The Economic and Social Foundations of Collaborative Innovation

Ever since the Internet hit the mainstream in the mid 1990s, we have seen more and more innovation coming from people working together in open communities, something we have been calling Collaborative Innovation.  This is no accident, as the Internet and everything around it have proven to be a wonderful platform for people to come together from all over the world and collaborate on whatever problem they all agree to work on.

During this period, we in IBM have actively joined a number of the standards and open source communities involved in some of the most important initiatives in the IT industry,  including the Internet (IETF) itself,  the World Wide Web (W3C), Apache, Linux, and Grid Computing.  In addition, we have helped organize a number of smaller communities like eclipse.org, power.org and most recently blade.org, which are working on a more focused set of problems. We're walking the talk in lots of ways -- including our pledge earlier this year of open access to the innovation contained in more than 500 software patents to individuals and groups working on open source software.

Clearly, despite having built a highly successful, profitable business on a proprietary model, IBM takes the open source movement in its many manifestations very seriously.  Working in an open community is for us a no-nonsense business decision, made only after considerable analysis of the technology and market trends, and due diligence on the community, its licensing and governance, and the quality of its offerings.

Which is why I was very excited to have recently attended a fascinating lecture by Yochai Benkler, who is a Professor of Law at Yale Law School on the "Rise of the Networked Information Economy."  In 2002, Professor Benkler published a seminal essay with the provocative title "Coase's Penguin, or Linux and the Nature of the Firm."  In Coase's Penguin Professor Benkler states that for decades we have lived with two major ways in which individuals organize economic production:  "as employees in firms, following the directions of managers, or as individuals in markets, following price signals."  What we are now seeing, he writes, "is the broad and deep emergence of a new, third mode of production in the digitally networked environment.  I call this mode commons-based peer-production, to distinguish it from the property- and contract-based models of firms and markets. Its central characteristic is that groups of individuals successfully collaborate on large-scale projects following a diverse cluster of motivational drives and social signals, rather than either market prices or managerial commands."

Professor Benkler is essentially saying that collaborative innovation is a serious mode of economic production that has arisen because the Internet and related technologies and standards now permit large numbers of individuals to organize themselves for productive work, in a decentralized, non-market way.  A similar argument has been made by Steven Weber, Professor of Political Sciences at UC Berkeley and Director of Berkeley's Institute of International Studies, in his writings, and in particular in his recently published book The Success of Open Source.

A question that I still often get asked is why people would work as a community on projects like Linux, Grid and Wikipedia while not getting paid for their efforts.  Some people are mistrustful of the motives of individuals who work hard on something that does not include monetary rewards for them personally.  Some have gone so far as to suggest that perhaps these open source efforts are aimed at undermining capitalism, the US economy, and their own companies in particular.

Professors Benkler and  Weber address the questions of what motivates people to work together as a community for the common good with no direct fiscal gain, as well as how such communities organize and manage themselves.  They also point out, though, that these new, collective approaches do create wealth, do create value, and are, in fact, viable business models that can coexist in a fruitful economic way with more traditional business models. We don't yet know all the ways in which this new, dual-track marketplace is going to evolve -- any more than people in the 18th century could foresee the full future impact of industrialization. But I think we have enough evidence already to say with some confidence that open approaches are not a flash in the pan or a flavor of the month.

I have personally thought a lot about this question, and I sometimes wonder if there isn't something deeper going on beyond the rational answers discussed above.  I wonder if there isn't something about the human condition that urges us to collaborate, work as a community and solve problems together (as just one example, see the World Community Grid Project).  Making money is important to us all. But so is gaining the respect of our families, friends, colleagues, and the community at large -- maybe even more so for most people.  Why is that?  Allow me to speculate. We are, after all, social animals, and perhaps some of the answers are found in evolutionary biology and our continuing attempt to become alpha members of the group. For many, what brings us together in communities is perhaps something more spiritual. While I do not think of myself as religious, I found a quote from Rabbi Tzvi Marx in Tom Friedman's "The World is Flat" (p 438) particularly moving in this regard:  "Collaborating so mankind can achieve its full potential is God's hope."  Human beings respond to many things.

I think that all these motivations have always been part of economic activity and of capitalism. Open source doesn't change that. What is different today is that for the first time, in large part because of the Internet, we have the capacity to self-organize into groups fluidly and globally. The firm is no longer the only -- or, in some circumstances, the optimal -- institution for organizing productive, value-creating work.  And that promises a much more diverse and exciting -- and very innovative -- kind of marketplace.

Comments

[Howard Rheingold]

We've been working on a broad framework that encompasses the biological, sociological, economic, computational, business-practice aspects of this phenomenon:

http://www.rheingold.com/cooperation/CooperationProject_3_30_05.pdf Project description
http://www.rheingold.com/cooperation/Technology_of_cooperation.pdf Technologies of Cooperation report
http://www.rheingold.com/cooperation/Tech_of_cooperation_map.jpg lo-res 384 kb
http://www.rheingold.com/cooperation/TechCoopMapLarge.jpg hi-res 4.1 mb

http://www.businessweek.com/magazine/content/05_25/b3938601.htm Business Week cover story
http://www.fortune.com/fortune/fastforward/0,15704,1088315,00.html Fortune on contribution economy

[Michel Bauwens]

In echo of Howard Rheingold's commentary, here's another take on the same topic, research that specifically looks at the dynamics of peer to peer cooperation, and compares it to the market, gift economy exchange, and hierarchy based cooperation.

The URL is http://integralvisioning.org/index.php?topic=p2p

[Pho Nguyen]

I suggest IBM should starts to invest and research something outside computer world such as energy, agriculture, etc. For example , invest and research on new energy sources such as solar, wind. According to this http://www.scaruffi.com/politics/oil.html
the globe can only provide oil for 27- more years !!

[Japanese words]

I think the choice to back open-source will have a large pay off for IBM. As it is really just now emerging and competing I guess we will find out in the next few years.