CNBC Business | SIX DEGREES OF COLLABORATION

SIX DEGREES OF COLLABORATION

While business was once all about keeping one step ahead of your rivals, in today’s socially networked society, working together can lead to greater success. Colin Brown reports

Want to know how to succeed today in business without really trying? Forget about Old Boy networks and climbing the corporate ladder by whatever Machiavellian means necessary. Try instead tapping into the kindness of strangers and being upfront about your weaknesses. It certainly worked for Henk van Ess, a Dutchman who stumbled upon a thriving global sideline business by accident.

Annoyed at how his beloved smartphone kept losing its charge, the investigative reporter-turned-technology expert posted a general plea on LinkedIn, the social network for the business community.

“Who brings me the smallest rechargeable battery for the iPhone 3G without silly cases?” asked van Ess on a Friday night of his 500-plus online connections. Within 24 hours of that all-points bulletin, van Ess was being directed towards a Chinese manufacturer that works closely with NASDAQ-listed China BAK Battery.

And so began a planetary chain reaction in July 2008: China BAK teamed up with the manufacturer to spec up a snap-on battery booster; a San Francisco artist designed the logo; a Dutch student came up with the box; a blogger from Engadget made a commercial; a New York video artist fashioned six other adverts; and a German supplied the music.

Van Ess himself agreed to moonlight as the worldwide distributor for what became 3G Juice, presiding over a global backroom operation from his office in Amersfoort, central Netherlands – even while keeping up his day-job training professionals to use IT. The resulting enterprise has seen rocketing sales through its Amazon storefront and is now expanding into new product areas.

“I can’t take credit for this” says van Ess. “All those strangers, professionals, did it for free. I was flabbergasted that people who I never met, helped. Like me, they hated the battery life of the iPhone.”

Propelled by the advent of online search and networking applications, good ol’ office scheming and corporate secrecy has been stabbed in the back by this new wave of volunteerism and transparency.

“This is a great time to start a new business if you know how to harvest social media,” says van Ess. “I call it Product
2.0 – although the term 2.0 is a little worn-out. Try to develop your product with your customers and engineers and do this openly. Find what people want in Twitter, Facebook, MySpace and LinkedIn; find the engineers and marketers too in social media.” He also urges the disclosure of any product failings in an open-book policy that ought to give Toyota pause; in a world atwitter with instant feedback, there’s no room for soft-pedalling.

Steering an enlightened path between outright capitalism and downright communism, a new C-word has emerged as the way forward for business: Collaboration. In today’s hyper-socialised economy, it’s not who you know that really counts, but who you don’t.

Latching onto this open-sourced paradigm, the priority for many CEOs today is to break down the barriers that stand between them and their employees, their customers, their partners, their vendors – even their rivals. National boundaries are being bridged, corporate walls breached, expertise shared.

When he’s not looking to take a bite out of Apple, Google chief Eric Schmidt’s prevailing mantra is “collaborate or perish.” Similarly, conglomerates such as IBM and Cisco have got collectivist religion and are bent on replacing the top-down managerial model of benevolent dictatorships and proprietary ownership with flatter hierarchies and reciprocal relationships. They know that no single industry, company or individual has a monopoly on useful ideas.

Failure to adopt this new collaborative mantle also leaves dyed-in-the-wool companies vulnerable to agile entrepreneurs who now have all the communication, technology and information at their disposal to become global competitors. And if such weapons of mass disruption are still not enough to assail entrenched market strongholds, there’s always the nuclear option: offering products and services for free. Wikipedia, Craigslist, Yelp, Loopt, Delicious, YouTube, Flickr and Digg are only the most visible examples of this barter mentality.

There is no one rigid philosophy or management practice that is driving this shift, but rather a spectrum of changing attitudes, techniques and tools that combine to promote sharing, aggregation, peer group coordination and social cooperation. Together, they amount to one giant “reset” button for business.

That the internet is largely responsible is not coincidental. In his book, Weaving the Web, the web’s founding father Sir Tim Berners-Lee says his objective was to make it easier for people to collaborate by combining knowledge. Well, mission accomplished. Today, people and firms are reaching out to one another in ways that would have been unfathomable even to Berners-Lee when he proposed his “global hypertext project” in 1989. In doing so, a looming marketplace for connectivity tools has opened, one that is embracing media way beyond just text messages.

“Collaboration is a $34bn [€25bn] market today, enabled by technologies which have video at its heart,” says Marthin De Beer, senior vice president of emerging technologies at Cisco Systems. Once the world’s largest company in terms of market valuation, Cisco is now amassing a portfolio of videoconferencing platforms, wikis, document management and team workspaces.

Already, estimates Irwin Lazar, vice president of communications and collaboration research for Nemertes Research Group, approximately 40% of US firms are deploying or planning to deploy a social computing platform to create a central nervous system, keep staff members looped in and enhance their institutional memory.

Unsurprisingly, others are eyeing this same mother lode. Among them is Marc Benioff, chairman and CEO of Salesforce.com, the €7.1bn San Francisco firm best known for selling on-demand business software applications. Benioff sees collaboration software as the next frontier, “the most exciting revolution in computing, ever” that will serve as a catalyst for a productivity boom unlike anything seen before.

Responding to an email within 45 seconds of it reaching his BlackBerry – proof of just how real-time business communications has become – Benioff draws a distinction between his own ambitions and those who have failed to grasp the transformational potential of social media. He says existing enterprise collaboration platforms such as Microsoft’s SharePoint and IBM’s Lotus Notes are so yesterday.

“We need a new generation of enterprise collaboration. Lotus Notes is so old it was conceived before [Facebook founder] Mark Zuckerberg was. That’s why we are working on Salesforce Chatter, the Facebook for the enterprise.”

In an open letter to the tech community in the US on 10 March, Benioff said he thought Facebook and Twitter one of the most productive ways to start his day. Using these internet-enabled networks of friends and followers, he has tested new ad campaigns, elicited customer responses, promoted his book to a large audience, and even named a new product – all before sitting down for breakfast.

By drawing a generational battle-line between the tech giants of the desktop era and the cloud-based upstarts, Benioff is pointing out the attitudinal divides evident in global business as a whole. The following pages will highlight six ways that collaboration is helping executives prosper in the flattening world economy.

All of these initiatives are designed to create more of a two-way street in business dealings. While some are still rooted in the traditional notion of companies that flex up or down in size according to market conditions, others foresee a more free-floating vision of commerce, one that is increasingly dictated by a shape-shifting universe of freelance operatives who coalesce around single projects, disband and then reform for the next. Their umbilical chords are not attached to the corporate motherships, but rather to the information feeds and personal profiles that accompany them wherever they apply their skills and connections upon demand.

“The enterprise is not just going to the cloud, it’s now going social, and it’s going mobile,” says Benioff. “Not everyone has to get it yet, but eventually they will.

“As they say: Shift happens.”

1 TAP YOUR OWN STAFF

If Facebook were a country, its population would rank third largest after China and India. Its exponential growth, and that of LinkedIn and other social networks, is testament to the multiplier effect of human networking. They also serve as daily reminders that chief executives know more about their social media “friends” than they do about most of their own staff .

Which is why employers have started their own private collaboration spaces. Danone, the French food group, has forged invitation-only discussion groups to unite its 90,000 employees across 100 countries. US electronic retailer Best Buy has created an in-house wiki to discover insights into competition and popular trends, while extreme off-site brainstorming with employees has also led the company to form a web design consultancy for small businesses.

Such initiatives are designed to foster in-house incubators of creativity and to break down the corporate silos that can lead to wasteful duplication and the hoarding of valuable tidbits. Left to their own devices, knowledge workers fritter away up to 10 hours every week hunting for information through Google and other sources, according to market intelligence firm IDC – and often for information that the company already possesses.

Océ, one of the world’s leading providers of document management and printing for professionals and soon to be under Canon control, turned to the micro-blogging application Yammer in order to reach across its virtual and physical employee walls from its Dutch headquarters in Venlo.

Relying just on internal email exchanges alone would not have been enough to galvanise a company with 23,000 people worldwide, argues Océ’s information architect Samuel Driessen. “Email is a closed network. Lots of important information and knowledge runs through email. And it stays there. Hardly anyone takes out the nuggets and shares them publicly. We have an internal blogging platform as well. But what we see is that blogging is not for everybody. Microblogging has fewer barriers: it’s easier, quicker, more flexible.”

Driessen says once employees have been reassured about the privacy issues that come with using a hosted platform that resides outside its security firewall, a tool like Yammer yields surprising new connections. Employees can read status updates and discover others (that they were perhaps unaware of) doing related work. Microblogging is also an implicit expert-finder. “Employees that write about certain topics probably know something about it. So you can search Yammer and find those back posts and contact the poster. I see people emailing less and microblogging more,” adds Driessen.

While Driessen does not explicitly measure Yammer’s return on investment, he is convinced he has seen an increase in productivity. Building on that success, Océ is working on enhancing its in-house mentoring. “We have developed an interesting – and patented – approach that is now spun out of Océ. The company, called Guruscan, uses social networks to capture emergent expertise networks (using referral chaining). This is not your typical who-is-who with manual input of expertise and hobbies, but a more sophisticated, low-barrier way to support expert-finding in the organisation.” Unsurprisingly, you can learn more about this on Driessen’s own blog.

2 TRADE YOUR SECRETS

It’s not just Océ that has developed its expert-finding service. IBM has BluePages, an internal web-based directory to help employees find advice and answers from colleagues across the world.

But IBM, in keeping with its “smarter planet” mantra, doesn’t just stop at its own corporate boundaries. In a quest to reap the collective intelligence of the world, the IT giant has been deploying outside talents and working with governments, universities and local companies to establish a network of influential “collaboratories”. For a company that once jealously guarded its research and stockpiled its patents, such partnerships are tantamount to a revolution.

As altruism goes this open innovation drive is highly self-interested. By letting ideas flow more freely, participants get to leverage the insights of others. The exchange also assures an inside track on lucrative contracts, particularly now that government stimulus packages have accelerated the need for large private firms to work with public officials and regulators.

Cisco Systems is another firm believer in the “distributed idea” model, going so far as to share its ideas and expertise with AT&T, General Electric, Proctor & Gamble and other fellow “frenemies” of the global business elite. The collaborative concept is applied internally as well, in order to speed decision-making. Instead of a lumbering Pentagon-like central command-and-control system, Cisco has more of an allied forces approach to corporate warfare, empowering a global network of councils to push their own buttons on new business assaults. Rapid response is the key here.

The next wave will be firms swapping not just knowledge, but also IT systems and workers. Already, Google has reportedly shared staff with Proctor & Gamble, the Fortune 500 equivalent of top-tier football teams loaning players to each other mid-season. Pfizer, the pharmaceuticals company, has no problem with outsourced operatives in India preparing Powerpoint presentations and conducting web searches on behalf of its top executives, even at the risk of confidential data being compromised. Far better to have those executives apply their skills on strategic matters, rather than exhaust hours on tactical grunt work.

Indeed, the fear that competitors will glean information and skills is becoming more of a non-issue. Businesses today are built less on proprietary secrets and more on execution and connections. A tightened economy means companies are increasingly sharing consultants . And why stop there? With so much managerial talent available as a result of recent lay-offs, outfits could rent out custom-suited CEOs by the day.

However, how amenable Pfizer and other big pharma companies will be towards collaborations to lower the cost of life-saving drugs – the “patent pooling” model being championed on behalf of struggling economies by international health funding agency UNITAID – remains uncertain.

3 REAP WHAT YOU SOW

Among the positive outgrowths of Web 2.0, the user-generated phase of the internet’s evolution, are all those desktop factories that deployed a volunteer workforce of agents and willing input from a global audience to create mission-critical products such as the Linux operating system, Mozilla Firefox, the MySQL open source database management system and the Apache web server.

Dubbed “dot-communism” by those who failed to understand why anyone would contribute code, apps, scripts and APIs in one big global matrix of social cooperation, the resultant dissemination of talent and technology has proven hugely beneficial – even to the cynics. Some 60,000 man-years of coding went into the creation of Fedora Linux 9 in 2008, which then went on to power an estimated 60% of all web servers.

OhLoh, which tracks the open source industry – and is itself openly edited – reckons there are currently a quarter of million people working on some 275,000 different collaborative projects. This virtual beehive rivals Samsung, Nestle, Deutsche Telekom and General Motors in workforce size – except that these particular drones are happily working unpaid.

Such munificence can spark off subsequent innovations. When PayPal opened up its codes, it unleashed a wave of alternative payment systems that are now challenging banks as the pre-ordained mover of money. Outfits such as Twitpay and Square are making it effortless to send and receive cash through a mobile phone. Another example, Obopay, which is funded by Nokia, is a boon to countries such as India where financial institutions are scarce and where mobile phone users outnumber bank accounts by three to one.

Similarly, game-makers have been leveraging Facebook’s technology for their own gain. Zynga, Playfish and Playdom are among the many developers that have used the social media platform as a launch pad – and boosted Facebook’s popularity in the process. Zynga’s FarmVille stands as a metaphor for the whole nurturing spirit of collaboration. The game lets users plough, grow and harvest a variety of crops for money and game points and players also have options to invest in their farms by purchasing fruit trees and animals, and complement their crops with other assets such as barns, windmills and greenhouses. Around 75 million take part each month, creating a virtual agricultural community totalling more than 10 times the number of actual farms operating across Europe.

4 LEARN FROM EMERGING MARKETS

The fact that there are now more Chinese online than Americans is vivid illustration of the changing world order. The geographical divide between the digital haves and have-nots is narrowing, meaning web-based tools of innovation are within the grasp of all corners of the globe. This tilt in the global balance of power is changing how Western firms view emerging markets.

Developing markets have long been seen as the lucrative dumping ground for products like drugs that were researched, developed and marketed at considerable cost in the West, and then manufactured for pennies on the dollar in the East. But now the polarity is being reversed. In a trend that has been termed “trickle-up innovation” companies are looking at these regions as creative wellsprings in their own right, rather than as sources of cheap labour.

Under its CEO Gerard Kleisterlee, Philips Electronics has been transferring resources, such as manpower, advertising spend and research investment, to such developing countries. This has already born fruit in the Ghana, where a Philips outpost designed a low-cost solar-powered lighting system.

Philips has held off marketing this as a hand-me-up to the West for fear of cannibalising sales of its existing, higher-margin products; GE Healthcare, on the other hand, had no such reservations when its came to a lightweight electrocardiogram machine that it developed expressly for India and China. The machine, which weighs just 2.7kg, was repurposed for the US marketplace at a fractional development cost of €185,000 and sold as the €1,850 Mac 800 – making it 80% cheaper than its closest rival and allowing the company to invent a new market niche.

The resourcefulness with which developing countries adapt to low living standards and infrastructure obstacles has turned them into laboratories. For example, Nokia watched how phones were shared in such countries, then used the information to decide where to place speakers on its 5800 Xpress Music smartphones.

India, in particular, is proving a fertile hunting ground for game-changing business model and management practices. Kiva’s peer-to-peer lending website for small-scale entrepreneurs has inspired several other micro-finance programmes to help alleviate poverty in different parts of the world. And then there’s Fabindia, which has turned 15,000 of its 22,000 strong network of artisanal weavers, block printers, woodworkers and organic farmers suppliers into shareholders of the company – even though many of them are illiterate. As many of the population are still so reliant on visual cues has prompted HP to prowl in India for web interface applications that can migrate to mobile phones. Poverty has its commercial upsides too.

5 COLLUDE WITH YOUR CUSTOMERS

Social media has created exciting new ways to reach and influence customers, as well offering free focus groups for new ideas. But those network communities can cut both ways, providing a forum through which to cross-check and verify a company’s ethical behaviour, question the environmental record of its vendors and to subject services to public scrutiny. The supply chain has become naked, putting into play that most perishable of assets: customer reputations.

Rather than shy away from excessive exposure, today’s more successful companies have learnt to come clean about themselves and their practices. Even Apple, the paragon of corporate secrecy, has learnt to open up its kimono a tad and share enough code with third-party developers to enable a vast panoply of mobile applications.

Zappos, the online retailer bought by Amazon, attributes its success to that very culture of openness. Transparency is CEO Tony Hsieh’s constant watchword. He opens his books to buyers and suppliers, and encourages his employees to engage directly with customers through unfiltered microblogging. Such tactics not only build trust and make faceless corporations seem more human, they also provide Hsieh with thousands of additional eyes with which to steer his business. Not to mention a supplemental revenue stream: entrepreneurs keen to learn Zappos’ tricks of the trade pay $39.95 (€30) a month to watch this live business school.

“Make your customers part of the process of production” advises 3G Juice instigator Henk van Ess. “Real people will tell you about real problems. They love to hear that you want to produce something new that they need and like. Tell them your failures and successes. Be transparent, even if you fail. I did this recently with a cable for the iPhone that some customers needed, but no one in the world made. Through social media I found professionals who helped me to design the product. Prototypes were sent over and over again to the potential customers. In the end, not only did the idea for the cable come from social media, but so also the buyers and the people who made the cable. Since so many people knew about the idea, the product was instantly known to early adapters who gave it rave reviews on Amazon.”

Van Ess’ devotion to self-expression on social networks has also paid off in unexpected ways. “Ziv Gillat of Eye-fi choose me to be his European partner just because I posted an idea to combine Mifi and Eyefion YouTube and announced that on Twitter. He loved the idea and Mifieurope.com was born.”

6 BUILD YOUR OWN DREAM FACTORY

Look beyond Hollywood’s velvet rope and you will see a working model for the 21st-century economy. Movie-making has long stopped being the product of indentured talents working for The Man under the old studio system; these days, films arrive on the big screen courtesy of teams of independent contractors who are assembled based on the skills required for a particular project, and then disbanded.

Such temporary, single-purpose vehicles are designed to spread risks and contain costs, and help explain why everyone involved in film seems perpetually between jobs. The same can also be true now of manufacturing. The sweatshops of old, with their high-cost machinery and long development cycles, are being replaced by nimble, high-tech garages that boast state-of-the-art fabrication prowess and global reach but without any of the associated expense of traditional assembly lines.

Appropriately enough for a methodology that mimics the creators of Hollywood fantasy, one of the key enablers for these DIY factories is a website called Alibaba. Essentially a massive online database of nearly five million manufacturers and companies, the $15bn (€11.2bn) Chinese internet trading platform has become a favourite of European and American SMEs who buy from Chinese suppliers to support their own manufacturing needs. Founded by former teacher Jack Ma in 1999, Alibaba has grown to become China’s second-largest internet company after digital entertainment portal Tencent. Its $1.7bn initial public offering on the Hong Kong Stock Exchange in November 2007 was biggest Internet IPO since Google’s 2004 offering on the NASDAQ.

If you are looking for a Chinese factory capable of fulfilling that high-margin micro-order, then Alibaba is ground central. Language is not even an issue here since the website offers real-time English-Chinese translations of instant messages. Add into the mix TechShop, which can provide you with prototyping tools for as little as $100 (€75) a month; Regus, with its chain of worldwide offices for hire; and Amazon, with its cloud-based web services and e-commerce storefront, and you have the makings of a global mini-factory from your comfort of your web-connected home.

All that’s really missing is staff. And once again collaborative software provides the key. Job specialists are hired as required through the use of matchmaking databases – the high-tech temp agencies of the freelance economy, one in which talent data has become the prized new commodity.

Even within company walls, human resource departments are turning to digital sleuthing specialists such as Cataphora to map out company links and employee performance, identify super-connectors and thought leaders, and establish cost-benefit analysis for recruiting, training, retaining and laying off staff members. But the truth is that many of those who have been laid off during the recession will never return to the corporate bosom. Propelled into involuntary entrepreneurship, they are reinventing themselves as free agents, and learning that there is little need to go back: they already have all the friends they need.

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Someone said: “The future is here”

Rarely do I see the future before it arrives, but with this article, I believe Mr. Brown has shown the world how business will be done. Fantastic work, in my humble opinion.

Posted on Tue 04 May 2010 22:20:47

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May 2010

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SIX DEGREES OF COLLABORATION

1 TAP YOUR OWN STAFF

2 TRADE YOUR SECRETS

3 REAP WHAT YOU SOW

4 LEARN FROM EMERGING MARKETS

5 COLLUDE WITH YOUR CUSTOMERS

6 BUILD YOUR OWN DREAM FACTORY

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