An excerpt from WIKINOMICS: HOW MASS COLLABORATION CHANGES EVERYTHING, by Don Tapscott and Anthony D. Williams. Used by permission of Portfolio, a member of Penguin Group (USA) Inc. Copyright © Don Tapscott and Anthony D. Williams. All rights reserved. For more information or to purchase the book, please visit www.wikinomics.com. Chapter 9. THE WIKI WORKPLACE Unleashing the Power of Us When Robert Stephens graduated from the University of Minnesota with a degree in computer science in 1994 he wanted to start a business consultancy. The problem was that good consultants cost a lot of money to hire, and Stephens had little, so he went into computer repair instead. Stephens recognized early in his venture that the do-it-yourself crowd is a dying breed. From coping with the annoyance of computer viruses and spyware to the trauma of setting up a home network, a growing number of consumers trade cash for peace of mind by having a technician do the job. Stephens’s answer to this consumer desire was Geek Squad, a cheekily branded service company that helps consumers navigate the increasing complexity of electronic gadgetry. From very humble origins, Geek Squad grew and grew. Then, in 2002, the company was acquired by consumer electronics giant Best Buy after nearly a decade of profitable operations. Stephens had 60 employees at the time, and was booking $3 million in annual revenue. Today Geek Squad has grown to 12,000 service agents, and under Best Buy’s umbrella the division clocks nearly $1 billion in services from over 700 locations across North America, and returns $280 million to Best Buy’s bottom line. At age thirty-seven, Stephens is now leading the company in a bold effort to move Best Buy away from products and into services. Best Buy anticipates high-double-digit Geek Squad revenue growth in 2007 as the service offering benefits from volume and scale. CEO Brad Anderson describes Stephens’s impact as huge, and says, “Robert Stephens has been at the heart of our service culture that we’re building across our company.” Stephens is also teaching the old guard a thing or two about how to use the new universe of collaborative technologies to get the most out of Best Buy’s employees. Geek Squad employees use wikis, video games, and all kinds of unorthodox collaboration technologies to brainstorm new ideas, manage projects, swap service tips, and socialize with their peers. They even contribute to product innovation and marketing. And all this makes Geek Squad a great place to work, and contributes to its stellar service record. We’ll come back to those stories shortly, but first let’s flesh out our hypothesis. Just as the new Web is revolutionizing media, culture, and the economy, it is reshaping organizations and workplaces in a profound way. Peer production and cocreation are not just happening in online communities and networks like MySpace, Linux, and Wikipedia. Increasingly employees are using blogs, wikis, and other new tools to collaborate and form ad hoc communities across departmental and organizational boundaries. Geek Squad is just one of many examples in this chapter that signal the rise of openness, peering, sharing, and acting globally as fixtures of the future workplace. The result is a number of deep, long-term transformations in the culture, structure, process, and economics of work. We are shifting from closed and hierarchical workplaces with rigid employment relationships to increasingly self-organized, distributed, and collaborative human capital networks that draw knowledge and resources from inside and outside the firm. For people who toil away at desk jobs today, this prediction might sound outlandish. But as we explained in Chapter 2, a generation of young people are entering the workplace with a radically different philosophy of work. As eighty million young people in the United States alone enter the workforce they will bring high-technology adoption, creativity, social connectivity, fun, and diversity to the companies they work for, and increasingly, to the companies they found themselves. Robert Stephens’s Geek Squad is a great example of how technology and demographics are coming together in a radical workplace meritocracy that is rewriting the rules of engagement at Best Buy and showing the world how the new wiki workplace can produce superior bottom-line results. GEEKS, WIKIS, AND GLOBAL DOMINATION If you haven’t already had occasion to call on Geek Squad’s services, picture a cross between Ghostbusters, Men in Black, and Dragnet. Geek Squad agents carry a special agent badge and dress in black pants, white shirts, a black clip-on tie, and white socks with polished black shoes. All agents get special titles like Mission Controllers, Special Agents, and Black Ops, for the serious tech guns. To top it off, Geek Squad agents arrive at customers’ homes in black-and-white Volkswagen Beetles.1 Together with the outfits and Geekmobiles, the James Bond titles foster a sense of fun and irreverence in an otherwise banal job. “Employees strongly identify with the brand,” says Stephens. “They go on four to five emergencies a day, they drive a Geekmobile, they carry a badge—but it would all be pathetic and sad if we weren’t profitable and we weren’t really good service providers,” says Stephens. “Agents even go grocery shopping with their Geek Squad jackets, and people walk up to them and ask them questions.” Geek Squad has got a lot of things right. Its brand, its systems, its business model, and its relationship with Best Buy are all part of Stephens’s not-too-secret plan for world domination of computer services.2 Take the Best Buy acquisition, for example. The potential for synergies was obvious.3 Most service offerings in the computer industry are in shambles. And most customers dread wasting their time getting bounced from call center to call center. If Best Buy could turn the tech service into a sleek, profitable, and growing line of business, it would not only delight Best Buy customers, who could then count on quick and reliable service, it would benefit shareholders with increased revenue and earnings growth. Certainly, it was all upside for Stephens, who stood to gain access to a natural launching pad for a national computer services offering. Indeed, the customer response has been so great that Geek Squad precincts have now been stationed in nearly every Best Buy location across the United States and Canada. The real Geek Squad secret sauce, however, is the people and how they collaborate. “We attract and retain talent longer, better, and more efficiently than anybody else,” he says. Part of Geek Squad’s ability to retain talent has to do with the branding and the fun workplace ethos that Stephens has cultivated. Part of it has to do with traditional things like “hiring the best people.”4 But branding and smart hiring aside, Stephens has learned to engage his agents in a continuous process of innovation and improvement that keeps the agents motivated to perform at their highest level. In fact, Stephens is full of great stories about the myriad ways his agents are the driving force behind innovation in Best Buy’s services, and how the agents are always surprising him. The story that tops our list is the one about how Geek Squad agents instinctively started using online multiplayer games to stay in touch as the organization grew from 60 to 12,000 employees in just three years. The ironic part of it is that Stephens had spent considerable time and effort building an elaborate internal wiki for exactly that purpose—to help keep all of the agents in the loop and to gather their input into the business. But the wiki was slow to take off, and Stephens was perplexed. He was always harping on the agents to use the wiki to communicate, but, at first, few of the agents bothered. Geeks are supposed to love wikis, so what was the problem? Then one day Stephens asked a deputy director of counterintelligence at corporate how things were going in the field. “I worry about those agents in Anchorage, Alaska,” he said. “There’s about twenty of them there, and I worry about them staying connected to the mission.” The deputy director said to Stephens, “Oh, those Anchorage guys, I talk to them all the time.” Curious, Stephens prodded him to reveal more details. So the deputy director sheepishly told him that they all play Battlefield 2 online. “With each server you can have 128 people simultaneously fighting each other in a virtual environment,” said the director. “We wear headsets and use Ventrilo software so that we can talk over the Internet while we are running around fighting.” Stephens, who now joins in himself from time to time, says the agents taunt each other, saying, “Hey, I see you behind the wall. But then, you know, while we’re running along with the squadron with our rifles in our hands, one of the agents behind me will be like, ‘Yeah, we just hit our revenue to budget,’ and somebody else will be like, ‘Hey, how do you reset the password on a Linksys router?’ ” Stephens was aghast when he first learned of the agent’s antics. “I just stood there in the hallway going, ‘Oh my God,’ I’m sitting here trying to build this shiny playground with all these tools for collaboration and I failed to notice what the agents were already doing. While I had my head down doing this in preparation to open the wiki’s floodgates, the agents had self-organized online in probably the most effective and efficient collaborative tool that’s already out there.” Stephens says that the agents now have up to 384 colleagues simultaneously playing at any one time. “They’re talking and they’re hanging out, and often they’re talking shop and swapping tips,” Stephens said. Geek Squad agents had just unofficially added another collaboration tool to the palette. Stephens says the experience changed his thinking completely. “Instead of trying to set an agenda,” he said, “I’m now going to try and discover their agenda, and serve it.” Stephens even muses that he may get the agents to hack Battlefield 2 into a Geek Squad video game that he can use for training and recruitment. By this time we were about halfway through our interview with Stephens. He had a lot more stories, each more compelling than the last. It turns out that for the Geek Squad agents, bottom-up communications was just the beginning. Next up was product development, as the agents applied their intimate knowledge of customers and technology to design award-winning products for Best Buy. It all started when Best Buy decided to produce a new line of private label goods in China. They asked Stephens if he would allow them to put the Geek Squad logo on some of the devices. Stephens told Best Buy that he would do it, but only on one condition: Best Buy had to observe certain quality criteria, a bit like Martha Stewart or Ralph Lauren would. But above all, Stephens insisted that the Geek Squad agents should design them. No products would be released with Geek Squad logos without the agents’ approval. Best Buy agreed, but no doubt wondered if Stephens was crazy. He told the product developers not to bother hiring designers. “I want you to hire engineers who will execute the Geeks’ actual designs,” he said. Stephens rallied the agents to put sketches of potential products on the wiki. Hundreds of them did, and many more spent time providing feedback on the designs. “The agents love to debug, they love to criticize, taunt, and tear ideas apart,” said Stephens. Two months later the agents came back with a unique and pragmatic flash drive, which in today’s electronics market is about as close to a commodity as you can get. And yet, the agents did something clever. Their design enabled the flash drive to fold into itself, so that it didn’t require a cap. The agents knew that customers were always losing the cap, so a capless drive would be convenient. They also knew that nobody ever puts their flash drives on their key chains—not because they don’t want to, but because the plastic rings are too thick and too hard. So the agents designed a flash drive with a thinly reinforced loop that slides easily onto a key ring. The design was good—so good, in fact, that in June 2006, Geek Squad won a prestigious German design award. “When the Germans give you an award for engineering, you know it’s good,” said Stephens. Geek Squad agents have even come up with some of the company’s most successful PR stunts. Stephens said that a few weeks before the new Star Wars movie was set to come out in the theaters, the agents were predicting that business would pick up. Why would business pick up, Stephens wondered? Because IT workers are the people you tend to see lining up at midnight to get advanced tickets. They end up staying up too late, and the next day they call in sick. Then, when problems occur in the workplace, their bosses call Geek Squad! Stephens thought this was hilarious (and so did we). But the agents had more. They suggested the company fabricate an excuse note that IT workers could download up to a month ahead of time. They called the syndrome “prequelitis,” and even established a trademark. Next, Geek Squad sent out a press release predicting a mass wave of “prequelitis.” IT workers and students, they claimed, would be reporting mass illness on March 28 (the day after the Star Wars movie was released). In the meantime, they posted the downloadable excuse notes on their Web site. They got over eight hundred thousand downloads, and a day later Stephens was on the Today Show. Stephens calls it “the cheapest money we never spent,” and hails the fact that it was an idea that came straight from the Geeks. “The PR value is nice,” says Stephens, “but the real value lies in the sense of pride, identity, and purpose that is growing within the Geek Squad agents. There is a new, deeper level of self-awareness of their power as a group,” he says. Stephens warns that group identity and purpose do not emerge overnight. “It took years to cultivate this culture. . . . It doesn’t happen in a year.” Now that “agent culture” has taken root, Stephens says there is no telling where it will go. One thing is certain, however. When is comes to orchestrating employee collaboration, Stephens has a new rule: First observe, and then implement. “I’m deathly afraid of wasting time and energy trying to get people to do something they don’t want to do. So next time, before I build that shiny, new playground, I’m going to think about how Geek Squad agents are already organizing—it’s just much more efficient that way.” As for Geek Squad’s prospects within Best Buy, Stephens is optimistic. “As long as there’s innovation,” he says, “there’s going to be new kinds of consumer chaos.” RISE OF THE WIKI WORKPLACE Geek Squad’s successes signal the value of bringing high-technology adoption, creativity, social connectivity, fun, and diversity into the workplace. But are ideas behind the wiki workplace really new? There has long been recognition that organizational bureaucracy impedes innovation, agility, and success. Walk into a typical office less than a century ago and one would expect to see long rows of desks, regimented in army fashion, with typists clicking away from nine to five—all under a managerial ethos that borrowed heavily from the military’s command-and control structure. For half a century there have been successive theories and attempts to free the creativity of human capital. Most of these management theories were predicated on the view that computers could change the ways organizations work. In 1962, Douglas Engelbart wrote an extraordinary paper entitled “Augmenting Human Intellect: A Conceptual Framework,” where he explained how electronic workstations could augment the thinking and communications abilities of what he called “knowledge workers.” The theme of teamwork was big in the eighties, and empowerment and networking were big in the nineties.5 But what has really changed? The record shows that corporations have become networked in the sense that they build business webs with partners on a platform of information technology. While this is a huge development, fundamental changes in the internal structure and management of organizations have been illusive. Jeff Pfeffer of Stanford’s Graduate School of Business says, “For fifty years various people have speculated about how the advent of computers was going to change the workplace—the distribution of information would delayer and decentralize organizations and management. Except for relatively few organizations this hasn’t really occurred.” He argued, “Traditional hierarchies still exist. Bosses still expect to be bosses. Command and control is alive and well.” To Pfeffer, this partly explains why there is considerable dissatisfaction in the workplace today. However, the new business environment, the Net Generation, and the rise of the new Web are finally beginning to change all this. Most large organizations today are geographically dispersed. This fuels a need for people to communicate and work together while being separated by great distances. Networking technologies allow companies to run cohesive yet decentralized operations by linking employees in virtual teams and communities of practice. Competitive pressures, meanwhile, are making organizations leaner and more agile, more focused on the customer, and more attuned to dynamic competitive strategies. This means firms are less hierarchical in structure and decision-making authority than they used to be. But it also means that they will be less likely to provide lifelong careers and job security, and more in need of continuous reorganization to maintain or gain competitive advantage. At the same time, the nature of work itself is changing. Work has become more cognitively complex, more team-based and collaborative, more dependent on social skills, more time pressured, more reliant on technological competence, more mobile, and less dependent on geography. Many employees are already given far more autonomy to decide how and where they want to work. A growing number of firms are decentralizing their decision-making function, communicating in a peer-to-peer fashion, and embracing new technologies that empower employees to communicate easily and openly with people inside and outside the firm. The continuous flow of new technologies into the workplace has been a key source of change in the way that we work. For members of generation X and earlier, the most definitive workplace changes began with the rapid convergence between office telephone systems and computer networks. E-mail enabled employees to share information far more efficiently than they could with typewritten memos. Client-server computer architectures gave them access to company data that used to be guarded jealously by senior managers. Cell phones and BlackBerrys gave staffs the ability to work on the move and spend more time out of the office. Finally, today, a younger generation of workers is embracing new Web-based tools in a way that often confounds older generations but promises real advantages for companies that adapt their style of working. Tools such as blogs, wikis, chat rooms, peer-to-peer networks, and personal broadcasting are putting unprecedented power in the hands of individual workers to communicate and collaborate more productively. This in turn is driving a new revolution in workplace collaboration of a qualitatively different nature. Having matured quickly in the last three years, these weapons of mass collaboration enable employees to engage and cocreate with more people, in more regions of the world, with a richer, more versatile capability set, and with less hassle and more enjoyment than any earlier generation of workplace technology. Employees can act globally too—cutting across organizational silos and connecting with customers, partners, suppliers, and other participants that add value in the firm’s ecosystem. What’s more, the increasingly open source nature of these tools means that this new infrastructure for collaboration is accessible to a much wider base of people and businesses—so wide, in fact, that there are very few barriers to adoption for organizations of any persuasion. To add further fuel to the fire, a new demographic is arriving in today’s workplace that cannot imagine a world without Google or mobile phones. The Net Gen has experienced these inventions and breakthroughs as part of their birthright, unlike earlier generations who have had to adapt or acclimatize to instant messaging and the iPod. Having been nourished on instant messaging, chat groups, playlists, peer-to-peer file sharing, and online multiplayer video games, they will increasingly bring a new collaborative ethos into the workplace. Working together and sharing their knowledge across organizational boundaries—in much the same way as they swap songs and videos over the Internet—will be perfectly normal for tomorrow’s workforce.6 Of course, the new workplace is about much more than wikis and other technologies, just as wikis are about much more than Wikipedia. The Net Gen also has a unique set of formative experiences that shape their sense of workplace norms and values. When asked about the experiences that define their worldview, members of the N-Gen talk about the fall of the Berlin Wall, the Rio Earth Summit, and 9/11. All of this adds up to a profoundly different attitude and approach to work and a unique set of expectations of their employers. Whereas previous generations value loyalty, seniority, security, and authority, the N-Gen’s norms reflect a desire for creativity, social connectivity, fun, freedom, speed, and diversity in their workplaces. Attracting, engaging, and retaining these employees in an increasingly competitive environment will demand that companies understand the Net Generation and the individuals who will emerge as its leaders. BEST BUY’S BOTTOM-UP INNOVATION After talking to Robert Stephens and hearing the incredible story of the Geek Squad we then spoke with Best Buy CEO Brad Anderson. The $30-billion-a-year company has ruled consumer electronics retailing for about ten years now, and there are no signs of its category dominance abetting. So we wanted to see what was up. We learned that Geek Squad was only one of many tales of workplace innovation at Best Buy, and that there were more audacious leaders like Stephens making waves inside the company. When we spoke, Anderson was in the midst of rolling out a bold new “customer centricity” strategy in a bid to boost profits. In a nutshell, Best Buy figures out which customers make it the most money, segments them carefully, then realigns its stores and empowers employees to target those favored shoppers with products and services that will encourage them to spend more. According to Anderson, the key to getting everything right was an enterprising group of sales associates and managers led by Gil Dennis—a bright and passionate store manager with a radical idea for his employer. Dennis believed his peers across the company probably understood Best Buy’s customers in ways head office didn’t. But until Dennis came on the scene, Anderson’s customer centricity strategy had relied heavily on market researchers who poured through reams of sales and demographic data to determine how to optimize Best Buy’s store in each location. Store managers and associates were already getting to know customer habits, wants, and frustrations more intimately than can be conveyed in market research statistics. Their knowledge of the surrounding community could assist Best Buy in fine-tuning its customer centricity strategy to the needs of the local demographic. Dennis himself had many ideas about how Best Buy might enhance its day-to-day operations. But how, thought Dennis, could these employee insights travel from the front lines to the core of Best Buy’s strategy? In most companies Dennis’s idea would have had to work its way up the bureaucracy before some minion with authority could consider it. The idea would be quashed 99.9 percent of the time before it got anywhere near a decision maker. Dennis wanted an open forum where all Best Buy store managers could communicate with each other and influence the CEO. Dennis might have been politely thanked for his enthusiasm, encouraged to stay focused on his job, and told to climb the company ranks before his ideas would have merit. But Brad Anderson caught wind of the idea, and it triggered a revelation. His team wasn’t doing enough to tap the vast and intimate knowledge of Best Buy’s employees—especially those employees on the front lines who engage with customers on a daily basis. “We needed to use the entire range of human capacity within our business to generate those customer insights,” said Anderson. “Getting frontline employees involved in customer centricity was crucial to both the design and execution of the centricity strategy.” Part of the challenge in executing the strategy, however, was finding an efficient way to share, evaluate, and apply the insights that thousands and thousands of Best Buy employees were harboring about what customers need and how best to serve them. It seemed that Gil Dennis had the answer. With support from Kal Patel, Best Buy’s executive vice president of strategy, Dennis organized a meeting of some other general managers, and they called it the GM Forum (now the Retail Leadership Forum). Dennis facilitates the meetings, and along with other store managers has initiated a broader collaborative process that is generating some great insights. Dennis’s initiative to engage the field has become a key part of the management process at Best Buy. Various corporate functions now gather the latest customer insights by talking to the Retail Leadership Forum on an ongoing basis. “It seemed like a very natural thing to do,” said Patel, “for senior executives to spend time with people who are interacting with customers every day, and to let that shape how they direct the company and how they determine strategy.” And yet, Patel and other leaders at Best Buy discovered that cutting across the organizational hierarchy was quite unsettling at first. Patel observes, “When employees are living in a hierarchical structure there’s a lot of fear. People two or three layers above you resist the rules being changed. And with all that fear most people do nothing. They let the hierarchy rule.” Management innovations like the Retail Leadership Forum change the rules with respect to whom people talk to, how they talk to each other, and what they talk about. In most workplaces talking to your boss’s boss is a no-no. Disrespecting the established channels of authority might even get you fired. Young employees like Dennis have less reverence for organizational protocol. Patel describes Dennis as “relatively young in his career, with a naive sense of idealism and a ton of raw energy for change. Dennis hasn’t totally embraced the orthodoxy of business structures and all the things that beat people up inside large businesses.” Dennis’s infectious enthusiasm for getting people to connect across the company has ignited a new way of executing the customer centricity strategy. Anderson sees the Retail Leadership Forum as a way to open up the company to new kinds of interaction and knowledge sharing. “We’re drilling holes through the bureaucracy and giving people a safe place where they can create a community of shared knowledge,” says Anderson. “We needed to make that knowledge available to people inside the system and to try to keep it as impervious to the influence of the bureaucracy as possible.” Now instead of dictating the customer centricity strategy from on high, Best Buy gives employees autonomy to develop their own strategies. It requires innovation at the store level and general managers fine-tuning the company’s broad-brush thinking to meet the needs of local demographics. To a company that had relied on a classic merchandising model that flogs new products at customers with a cookie-cutter approach, this was a radical change. Every associate is encouraged to try new ways to increase Best Buy’s sales and profits. They are rewarded financially when they succeed, and in lots of other ways just for trying. Patel likens Best Buy’s bottom-up approach to innovation to the scientific method: “Every one of our associates is trained in a method that starts with a hypothesis, and then proceeds to stages like test and verify. At the end of the experiment, the associate who undertook it reports out on what he or she has learned.” “These are quick ‘popcorn-stand’-like experiments,” says Patel. “If we want to try something new, we might pitch a tent in the parking lot of one of our stores and test an idea out with our customers.” Some business thinkers claim that the bottom-up approach to collaboration and innovation is often counterproductive. They warn that “letting a thousand flowers bloom” ends up giving companies a lot of weeds, diluting their focus on the few big ideas that are going to “move the needle” in multibillion-dollar companies. But Anderson counters that without these systematic, cross-company forums much valuable knowledge inside the organization would go unutilized. “Getting other points of view and other pieces of knowledge into our learning system that might otherwise have escaped is key to our success as an organization,” said Anderson. At the same time, frontline employees get a chance to see how their views mesh with the perspectives of people inside the bureaucracy that “might have merit that store managers are not paying attention to,” says Anderson. Store managers can then communicate those perspectives back to employees in a way that the bureaucracy couldn’t. SOCIAL COMPUTING IN THE ENTERPRISE Best Buy demonstrates how drilling holes through the hierarchy of an organization can produce great results. But what happens when you mesh Brad Anderson’s philosophy with a powerful new infrastructure for collaboration that includes wikis, blogs, and RSS? To find some answers we talked to Ross Mayfield, CEO and founder of Socialtext, one of a growing number of start-ups that have emerged to supply social computing technologies (especially wikis) to enterprises. Socialtext itself is emblematic of the new organization and the new approach to work. The entire company is virtual. They have ten employees, zero overhead, and everybody works out of their homes. Socialtext doesn’t spend a dime on traditional marketing. But they’ve managed to cobble together funding from angel investors that has kept them on a shoestring budget and hungry to drum up business. “Every single thing we do is tapping into the network that we’ve been able to create, and then also eating our own dog food using a combination of Socialtext, Skype, and FreeConference to run our entire company,” says Mayfield. “We’ve developed a business model—through blogging, social networking, PR, and through our product—where demand comes to us.” When we last spoke with Ross, he had over four hundred customers, of which nearly thirty were Fortune 500 firms. That demand, if anything, is a product of the buzz that has been generated around the new way of working and collaborating enabled by Socialtext’s enterprise software. Mayfield has a bold vision of the future of the organization, and it’s largely his enthusiasm and tenacity in pursuing this vision that is driving the company forward. The vision springs from complete disillusionment with traditional workplace collaboration tools. “For a long time,” says Mayfield, “personal productivity tools and applications—the kind that Microsoft makes—have been centered on a single user who generates documents. You also have highly structured enterprise systems designed and implemented from the top down—in many ways as an instrument of control—with rigid work flow, business rules, and ontologies that users must fit themselves into. The problem is that users don’t like using those kinds of tools, and what they end up doing is trying to circumvent them. That’s why ninety percent of collaboration exists in e-mails.” Mayfield argues that traditional organizations have reached a point where e-mail itself is breaking. “You could argue that ten or twenty percent of e-mail is productive,” says Mayfield. “Your average Fortune 1,000 employee spends four hours a day in their in-box, and we’ve got to find a way to get them out.” Anyone who has to deal with a daily flood of occupational spam can surely sympathize with Mayfield’s view. Mayfield thinks the solution is collaboration tools that adapt to the habits of workplace teams and social networks rather than the other way around. Indeed, this insight was the genesis of the business. He and his 252 partners came up with the idea for Socialtext when they observed how employees in Silicon Valley firms were bringing in applications from the open source community and using them as a source of personal competitive advantage. If the tool proved to be effective, they would quickly begin to see a bottom-up demand pattern emerging in the firm as other employees clamored to try them out. This “in-through-the-backdoor” approach to technology adoption is not particularly new in the workplace. It happened with e-mail, and especially with instant messaging—a technology that many organizations found threatening at first. Now e-mail and instant messaging are workplace standards, and the same thing is happening with wikis. According to Tim Bray at Sun Microsystems, this is a lesson we ought to have learned by now. “The technologies that come along and change the world are the simple, unplanned ones that emerge from the grassroots rather than the ones that come out of the corner offices of the corporate strategists,” he says. John Seely Brown, former chief scientist of Xerox and director of its PARC, says, “A lot of corporations are using wikis without top management even knowing it.” “It’s a bottom-up phenomenon,” he adds. “The CIO may not get it, but the people actually doing the work see the need for them.”7 As a growing number of CIOs see the benefits, however, they are beginning to give workplace teams license to experiment with new social-computing technologies. At Dresdner Kleinwort (DKW), a Europe-based investment bank, employees started using wikis in the IT department to document new software in an informal pilot. Soon afterward, wikis began to migrate out of the IT department and into the broader workplace environment, where teams picked up on them as a way to get collaborative projects up and running quickly. When DKW CIO JP Rangaswami learned of the process, he was intrigued by the technology’s versatility. The company went ahead with more pilots, and after just six months of usage, the traffic on the internal wiki exceeded that on the entire DKW intranet. Today the wiki has more than two thousand pages, and is used by more than a quarter of the company’s workforce. Lead users have decreased e-mail volume by 75 percent and cut the company’s meeting times in half. Rangaswami says, “We recognized early on that these tools would allow us to collaborate more effectively than existing technologies.” At Xerox, the company’s chief technology officer, Sophie Vandebroek, is using a wiki to collaboratively define the company’s technology strategy. Normally, high-level strategy documents are created in a hierarchical fashion, where the boss controls the vision and content. Vandebroek decided to turn everything inside out by opening the process up to all researchers in the R&D group. Vandebroek expects more robust technology road maps and a much stronger competitive strategy section as a result. “We’ll get more content and knowledge in all of our areas of expertise,” she says, “including everything from material science to the latest document services and solutions.”8 Mayfield suggests that part of the reason wikis are popular and useful is inherent in the nature of the collaborative tools themselves. “They have very different properties, because they ask users to share control, and that actually fosters trust. The more participation that you have,” he continues, “the greater quality you’ll have in a project, in the same way that open source works.” Many wiki users and aficionados say the benefits are linked to the ease and efficiency with which collaboration takes place. Tantek Çelik, Technorati’s chief technologist, uses wikis for everything—his work, his social life, his voluntary activities, and for staying in touch with family. He says wikis distribute the burden of organization across a collaborative network instead of making an individual project manager a choke point. “Now everyone can make incremental progress without having to wait for everyone else,” he said. “It’s like parallel processing for people rather than computers.” Çelik goes so far as to suggest, “The ability to use wikis will be a required job skill in five years.” Everyone we spoke to about wikis in the course of our research agreed that the trust and efficiency benefits of social-computing technologies are evident. But most also agree that more profound opportunities lie in the ability of organizations to experiment with nontraditional workplace design philosophies. As Robert Stephens learned with Geek Squad, real innovation can occur when companies take the time to observe how the existing workplace culture operates in a “state of nature,” and then learn how to serve that culture effectively. This means ending the practice of trying to force employees into rigidly structured work-flow tools that stifle their creativity and encumber them with complex processes and architectures. In contrast to complex group collaboration tools, wikis conform naturally to the way people think and work, and have the flexibility to evolve in a self-organizing fashion as the needs and capabilities of the organization change. This flexibility arises from the fact that at their most basic, wikis are completely unstructured. “The structure,” says Mayfield, “is created by demanding active involvement from users in ways of organizing and creating their own information architecture.” So rather than begin with a top-down ontology, process, or taxonomy, employees can fashion their own structure as required with a bottom-up, collaborative process. “Wikis hand control over to users to create their own ways of organizing knowledge, workplaces, processes, and perhaps even their own applications in ways that they’ve not been able to do before,” says Mayfield. The bottom-up approach that Mayfield and others advocate challenges the deeply engrained notion that employees are helpless without the aid of clearly and rigidly defined structures to guide them. The fact that such notions persist, however, highlights the degree to which we have failed to update our assumptions and biases as the nature of work changes. We still, for example, think in industrial-age terms about work as a routine that repeats endlessly. Even as work has become more cognitively complex, we still entertain visions of knowledge workers spending much of their time pushing paper.9 Yet the vast majority of employees don’t do business processes anymore, at least not in the traditional sense. After years of optimizing supply chains, outsourcing, automation, and stripping costs and inefficiencies out of the back office, most employees spend very little of their day working on regularized activities. “What they do,” says Mayfield, “is they manage exceptions to processes. Even in the most mundane workplaces like a call center, people are constantly wrestling with new problems.” When new problems and exceptions arise, people in organizations will swarm around that exception to try to resolve it. Think about the last time something in your workplace went haywire. How many people were jumping up to help solve the problem? In most workplaces, the answer is “as many as possible,” because people genuinely enjoy the challenge of coming up with solutions to workplace exceptions in a truly spontaneous and collaborative fashion (it definitely beats the 9:00 a.m. meeting!). The problem from an organizational and knowledge-management point of view, however, lies in the inability of firms to capture and codify those moments of inspired brilliance—the moments when someone does something spontaneous that could be the key to unlocking a whole new approach to getting things done. Mayfield suggests the self-organizing group formation process should occur in social software. “Those are the moments where the greatest amount of learning occurs,” he says. In a traditional workplace, this decentralized approach to problem solving might be worked out in the lunchroom, while leaning over a colleague’s cubicle, over a pint after work, or increasingly through a long thread of e-mails. The problem is that this casual approach to problem solving leaves no organizational memory of the event, with the risk that only the people involved in creating the solution walk away with any new insights. Problems can persist like a bad cold, and solutions will be reinvented every time the problem reoccurs. Social software provides companies with a way to document and leverage those moments of innovation with relative ease, providing a living, breathing repository of easily accessible knowledge that grows along with the organization. Companies can continually harness their local insights and adaptations to new problems by capturing and using those insights to drive organizational change and renewal. “You release early and release often,” says Mayfield, citing the open source dictum. “When you come across a bug in the workplace, you have an ethic of fixing it right then and there so you have these tight little iteration cycles. Wikis compel teams to engage in a constant state of rapid prototyping.” The world of software and Web services may have set the standard. But, in this case, we’re not just talking about software. This iterative and collaborative approach to innovation is how the entire economy will run from this point forward: rapid incremental innovation, over and over and over again. Every product, project, or service is in perpetual beta mode—a state of continual refinement and improvement as employees, partners, and suppliers pool their knowledge and capabilities to meet the evolving needs of customers. “In the end, nothing is in an end state,” says Mayfield. “Even with Wikipedia, the best thing you could say today is that it’s better than it was yesterday, and tomorrow it’s going to be even better. The project is never going to end.” PEER PRODUCTION IN THE WORKPLACE We’ve now heard from Brad Anderson and Robert Stephens about Best Buy’s bottom-up approach to innovation. Ross Mayfield from Socialtext told us about social computing and how simple technologies like wikis are giving rise to new forms of workplace collaboration. So far, so good. Now what if we took this a step further and embedded a full-fledged, no-holds barred version of peer production in today’s enterprise? How would work and life be different? Our research revealed that this is an exercise in fact-finding not fiction. Companies that increasingly seek to leverage external knowledge and resources must ask new questions about how to manage their workforces. What kinds of talent and expertise should they seek to retain inside their boundaries, and what should they seek to harness externally? How do they weave external and internal resources together? And to what extent can the new models of peer collaboration and production discussed in this book serve as a model for managing these hybrid workforces? Think back to some of the key examples in earlier chapters. Large companies like Amazon, Boeing, IBM, P&G, Merck, and others know that keeping up with customer demands for faster innovation and greater customization means sourcing a lot more innovation from outside their corporate walls. Some of this will come through proprietary channels and networks like licensing, outsourcing, and joint ventures. But a great deal more will come from more open and amorphous networks of peers. Many of the people who participate in corporate ecosystems will not work for them. There will be no contractual relationship, so they can’t directly control them, nor can they expect to own or monetize all of their intellectual property. IBM, for example, has no legal contracts with the Linux community. So instead of “managing” this extended development team in a traditional top-down fashion, IBM is learning a new participatory management model where many key decisions, resources, and activities are shared with the community. In fact, the company took this new workplace philosophy a step further in September 2006 by inviting employees from more than 160 countries—along with their clients, business partners, and even family members—to join in a massive, wide-open brainstorming session it called the InnovationJam. Over the course of two seventy-two-hour sessions IBM engaged over one hundred thousand participants in a series of moderated online discussions. Their combined insights surfaced breakthrough innovations that IBMers expect will transform industries, improve human health, and help protect the environment over the course of the coming decades. CEO Sam Palmisano believes so strongly in the concept that he’s committed up to $100 million to develop the ideas with the most social and economic potential. With increasing access to external capabilities—and clever collaborative mechanisms like the InnovationJam—many mature organizations will opt to employ smaller and much more decentralized teams, whose principal role will be to orchestrate value creation rather than participate directly in it. Their job will be to identify and broker deals with the communities where exciting things are happening, wherever they happen to be in the world. These new workforces will need to craft the incentive systems that enable firms and their collaborators to reap a fair share of the value. They will also take responsibility for functions where hierarchical control of mission-critical apps is still important. You may not want to self-organize your inventory or accounting, for example. Companies will need to identify the leaders within their organizations who are capable of orchestrating these amorphous networks of peers. Everyone else will plug-and-play, adding value and then moving on to other projects. The end result might look more like a Jackson Pollock painting than a traditional organizational flowchart, but this much more granular and collaborative division of labor will enable a more flexible and fluid approach to innovation and value creation. That in turn will make companies successful in a highly turbulent and competitive environment. The bottom line is that the workplace is becoming a self-organizing entity where centralized and tightly controlled processes are increasingly giving way to more spontaneous and decentralized forms of mass collaboration. To see how this might pan out, we took a look at five typical workplace functions: teaming, time allocation, decision making, resource allocation, and communications. Teams In the old days you were assigned to a corporate team, and that’s where you stayed, building up bonds of trust and loyalty that would enable you and your teammates to collaborate effectively. Today, new forms of mass collaboration suggest that companies may be better off with a more self-organized approach to teaming. Over 16,000 people are actively peer-producing Wikipedia. A quarter of a million people collaborate on Slashdot. Thousands of programmers contribute to Linux. On Amazon, 140,000 developers are building applications and businesses. These large-scale efforts don’t employ teams, at least not in the traditional sense. They “employ” peer-to-peer networks with a constantly changing roster of participants. Could such a highly federated and highly fluid approach to teaming ever fly in a traditional workplace? Most firms assume not and opt for the U.S. military standard of 150 people as the ideal size for an operating unit. And yet, an increasing number of employees work from home or on the road. Some companies have even done away with specific desks for employees, who set up their tools of the trade wherever they find a vacant space and clear away their things as soon as they leave. Some teams form temporarily around a particular project, in much the same way that film crews come together for a few months at a time to produce a movie, and then go their separate ways to work on other productions. Some will no doubt complain that such a radical approach to workplace organization is unmanageable. But if that were really the case, then we wouldn’t see communities like Wikipedia, the open source movement, or the Human Genome Project collaborating successfully on a very large scale. With the right tools and enough transparency, a large and diverse group of people self-selecting to add value can complete even the most complex tasks with only a minimum of central control. Time Allocation If you work at Google, what are you required to do with 20 percent of your time? Goof off! The company directs employees to dedicate 20 percent of their time to personal projects—projects that interest employees but needn’t slot neatly into Google’s predefined product road maps. In keeping with its belief in collaboration and encouraging self-organization, the company tracks the pet projects that employees conjure up. Company officials reason that although Google employees are only a small fraction of the programming talent in the world, they are among the brightest programmers in the world. So in addition to leveraging the insights of external developers (as explained in Chapter 7), Google allows its employees to pursue their own interests. This not only makes them happy, it boosts creativity and can surface unplanned innovations that may one day evolve into successful business ventures. Google CEO Eric Schmidt told us he hadn’t had a product idea in years. “Virtually all of the product ideas in Google,” he says, “come from the twenty percent of the time employees work on their own projects.” One such innovation is Orkut, a social-networking service named after its inventor Orkut Büyükkökten, a Google software engineer who developed the project during his allotment of personal time. Decision Making Ronald Coase liked to describe firms as islands of hierarchy within a sea of decentralized market activity. Today it’s like the invisible hand of the marketplace is being extended right down to the actual worker, rather than merely to the industrial sector or firm. Markets are being put to work in corporate strategy, planning, and execution to allow the insights of a much broader and representative group of company stakeholders to inform company decision making.10 Companies including Hewlett-Packard, Eli Lilly, Siemens, and Microsoft, for example, have used internal prediction markets to forecast product sales, identify promising drug candidates, and spot emerging trends and technologies. In essence, these companies ask a question, then invite as many people as they like—including employees, partners, suppliers, customers, and other knowledgeable participants—to buy and sell “virtual” stock based on their confidence in a particular outcome (i.e., this product will be a winner with soccer moms). The result is a trading price that tracks the consensus opinion over time, reflecting new information and changing circumstances on the ground. In each case, the predictions generated by internal markets have been as good or better than official company estimates.11 For example, Kay-Yut Chen, principal scientist for HP Labs, says that prediction markets run to forecast annual computer workstation sales outperform internal corporate forecasts in six out of every eight cases. The great thing about prediction markets is that they provide a relatively low-cost, self-organizing approach to tapping collective intelligence, both inside and outside the firm. But few companies would make markets their sole source of decision inputs. For one, there is the problem of the herd. “The wisdom of crowds” breaks down when they lose diversity or people stop thinking independently and start following the group. Yet, on average, well-structured prediction markets provide forecasts that outperform those of even the best-informed and highest-paid experts. Resource Allocation Similar market-based processes are being extended to tasks like resource allocation within firms. The idea is simple: Resources ranging from spending budgets to computing power are tradable commodities, so why not allocate them with a marketplace approach that ensures they go where they are most valued? It largely removes internal politics from the process and sets up a dynamic where teams buy and sell access to resources based on their independent judgments about how badly the resources are needed. At Hewlett-Packard a group led by Bernardo Huberman at HP Labs is testing internal markets that let employees buy and sell rights to use shared resources like computing power and even conference rooms. Think of it as an eBay for internal resources that prices and allocates usage on demand.12 Huberman’s system has a number of advantages over old-style reservation systems that allocate resources on a first-come first-serve basis. Reservation systems cannot accommodate new tasks as they arise, even if they are extremely urgent. When both demand and supply change constantly and unpredictably, as they do on a computer grid, markets perform much better. Imagine, for example, a business experiencing an unexpected surge in sales, or Web traffic that could purchase more resources as needed at a price set by the market. After a successful internal trial run, HP’s system has been handed over to CERN, the world’s largest particle physics laboratory and a hotbed of grid-computing research, for further testing. Huberman hopes that the system might one day play a role in allocating computing power on a worldwide computing grid, where it will compete with similar solutions offered by IBM, Sun Microsystems, and others. Corporate Communications Corporate marketing and communications have traditionally been top-down activities. Most companies allow only a few key individuals to play a role in carefully shaping corporate images and brands. While some companies fire their employees for blogging on company time, smart companies are actively encouraging it. Sun Microsystems CEO Jonathan Schwartz has been blogging for years. He may even be one of the first corporate executives anywhere to engage regularly in online conversations with employees, partners, shareholders, and customers. When we asked Schwartz why he blogs he gave us an unexpected answer. He wasn’t blogging for PR or to impress customers, or even to stroke his own ego. No. Blogging was just a more effective, more personable, and more transparent way of communicating with employees than sending an all-Sun e-mail. “I wanted employees to understand why Sun executives were thinking the things we were, why we said the things that we did, and what more efficient vehicle than leveraging the network culture was really at the core of Sun to begin with,” he said. Now Schwartz thinks that everyone at Sun should blog, and he has been actively encouraging more employees to take up the practice. “We’re going to be driving unparalleled transparency into everything we do,” said Schwartz, “precisely because it’s the most efficient mechanism to accelerate change throughout Sun. Transparency enables everything to go faster, invites accountability, and drives dialogue between Sun and the communities we serve.” Not everyone is comfortable with the new dynamic, networked forms of communication.13 “It is definitely alienating the old guard,” said Schwartz. “They would like to believe that their groupwide e-mail is the exclusive vehicle for communicating direction.” At the same time, Schwartz says blogging is definitely attracting a new guard at Sun. “It’s yielding pace and transparency into our decisions and it’s helping dissolve the boundaries between what is Sun and what is the market. And this in turn brings more and more people into Sun’s ecosystem.”14 Workplace Peering Is Here to Stay These examples of how companies are taking unorthodox approaches to workplace functions such as teaming, time allocation, and decision making show that mass collaboration can succeed, even within the confines of a traditional firm. Indeed, self-organizing communities on the Web have proved time and again that they can be more effective in creating value than hierarchies—so why should it be different in the workplace? It is just a matter of shifting organizational paradigms. As self-organization becomes accepted as a viable method of production, more and more workplace processes will move from being hierarchically directed to self-organizing. WAKING UP TO THE WIKI WORKPLACE If an army marching in lockstep to tightly arranged military music is a metaphor for yesterday’s workplace, the workplace of the future will be more like a jazz ensemble, where musicians improvise creatively around an agreed key, melody, and tempo. Employees are developing their own self-organized interconnections and forming cross-functional teams capable of interacting as a global, real-time workforce. Such decentralization of the work flow and the actual workplace will be the defining trend in years ahead. Indeed, if Linux, Wikipedia, and other collaborative projects are any indication, it will often be easier and less expensive for workers to self-organize productively than to squeeze them into a corporate hierarchy. While still in their infancy, these trends will change our experience of work, and especially the experiences of our children, deeply. Though these are long-term changes, self-organization in the workplace can give competitive advantage to firms that wield it effectively today. Loosening organizational hierarchies and giving more power to employees can lead to faster innovation, lower cost structures, greater agility, improved responsiveness to customers, and more authenticity and respect in the marketplace. Is there is a danger that too much openness and self-organization in the workplace could lead to disorganization, confusion, and lack of focus and direction? Google CEO Eric Schmidt admits, “If you have worked in a traditional company, a place like Google doesn’t feel right, it doesn’t feel like you have the kind of control over the way in which decisions are made that you might have had in a more traditional environment.” And yet, Schmidt is convinced that self-organization is better. “You talk about the strategy, you get people excited, you tell people what the company’s priorities are, and somehow it works out,” he says. Clear goals, structure, discipline, and leadership in the organization will remain as important as ever, and perhaps more so as peer production emerges as a key organizing principle for the workplace. The difference today is that these qualities can emerge organically as employees seize the new tools to collaborate across departmental and organizational boundaries. Indeed, our research suggests that the results are often better when self-organization takes precedence. Many of Geek Squad’s notable successes, for example, would not have come to fruition had Robert Stephens not loosened the reigns on the leadership to allow his employees to shine. Where else might this new workplace modus operandi take us in the future? Predictions are always risky, but that’s what books are for, so here are a few thoughts anyway. New workplace environments. Is the centralized corporate headquarters a thing of the past? Many people, including John Seely Brown and Paul Duguid, have argued that they’re not.15 Proximity creates personal familiarity and fosters trust. Body language, intonation, and general demeanor play an important role in human interaction. Moreover, it’s easy to underestimate the degree to which tacit learning and knowledge creation are enhanced by face-to-face contact. These are all valid considerations, and will remain true for as long as we remain human. So while workplaces will not disappear (no, we will not all work from tele-cottages), there are fewer and fewer compelling reasons to organize monolithic physical workplaces to which the vast majority of employees report on a daily basis. More than 40 percent of IBM’s employees don’t work in traditional offices—they work from home or on the road. At most companies the majority of employee communications already flow electronically through blogs, wikis, instant messaging, video conferencing, and various enterprise collaboration tools. As collaboration tools improve they will enable collaboration that looks and feels as though everyone is in the same room. The result is that workplaces will become smaller and teams will be more distributed, with participants drawn from all over the globe. New economics of work. The days of lifelong employment and pensions are already long gone. But there is more change yet to come as firms seek to address the need for greater agility and lower costs. Employment relationships will necessarily become more fluid, definitely less long term, and undoubtedly more horizontal. Many employees will welcome this, as they search for flexibility, identity, ownership, authenticity, and continuous learning, both in the workplace and with their peers. The creation of ad hoc, self-organized teams that come together to accomplish specialized tasks will become the norm. So look for consultancy to be the dominant contractual model for work in the near future, and expect more employees to demand a share of the profits derived from their intellectual contributions. Indeed, one of the big developments in the next decade entails a shift from voluntary and nonmonetary participation in peer-to-peer communities to a model where participants directly monetize their contributions. As this happens, we will see more and more freelancers, individual entrepreneurs, and SMEs taking on a larger and larger share of economic production. New sources of identity and security. Our work may still largely define who we are, but employers no longer will. Our sense of stability and our sources of encouragement, learning, and growth in our careers will come from communities of practice and our engagement with like-minded peers who we meet and keep in touch with online, and not necessarily our long-term employment relationships. Rather, the people we meet at work join the personal networks we create as we move from organization to organization over the life span of our careers. Expect new guildlike formations with codes of conduct that set the formal and informal norms and rules that govern how a growing number of people carry out their trade. Also, look for new peer-to-peer reputation rating services to play a greater role in identifying high-quality, reliable collaborators. New intermediaries in the talent market. Talent agencies, auctions, and markets will play a larger role in managing the interface between employers and employees. Human capital marketplaces like InnoCentive and collaboration brokers like CollabNet provide some noteworthy examples of the kinds of new intermediaries that will emerge as firms seek to interlace the contributions of people inside and outside corporate boundaries. Their value is in bringing a bit more structure and regularity to peer collaboration and making it easier for companies to tap into global talent pools on an as-needed basis. As companies learn how to harness these systems, traditionally vertically integrated corporate functions such as R&D and marketing will be radically transformed. A DEMOGRAPHIC KICK FOR CHANGE Don’t expect overnight change. Previous shifts in organizational paradigms have been slow. The shift from cottage industries to the factory system unfolded over the better part of a century. The transition from industrial factories to today’s high-tech office environments took at least a few decades. One factor is institutional inertia. Organizations have their own internal logic, including rules, routines, norms, and power struggles. Practice shows that these intangible social elements of the workplace are much more difficult to change than the IT system. This is especially true of elders in the workplace, many of whom resist changes in their routines. The baby-boom generation grew up using typewriters, telephones, and cars to commute to work, and will have a difficult time changing its lifestyle. Technology may open doors, but it can’t force people to walk through them. There is no such problem with the Net Generation. “Look at the Net Gen,” says Ross Mayfield. “You know, the children of the baby-boom generation who have five to seven instant messaging windows open at any time. When they’re connected to the Net they’re doing so socially. The computer is not a box, the computer is a doorway.” A truly self-organized and distributed way of working is not far off on the distant horizon. It’s an imminent reality that few workplaces today are prepared for. “As the Net Gen enters the work space in really large numbers,” says Mayfield, “there will be a very different, more informal method of working that this generation has already grown accustomed to. That will be a pretty big change in the workplace over the next couple of years.” Mass collaboration is already transforming the way goods and services are created throughout the economy, and it is now becoming a growing force in today’s workplace. As a hypercompetitive economy combines with new technologies and the Net Generation, more companies are heeding the principles of openness, peering, sharing, and acting globally. Companies that embed these ideas in their workplaces will create competitive organizations that leverage internal and external capabilities more effectively than their traditional counterparts. ABOUT SOCIALTEXT This complementary paper is provided by Socialtext in partnership with the authors of WIKINOMICS: HOW MASS COLLABORATION CHANGES EVERYTHING. As the first wiki company, Socialtext leads the industry in applying next-generation Web2.0 technologies to the critical challenges facing today's enterprise. With the most flexible deployment options in the industry - including appliances, hosted services, software and open-source – Socialtext wikis are designed for any organization that wants to accelerate team communications, better enable knowledge sharing, foster collaboration, and build online communities. Today, over 2000 organizations use Socialtext, including Symantec, Nokia, IKEA, Conde Nast, Ziff-Davis, Kodak, University of Southern California, Boston College, among others. Based in Palo Alto, Calif., Socialtext is a privately-held company with world-class investors including Draper Fisher Jurvetson, SAP, and the Omidyar Network. For more information about Socialtext, please visit www.socialtext.com or call 1-877-GET-WIKI.