January 2008 Monthly Newsletter :: Anduro Marketing
Peer Production & the Changing Face of Business
Anduro’s focus on business and marketing trends has brought to our attention a development both fascinating and of potentially seismic scope for companies across many fields and industries. While the purist of heart and sentimental of mind may be alarmed, those adventurous among us will be eager to capitalize on this new evolutionary stage in business: peer production. The ability of large numbers of people to collaborate on seemingly any project over the Internet has decreased the reliance on traditional corporate structure and increased productivity in general. For highly visible examples of peer production, visit YouTube and Wikipedia (for the purposes of this newsletter, all links within the text will direct readers to pages on Wikipedia, which were created by the website's users and not its employees).
In his recent book, Wikinomics: How Mass Collaboration Changes Everything, Canadian business strategist and consultant Don Tapscott claims that business and production are in the throes of a profound shift thanks in part to wikis and other open-source technology that allows anyone from anywhere to contribute. Click here to view his speech at the Web 2.0 Expo in Berlin.
"Tapscott is one of many witnessing the same trend: the democratization of not only ideas, but their manifestations as well. The Internet has connected disparately brilliant, and sometimes not-so-brilliant, minds in ways inconceivable to the earliest founders of centralized production. As a result, corporate boundaries are becoming increasingly permeable in light of the potential advantages of mass collaboration, in some cases with the blessing of forward-thinking executives within said corporation. Tapscott and analysts like him are issuing a final caveat: the writing’s on the wall and in the wiki. Ignore at your company’s peril…"
Ronald Coase won the 1937 Nobel Prize in Economics for adequately explaining the nature of the islands of economic centralization, commonly called corporations, which existed in supposedly laissez-faire societies. Coase surmised that this organizational hierarchy and the in-house specialists and manufacturing of materials necessary to the finished product were all requisites to a sustainable business. The sheer effort required to benefit from the specialized knowledge and services of a given craftsmen in a totally free and anarchic society would be ludicrous and infeasible. In response to this undeniable fact, many people with different specialties took to organizing themselves to combine their assorted skills and achieve a common goal.
With the advent of open-source Web destinations like Wikipedia, YouTube, and MySpace, this free-form collaboration is not only possible, but potentially cheaper and more effective than traditional companies in some cases.
The best and most frequently cited example is Rob McEwen, former CEO of Canadian gold-mining company Goldcorp Inc. Faced with dwindling gold deposits and falling share prices, McEwen declined to hire new and better experts within his company. Instead, he chose the radical alternative of publishing Goldcorp’s secretive geographic data online in the hopes that a $570,000 prize and the thrill of a challenge would attract enough experts to the case to locate the elusive mineral. Over 100 locations were submitted by applicants from various fields, both professionals and amateurs, all of whom emerged from the seemingly amorphous and chaotic World Wide Web. Over 80% of the submitted locations produced results, and in exchange for a half-million dollars, Goldcorp went from being a $100 million company to a $9 billion company.
It’s one scenario among many that demonstrates the effectiveness of accomplishing certain tasks with the help of the online public at large, comprised of many fools but more experts than one might think. If peer production can produce computer operating system Linux, photo-sharing web community Flickr, UK-based peer-to-peer banking service Zopa, and online encyclopedia Wikipedia, then what else is it capable of producing?
This has been the latest in Anduro’s continuing efforts to follow business and marketing trends that may affect our clients as they develop.
For more information on any of the products available from Anduro Marketing, contact us at info@anduro.com or (403) 410-3803.
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