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 / Winter 2008 /Issue 53(originally published by Booz & Company)


Best Business Books 2008: Innovation

According to the authors, both executives at the strategy group New Paradigm, companies will compete in the 21st century by being more open to outside partnerships, more reliant on collaborative idea generation, less protective of their intellectual property, and wholly global in their outlook. The old model for corporations — insular, hierarchical, and paranoid — is rapidly becoming outmoded. The new model harnesses the insights of customers and business partners to improve (or, even better, to create) its products and services. “Increasingly,” the authors note, “you should assume the best people reside outside your corporate walls.”

Wikinomics is by no means wikiperfect. It is a testament to the rapidity of the Web’s evolution, as well as to the speed of its cultural penetration, that some of the authors’ observations on virtual destinations like MySpace already seem dated (indeed, the 2008 edition updates a book that was originally published less than two years ago). In addition, the book’s enthusiasm about projects like the Boeing 787 seems unwarranted in light of that jet’s serial delays, most of which are precisely a result of its collaborative production process. More problematic still are the breathless claims in the book’s early chapters (“collaboration on a mass scale is set to change every institution in society”; “we are witnessing the reweaving of the social, political, and economic fabric that binds our planet”) that threaten to undermine the authors’ arguments before they even have a chance to put them forward.

Yet when the authors do get down to specifics — in discussing IBM’s adaptation of the Linux operating system, for instance, or the promise of a Web site like InnoCentive, which matches independent innovators with companies seeking help on specific problems — their arguments are astute and nuanced. And clearly, Wikinomics is on to something very big that any entrepreneur or manager would do well to understand. The book’s substantial achievement is not only in explaining how new businesses like Flickr, Second Life, or YouTube have succeeded by collaboration, but in exploring how collaborative processes yield results that seem to surpass the capability of individual efforts. In the case of Best Buy’s Geek Squad, for instance, employees from around the country now trade tips and share field reports in the course of playing online games like Battlefield 2, a process the division’s managers deem far more effective — and fun — than a more formal, top-down information transfer.

With the Web still in its infancy, it remains unclear how far collaborative models can push the innovation process. What if pharmaceutical research, the authors wonder, became an open pursuit? Could we then make collective headway on in­tractable diseases that have flummoxed the industry? The authors rightly note that wikinomics is not a panacea; simply looking outside your company for good ideas, for instance, cannot make up for shortcomings like bad internal management. And relying on outside input does not mean that corporations should immediately open their books and unburden themselves of trade secrets. But according to Wikinomics, companies will certainly need to move at least a few steps in that direction, and perhaps a whole lot more. In the words of the authors: “The choice facing firms is not whether to engage and collaborate with peer-production communities, but to determine when and how.”

Patently Ineffective
The problem with a whirring, blinking, interconnected, electronic world — where information is rapidly disseminated, shared, swapped, and improved — is that it comes into natural tension with privacy and intellectual property rights. The current patent system is ailing, say James Bessen and Michael J. Meurer, both legal academics based at Boston University and the authors of Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk. It is time, they argue, to figure out how we can reward inventors for their work without putting fences around new research that restrict social and scientific progress.

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