are dominated by profit- making organisations, perhaps increasing the possibility of financial motivations for being involved (Tapscott & Williams, 2007:23-24). Tapscott and Williams (2007:25) believe that participants in peer production communities partake for different reasons, including recreation or to achieve something that has a direct value to them. These communities do have a structure with certain people having authority. However, they do differ from hierarchal environments as explained in the cases of Ubuntu Linux, Wikipedia and Slashdot. 36

2.4.4 Sharing Many industries believe that knowledge resources and innovative capability – intellectual property in today’s parlance – should be protected via patents, copyright and trademarks. If this intellectual property rights are infringed, then the law should take its course. The music industry has decided to take this approach and has been slow to adopt new business models to embrace the opportunity to have musicians and consumers at the centre of value creation. This stance has angered music listeners and alienated them. In its digital form music is easy to copy and distribute, making it difficult for record organisations to recoup fix-cost investment. Hollywood’s solution, via digital rights management technologies, is to charge a fee to access services provided (Tapscott & Williams, 2007:25-27). 2.4.5 Acting Globally A global IT platform that encourages collaboration using tools to make this possible will allow different part of a business and a organisation’s external partners to prosper. This will provide access to new markets and ideas. In order to do this, organisations need to think and act globally. It is becoming easier to build a global business, due to open IT standards (Tapscott & Williams, 2007:29-30). Another organisation embracing these factors is IBM. IBM became a leading hardware and software organisation by selling proprietary software that would only work on IBM computers. If a client wanted to move IBM's software to another vendor’s hardware this was not possible, as IBM prevented this from happening. Despite IBM's initial success, as noted by Chesbrough (2003:36) its proprietary software products were having a difficult time making an impact, while its rivals were overtaking them in the hardware and software sectors. In a move to unseat rivals IBM took a different 37

approach and began to establish teams to assist the Apache and Linux open source communities (Tapscott & Williams, 2007:78-79). The history of Apache goes back to 1995, when the Apache Group, consisting of a team of software developers, began building an open source web server that has become the most popular web server (Hars & Ou, 2001: 2). Statistics show that the Apache HTTP Server has a market share of 50.42%, with its nearest rival being Microsoft's proprietary offering with a market share of 35.33% (Netcraft, 2008). IBM had developed a web server product called Domino, which had less than 1% of the web server market and was struggling to compete with the Apache HTTP Server. In 1998, IBM made the decision to join the Apache group with IBM employees participating in software projects like other contributors. The Apache group also received a financial contribution from IBM to setup the Apache Software Foundation that provides support for open source projects. Shortly after joining the Apache Software Foundation IBM began to package the Apache HTTP Server with its WebSphere product and provide support for it. This proved to be a success for IBM who began to realise the benefits (Tapscott & Williams, 2007:78-79). After the success of working with Apache, IBM began to work together with the Linux community. IBM allowed their developers to contribute to Linux distributions, such as Red Hat and Suse. This has allowed IBM to compete with its rivals, such as Microsoft and Sun Microsystems. IBM learnt that by embracing open source software they would be able to grow quicker than proprietary based software organisations (Tapscott & Williams, 2007:81). IBM recognised that they did not have the resources to develop a successful web server, as demonstrated by the lack of market penetration of their Domino web server. They decided to use the expertise of people outside the organisation (Apache and Linux developers) and combine it with the expertise of their own developers to create the WebSphere product. This fits with the concept of open innovation put forward by Henry Chesbrough (2003:35), that organisations need to realise that not all the brightest people work for them and that, in order to innovate, internal R&D needs to work together with external R&D. More interestingly, IBM, 38

combining as they did with open source communities, is an example of global collaboration (in the terminology of Tapscott and Williams) or commons-based peer production (in the terminology of Benkler). By investing in open source projects, IBM followed a new model of value creation. IBM have benefited from the work from its own software developers by encouraging them to partake in open source projects to produce software with thousands of developers around the world. This has enabled them to compete with rivals, where they were previously losing ground. IBM changed their mode of production from a proprietary based software producer to a organisation that partners with the open source community and thus embraces global collaboration projects (Tapscott & Williams, 2007:82). By following this approach IBM estimates that it has saved $900 million per year compared with the cost of developing their own operating system software (Tapscott & Williams, 2007:94). Chesbrough (2003:35) notes that historically, traditional R&D was seen by organisations as a strategic asset. Competitors who wished to enter a market found it increasingly difficult with R&D being a hindrance. This is changing, with large organisations facing competition from start-ups that do very small amounts of research on their own. When Lucent Technologies inherited a large share of Bell Laboratories, many thought Lucent would have a strategic advantage in the telecommunications equipment market. Bell Laboratories was a large research organisation that produced a range of cutting-edge technologies. Despite this, Cisco Systems managed to keep abreast of Lucent, even eclipsing them to the market with certain products, despite not having large internal R&D competence. Cisco achieved this by acquiring technologies from outside the organisation by investing in promising start-ups. Chesbrough (2003:36) explains that this allowed Cisco to keep up with Bell without conducting much research within the organisation. This is not the only example, with IBM being surpassed by Intel and Microsoft in the hardware and software business and Nokia managing to overhaul Motorola and Siemens in the wireless telephony market. 39

Chesbrough (2003:36) suggests that there is a shift in how organisations are bringing new ideas to the market. In the past, organisations hired the brightest people to conduct R&D and believed that innovation required control and would therefore develop ideas themselves. This allowed them to get to the market first and gain most of the profits that were protected by intellectual property. This particular model worked well for most of the 20th Century, but changed towards the end of the century. Playing a key part in the rise of Open Innovation was the rise in the mobility of knowledge workers. This made it hard for organisations to keep hold of propriety inventions. The availability of private venture capital firms, who assist with financing new organisations ideas and commercialise them, has proven to be another factor in the change in which organisations innovate. These factors have caused a shift from closed innovation to open innovation. Table 2 explains the differences between closed and open innovation. Table 2: Differences between open and closed innovation Closed Innovation Open Innovation The brightest people work for an organisation. Not all the brightest people work for an organisation, so it is necessary to use expertise outside the organisation. In order to ensure a return on R&D, an organisation External R&D can contribute to the must discover and develop ideas. business, with internal R&D used to claim a piece of the value. If an idea is discovered by an organisation, then the Ideas don't have to be discovered by organisation will get it to the market first. internal R&D, in order to gain profit. If the organisation creates the greatest and In order for success to be achieved, a substantial ideas, then success will follow. organisation needs to use internal and external R&D. An organisation should use intellectual property, so An organisation should gain success from that competitors don't gain from the organisation’s others use of intellectual property and ideas. purchase another organisation’s intellectual property, if it can advance the business model. (Adapted from Chesbrough, 2003: 38) 40

Chesbrough (2003:41) believes that an internal and centralised approach to R&D has become outdated. Knowledge is ubiquitous and must be used; otherwise, it will be lost. This change in thinking brings new opportunities. Despite this, organisations still need to perform the laborious work in order to take a promising idea and convert it into a product or service. 2.5 Summary of the Literature Review An increasing number of organisations have realised the benefits of collaboration and for some it is becoming a major factor in formulating corporate strategy. Isolated cases in the 19th and 20th centuries found the sharing of knowledge to be beneficial in the creation of innovative products. Recently, as demonstrated in the cases explored here, there has been an uptake in adopting collaborative principles, with this now happening on a global scale. This is quite different to the early examples of the steam engine, iron blast furnace and the Homebrew Computer Club, that drew smaller numbers of participants and where information sharing was by means of meetings, newsletters and other publications; collaboration took place, but didn’t reach large audiences. This particular mode of creation, using global collaboration, began to gain popularity when interest in the Internet began to gain momentum in 1993-1994, as noted in the case of Linux (Raymond, 2000). All cases following Linux occurred through collaboration using the Internet. Tapscott and Williams (2007:1) found that millions of people are now making use of Web 2.0 software like blogs, wiki's and chat rooms to create dialogue and debate. Organisations such as SAP, eBay, Google and Amazon are creating platforms via an API (Application Programming Interface) that create partnerships with software developers, by opening up their software services and databases for them to access (Tapscott & Williams, 2007:184). The web allows organisations to reach large audiences, which was not possible before. Organisations that make use of global collaboration have realised that to be competitive they cannot always rely on their own resources to solve problems, they have to seek the assistance of those that are not directly employed by them. Goldcorp Inc. and NASA realised 41

that they did not employ the best geologists and IBM found that they did not employ the best software developers. These organisations decided to either create a platform or use an existing one to better the chances of solving a problem and reach the masses to achieve this. Not all situations cater for global collaboration, with the web providing a platform and therefore, it is important to understand under which circumstance to leverage talent that exists outside the boundaries of an organisation. It can be seen that global collaboration goes a long way beyond open source software, which for many people was the first manifestation of the idea. It is a new way for individuals to learn, create, socialise and (in the process) create online communities. The organisations cited in the literature review indicate that relying on internal resources for growth and innovation is not sufficient to match consumer expectations. These organisations have found how to leverage external resources as a supplement or substitute for an R&D department, and to combine them with internal resources to create value. The examples presented show that a concept evolves when it is shared. Goldcorp Inc. reaped the benefits of sharing its geological data. The steam engine design improved significantly after the patent expired and was shared via a publication. The same pattern emerges for the Linux, Apache, Wikipedia and NASA examples. As will be seen as this research develops in later chapters, the tools available via the web allow this to happen at a rapid pace and on a global scale. Individuals around the world can now present their ideas via blogs, microblogs, wiki's, social networks, discussion boards and instant messaging. This can be great for self-expression, but real value is created when all these ideas are shared amongst each other via dialogue. And, in the research at hand here, these vehicles for communication provided valuable primary data for analysis. Organisations are sharing information via various channels with individuals, who use it to contribute back to business processes that would normally be performed by individuals working within the organisation. These organisations are realising that they can’t hire all the smartest people and in order to reach the smartest they are embracing global collaboration. They understand that in order for an idea to prosper it needs to be revised, modified and extended, which occurs when it is shared amongst people who have different opinions and thoughts. This platform is essential to the success, as it allows individuals to be reached and 42

allows them share and thus contribute. Innovation comes from communities and at the centre are people. The technologies allow these communities to prosper. The needs of people in these communities have to be fulfilled in order to attract a wide scope of individuals and ensure the sustainability. What the needs are requires further investigation. Community members who partake in these online communities are vital to their success. Without attracting members, these communities would not exist. Members participate for various reasons and keeping them interested is a challenge, as if they lose interest the benefits will not be realised. Members participate for various reasons, including recognition, the ability to gain knowledge, financial reward, altruism, personal career development and self-marketing. In order to satisfy these needs, a project needs to be of a modular nature to allow individuals to contribute where they want. As noted by Carr (2007:3), the size of the community matters, as it brings diversity that is essential. It is important to understand what the motivational factors are, in order to build and maintain a thriving community that makes contributions. Without the community, this process will not be able to prosper. People will have to be understood for their motivation, capabilities and the expected rewards. Finally, the process or processes used in global collaboration are central, as it is vital to understand how information is protected for both parties involved and to protect intellectual property. The dangers involved with sharing and opening up an organisation could lead to chaos and possible destruction. This relates to quality, which is essential when a product or service is being produced. With a global community at hand, difficulties will ensue. These communities need to have rules, as they attract diverse people who might not agree with each other and could lead to conflicts. Linux, Wikipedia and Slashdot are examples of self- governed communities who have successfully implemented this model. These organisations have followed processes by engaging and collaborating with their communities. A change in process could be a real challenge for organisations as this a vast shift. The process must also incorporate quality control in order for it to prosper. The underlining pattern emerging from the literature review highlights three key areas: people, processes and technology. These three areas require further investigation in order to establish how organisations can benefit from global collaboration as mentioned by Benkler (2002:73). 43

3 Chapter Three – Research Methodology 3.1 Background Existing literature about the topic was reviewed in order to gain a detailed understanding of the existing state of global collaboration as a phenomenon, and to identify existing research. Organisations that have used global collaboration as a source of innovation in recent years, via an open call, were examined in order to gain an understanding and to assess potential candidates for the case studies. It was found that there are a limited number of organisations making use of global collaboration. This is a new phenomenon that has gradually been adopted by different kinds of organisations. The research approach for this study was qualitative, and based on two global collaboration platforms, from which were drawn three case studies. This allowed for an investigation in a real-life context taking into account the three key areas as found in the literature review: people, process and technology 3.2 Approach to the research Research is generally seen as qualitative or quantitative in nature. Sometimes a mix of the two approaches is used. Qualitative research focuses on a phenomenon in the “real world.” Quantitative research focuses on identifying the distinctiveness of a phenomenon, or exploring the colorations among two or more phenomena. It is not the intention of quantitative research to determine the relationships of the phenomenon (Leedy & Ormrod, 2005:179). Quantitative research begins with a theory and uses formal instruments to find the norm via statistical models; hence the researcher must know what they are looking for at the start, in some detail. 44

It follows that qualitative research is more appropriate for this study, as a discovery needs to be made about what and who is involved with the phenomenon, and what relationships emerge from analysis of the data gathered. Leedy and Ormrod (2005:134-135) explain that qualitative research serves one or more of the following: • Reveals the settings, processes, relationships and people involved with a phenomenon, • Allows the researcher to gain new insights into a phenomenon and/or find problems within the phenomenon, and • Allows the validity of assumptions to be examined. Within the qualitative paradigm, using case studies allows the investigation of a complex problem in a real life environment, by taking into account as many variables as needed. Leedy and Ormrod (2005:135) argue that a case study may be suited to a situation where little is currently known or understood. Berkwits and Inui (1998:195) also highlight that qualitative research is applicable to a new situation. Since this project concerns a complex, new phenomenon, about which little is yet known; case study research is therefore applicable. Yin gives an approach to qualitative research that can be followed here (Yin, 2003:2): • Design the case study, • Conduct the case study, • Analyse the case study evidence, and • Develop the conclusions, recommendations and implications. The following paragraphs explain how each step has been addressed here. 45

3.2.1 Design the Case Study The first step was to review the objectives of the project and determine how data can be accessed about the cases chosen. In anticipation of interviews, questions were drawn up to assist in the data collection phase. When selecting a specific case, locality and accessibility was taken into account, as this could be an obstacle in the data collection phase. The objective is to understand how organisations create a platform for global collaboration that encourages the participation of individuals and at the same time manages the impact on business processes and deals with the risks involved. Possible potential issues identified include: • Reluctance from organisations to reveal information due to protecting intellectual property, • Case locality and accessibility, • The need to make use of online resources, such as blogs and discussion boards, • The complexity of the three parties, platform operator, client and community, • The rapidly changing global understanding about technology and its application to global collaboration, and • The lack of community member involvement in the research due to identities being protected and community members signing confidentiality agreements to protect intellectual property. Requirements to be part of the case study included: • A platform with a global presence, • The platform had to give permission in order to assist with data gathering, • The organisations making use of the platform had to give permission, and 46

• The product or service conducted would have a time constraint deadline and would have been completed by the time data gathering began. Sample generic questions asked via Skype and email interviews include: • What were your motivations for selecting global collaboration? • What benefits does global collaboration have over using traditional R&D? • Did the project yield any benefits with regard to operational, technical and financial aspects? • What problems were encountered throughout the process? • In terms of quality of the final product, did the community meet expectations? • Could global collaboration be used for future projects? • Were time, cost and quality improved? • Are there any risks involved with opening up to a community, as opposed to just one organisation dealing with their own staff completing work? • As a result of a platform providing a global presence of members, many submissions could be submitted. Is the process of finding the best solution complex? • What happens in the case of nobody submitting solution? 3.2.2 Conduct the Case Study The primary objective of this phase was to collect data. The data collection enhanced the internal and external validity of the case study. Sources of data could come from (Yin, 2003:86): • Documentation, • Archival records, 47

• Interviews, • Direct observation, • Participant observation, and • Physical Artefacts. Data was collected from multiple sources in order to avoid bias opinion. This was achieved by retrieving data from: • Reviewing existing academic literature, • Conducting interviews with those implementing global collaboration, • Observing via discussion boards, mailing lists, wikis and blogs, and • Taking part in global collaboration projects. 3.2.2.1 Selection of Case Studies After reviewing various pieces of academic literature, establishing what platforms exist and taking into account the case study requirements, it was decided to approach InnoCentive as the platform for global collaboration and establish whether organisations making use of their community members to solve problems would be willing to be part of the case studies. Initial contact was made with InnoCentive via the microblogging service Twitter. An introductory interview was conducted via Skype with Enterprise Marketing Manager, Connie French. InnoCentive were willing to be part of the research. French explained that InnoCentive had set up a blog that had contributions from the CEO, InnoCentive staff, community members, academics and organisations that used InnoCentive’s services. French explained that they had received numerous requests to be part of studies and found the blog to be a useful tool to gather data about InnoCentive. The question of validity of using a blog for academic data gathering was discussed. French mentioned that InnoCentive had to ensure that the information presented in the blog was reputable, as it had a reflection on InnoCentive to its clients and was no different from gathering information about InnoCentive through its 48

corporate website. It was also mentioned that when organisations approach InnoCentive, their identity is withheld from community members in a majority of cases due to the protection of intellectual property. There are certain organisations that do reveal who they are and would stand a better chance of gaining interviews with them, as they would be more open to be part of the case study. After browsing the InnoCentive website and blog, it was established that options were limited with regard to organisations who were willing to reveal their identity. However, an organisation that has been fairly open about their use of InnoCentive for two products put forward to the InnoCentive community is SunNight Solar. It was therefore decided to select their two products as case studies. Permission was gained via InnoCentive and it was confirmed that SunNight Solar were willing to be part of the case study. InnoCentive and SunNight Solar both met the criteria to be selected as a case study. InnoCentive has a global presence and had an established client base and large community of contributors. The process of making use of global collaboration to solve the two problems had already been completed which matched the criteria. 49

3.2.2.2 InnoCentive and SunNight Solar Data Collection Table 3: Details of the data collection Data Type Details Interviews InnoCentive Enterprise Marketing Manager - Connie French CEO SunNight Solar - Mark Bent Blog post InnoCentive Client Services Team Member - Gabriel Eichler InnoCentive solver - Tom Kruer InnoCentive Client Operations Manager - Elly Madrigal InnoCentive Client Services Team Member - Peter Lohse Press Release InnoCentive Enterprise Marketing Manager - Connie French Magazine Articles Time Magazine Websites InnoCentive SunNight Solar Video InnoCentive’s YouTube Channel Participation Taking part in challenges Observation Twitter An interview was completed with the CEO of SunNight Solar, Mark Bent. Various feedback reports via blog posts were analysed during the data collection. InnoCentive’s YouTube channel that contained interviews with Mark Bent was also used as data gathering tool. 3.2.2.3 TopCoder and On Point Technology Data Collection While reviewing various academic literatures to gain an understanding of which organisations and platforms could be potential candidates, contact was made by Dave Messinger, Chief Architect of TopCoder, indicating that TopCoder could be a potential candidate as a case study via Twitter. An interview was setup via Skype where TopCoder was discussed and permission was given to use TopCoder as a Case Study. Director of Communications, Jim McKeown, provided academic literature of which TopCoder was a 50

part. McKeown then provided case study literature conducted by TopCoder, which profiled cases of organisations making use of TopCoder's platform. From this list On Point Technology was the only organisation willing to be part of the study. McKeown then set up interviews via email with TopCoder President, David Tanacea and CFO and VP Product Development of On Point Technology, Ron Burkhart. TopCoder had a global presence with an established client base. It also has a large community of software developers. The product required by On Point Technology had also gone from development to production and would therefore serve as an ideal candidate. Table 4: Details of the data collection Data Type Details Interviews Chief Architect - Dave Messinger President TopCoder - David Tanacea CFO On Point Technology - Ron Burkhart Case Studies On Point Technology Marketing Documents TopCoder marketing presentations Websites TopCoder On Point Technology Participation Taking part in challenges Observation Discussion Boards, Twitter and mailing lists 3.2.3 Analyse the case study evidence The purpose of this phase was to examine, categorise and combine the evidence gathered, which addresses the purpose of the study. Yin (2003:116-127) recommends that analytical techniques be used such as: • Pattern-matching, • Explanation building, and • Time-series analysis. 51

For this study, explanation building was chosen. The data was analyzed and an explanation was given in the form of a discussion. The three key areas identified were used as a guideline to compare the findings of the different case studies. 3.2.4 Develop the conclusions, recommendations and implications In the final chapter, the findings of the analysis are presented with an explanation of the meaning of the results gathered. This assists in assessing the achievement of the objectives set out for the case studies, as well as the objectives for the thesis. 52

4 Chapter 4 - Case Studies This chapter now proceeds to present and analyse the data collected of the case studies selected. 4.1 Introduction The case studies focus on three cases from two platforms operators, TopCoder and InnoCentive (Figure 3). The TopCoder platform examines a case called “Recover” from a client organisation, On Point Technology. The InnoCentive platform examines 2 cases, BOGO Flashlight and Solar Powered Mosquito Repellent, from a client organisation, SunNight Solar. Figure 3: Case studies This chapter provides background information for each platform operator followed by the lifecycle undertaken to ensure a client organisations case is completed. The case is then presented followed by an analysis of the people, processes and technology involved. 53

4.2 Platform Operator - TopCoder 4.2.1 Background Jack Hughes founded TopCoder in November 2000, after selling his software organisation Tallan for $920 million (Howe, 2008:122). TopCoder acts as a software vendor for outsourced projects to its customers. The objective of TopCoder is to develop better quality software, on time and on budget. The approach used by TopCoder to achieve this differs from a traditional labour-based model. In a labour-based model, software developers would be paid for the hours spent on a project and not on what is delivered only. In the TopCoder approach client organisations approach TopCoder to develop a software product. TopCoder then breaks up the project into modules and a community of software developers are invited to develop each module in a competition format (Figure 4). In the competition, each module has a set time period that it has to be completed within and the best solution wins a financial prize. Figure 4: Role players in the TopCoder approach TopCoder licenses the software developed by the community. The individuals involved with the creation of the software earn royalties from the sales. Developer ratings and performance 54

metrics are kept and made publicly available (See Figure 5 for an example) to track a developer’s standing within the community, and to include skill ratings and a history of submissions. Chief Architect, Dave Messinger (2009), explains that community submissions are reviewed with community members receiving feedback so that “they can improve in areas where needed”. The TopCoder platform also provides exposure for the community members, as TopCoder is also a recruitment centre where organisations can find the best software developers from around the world. Figure 5: TopCoder member ratings (Taken from TopCoder, 2009) TopCoder President Dave Tanacea considers that a labour-based model for software development is inefficient and costly with significant risk around project delivery. TopCoder’s model for software development removes much of the inefficiency, reduces cost and improves time to market, he argues, which is a high priority for TopCoder’s customers. Since the inception of the organisation, TopCoder has managed to establish a community of 180 000 members from over 200 countries with over 30 000 members being regarded as active as of February 2009. This community has grown through word of mouth among like- minded individuals. 55

There are over 1200 reusable software components. Inc. magazine publishes an annual list of the 500 fastest growing private organisations in the USA and have ranked TopCoder for two consecutive years as one the fastest growing software organisations. Client organisations of TopCoder include ESPN, AOL, Google, Yahoo!, Microsoft, Motorola and Merrill Lynch. Tanacea (2009) admits that adoption of his model could be daunting for client organisations. He even uses the term “paradigm shift” to describe it, which implies a radical level of change to the strategies, processes and procedures of client organisation. Nevertheless, over the past few years, their experience is that innovative organisations have made increasing use of the TopCoder platform. In 2009, TopCoder has seen adoption increase faster than ever, which could be attributed to the current economic times where there is no room for monetary waste. 4.2.2 Software Development Lifecycle The lifecycle (Figure 6) followed by the TopCoder community aims to ensure that quality and standards are applied throughout. Three independent members of the review board evaluate the submissions received for the competition. Industry research shows that there are six defects per 1000 lines of code. TopCoder states that their projects have revealed that there is less than 1 defect per 1000 lines of code. Figure 6: TopCoder SDLC In the Conceptualisation and Specification phase, the requirements of the project are interpreted using Unified Modelling Language (UML), prototypes and specification documents. Although both phases define the project requirements the outputs differ. 56

During the Conceptualisation phase community members collaborate with client organisations in the TopCoder forums to document their requirements in the form of a high- level business requirement document. During the Specification phase definitive requirements are written whereby winners of the Conceptualisation phase collaborate with community members to define the Application Requirements Specification. The outputs from this phase are peer-reviewed in order to ensure that quality criteria are met. The outputs include application requirements documents, use cases, activity diagrams and a storyboard or prototype. The Application Architecture phase breaks down the application into a component-based architecture that is defined using UML and Architecture competitions. During this phase, previously built components are singled out if they are applicable to the project. Outputs of this phase include module and system design specification, module and system sequence diagrams, module and system interface diagrams and component designs. The specifications developed during the Application Architecture phase are used for the Component Production Phase. This phase is completed in Component Design, Component Development and Component Testing Competitions. A component developed can be categorised as catalogue or custom. Catalogue Components are added to the TopCoder Component Catalogue. The custom components are handed over to customers who own the intellectual property. Outputs of this phase include component requirement specifications, component sequences, class and use case diagrams, component source code, and component documentation and component unit tests. The Assembly phase is completed in a competition format, whereby the components are pieced together into modules and then the modules are pieced together into applications. The community forms teams during this phase and compete against each other to piece together the application. Outputs of this phase include a fully assembled application and a deployment document. 57

Once the application has been assembled, Certification is met through testing competitions and bug races to ensure that the requirements have been met. Outputs of this phase include an automated application test suite. The final phase is Deployment, whereby the project deliverables are tested and deployed in the production environment. TopCoder follows a SDLC like many organisations, but what differentiates it from other software development organisations is that the work during each phase is completed in a competition format by a community of software developers not employed by the platform operator or client organisation. 4.2.3 Client Organisation – On Point Technology On Point Technology, founded in 1996, is an American independent solution provider that has a focus on providing web-based applications for State Governments that assure accountability and integrity for their unemployment insurance programs. On Point Technology has deployed application solutions in more than 20 states. On Point Technology’s aim is to establish a network of knowledge for the Unemployment Insurance community, whose stakeholders are made up of the Federal Government (DOL), 53 State Workforce Agencies, employers (FUTA and SUTA taxes) and claimants. State Workforce Agencies distribute over $30B in unemployment insurance settlements yearly. Approximately half of the $7B of FUTA taxes collected by the Federal Government is given to the State Workforce Agencies to cover the administrative costs of the program. On Point Technology’s customers are the State Workforce Agencies. According to On Point Technology, a majority of these agencies are running legacy mainframe systems dating back to the 1970s. On Point Technology estimates that approximately 20% have made an effort to modernise their programs with less than favourable results. Most of these software development projects, with costs of around $40 - $100 million, are run by organisations such as IBM, Accenture and Bearing Point. 58

On Point Technology required several software systems and wanted to improve their software design and development methodologies. In an interview with CFO and VP Product Development, Ron Burkhart, he revealed that On Point Technology had attempted delivering software under three different scenarios, all of which had failed to deliver projects on time and on budget. The three scenarios were: • Using their own employees to develop software, • Outsourcing development to an off-shore organisation in India, and • Hiring consultants that were paid by the hour, which increased On Point Technology’s development team. On Point Technology’s failure to deliver software on time and on budget is not uncommon in the software industry. A 2004 report by the Standish Group found that 28% of software projects are successfully completed on time and on budget. The annual “CHAOS” study that includes data from several thousand projects also found that 18% of projects were cancelled before they were completed and 51% of projects were completed over-budget, behind schedule and had fewer than the required features (Tesch et al, 2007:1). The Standish Group report also shows that the average percentage of cost above their original estimate in 2004 was 56% (Johnson: 2006). The Standish Group was not the only group to identify problems in the software industry. Independent watchdog agency, the European Services Strategy Unit (2007:3-6), identified 105 outsourced public sector ICT contracts with cost overruns, delays and terminations. Contractors involved include IBM, Accenture and Atos Origin amongst others. The report reveals the following: • 57% of projects had cost overruns which totalled £9.0 billion, • The average percentage of cost overrun was 30.5%, • 33% of contracts suffered major delays, and • 30% of contracts were terminated with no results. 59

On Point Technology set out to overcome these obstacles by becoming a client organisation of TopCoder and following the TopCoder SDLC to deliver a project on time and on budget. On Point Technology decided instead of every phase being completed by the community, On Point Technology’s own staff would be involved with certain parts of the SDLC and the community involved with the rest. This was because On Point Technology’s long-term goal was for their employees to take over the managerial and architect roles and author the documents for the project plan. TopCoder’s purpose would then be to ensure that standards are adhered to, to conduct reviews, and to play a mentorship role with employees and assist with the determining what the financial reward for the competitions should be. 4.2.4 Case - Recover The first system that was required is known as “Recover.” The system has an aim of improving overpayment collections, which could be achieved by automating parts of the process. This would allow On Point Technology to deploy staff to other critical areas and improve the recovery rates. This system would require the use of complicated business rules-based decision support processing. TopCoder set out to achieve project goals and deliverables using its component based SDLC. The aim was to develop a system from already built software components where possible. These components would have already been tested and used in a production environment. Each component is built following a process. Each component had a set of deliverables and quality criteria that had to be met within time requirements. This particular process allows for parallel development which speeds up development time. Parallel development can be used when a system needs to be modified along two or more paths at the same time. This can be useful if you have multiple people working on a system and want a separate area for each person or group of people or if a new version of a system is being developed and at the same time changes need to be made to the current system. 60

On Point Technology’s staff were responsible for the business specifications, project management and quality assurance. TopCoder staff led the architecture and launching competitions. The first step for On Point Technology was to gather the requirements. This project started with the specification phase as a conceptualisation phase was not required. This phase was driven by On Point Technology, which was approved by TopCoder staff after review. The specification effort spanned over 72 weeks with TopCoder only brought into the process in the last 5 weeks. On Point Technology spent 2357 hours on the business specification, while TopCoder approved the business specifications after 4 weeks. The next phase was the architecture phase, whereby, with the assistance of the On Point Technology team that was made up of two architects, it was established that TopCoder already had 58 generic components in their catalogue that could be used for this project. These components would have already been developed and tested. 13 new custom components were to be built using the TopCoder SDLC from scratch. The architecture phase was completed during week 13. These 13 custom components progressed through the architecture, component production, and assembly and certification phases. The TopCoder community completed this process in competitions. Before any development could happen, each component would need to be designed. The community members choose which components to work on. Once the designs are submitted, a review board is selected by the TopCoder staff from the community, based on qualifications, and that board evaluates the designs so as to identify the winners. The next phase is made up of the winning designs being posted with the community being asked to code the component according to specification and design. These components follow another review, whereby the best components are chosen as winners. The component production phase was completed in week 23. 61

Once the components are completed, they need to be integrated into the final system. This is achieved during the assembly phase, wherein members from the community again participate. However, members who partake in this phase are asked to sign non-disclosure agreements. The components are then integrated into applications. The assembly phase was completed in week 30. TopCoder was also assigned with creating the automated test scripts for the certification phase. On Point Technology handled the QA during the certification phase with the TopCoder community fixing bugs and changes to the project in a competition format. A TopCoder deployment architect worked with On Point Technology to create deployment scripts, which would assist with the deployment of the application. The certification phase was completed in week 50. Once the application passed the certification phase, On Point Technology deployed the final application and user acceptance testing was completed. The application was successfully built using TopCoder’s SDLC, component catalogue, staff and members. The project had • 1 TopCoder project manager, • 2 TopCoder Architects, • 2 On Point Technology Architects, • 58 Generic Components, • 13 Custom Components, • 29 Different Members won Design Competitions, • 38 Different Members participated on 3 Person Design Review Boards, • 37 Different Members won Development Competitions, • 69 Different Members participated on 3 Person Development Review Boards, and • 123 members involved with design, development and review of components. 62

Burkhart states that the project yielded many operational, technical and financial benefits. The “Recover” product that was delivered added to the organisation’s revenue. The latest technologies, which included Microsoft .NET 3.5 and Windows Workflow Foundation, were adopted. However, On Point Technology had no experience with these technologies internally. The TopCoder process allowed On Point Technology to improve collaboration amongst their own business analysis, development and quality assurance team and improve their implementation of projects. Burkhart (2009) notes that there were problems during the process: “We felt the quality produced by the TopCoder design competitions were better than the development competitions. We severely underestimated the time needed to complete assembly & integration phases.” After the project was completed, those members involved with the component development were still receiving financial compensation, as the components were being sold to other interested parties. Table 5 shows the Top 10 downloaded components from the Recover system. 63

Table 5: Recover’s top 10 downloaded .NET components Number of Downloads Component Description Report Generator 1.0.0 2,857 Self Documenting Exception 1.0.0 521 Configuration Manager 2.0.1 497 Object Factory 1.2.0 430 Configuration API 1.0.0 424 WCF Base 1.0.0 382 Object Factory Config Plugin 1.1.0 292 Exception Manger 1.0.0 269 Data Access Interface 2.0.0 267 File Based Configuration 1.0.1 208 Burkhart (2009) concludes that On Point Technology can rely on TopCoder as a software development partner and further states: “TopCoder provides us a very efficient way to add to our internal resources if growth suddenly accelerates.” On Point Technology has already used TopCoder for two other projects; Norm and Enforce. As a result of using component-based design, On Point Technology was able to reuse components and save on the development time and costs. A breakdown of the components is as follows: • Norm Product, o 78 Generic Components, o 85% of Recover’s generic components reused, o 15 new generic components, 64

o 31 Custom Components, o Enforce Product, o 77 Generic Components, o 100% reuse from Norm, and o 20 Custom Components. 4.2.5 People Community members participate for a variety of reasons. Compensation is major motivational factor. Tanacea (2009) mentions that, in the possibility of nobody submitting a solution, one remedy could be to increase the financial compensation for competitors. TopCoder have also implemented a Digital Run bonus structure that compensates members that don’t win, but do place highly. Recognition plays a major factor. TopCoder has found that members will put in the effort, if it means that they will be seen as the best amongst their peers. As mentioned, the feedback from the review board provides feedback in the development of TopCoder members. TopCoder Chief Architect Dave Messinger (2009) mentions that according to statistics, people might not do well at the beginning, but get better as a result of the learning from how others have done it, which allows them to pick up new techniques. TopCoder also acts as a recruitment centre that provides further motivation for the community. When TopCoder members signup their identities are protected, making it difficult to gain interviews with members. In order to garner an understanding of the people involved with TopCoder, TopCoder forums were used to learn about this aspect as well as other academic studies. 65

A TopCoder member wrote about getting a job via the TopCoder Employment Service on the TopCoder forum (Anonymous, 2005). The member mentions that other recruitment agencies don’t compare to TopCoder and cites their inability to follow up and the fact that TopCoder continually requests changes to a resume as reasons to why TopCoder is better. The member explains that, of the two interviews conducted, the interviewers explained that they were looking to hire candidates who can complete the work and have problem-solving skills, as these candidates can pick up new skills swiftly. The member believes that this is beneficial to active TopCoder members, as there are organisations continually looking for candidates. A discussion on the TopCoder forum (Anonymous, 2009) about motivations amongst five members shows that money is not the only reason for participation. The first member in the discussion explains that, at first, participation in TopCoder contests was about earning extra money. This did not materialise for the member and s/he does it now for fun and to learn, which allows the member to improve his/her skills. The member also mentioned that TopCoder is something that can be added to the resume, which adds to the motivational factors. The second member mentioned that the member participates for the challenge and the financial reward. The third member mentions that the member became interested in programming questions in 2007 and participated in a number of different programming competitions, but preferred TopCoder amongst all the other competitions tried out. This member has solved more than 1000 problems. The fourth member was impressed by the third member achieving so much in so little time and praised the member and asked the third member to share their experiences. The third member then responded by saying the member practices in the following way: • Attempts to solve 3 problems in 75 minutes and runs a system test after that, • If it can’t be achieved in 75 minutes continue to write after the time and run the system test, and • If the solution fails the system test, a debug is done, after which it is submitted. 66

If the member can’t solve the problem, editorials are consulted and he/she attempts to solve it with the knowledge gained. The member also mentions that the member reads solutions provided by highly rated coders’ solutions. The fifth member mentions that participation first started for fun, but after a few years TopCoder became this member’s job. Independent software engineer Tim Roberts managed to secure a variety of contracts with IT services organisations - with one contract spanning seven years and another contract spanning six years. Roberts finds that these opportunities are becoming scarce, as a work is now being outsourced to overseas organisations and notes that rates that are half what they were in the past. In order for Roberts to improve his skills, he partakes in TopCoder competitions. Besides the cash prizes, winners also get contract opportunities from organisations that require skills. Roberts states that in order to improve one’s skills the best way to do it is to compete with others, as you get better via necessity and looking at how others accomplish things. Roberts secured a client via contact with other TopCoder members (Kranz, 2004). TopCoder provided a platform for On Point Technologies to harness the skills of a community that spans the world. This community is made up of some the best software developers in the world. The winners are financially compensated on an ongoing basis via a royalty program, if the components that they were involved in are sold to other organisations. Those that were not successful in the various competitions were provided feedback on their work that points to areas where they could improve. TopCoder has successfully managed to cater for internal and external rewards to ensure that the community continues to grow. 4.2.6 Process Making use of the TopCoder SDLC is not just about giving a description of what is needed and writing the code, a rigorous process is followed and adhered to, with a review board making sure that things are done to proper standards. This, of course, is what thousands of other software development organisations strive to do. 67

What separates TopCoder from other software development organisations, is that a community of software developers from all around the world now participates in parts of the process, where conventionally internal staff would complete all parts of the design and development of the software system. This significantly changes the way software is developed and introduces a different set of possible benefits and pitfalls. TopCoder has built into their process a peer review mechanism to ensure quality. A review board reviewed every submission in the On Point Technology case. A scoreboard card, which is specific to each competition, is used to rate the submissions. The metrics are then used to determine the winner and are tracked by the member who receives feedback (Figure 7). Figure 7: In depth ratings card (Taken from TopCoder, 2009) Quality could be an issue and uncertain results would severely undermine the merits of the TopCoder idea. Tanacea (2009) explains that the quality is “extremely high” and attributes this to the competitive nature of the “resourcing” of the process. Community members that compete on a regular basis are amongst the best in the world. Tanacea (2009) finds that the 68

reason for this is that the notion of competition scares away most of the mediocre talent with the remaining confident enough to demonstrate the talent that they have. Others, outside the TopCoder community, can see problems with the way that they work. Moshe Vardi, at Rice University, states that although we have technology to work remotely from all around the world, in some cases stakeholders involved with a project do not know what they want until they see code. The TopCoder model makes it a challenge to make ongoing changes if the team implementing them work remotely. Vardi also notes that informal communication is valuable when communicating with team members; simple questions such as “How’s it going?” or “What’s happening?” (Arnoldy, 2006) are important in keeping things under control. The possibility of nobody coming forward to develop software for a component could occur. Tanacea (2009), explains that TopCoder plans meticulously to avoid this situation. Metrics are taken for each member that includes ratings for each competition and the member’s reliability. Tanacea (2009) reveals: “We have algorithms within TopCoder that allow us to predict with good certainty the probability that we will receive a high quality submission for a competition.” When this is not possible TopCoder reviews the inputs to address the problem. In most cases, it could be attributed to one of the following two causes: • The specification is inaccurate which means that it needs to be narrowed or broken up, or • The financial compensation is low and therefore needs to be increased. By sharing information with the community, the risk emerges that this information could be used by the community, or even competitors, for the wrong reasons. It should be noted that this risk exists in the more traditional model of software development where projects involve 69

contractors and offshore developers. Tanacea (2009) notes that most of the worst disasters arose where internal employees made inappropriate use of their access to production applications Tanacea (2009) further explains: “The key to security is to imbed it into the process as opposed to trying to find “good” or “safe” people. Every TopCoder competition has a corresponding scorecard and every scorecard has a section for security. In this manner security is consistently and rigorously employed.” TopCoder has achieved and evolved a process that ensures software is developed in a timely manner. Statistics indicate that the software developed by TopCoder is of much superior quality to that which is developed by more conventional means. By using a component-based methodology, code reuse is possible. The system developed for On Point utilised generic components that made up 75.01% of the application. The rest of the components were developed from scratch and made up 13.37% of the application with the rest of the application not developed using components. TopCoder has built into their process ways that ensure quality and minimize the risk of not meeting the standards required. 4.2.7 Technology The uptake of the web since its inception has meant that people from around the world have been able to form communities with a shared interest. Web 2.0 has allowed organisations like On Point Technology to collaborate with these communities to create products. Web 2.0 has allowed for two-way conversations to happen. TopCoder members are notified via email, twitter, calendar and RSS feeds of competitions or recruitment opportunities. One of the benefits of using a RSS reader is that the user can have multiple feeds in one place and does not have to visit many different websites at different locations. A forum is also available for members to discuss various topics. Members communicate with each other 70

posting questions and answers with topics varying from TopCoder specific questions to general questions about software. Members also get badges and cards. Members are allowed to place badges on their resume or website which indicate that the member has been rated by TopCoder. The TopCoder cards are a digital interpretation of member’s statistics. TopCoder provides a platform for collaboration that is not just about publishing information. The platform allows a problem to be solved. In the case of TopCoder, the problem concerns the development of software. TopCoder provides customers like On Point Technology with a virtual workforce of over 180 000 members from over 200 countries and gives them access to a diverse global workforce. According to TopCoder, the quality produced surpasses industry standards. This would mean lower maintenance costs. On Point Technology also saved, as a result of paying only for software that was developed. 4.3 Platform Operator - InnoCentive 4.3.1 Background InnoCentive, founded in 2001, created a platform for organisations to collaborate with a global community to solve R&D problems. Statistics provided by InnoCentive show that the global community is made up of over 165,000 individuals as of January 2009. Commercial, government and non-profit organisations such as Procter & Gamble, Avery Dennison, Pendulum, Eli Lilly and Organisation, GlobalGiving and The Rockefeller Foundation seek the assistance of this global community to solve R&D problems. According to Tapscott and Williams (2007:98), 35 Fortune 500 organisations had made use of InnoCentive’s platform and global community. 71

Client organisations, known as “seekers”, work with InnoCentive to post problems on the website anonymously. The global community of individuals, known as “solvers”, are then asked to provide solutions to the problems. The seeker then selects the best solution. If a viable solution has been found, the solver receives a financial reward. The financial rewards range from $5,000 to $1 million. The seeker holds the intellectual property once the money has been awarded. Gabriel Eichler (2008), a member of InnoCentive’s Client Services team explains: “the primary responsibility of InnoCentive in its role as a trusted transaction broker is to provide clear expectations of both parties and to facilitate an efficient and equitable outcome for all parties”. Statistics provided by InnoCentive show that seekers have submitted a total of 800 challenges to the community of solvers, and that 348 of these challenges have been solved with 11,872 submissions provided. A total of $19.25 million in award money has been posted, but with only $3.7 million of that amount having been awarded, which gives an indication of the actual success rate of the challenges. 4.3.2 InnoCentive Challenge Lifecycle InnoCentive follows a three-phase challenge lifecycle (Figure 8) that requires the input of the InnoCentive Team Members, seekers and solvers (Madrigal, 2009). Figure 8: InnoCentive lifecycle The first phase involves information gathering and conducting research in order to develop the challenge. This phase generally lasts two weeks. The seeker submits a one or two 72

sentence idea, which will then be reviewed by an internal InnoCentive team member with the seeker in order to understand the details of the problem. The InnoCentive team member would then conduct research about the details that surround the problem to gain a better understanding. A draft copy of the challenge would then be drawn up, which would be adjusted with the seeker until both parties agree upon the contents (Madrigal, 2009). InnoCentive’s Client Operations Manager, Elly Madrigal explains: “the focus here is to ensure that the seeker’s confidential information is not revealed, while conveying critical information that solvers need to Solve the problem.” After the seeker approves the content of the challenge, it is posted on the InnoCentive website with a deadline, and the second phase commences. Solvers are then able to view the challenge. They are able to submit any questions they have concerning the challenges. If InnoCentive cannot answer the question, it is passed onto the seeker who will provide a response. This phase lasts 1 to 3 months (Madrigal, 2009). Solvers have an online secure space called a “project room” for each challenges. In the project room, solvers access confidential information about the challenges, submit solutions and ask questions about the challenges. InnoCentive has different types of challenges and each challenge is classified as one of the following: • Ideation, o A brainstorm in order to present new ideas, which is usually, fewer than two pages. This challenge has a guarantee of at least one solver being awarded the prize money. The solver grants the seeker a non-exclusive license instead of a transfer of intellectual property for the ideation, • Theoretical, o A detailed description of the solution is required from the seeker with the solver willing to transfer the intellectual property of the solution. A submission is usually a proof of concept. The winner(s) will win a financial prize if a suitable solution is found with those that are not chosen receiving technical 73

evaluation of the work. Seekers do not have to select a winner if a suitable solution is not found, • RTP (Reduction to Practice), o Like a theoretical challenge, in a RTP challenge a detailed description is required with the exception that solvers must provide physical evidence that the challenge does work and is better than other solutions submitted. These types of solutions generally have longer posting periods. The winner(s) will win a financial prize if a suitable solution is found with those that are not chosen receiving technical evaluation of the work. Seekers do not have to select a winner if a suitable solution is not found, or • eRFP (Electronic Request for Proposal), o eRFP challenges allows a seeker to request a partner or supplier. The cash reward is negotiated directly between the winners and the seeker. The third phase starts after the deadline for submissions has passed. The submissions are passed on to the seeker, who will evaluate and select the best solution and assess its viability and practicality. The seeker can take anything from 15-60 days depending on the complexity of the challenge. Certain challenges are evaluated in seeker labs and goes through testing. Once the seeker selects the best solution the winning solver is notified (Madrigal, 2009). The closing steps in the procedure follow the third phase and formalise the outcome. The seeker provides InnoCentive with the following documentation: o A Notarized Affidavit that reaffirms the solver agreement, o A signed waiver if intellectual property is transferred, o A photo of the solver, and o Banking details for the money transfer. 74

Finally, solvers whose submissions were not successful are notified of this and the intellectual property is transferred back to the solver. 4.3.3 Client Organisation – SunNight Solar SunNight Solar is a renewable energy organisation founded by former US Diplomat and oil executive Mark Bent, who had lived in Africa for over 20 years. Inspired by seeing friends, employees and children living without electric light in Eritrea, Bent decided to form SunNight Solar with the goal of providing solar powered flashlights light to Africans who have a lack of access to electricity (SunNight Solar, 2009a). Two billion people worldwide rely on kerosene, candles and traditional battery flashlights as a medium to light up a room (Walsh, 2009). The cost of using these traditional means of illumination can be huge for those living in the developing world. The World Bank and International Finance Corporation estimates that the cost of lighting can cost between $8 to $10 dollars a month, which is as much as 30 percent of a family’s disposable income in the developing world (SunNight Solar, 2009a). Due to the general rise in the cost of petrochemicals, the cost of kerosene increases. This money (and the precious kerosene) could be used for other purposes if a renewable energy solution could be used instead. Bent set out to improve the lives of many by eliminating the need for kerosene, candles and battery flashlights with a solar-powered flashlight. After investing $250,000 of his own money into developing a solar-powered flashlight, Bent ran into problems with the flashlight developed. Although the flashlight managed to provide 5 hours of illumination after a 10-hour charge, testing in Kenya revealed that the flashlight could not light up an entire room like a kerosene lantern. Instead of hiring engineers to solve the problem, Bent approached InnoCentive to assist, having heard about it from the Rockefeller Foundation. According to Bent (2009), the reason why SunNight Solar decided to go with InnoCentive is that it gave them access: 75

“to the best and smartest people who could assist from around the world“ 4.3.4 Case – Solar Powered Flashlight After receiving funding from the Rockefeller Foundation and venture capital organisation Spencer Trask, SunNight Solar became a seeker on InnoCentive asking solvers to improve SunNight Solar’s BOGO (Buy One Give One) flashlight. This was an ideation challenge, which means that at least one solution must be selected and the $20,000 being awarded. Bent found that the most exciting part of making use of InnoCentive was the unexpected innovative solutions provided by the community. A solution submitted by Russell McMahon (an Electrical Engineering Masters degree graduate from Auckland University) was selected as the best solution and awarded $20,000. The solution provided a better design that makes better use of the solar battery and LED’s (InnoCentive, 2008). McMahon had 22 years experience at a New Zealand telephone organisation. Bent explained that McMahon had convinced him via science how to rearrange the LED and power management system. The design makes use of three Nickel Metal Hydride (NiMh) AA batteries that will provide light for 750 to 1000 nights, 8 hours per night. C or D cell batteries require replacement after around 15 hours of use. The cost of using 2 D-cell batteries for the equivalent of 750 nights/6000 hours at $3 would amount $1,200. By adopting the solar powered flashlights, the reduced use of kerosene would help reduce the emissions of carbon into the atmosphere. According to SunNight Solar, there are two billion people still relying on kerosene lanterns. The replacement of kerosene lanterns with solar powered flashlights would reduce the number fires and possible injuries and deaths that could occur as a result of the fires (SunNight Solar, 2009c). The benefits of the BOGO flashlight design include: • Reducing greenhouse gas emissions from the kerosene lanterns, • Reducing groundwater contamination from batteries containing mercury, • Less people are exposed to the fumes from kerosene lanterns, • Reducing the risk of accidental fires, and 76

• Reducing the spread of malaria via mosquitoes, as they are not attracted to the white light of the solar-powered flashlight. Figure 9: BOGO Flashlight charging (SunNight Solar, 2009b) The distribution of the BOGO flashlight (Figure 9) is done through the Buy One, Give One program, whereby for every purchase in the developed world, a second identical flashlight will be given to an organisation that will distribute it to someone in the developing world. You can even choose where to give the flashlight. At the time of writing, programmes had also been set up to distribute lights to American troops in Iraq and Afghanistan, as well as to families affected by the war in Gaza. 4.3.5 Case - Solar Powered Mosquito Repellent Inspired by the results of using InnoCentive, Bent decided to progress SunNight Solar’s next project in the same way. SunNight Solar requested a design for a low cost solar-powered device from the community of InnoCentive, to prevent or limit the spread of malaria. Currently the most common form of prevention is insecticides or nets (InnoCentive, 2009). See Figure 10. 77

Figure 10: Mosquito nets draped over a bed (Taken from Handy, 2008) According to SunNight Solar the problem with using insecticides is the danger of human poisoning, and the fact that mosquitoes can build up a resistance to the insecticides from one generation to the next. The problem that lies with using nets is that one has to stay under them all the time, in order for them to be effective. Every year there are between 300-500 million cases of malaria with over one million deaths. A child dies every 30 seconds from malaria. While living in Africa, Bent had contracted Malaria twice. He also had friends die as a result of malaria (InnoCentive, 2009). Bhattarai et al (2007:1790) affirms these statistics by finding that malaria is the cause of about one million deaths every year. However, Bhattarai et al finds that it can be controlled with insecticides treated nets and is being strongly promoted as a way to prevent malaria. 78

The RTP challenge was set with a prize of $40,000, funded by The Rockefeller Foundation, and the InnoCentive community submitted 18 proposals. Bent expected a solution similar to the BOGO Flashlight, whereby electricity stored in rechargeable batteries would power a device. It turned out that a majority of the proposals matched this expectation. The winning solution, however, did not work anything like the majority of solutions. InnoCentive solver, Tom Kruer’s, solution (Figure 11) was selected and awarded $40,000 for a low-tech approach to solving the problem (InnoCentive, 2009). One solver complained that the solution submitted did not meet the stated requirements. Bent explains that the winning solution stood out from the rest and took to the term “think outside the box” as stated in the requirements. Figure 11: A prototype design submitted by Kruer (Taken from Kruer, 2009) Kruer, who is a Product Development Engineer and has founded several organisations, had already solved four other challenges before winning the SunNight Solar challenge. Previous challenges solved include a cost-effective machine to manufacture bricks in Pakistan and a machine to grind grain in India. Kruer is a contributor to Wikipedia and makes use of open source software, such as Linux, and felt that participating in open innovation was a natural step. 79

Kruer (2008) says: “Beyond the financial benefit, which is wonderful, I have a unique opportunity to ‘give back’ in a way that takes advantage of my skills and background.” Another benefit Kruer found was connecting with like-minded individuals. Kruer explains that the InnoCentive solvers are starting a new way to conduct business and feels that open innovation can be applied to other sectors. Kruer finds that the model can be used to turn the world’s problems, such as war, poverty, oppression and water shortages, into opportunities. Kruer says: “Opportunities for grass roots efforts of creative and motivated people from all types of backgrounds and disciplines to come together and implement much-needed changes.” The design submitted by Kruer can be developed for under $10. While conducting research together with his son, they found that mosquitoes are attracted to humans under the combination of the following factors (Kruer, 2008): o When the human temperature reaches approximately 29 degrees Celsius, o The skin releases moisture, and o The scent of a human and resident micro flora. 80

Figure 12: Components of the design (Taken from Kruer, 2009) Based on the research Kruer designed a device that could draw, catch and kill mosquitoes using the 3 factors uncovered by the research. The ingredients for the device to trap mosquitoes are paraffin wax and human sweat. The wax absorbs solar energy during the day. During the evening the heat is released at roughly the temperature of a human body as the wax hardens. Together with the human sweat, the device mirrors the scent, moisture and temperature of a sleeping human, which would attract mosquitoes, which are then trapped (Figure 12). 4.3.6 People InnoCentive provides seekers with a platform to collaborate with a global community to assist with solving R&D problems. This platform differs from the traditional approach of hiring the best talent and requesting from them solutions to problems. InnoCentive’s seeker’s provides solvers with various different challenges to choose from. In a platform where many challenges are available, InnoCentive do try and match up solver’s 81

preferences to challenges that match their skills and interests. Upon completing the registration process, solvers are asked to indicate what their areas of expertise and interest are, so that InnoCentive can recommend challenges to them. Disciplines include: • Business/Entrepreneurship, • Chemistry, • Computer Science/Information Technology, • Engineering/Design, • Food/Agriculture, • Life Sciences, • Math/Statistics, or • Physical Sciences. This allows solvers to select areas where they would like to solve challenges and where their area of expertise lies. InnoCentive’s Innovation Program Manager, Michael Albarelli (2008), investigated the commonalities among successful InnoCentive solvers. Albarelli found that there is not just one typical solver, but also a rather diverse range of solvers. Experience varies from undergraduates to retirees with over 30 years of experience. Some are heads of large research organisations, with others to assist them, while some are consultants who work on their own. They come from different backgrounds that include academia, government and non-profit organisations amongst other industries. The winning solvers tend to be analytical and love to solve various real world problems that will make an impact on the world. Winning solvers do not just work on any challenge, they choose challenges to solve if they have an idea of how to solve it. Prolific solvers have a success rate of up to 50%. Winning solvers tend to focus on areas where they can contribute and where their strengths lie. They often provide detailed explanations when they submit a solution and do not assume obvious points. They go into detail as to where to find materials needed for a solution. Winning solvers also relate to a similar problem that they have solved or seen being solved. There have been instances where different industries have been linked as a result of somebody from the outside looking in. Albarelli cites a particular 82

challenge where a solver who had knowledge of the cement industry solved a challenge concerning frozen oil. The winner of this challenge used some of the money awarded to fly out to the location of the frozen oil to see how the process was going. The fact that this solver flew out at their own expense indicates that financial compensation is not the only incentive. Tom Kruer, the solver of the mosquito challenge, was a repeat solver of InnoCentive challenges, having also solved four others. Kruer highlighted that InnoCentive brings benefits beyond financial compensation. Kruer cites the reason of “giving back,” which would concur with Albarelli’s (2008) findings, that solvers want to make an impact on the world. Kruer goes onto further highlight that open innovation can be used to solve other problems like war and water shortages. Kruer makes the point that it’s not only about the money, but also about solving challenges that can make a difference in the world. 4.3.7 Process Mark Bent explains that the traditional or closed innovation process is a challenge, especially in the case of a start-up, as this would require the start-up to pay staff a full salary plus additional costs like insurance. InnoCentive allows for a one-time payment that reduces costs. Bent anticipates that more organisations will make use of platforms like InnoCentive, as a result of cost reduction that is a huge benefit. InnoCentive provides seekers with a platform with over 165,000 people and an immediate global presence of personnel that could contribute to a project. SunNight Solar’s investors responded positively to the use of InnoCentive’s global network of solvers. For the BOGO flashlight challenge SunNight Solar received 25 submissions; for the mosquito challenge they received 18. SunNight Solar got to select the solution that they thought was the most qualified. Bent explains that SunNight received a wide variety of submissions for the mosquito challenges; 80% were rated “good” to “very good,” with 20% rejected on the grounds that they were not going to work (it was decided that this was largely because the solvers concerned did not have an understanding of the nature of life in Africa). Bent highlighted that it is important to explain the requirements correctly, as incorrect 83

requirements will mean incorrect solutions. While the SunNight Solar case yielded positive results, InnoCentive employee Peter Lohse (2008) reveals that often challenges do lack the information that is required. This comes as a result of organisations not wanting to release certain details as the information is confidential, or they do want to release proprietary knowledge to reduce risk. Lohse highlights that in order for InnoCentive to be successful, confidentiality and intellectual property needs to be protected. InnoCentive have created processes, services and agreements that protect the information presented in a challenges. Despite this, seekers have been reluctant to provide detailed information. InnoCentive follows a lifecycle that allows seekers to protect their identity. It also gives the community a chance via the project rooms to seek out further information. InnoCentive and SunNight Solar highlighted the importance of stating in depth requirements, as this can have a direct impact on the validity of the submissions. By opening up to a global audience, an organisation could be at risk of alerting competitors of what they are doing. Bent notes that while this is a risk, nothing stops another organisation from taking apart the BOGO Flashlight and rearranging the circuit board and saying that it is unique, thereby avoiding patent and copyright issues. 4.3.8 Technology The web is the enabler that allows organisations like SunNight Solar to collaborate with their community. These individuals have knowledge in various disciplines which could assist seekers and allow them to work on challenges that they have the expertise in. InnoCentive encourages solvers to share what areas their interests and expertise lie. This allows InnoCentive to match up challenges with these areas of expertise and interest and suggest challenges for solvers to partake in. In addition to this, a weekly challenges bulletin 84

is emailed to solvers highlighting various challenges. RSS feeds for the various disciplines are also available for solvers to add to their RSS aggregators. A twitter feed is also available that publishes challenges as they become available. The InnoCentive website has a section devoted to a specific user’s challenges, which can include open, closed and awarded challenges. For every challenge that a solver wants to partake in, a project room is opened up. If information has been omitted, solvers have the opportunity to ask questions via these project rooms created for every challenge. If InnoCentive cannot answer the question, it will be passed onto the seeker to answer, providing that the answer does not contain confidential information. Eichler (2008), a member of the InnoCentive Client Services team, reveals that in 2007 the team answered nearly 7000 questions. If the same question is being repeatedly asked, it will be posted to a Q&A addendum to the challenges. In order to attract and serve the needs of a community of solvers, communication is imperative. The web and all that comes with it has made this possible. The challenges not only needed to reach solvers, but also needed to be targeted at solvers who have the expertise in this area. InnoCentive does this by matching up profiles with challenge details. Another important aspect is notifying the solvers about challenges. As mentioned, InnoCentive are using various Web 2.0 tools to achieve this, such as blogging, microblogging, RSS feeds and email. This platform is what enables organisations like SunNight Solar to reach outside their own boundaries to solve problems at a low cost. 85

5 Chapter 5 – Case Studies Discussion 5.1 Introduction The information gathered from the three cases of global collaboration had the goal of answering the research questions, which will be addressed in the following discussion. The discussion focuses on the three areas uncovered in the literature review: • People, • Process, and • Technology. 5.2 People Two research sub-questions addresses the area of people; why do individuals partake in global collaborating projects, and how do you attract individuals to participate? This section attempts to answer these questions. In order to understand how to attract individuals to partake, it needs to be understood why individuals partake. In projects with an open call to solve problems (such as TopCoder’s and InnoCentive’s), multiple solutions could be presented with the best viable solution being selected and the rest being overlooked. A key success factor for TopCoder and InnoCentive is to continually grow their community base and encourage those that are not successful to try again in other projects. The data gathered shows that TopCoder has managed to implement a model that has benefits for both those that win and those that do not. InnoCentive has also achieved this, but not to the extent and detail that TopCoder has. The benefits to people who partake in TopCoder and InnoCentive projects can be classified in two categories, direct and indirect. Direct benefits are those that are guaranteed from the platform like money. Indirect benefits are factors that come as a result of participation but are 86

not guaranteed by the platform and can be seen as beneficial by the community members and play a part in motivating members to partake. Direct benefits for TopCoder include: • Financial compensation for winners of competitions, • Financial compensation for members who do not win, but do place highly in rankings, and • Financial compensation from components that are sold to other TopCoder customers, which are in the component catalogue. Direct benefits are guaranteed for individuals within the community of TopCoder. With TopCoder, individuals can win specific competitions, but they can also receive financial compensation over a period of time if they partake in the development of components that are in the component catalogue, and are sold to other organisations that have need for the component. These members could possibly receive income long after they developed or designed the component, as a result of sales thereafter. InnoCentive use a similar model to cater for direct benefits, but not as in much detail as TopCoder. Direct benefits for InnoCentive include: • Financial compensation for winners of challenges, and • Financial compensation if a solver recommends another winning solver and the challenges prize money is over $2500 for the first challenges. There is no financial compensation for those who do not win, only the winners are rewarded. It should also be noted that not all challenges have to award a winner. Only Ideation challenges have a guarantee that a winner is selected. So there is a possibility that a seeker could receive multiple solutions to challenges and not select any one of the solutions, meaning that nobody from the community is rewarded financially except in the case of an ideation challenge. 87

As noted in the literature review, Benkler (2002:61-62) finds that providing financial incentives will not necessarily provide motivation for people to participate. Other motivational factors will have to be provided to community members, in order to encourage participation. These Indirect benefits for TopCoder include: • Community members pick up new techniques from others, • Community members work on parts of a project where they want to and where their areas of expertise can be utilised, • Community members work on parts of a project where they want to get more experience, • Feedback is provided, whereby community members are told where they need to improve, • Peer recognition is provided via developer ratings, which are publicly available, • Meeting link-minded individuals and networking, and • Career Advancement. Indirect benefits provide members with a view that their time spent on these projects is an investment that could yield future rewards. The TopCoder platform provides members with a chance to show their capabilities and provides a platform to self-market one. This provides an opportunity for organisations to see whom they can employ. TopCoder provides feedback on the quality of their work and shows members that people are using their contribution, which spurs participants to pursue perfection. Indirect benefits for InnoCentive include: • Community members work on parts of a project where they want to and where their areas of expertise can be utilised, • Community members work on parts of a project where they want to get more experience, • Feedback is provided whereby solvers are given a technical evaluation (but for Theoretical and RTP challenges only), 88

• Peer recognition is provided via the InnoCentive website, where a list of winners and the biography is posted, and • Meeting like-minded individuals and networking. The Indirect benefits of InnoCentive are not as extensive as TopCoder. Again, only winners seem to get recognition. For two types of challenges feedback are provided. Solvers, who submit and do not win, do not receive feedback for Ideation and eRFP challenges. The winning solutions in a majority of cases are not published, so those who were not successful do not learn from others like those in the TopCoder community. This could be attributed to organisations not willing to let the intellectual property become public knowledge. InnoCentive does provide a wide variety of challenge types, which means that they do cater for different types of people’s expertise and experience. Solvers have noted that participation is about making a difference, which indicates that financial compensation is not a major factor. The literature review also noted that Leadbeater (2007:75) finds a majority of users do it for recognition amongst their peers for the work that they enjoy, which gives them a sense of achievement. Leadbeater, like Benkler, also finds that some do it in order to better career prospects, by gaining a reputation in the communities that they participate. TopCoder and InnoCentive to an extent provide members with a platform to achieve this. A web-based survey study of 166 scientific problems from InnoCentive revealed the following (Lakhani et al, 2006, 8-11): • 65.8% of solvers have a PhD, • Winning solvers spent twice as many time solving a problem as non-winning solvers, • 10.6% of respondents work in teams attempting to solve a problem, • The average team size was 2.8 members, • 83.3% of winners did not consult with others, • 73.8% of non-winners did not consult with others, and 89

• 72.5% of winning solvers based their solutions from work of others. A majority (65.8%) of the respondents had a PhD qualification, which indicates that InnoCentive attracts a community with high intellectual capability. The winning solvers tend to work alone and spend double the amount of time solving a problem than those who do not. Another important aspect to note is that 72.5% of winning solvers based their work on that of others. This indicates that research of previous information plays a critical role in solving a problem. The same could be attributed to TopCoder. With TopCoder, participants mentioned that learning new techniques was a motivational factor for participating. The more these members learn the better chance they have of improving their own skills, as well as solving problems. The same study asked the respondents to rate motivations for attempting to solve an InnoCentive challenge. The findings revealed that although there is financial prize, indirect motivations are more significant motivational factors. InnoCentive solver Tom Kruer (2008) mentioned that although the financial benefit is wonderful the opportunity to “give back” provides greater satisfaction. The study by Lakhani et al (2006: 1-5) further revealed that solvers managed a 29.5% resolution rate. This rate might not be significant, but it should be noted that these problems had previously remained unsolved using traditional R&D methods by solving problems within their own laboratories, and over extended periods of time. The study also found that this success rate is due to InnoCentive being able to attract specialised scientists with a diverse range of interests. The background of the two winning solvers backs this up. Tom Kruer was a Product Development Engineer and has founded several organisations. Kruer had also solved four other challenges. Russell McMahon was a Electrical Engineering Masters degree graduate from Auckland University and had 22 years experience at a New Zealand telephone organisation 90

It was also found that solvers managed to provide solutions to challenges that were not in their field of expertise, which indicates that openness can provide a transfer of knowledge from a scientific field to another. Furthermore, the study revealed that solvers mainly relied on information from solutions that had already been developed. The study also found that challenges had a better chance of being solved if the solvers had fewer scientific interests and were more specialised. The number of submissions per problem had no significant impact on the analysis, which the authors speculate means that diversity prevails over the number of submissions from similar fields (Lakhani et al: 2006, 8- 9). The winning solution for the malaria solar powered device was not what SunNight Solar were expecting. It did not even work anything like a majority of the solutions. One solver even complained about this the solution was nothing like what was expected. SunNight Solar received 18 qualified proposals, each with a different viewpoint on how to solve the challenge. The various and diverse areas offered allows solvers to provide solutions to areas where their particular area of expertise lies and focuses on their strengths. From the disciplines, it can be concluded that InnoCentive has a wide range of diverse challenges that would need wide range of diverse individuals to partake in challenges. Solvers are notified via various different means of challenges. Why individuals participate and how to attract them can be broken into the two motivations indirect and direct (see Table 7). 91

Table 6: Direct and indirect motivations Direct Indirect Financial compensation for Provide feedback so that community members can learn from winners. their experiences. Financial compensation for those Keep metrics to measure performance amongst community who do not win but place highly. members. Public recognition. Break a project into smaller modules, which allows community members the opportunity to work on parts of a project that they want to. A platform to meet like-minded individuals. Networking. Cater for career advancement like TopCoder that acts as a recruitment agency. Both these motivations will have to be catered for in order to attract a community willing to solve problems. Global collaboration has only begun to gain momentum as a result of the Internet connecting client organisations to community members all around the world who could provide expertise in a particular area. While it is useful that winners are rewarded with money, the next challenge for these platform operators is to cater for motivations for those that do not win with incentives to return and partake in challenges and competitions so that they can always provide the customer with a pool of talent. 5.3 Process Three research sub-questions addresses the area of process. The first two are dealt with mutually; “how does global collaboration differ from current means of operation?” and “who are the role players involved in global collaboration?”. The third sub question; “what are the risks involved with opening up an organisation to global collaboration?” are answered as a result of examining the process and role players involved. 92

To establish how global collaboration differs from the current means of operation the process followed by TopCoder and InnoCentive were investigated. Each step of the process was planned meticulously. What separates this process from traditional means is that organisations like On Point Technology and SunNight Solar are no longer hiring the best software developers or engineers to innovate and create products for their businesses. These organisations are appealing to the masses to solve problems and collaborate with individuals on a global scale. Figure 13: The process of innovation on a global scale This process as defined in Figure 13 also reveals three critical role players, the client organisation with the problem, the platform operator and the community who provides the solutions to the problems. The process is triggered when a client organisation recognises that it has a need that might be fulfilled by a process of global collaboration; then, to succeed, the process requires that there are willing participants within the global community, who will respond to an open call. 93

InnoCentive and TopCoder provide a platform for organisations like SunNight Solar and On Point Technology to collaborate with people on a global scale. These platforms are made up of community members that are willing to solve problems that are challenging and provide rewards. Another key element of the platform is communication to the members. This is provided through a website of InnoCentive and TopCoder. The tools that make up the web make this possible. Email, RSS feeds, blogs, micro-blogging and social networking. These tools bridge the gap between the customer like On Point Technology and SunNight Solar with a global community that could spur innovation. The platform links the organisation with a problem to a community that is interested in solving the problem. There is great reliance on these platforms, as they have an established community willing to participate. There is no point in an organisation posting a problem if there is little or no community willing to participate. One of drawbacks of having an open call is the risk that nobody comes forward to offer solutions to the problem. With an established community the chances are reduced. These communities then provide solutions, which are evaluated by the organisation providing the problem. Once the winners have been decided upon (if there is a winner), the reward is given. The final step would be the transfer of intellectual property if applicable. The success of this process will come down to whether time, cost and quality has improved. TopCoder measured this by comparing the time spent on the business specifications phase of each project. Over the course of the three projects, Recover, Norm and Enforce, there was a 54% reduction in cost, as time spent on this phase went from 2544, 1787 to 1179 hours respectively. Duration was reduced from 72 to 23 to 28 workweeks. The number of submissions required achieving a passing scorecard grade measured quality. Originally, Norm required 3 submissions over 5 weeks. Recover originally required only one submission. After every component was delivered during the design and development phases, payment was made to members of the community involved. Payment is reduced, as it is made on 94

delivery. On Point Technology would only have to pay if a component has been completed. In a labour-based model, an organisation would have to pay for hours spent delivering a project whether or not the project has been delivered on time. Making use of TopCoder’s global workforce decreases the chances of a project failing. In the case of On Point Technology, 13 custom components were required, each of which was made up of many tasks to complete a project. Each task represents a point of possible failure. If the component were not developed, the project would not be complete. By harnessing the TopCoder community many people compete to complete a single component, which means multiple submissions could be submitted for each component. Having multiple people at each point of possible failure minimises the risk and increases the probability of project success. If somebody can’t submit a solution, there will still be others to submit a solution (Figure 14). Figure 14: Multiple submissions in global collaboration Not only could these communities produce multiple submissions, which decrease the possibility of failure, but also multiple people are looking at each task with a different point of view. This diverse and multiple viewpoint at attempting to solve the problem has been found to be beneficial in certain scenarios. Using data from TopCoder competitions Boudreau et al (2008:27) found that a rise in competitors had a negative outcome on an individual competitor’s performance. However, when the problem being solved was complex, the effect 95

on the average and best individual score was found to be more positive when increasing the number of competitors. There were a total of 123 members of the TopCoder community involved with the Recover project. On Point Technology managed to tap into a wider range of talented individuals to develop better quality software, on time and on budget. Previous methods employed by On Point Technology (like hiring own staff, hiring offshore developers and bringing in consultants) had proved to be unsuccessful. There are possible drawbacks, although not prevalent in the Recover project. The project could have failed if there were not enough participants with the right skills. At the time of writing, TopCoder had an established community of over 180 000 members from over 200 countries with over 30 000 members being regarded as active. Even with an established community there is no guarantee that the community will build a particular part of a project or have the necessary skills. TopCoder do plan meticulously to avoid this. They make use of an algorithm to predict whether a high quality submission will be received. If this is not possible, TopCoder finds that the specification is inaccurate, which means that it needs to be narrowed or broken up or the financial compensation is low and therefore needs to be increased. Despite this, there is no guarantee this will improve the situation. Unlike a contract whereby an organisation providing outsourcing services can be held contractually liable for projects that they fail to deliver, this is not possible when having an open call to community members. TopCoder do use a pay-per-performance model, and so in the event that a suitable component is not delivered, the client organisation will not have to pay. If this affects the project deadline, this would mean that the time to complete the project would have increased and the risks pass back to the client organisation. On Point Technology felt that the quality of the design was superior to the quality of the development and we find that the issue is one of trading off time against quality. If the platform operators like TopCoder can help manage that trade-off more effectively, as they seem to do, then this is a clear benefit and would add to the argument to use global collaboration. 96

Projects of this nature, especially in the software industry, could be susceptible to targeted malicious damage. Every competition entry goes through a review board that ensures that this is not the case. By opening up to global workforce, On Point Technology managed to deliver the Recover project with better quality, shorter times and less cost. SunNight Solar experienced similar success to TopCoder with regard to time, cost and quality. Bent mentions that for the BOGO Flashlight, the timing was greatly reduced, from about 18 months of development down to six when compared to the first BOGO flashlight, which couldn’t light up an entire room. He also mentioned that it is hard to quantify the quality authoritatively. It was also hard to assess these for the mosquito trap as SunNight Solar had not attempted to make one previously. Mark Bent had already spent over $250 000 developing a solar powered device, but it did not light up an entire room, which was a requirement if the device was to replace kerosene lanterns. In a traditional approach to R&D, SunNight Solar would have to hire staff to find a solution. This would also have additional costs associated with it. The Ideation challenge would mean that at least one solution would have to be chosen. The award was $20,000, which means that SunNight Solar would have spent a maximum of $20,000 to attempt to solve the problem. This is far less than the $250,000 originally spent to develop the version of the flashlight that did not perform adequately. The challenge was solved by Russell McMahon, who had extensive electric engineering experience, which Mark Bent utilised to solve the challenge. With a closed innovation approach, the chances of Bent gaining access to the knowledge of McMahon, who is based in New Zealand, would have been unlikely. SunNight Solar adhered to one of the principles of open innovation, whereby organisations cannot hire all the best employees to assist with R&D. InnoCentive provided SunNight Solar with a platform to reach solvers that could possibly provide a solution at a lower cost than traditional means. If no suitable solution were found, SunNight Solar would have been forced to award the money to at least one solver due to the rules of the challenge type. SunNight Solar could possibly have come out of this challenge with nothing, yet still spend $20,000 as the type of challenge means that at least one solution must be chosen. However the same risk is associated with traditional methods of R&D. 97

The malaria challenge was an RTP challenge, which meant that the $40,000 reward would only be awarded if the design submitted, was proven to work. This is another pay-per- performance example like the TopCoder competitions. This means that SunNight Solar would only have to pay if a submitted design works. Adopting this model reduces the investment risk. Both SunNight Solar challenges received multiple submissions with different solutions from different points of view. This comes as a result of opening up to a global platform, which brings in different solutions to problems from all around the world There also risks associated with making use of communities from around the world like InnoCentive, although not evident in the SunNight Solar examples. A point of failure could have been the lack of qualified submitted solutions for challenges. InnoCentive has an established community of over 165,000 members at the time of writing and this reduces the risk. The study of 166 challenges found that 29.5% challenges were resolved. Opening up to solvers around the world does not guarantee results. For three of the challenge types, the money does not have to be awarded, so the organisation posting the challenge will suffer a loss of time and not direct monetary losses. InnoCentive does match up users’ interest areas with challenges and recommend challenges as to notify solvers of applicable challenges, but this does not mean that the solvers possess the necessary knowledge to solve them. As a result of the process, organisations can benefit, however, there are pitfalls that could prove not to be beneficial. Patterns emerging from the case studies show the following benefits and risks of global collaboration: o Benefits: o Payment is made on delivery in certain circumstances, o Communities bring diversity, o Community members choose to work on challenges based upon their strengths with specialised skills, 98

o Organisations have access to global talent pool which is not present within a single organisation, and o More people work on a problem, which increases the likelihood of it being solved. o Pitfalls o Increase in deadlines if a suitable submission is not found, o No written contract to ensure penalties when no delivery is made, o Possible decrease in quality, and o Community does not have people with the skills needed to solve the problem. 5.4 Technology One of the research questions was to identify how organisations reach a global community to solve problems. As was clear from the start of this thesis, it is technology - specifically the web – that enables organisations to collaborate with potential problem solvers on a global scale The web has allowed individuals to form communities through shared interests, and through a shared motivation to participate for rewards (albeit of different kinds). These communities offer knowledge and capability that could potentially create products such as software (in the TopCoder case) or solve scientific or engineering problems (as with InnoCentive). This is consistent with the findings of Rollett et al (2007:98) who mentions that with the emergence of Web 2.0 more sharing is occurring on the Internet via communities. Web 2.0 technologies have provided opportunities for special interest but global communities to form, and display their skills and capabilities in a manner that benefits other community members as well as client organisations that might require these skills and capabilities. The process of global collaboration involves three key role players: the organisation with the problem, the organisation providing the platform and the community who offer solutions to 99

the problems. In order for global collaboration to happen, these three areas have to come together. The web is what makes this possible. A key element is publishing these problems to communities that could solve them. This is done via the web. TopCoder and InnoCentive make use of email, the micro-blogging website Twitter, the social networking website Facebook, RSS feeds and online forums. TopCoder even developed algorithms that allow them to predicate the probability of a software task being completed. InnoCentive matches up solvers’ skill sets with tasks, in order to recommend challenges that could interest the solver. These platforms also publish the in-depth details of the tasks and challenges on their website, which is the central and pivotal point of the platform. InnoCentive offers a project room, which is a virtual space that contains information about the challenge. Solvers can also ask questions regarding a challenge in these project rooms. These questions are either answered by InnoCentive staff or by the organisation posting the challenge. Solvers can also view the terms and conditions of the challenge that they agree to by entering the room. The communication of the idea on a global scale is critical in amassing solvers to provide solutions and the Internet is what makes this possible. In the data gathered about motivations to participate, TopCoder members mentioned that learning from winners assisted with improving their own skills. The Internet allows TopCoder to broadcast this to other members. Peer recognition was also highlighted. TopCoder provides this via developer ratings while InnoCentive publishes a list of solvers that win a challenge if they wish so. InnoCentive also allows solvers to publish an online profile similar to what social networking websites offer. In order to succeed in these communities, the ability of the community members is what matters. The “normal” criteria to partake in work projects like software development do not apply, such as location, gender, race, age and qualifications. What matters is what the individual can produce. This means that quality, reputation, credibility and creativity matter most. Location is no longer an issue as a result of the connected world we live in as a result of the web connecting people. These communities have a pool of talent from which they can select. 100

Technology is what allows collaboration to happen on a global scale, for organisations like SunNight Solar and On Point Technology to seek the assistance of individuals within communities with the necessary skills to assist in the innovation process. These community members co-create or design products with platforms such as TopCoder and InnoCentive together with client organisations controlling the entire process. Technology is allowing these organisations to delegate the work to outsiders and create partners. This allows organisations to potentially bring products to the market faster and cheaper with quality standards adhered to. Technology is allowing these organisations to distribute work to people that have the required specialist skills. TopCoder did this by using 123 software developers to complete the Recover project. SunNight Solar managed to use the expertise of Russell McMahon who had extensive electric engineering experience and Tom Kruer who thoroughly researched the mosquitoes to design a repellent to stop the spread of malaria. These people had the knowledge and without technology and an open call SunNight Solar and TopCoder would have been able to reap the rewards. These organisations have shown by making use of Web 2.0 tools, that highly specialised work can be completed by those that sit outside the boundaries of the organisation, while maintaining their organisational structure. 101

Table 7: A summary of organisations making use of collaboration Start End Year Platform Contributors Year Steam engine 1811 1904 Lean’s Engine Reporter About two dozen Iron blast furnace 1850s 1870s Meetings - Homebrew computer 1975 1980s Meetings and Many Dozens club Newsletters Open source - Linux 1991 Ongoing Internet Thousands Slashdot 1997 Ongoing Slash - Google 1998 Ongoing Websites Millions IBM 1998 Ongoing Internet Thousands Goldcorp Inc. 2000 2001 Website 1000 NASA Clickworkers 2000 2001 Website Thousands TopCoder 2000 Ongoing Website 180 000 InnoCentive 2001 Ongoing Website 165 000 Wikipedia 2001 Ongoing Wiki 300 000 It has been noted that global collaboration is the result of an evolution of ideas about collaboration, originally constrained (in history) by the limited available means of communication, but now dramatically unconstrained in the “information age”. The question arises: where do we go next? 102

Table 7 summarises the examples highlighted in this thesis. The steam engine example had about two-dozen individuals taking part, while the examples following Linux show a dramatic increase in the number of participants with some communities boasting over 100 000 individuals. This increase could be attributed to the uptake adoption of the Internet. The Internet is allowing organisations to collaborate with more people than ever and comes as a direct result of technology enabling it. No longer are organisations restricted by geographical constraints when it comes to utilising the best talent. Technology provides the basis for the platform, which allows for the connection of organisations like On Point Technology and SunNight Solar with community members from around the world. Technology also allows for these problems to be communicated effectively at a low cost. The InnoCentive and TopCoder platforms make use of Web 2.0 tools to achieve this. They both have a website which is the starting point. This website is a central place for community members to come together and form into a community. The problems of On Point Technology and SunNight Solar are then circulated to the members of these communities in order to find a solution. InnoCentive and TopCoder are platforms that enable collaboration. These platforms form the communities needed to complete the task at hand. The platform has the task of translating the requirements so that the community can understand them. Another critical aspect of the platform is to distribute the problem to the community, handle the submission process and act as a transaction broker between the community and organisation with the problem. 103

6 Chapter 6 - Conclusion, Limitations and Further Work The notion of opening up problems to a world outside the boundaries of an organisation on a global scale is still new and emerging. On Point Technology and SunNight Solar together with TopCoder and On Point Technology have managed to successfully demonstrate some of the potential. As a new and emerging concept, this is a radical shift away from traditional thinking, where it is assumed that the best talent and best ideas sit within the four walls of an organisation. The notion of opening up and sharing problems with global communities, with some investment in management and control, is fundamental to reaping the benefits of global collaboration such as reported and reviewed here. Figure 15: Conceptualisation of global collaboration 104

The main research question set out to understand how organisations could create a platform for global collaboration that encourages the participation of individuals and at the same time manages the impact on business processes and deals with the risks involved. The research sub questions and objectives surrounding the three main areas; people, processes and technology addresses this and is conceptualised in Figure 15. The platform provides the foundation for global collaboration. The platform operator facilitates the global communication (using technology) with the people (community members) in order to complete the process of global collaboration. Two objectives had the goal of understanding the motivations of people that could then be used to find out how platforms could attract people to participate. People play an integral part in global collaboration. The correct and justifiable incentive will have to be provided in order to build a community. Organisations need to be careful of exploitation by not providing the appropriate incentives and think that community members will solve problems without being appropriately compensated. Community members participate for a variety of reasons, which platforms will have to cater for. A direct benefit should not be the only source of motivation for participation, as a minority of members are actual winners. Platforms will have to cater for the rest by catering for indirect motivations that TopCoder has successfully implemented as summarised in Table 6. Two objectives surrounded the second area of the process. The first was to identify what the process is and the second who the role players involved are. The process of global collaboration and who is involved was identified (Figure 13). The client organisation, platform operator and community members where identified as role players. The client organisation presents the problem with the platform operator interacting with the community members to have the problem solved. The process takes care of the execution of global collaboration with the evaluation and ratings of the problem solutions built into the process. Another objective was to discover the tools used in global collaboration and the third area, technology, addresses this. Technology allows the platform operator to facilitate collaboration on a global scale. The objective was to identify what technological tools could 105

be used to facilitate global collaboration. These tools were identified with the Internet and Web 2.0 tools playing an important part. Tools such as micro-blogging, RSS feeds, email, wiki’s and online forums are being used by platform. These tools allow for collaboration on a global scale. Platforms such as TopCoder and InnoCentive provide community members with highly specialised skills. Without these members the project is setup to fail. The platforms are responsible for connecting organisations with talented individuals to solve problems, as well as distributing the problem to the community those posses the skills to achieve this. Modularisation and streamlining problems into correct channels is critical in having problems solved. TopCoder does this by breaking software up into modules and piecing them together. InnoCentive streamlines problems into different categories to allow for more specialised community members to identify problems that could be solved. Used under the correct conditions, collaboration with individuals from around the world can be beneficial in the innovation process. A key enabler in allowing this to happen is the Internet drawing together communities that posses highly specialised skills to complete various tasks. Various organisations have used global collaboration to their benefit. Examples highlighted in this thesis include IBM, Wikipedia, Google, Linux Foundation, NASA, On Point Technology and SunNight Solar amongst others. These organisations have selected to forgo traditional means of innovating in certain circumstances and accepted risks involved as part of the process. With more organisations adopting this model global collaboration could become more widespread. Risks are a reality and final objective was to identify them. Although an open call can yield many different solutions to a problem, the possibly exists that nobody submits a suitable solution. If payment is made on delivery only then money could be saved as opposed to hiring a team to solve the problem, although time spent on a problem will have increased. Quality could be a risk, but TopCoder have put a process in place, which ensures rigorous reviews in order to maintain standards. This review also provides feedback to the 106

community, which caters for an indirect benefit. InnoCentive allows organisations to run various tests on a solution before a winner is selected and only in the case of an ideation challenge must a solution be selected. While access to data was available direct access to the community could have assisted in understanding more about the people aspect. It would have been ideal to have more case studies especially from a South African perspective to understand how organisations if any are making use of global collaboration. Further research that could be beneficial is examining the attitudes of people within an organisation with regard to shifting attitudes towards global collaboration. 107

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Innovation in the Age of Global Collaboration - Crowdsourcing

by Saadick Dhansay on Nov 17, 2010

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