July 7, 2012
Droog Downloadable Design: An Example of Mass Customization

When Droog launches its Design for Download website in the coming months, it will have the opportunity to do for furniture what Apple did for music: turn a commodity business into a service business. It’ll be FaaS: Furniture as a service. Simulatenously, it will be one of the earliest commercial efforts at “physibles”. Droog’s platform will offer digital design tools that enable ordinary computer users to make functional design decisions and generating blueprints for local 3–D fabrication services in various materials. The tools also enable communication between designer and customer, streamlining and lowering the cost of a custom design process. Among the first online offerings will be open–source decorative electrical sockets, tables, and chairs made with wood and 3–D printable brackets, and shelves whose composition can be customized using Droog’s new software.

July 3, 2012
Practical Advice on How to Design Massively Collaborative Activity

Every media revolution has given individuals greater access to the control panel of civilization. Consequently, the capacity of the individual – for inquiry, invention, influence, and collaboration – now rivals that of global institutions. Individuals are no longer content to simply consume what companies make or to be “engaged” by it. Increasingly, they want to co-produce it: The product. The service. The marketing. Thus, the dominance of mass communication is being trumped by that of mass collaboration.

Early efforts to enter this new domain reveal mass collaboration can reward organizations with:

  1. Self-propagating forms of marketing.
  2. Lowered dependence on media buys.
  3. Deeper involvement with consumers.
  4. New forms of value to offer the marketplace.
  5. New streams of revenue.
  6. Innovative business models.

Even so, a vast portion of commerce hesitates. For the uninitiated, designing a P2P systems—or “infrastructures of cooperation” as I like to call them—seems daunting. “I know how to make an ad, but how the hell do I build a community? I don’t even know where to begin.” “How do I make sure it works out if I don’t put anyone in charge of it?” To the untrained eye, it looks like chaos. Most advice out there is so macro or so vague that its near worthless for a hopeful practitioner. Luckily the theorist Michel Bauwens has conducted some great work in this area. Michel published a paper, called “The Political Economy of Peer Production.” In it, he lists five criteria necessary to facilitate the emergence of peer-to-peer processes.

  1. A networked technological infrastructure that enables distributed access to ‘fixed’ capital.
  2. Multiple communication systems which allow for autonomous communication between cooperating agents.
  3. The existence of a ‘software’ infrastructure (or as he later calls them “Tools” for autonomous global cooperation.
  4. A legal infrastructure that enables the creation of use-value and protects it from private appropriation.
  5. The diffusion of human intelligence. 

I like these. A lot. They do a lot to move the conversation forward. But I still feel like they’re too broad. I’m really looking for concrete, actionable components that lead to massively collaborative behavior.

Over the last five years, I’ve been studying the fields concerned with emergent social production. They include the new institutional economics (i.e. Elinor Ostrom), systems theory (i.e. Donella Meadows), computational social science (i.e. Robert Axtell and Joshua Epstein), and evolutionary psychology (i.e. Mark van Vugt). What was remarkable to me that not only did their insights overlap, but they also overlapped with Bauwens criteria. The only difference is that, coming out of their research, I see not five but seven components needed to design a successful P2P platform:

  1. Goal 
    People must know the “Why?” and “To what end?” of a P2P effort to perceive any value in it. Purpose spurs participation.
  2. A Shared Resource
    A shared resource is the “raw material” (data, soil, hard disk space, patents, workspace, a car fleet) that the community of participants transforms into new value or uses in new ways.
  3. Place
    The more often people bump into each other the more likely they are to develop strong social bonds, share knowledge, collaborate, and feel a sense of a community.
  4. Rules
    People need a sense what they can and cannot do in a particular P2P effort. Simple rules grease the skids of interest by helping people spend more time interacting within the brand commons and less time figuring it out.
  5. Information Exchange
    Facilitating sharing gives people the means to educate each other, help each other, create shared meaning, develop a shared identity, and self-organize around ideas that excite them.
  6. Tools
    By providing tools for creative and autonomous action, the sponsoring company lowers the barriers for all levels of people to create and contribute.
  7. Feedback
    A well-designed P2P effort should collect data about participants’ activities, analyze it, and feed it back to them in useful ways. Such a mechanism is called a “feedback loop.” Feedback loops, which come in digital and nondigital formats, are powerful tools that help people change destructive behavior — even those that seem intractable—and encourage constructive behavior.

Now you might say, “That’s nothing new. I knew all that.” Sure. You probably knew each of them individually, but you didn’t put them together. After all, you’re familiar with a bar, a chain, a wheel, a seat, a pedal. But put them together, and you get something greater than the sum of their parts. You get a bike. Thats the idea behind this model.

While I created this model to feed creative thinking, service design, business model development, and marketing campaign development, it’s been highly effective as a diagnostic tool in explaining successes and failures. Let’s consider the design of the collaboratively created information commons known as Wikipedia. Before Wikipedia was Wikipedia, it was Nupedia (a.k.a. component #3: Place) — a project dedicated to producing a free online encyclopedia (a.k.a. component #1: Goal). Nupedia, however, enlisted highly qualified volunteer contributors and vetted their writing in an elaborate multi-step, peer-review process (a.k.a. component #4: Rules). After one year, only 12 articles (a.k.a. component #2: Shared Resource) had been produced. In commons terms, Nupedia’s rules clogged the creative process by demanding a laborious peer-review process. Even if it changed those rules, the site did not provide contributors the tools to create and post articles autonomously. To remedy these problems, Jimmy Wales, the founder of Nupedia, rebuilt the site with Wiki software (a.k.a. component #6: Tools). This software allowed anyone the ability to create, post, and edit (a.k.a. component #7: Feedback) the articles at will. Most importantly, it provided the community with the ability to debate disputed content (a.k.a. component #5: Information Exchange). No more panels. No more vetting. Just free reign to create and publish on any topic. As a final move, Jimmy renamed the site Wikipedia. Six years later, the site contained more than 2 million articles, making it the largest encyclopedia ever assembled — a record previously held by the Yongle Encyclopedia (1408). Today, Wikipedia has 11.5 million articles it ranks as the 6th-most-trafficked site on the Internet; and tests show it is just as accurate and more up to date than traditional encyclopedias.

This model also works well to explain the Kony 2012 phenomena. Give it a shot.

July 1, 2012
The Company with the Smartest Consumer Community Wins. Here’s Why.

Networked technologies lower the threshold of participation, create more modularity and granularity in products and services, relocalize physical production, and create new production models that scale fast and more efficiently than traditional models. This raises serious questions for executives about how to help their companies capitalize on the transformation underway. 

Yesterday, the majority of competition was symmetrical: between players with relatively evenly matched resources and capabilities. Think Ford v. GM, P&G v. Unilever, or K-Mart v. Sears. While new entrants have always challenged these incumbents, it’s different now:

  1. Rarely before have new entrants upset incumbents so decisively — to actually put them out of commission. (i.e. 244–yr old Britannica v. 11–yr old Wikipedia).
  2. Never have entrants dominated entire industries with such speed (i.e. Facebook’s domination of not just the social media industry but the entire Internet).
  3. Never before have so little resources been needed to compete (i.e. Airbnb v. hotels)
  4. Never before have so many revolutionaries threatened so many incumbents across a broad sweep of industries.

In short, the Law of Asymmetrical Competition states that closed, hierarchical organizations will lose to those entrants who collaborate with their user communities via networked technologies. The work of physicist Geoffrey West, of the Santa Fe institute, proves why. He shows that companies scale SUB–LINEARLY. Their slope is .75, which means that, at each point of growth, a company has 25% less innovation (among other things) than they previously did. However, social networks scale SUPER–LINEARLY. Their slope is 1.15 meaning that, at each point of growth, networks have 15% more innovation (among other things) than they previously did. 

The broad message of P2P design is that organizations need to respond. They must incorporate an understanding of networks into their strategic thinking and hire leaders to design and integrate these new means of business. In the long run, a deliberately designed loss of control grants companies the only remaining and arguably most critical competitive advantage: access. As long as they enable and facilitate knowledge flows, ideas, passions, skills, and innovations among social networks, they have access to them. The truth is this: the company with the smartest consumer community wins. In fact, McKinsey discovered this to be true. Surveying global executives, the firm found that deploying networked technologies to foster mass collaboration is highly correlated with market share gains.

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