The Waning Power of the Profane

I've have recently undertaken a quest to discover the most offensive word in the English language. If you wish to help me go to my other blog here and read more.

The New Business Order

When people think of Web 2.0, they think of things like Wikipedia, YouTube, and Del.icio.us. They think of how people are finally interacting with the internet as opposed to just looking at it. You can go on Wikipedia and edit data about anything. You can post your homemade videos on YouTube. You can create links to other sites in order to show them to others on Del.icio.us. However as the Web 2.0 movement began to grow most people who were just starting to utilize its new platforms failed to see another application of this new technological movement. This aspect had been utilized long before there was any talk of Web 2.0 but only recently has it become more widely used. I am speaking of course about the business aspect of Web 2.0.

Back in 1999, the Canadian mining company Goldcorp was in danger of collapsing. They had been mining constantly on Red lake in Ontario for nearly fifty-five years and had seeming exhausted the mine. The CEO, Rob McEwen knew that something desperate needed to be done and drew inspiration from the Linux operating system. He saw how open collaboration was being used to create a system where flaws could be addressed by anybody who had access to the code. He took the idea and did the unthinkable: he posted all of the mine’s geological data to the internet and offered a reward of $575,000 to anyone who could predict where he could find more gold. The idea was controversial but in the end he found that many of the people who posted responses to his challenge were able to predict the location of new gold. The newly discovered gold changed Goldcorp from a 100 million dollar industry to a 9 billion dollar monstrosity.

The curious thing about this story is the types of people who responded to the challenge. Geologists got involved as expected but others such as college students, military personnel, and consultants began to write in to the company website. This demonstrates power of the internet. Anyone with web access can participate and so you can pull ideas from a gargantuan pool of knowledge. Any website can become a sort of “most wanted” board where bounties can be placed on solutions to various problems.

One company who has explored this possibility and has become widely successful as a result is Innocentive. Founded in 2001 Innocentive has become the leader in open innovation. “Seeker” companies in almost every area of business post challenges on the Innocentive site which in turn is accessed by “solvers” all around the world. This practice, often referred to as “crowd sourcing”, essentially allows a company to search the entire planet for answers. Anyone can work for one of these companies without even being on their payroll. Challenges are assigned values in based on how much a given company is willing to pay for the information. These prizes range from a few thousand to one million dollars.

Based on this information, one would expect Innocentive to be nothing more than an intermediary however this is not the case. Scientists working for Innocentive provide feedback to solvers and clarify the requirements that need to be met by a solution. To date Innocentive has posted over 200 challenges of which around 60 have been solved. One other important fact is that Innocentive accepts challenges from no profit organizations as well. The one million dollar challenge I mentioned earlier is for a biomarker for the progression of Lou Gehrig’s disease. The Rockefeller Foundation has placed many challenges on Innocentive such as creating a solar powered and inexpensive wireless router to connect cities and towns in developing countries. Other challenges include a biolatrine (essentially an outhouse which breaks down waste) for use in Africa and a stove which runs on 100% plant oil to be used by people in developing nations. This shows how this platform for innovation can be used for the good of mankind and not just large corporations. As long as someone has money to donate, the right people can easily be found to make it happen.

Innocentive is not the only company jumping on the open innovation bandwagon. Several similar groups such as NineSigma and YourEncore offer similar services. YourEncore is slightly different in that it does not allow anyone to be a solver. They scour the earth looking for retired scientists who want nothing more than to continue innovating.

One major effect this is having on the business world is how R & D departments are being run. Companies are no longer reliant on internal facilities to create new products. Instead they are able to put the majority of their resources into figuring out what their customers. They can concentrate on nailing down whatever criteria they will have while some external individual or group of individuals finds out how to make it happen.

One interesting consequence of this is the response of research scientists. People such as Werner Mueller, a respected and retired chemist, are now starting to build private labs in order to solve the challenges presented to them by sites like Innocentive. When he saw a challenge to improve upon an inefficient process to produce a certain drug he set to work and eventually came up with a completely unheard of solution. His reward was a solid $25,000 which he invested into his fledgling lab. Scientists the world over are starting up consulting firms based out of private labs of their own construction. At the rate that these independent labs are popping up soon the research industry will be run almost solely by information bounty hunters.

Essentially our society is moving towards a new business model where research will be done almost completely externally. Further down the line this will lead to companies becoming highly specialized. Some will become invention engines while others will take over the marketing industry. If a company can’t market its product with any real power they can easily sell it to another who can get the word to the right people.

Of course one might argue that if businesses become increasingly specialized our economy will become one driven by people selling services. Others say this has already begun to happen and in a way it has. I don’t see this as being a problem. If companies can each concentrate on one aspect of a business as I have said before, they can put all of their effort into perfecting that singular aspect whatever it may be. One firm would come up with the criteria a product would have to meet and then they could post these criteria to a network such as Innocentive. Another company would research the materials needed to create the product while another would then be able to develop processes by which to cheaply produce the product. This new business model is similar to how computers work. Instead of one large corporation running all of these processes under one roof sequentially many companies could work on each process parallel to each other. Now obviously one can’t research processes for creating materials which have not yet been determined but you would be able to have several different groups working on different methods. A corporation could essentially have several independent R & D departments trying many different ways to achieve the same goal. Essentially you end up with the research industry working much like an auction house.

As it stands about 90% of research is still done internally. Many industry purists refuse to give up their secrets to others. They also think that keeping their R & D people on a short leash is the easiest way to obtain new ideas. Companies will wait until they reach global status to start outsourcing. The trouble with this is that many companies will not make it this far. Businesses can climb much faster if they are aided by other businesses or independent researchers. The age of all encompassing corporations is slowly coming to an end just as the bloated trusts of the previous centuries were deflated by anti-monopoly laws. The difference is that law is no longer the enemy of such companies. Now they face a world where anyone with a computer can access data from anywhere in the world. If companies continue to try and keep all aspects of product creation internal, they will fall behind the others who have embraced the new model of collaboration. They will not be able to utilize the minds outside of their own work force.

Furthermore it isn’t an issue of finding smarter people outside of your company; it’s an issue of finding people who see things differently. If you look back at the Goldcorp case you can see that they found answers from people who weren’t even involved in the mining industry or the science of geology. The internet is helping this evolution along swiftly. As industries become more connected via the internet, they are starting to see that they all have similar principles which allows people from one to shift into another. Of course there is also the simple fact that people in different lines of work see things differently. With the internet’s help the business world is going to be changed dramatically for the better. As long as a company is willing to adapt to this new crowdsourcing model they will survive. If they can’t adapt then they will simply fall behind into obscurity.

The Architecture of Happiness

Here is the link to my third podcast. This week I will be talking about Architecture In Helsinki. This group of five from Australia has a sound so unique that I can't assign it a genre. I'll let you guys be the judge.

Enjoy

If you've given up. Just do the Whirlwind

Here is a taste of the band i will be reviewing for this Thursday. Architecture In Helsinki is quite the musical outfit. These six performers give off a vibe that you just can't help but groove on.