Innovation in the Age of Global Collaboration - Crowdsourcing

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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 (crowdsourcing); people, processes and technology.

The purpose of this study is to understand the motivational factors of people that partake in global collaboration (crowdsourcing), 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.

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Innovation in the Age of Global Collaboration - Crowdsourcing

  1. 1. 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
  2. 2. 2 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
  3. 3. 3 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.
  4. 4. 4 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.
  5. 5. 5 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
  6. 6. 6 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
  7. 7. 7 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  
  8. 8. 8 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  
  9. 9. 9 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
  10. 10. 10 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,
  11. 11. 11 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.
  12. 12. 12 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.
  13. 13. 13 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,
  14. 14. 14 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.
  15. 15. 15 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.
  16. 16. 16 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.
  17. 17. 17 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.
  18. 18. 18 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 organisations have in opening up, to provide a platform for others to participate in their operational activities? Literature Review. To identify what and how organisations are allowing outside individuals to contribute to critical operational activities. Why do individuals partake in global collaborating projects? Investigate how global collaboration platforms have built up a community willing to contribute. To identify what drives individuals to partake in global collaboration projects. How do you attract individuals to partake? Analysis of investigation. To establish how organisations can attract individuals to partake. How does global collaboration differ from current means of operation? Case Studies. To identify the process of global collaboration. Who are the role players involved in global collaboration? Analysis of literature review and case studies. To establish who is involved in the process of global collaboration. How do organisations reach a global community to solve problems? Analysis of literature review and case studies. To identify the technological tools involved with global collaboration What are the risks involved with opening up an organisation to global collaboration? Analysis of corporate and individual responses. To identify the dangers of creating a platform and how to avoid these situations.
  19. 19. 19 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.
  20. 20. 20 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.
  21. 21. 21 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
  22. 22. 22 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
  23. 23. 23 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
  24. 24. 24 • 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
  25. 25. 25 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
  26. 26. 26 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
  27. 27. 27 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
  28. 28. 28 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
  29. 29. 29 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
  30. 30. 30 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.
  31. 31. 31 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).
  32. 32. 32 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
  33. 33. 33 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
  34. 34. 34 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,
  35. 35. 35 • 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.
  36. 36. 36 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.
  37. 37. 37 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
  38. 38. 38 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,
  39. 39. 39 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.
  40. 40. 40 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 must discover and develop ideas. External R&D can contribute to the business, with internal R&D used to claim a piece of the value. If an idea is discovered by an organisation, then the organisation will get it to the market first. Ideas don't have to be discovered by internal R&D, in order to gain profit. If the organisation creates the greatest and substantial ideas, then success will follow. In order for success to be achieved, a organisation needs to use internal and external R&D. An organisation should use intellectual property, so that competitors don't gain from the organisation’s ideas. An organisation should gain success from others use of intellectual property and purchase another organisation’s intellectual property, if it can advance the business model. (Adapted from Chesbrough, 2003: 38)
  41. 41. 41 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
  42. 42. 42 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
  43. 43. 43 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).
  44. 44. 44 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.
  45. 45. 45 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.
  46. 46. 46 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
  47. 47. 47 • 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,
  48. 48. 48 • 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
  49. 49. 49 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.
  50. 50. 50 3.2.2.2 InnoCentive and SunNight Solar Data Collection Table 3: Details of the data collection 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 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
  51. 51. 51 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.
  52. 52. 52 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.
  53. 53. 53 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.
  54. 54. 54 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
  55. 55. 55 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.
  56. 56. 56 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.

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