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BLOG: Crowd collaboration drives innovation

Ross Maher | March 4, 2013
External collaboration is important to allow businesses to compete in the economy of the 21st century, which is increasingly being characterised by entrepreneurial start-ups with business models founded on the principles of collaboration and using methods such as crowd-sourcing.

77% of Australian companies do not use external collaboration. That means these companies have to rely on themselves for all their ideas, insights and experiences, skills and resources. Worse still, they have to take all the risk and absorb all the cost of innovation and new product development.

By not externally collaborating, they make it almost impossible for their business to compete in the economy of the 21st century which is increasingly being characterised by entrepreneurial start-ups with business models founded on the principles of collaboration and using methods such as crowd-sourcing.

Why should businesses collaborate? For four reasons:

  1. to get new ideas
  2. expand and road-test existing ideas
  3. reduce the risk of innovating, prototyping and producing new products & services
  4. improve productivity and speed to market

Obviously, however, something is preventing external collaboration from occurring: what is it, why is it a problem, and what can be done about it?

There are two general reasons companies don't collaborate with external partners, but arguably they are just the flip side of the same coin: (1) fear of losing IP, and (2) management that is grounded in the 20th century model of command & control, rather than the 21st century, networked model.

These are essentially just the flip side of the same coin because management that are stuck in the 20th century model fight against anything that will reduce their competitive advantage, and the thought of developing or sharing IP with other parties is absurd to them: they are unable to grasp the notion of 'growing the pie' where instead of owning 100% of a small pie, they can have 50% of a much bigger pie. This strategy comes with less risk and greater chance of success because they expand the knowledge, insight and experiences of the people developing and delivering new products and services; but instead they march on, convinced they can scale to capture the full market.

The other problem with IP is that it is likely to become less sacred as the various actors in our economy change. As Baby Boomers retire and Gen Y become the majority of the workforce (predicted to be 42% by 2020), the nature of information and how it is used is likely to change. Gen Y's grew up in a digital age and quickly started 'sharing' music (and undercutting the big studios and artists alike) without any real regard to its illegality or realisation that such actions challenged the fundamental pillar of business in the 20th century. They're doing it again with crowd-sourcing and crowd-funding business models, social networks such as Yammer, Twitter & Facebook, and who knows what they - or their younger siblings - will do next.

 

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