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Technology Will Make Collaboration Your Next Competitive Advantage

New tools are changing the way people work with each other, their companies’ partners, and their customers.

Editor’s note: Today we begin a new monthly topic in Business Impact at Technology Review: Collaboration Tools. Powerful software and widespread Internet connectivity are making it easier than ever for people to work together no matter where they happen to be. Throughout March we will look at the latest tools for collaboration within and between organizations. We’ll analyze why some technology-enabled collaborations work and why others don’t. We’ll explain why some collaboration tools have failed to prove useful to the employees meant to benefit from them. We’ll present case studies, profiles, and interviews that help you understand how to make the people in your organization more collaborative and more productive.

Since the dawn of managerial capitalism, collaboration and work have almost always been synonymous. People need other people to realize their greatest impact, and innovation, perhaps the most valuable activity in business, depends critically on the kind of cross-pollination of ideas that collaboration enables.

But technology has changed how we collaborate, especially since the communications revolution began 150 years ago with the telegraph and the telephone. This wave of change continued with the commercialization of the fax machine in the 1970s and of e-mail in the 1980s. The last 20 years have brought a convergence of communications and computing technologies that has expanded the possibilities for technology-enabled collaboration, whether synchronous or asynchronous, proximal or distant. With voice mail, videoconferencing, instant messaging, chat forums, blogs, wikis, social networking, microblogging (through services such as Twitter and Foursquare), voice-over-IP, telepresence, and, of course, mobile communications and computing, never have we had so many ways to collaborate without having to be in the same place at the same time.

Technology-based platforms explicitly designed for collaboration arose in the late 1980s with the concept of “groupware” or “collaborative work environments.” These made it possible for people to join forces even though they were working in different places and in different time zones. Lotus Notes brought the notion to the corporate market at a time when business use of the Internet was still in its infancy. As the journalist David Kirkpatrick wrote in 1992, “If groupware really makes a difference in productivity long term, the very definition of an office may change.” With admirable prescience, he noted: “You will be able to work efficiently as a member of a group wherever you have your computer. As computers become smaller and more powerful, that will mean anywhere.”

That prediction has become reality, especially since the recent financial downturn. As businesses cut back on workers and resources, the number of professionals who defined themselves as freelancers increased to 30 million in the United States alone, and many of them turned to social-networking sites, such as LinkedIn and Facebook, to build their businesses. Many people who remained employed used the same strategies as an insurance policy against the next reduction in force. They also compensated for leaner IT budgets by supplying their own hardware, leading to new acronyms such as BYOD (“bring your own device”) and BYOC (“bring your own computer”). In fact, Kraft Foods “coöpted” employee-owned smart phones and tablets, explicitly welcoming and supporting “third-party” devices not directly purchased by the company.

Such policies, in turn, created a new meaning for BYOC: “bring your own culture.” Why? Workers equipped with their own smart phones and notebooks became accustomed to using those devices in whatever ways they chose. They demanded freedom of access to rich media websites (like YouTube), social-networking platforms, and certain content providers (such as WikiLeaks and publishers of its documents, like the New York Times and that many corporations and government entities had blocked for reasons of bandwidth costs, data protection, and corporate security. One senior Dell executive I’ve come across argued that if he was going to spend 60 to 80 hours a week at work, the company had no business deeming any content on the Web off limits. The corporate firewall, designed to make a stark distinction between internal and external information resources, was an artifact of a bygone era. The Dell executive prevailed.

As we’ll see in this month’s articles, interviews, and case studies in Business Impact, network-enabled collaboration both within and between firms is changing work in fundamental ways.

To fuel this revolution, established companies and startups are offering tools and platforms that support ever more powerful means of collaboration. Their business propositions are predicated on Metcalfe’s Law: as linkages among individuals increase arithmetically, collaboration as a result of those linkages rises in value geometrically. That’s why many companies seeking to accelerate the pace of innovation turn to open innovation.

Here are seven big themes you should watch for as this month’s stories unfold:

1. Consumerize everything. Just as workers have flexed more muscle in their choices of smart devices and online resources, their expectations have changed even regarding the physical appearance of many workplaces. It makes sense that one U.K. design firm, Morgan Lovell, specializes in creating offices that look like living rooms and cafés, to stimulate more interaction. By the same token, many tech platforms for collaboration draw upon experiences from the consumer world. In its heyday, Linden Lab’s Second Life hosted a dealership for Toyota’s Scion brand, which enabled buyers to customize their prospective new cars while exchanging ideas with one another. Second Life also provided a platform for the World Economic Forum’s annual meeting of world leaders—in effect, a virtual Davos operating concurrently with the real one. Researchers at UC Irvine, with a $3 million National Science Foundation grant, now plan to study how online virtual worlds such as Second Life and multiplayer games such as World of Warcraft can help organizations collaborate and compete more effectively.

Less radical is the appearance at IBM of collaboration software that has put corporate garb on many familiar consumer applications: examples include Dogear (Delicious-like social bookmarking), Blue Twit (a proprietary Twitter knockoff), and SocialBlue (an internal social-networking platform strongly resembling Facebook). Similarly, Cisco’s collaboration software, called Quad, integrates WebEx along with third-party resources like Twitter, iGoogle, and personalized RSS feeds. Its home page, or “personal manager console,” is widget-based. Its design resembles the presentation layer of a popular Paris-based personal news site, NetVibes. But the casual-looking interface should not mislead: Quad also includes an “enterprise policy manager console,” which monitors task accountability, individual productivity, and policy compliance.

2. It’s all about the culture. International Data Corporation, an IT research firm, argues that we’re entering “a new phase of business collaboration” based on the “intersection of Web 2.0, Enterprise 2.0, and collaboration tools to form the social business.” Although IDC believes that the global market for collaborative applications in general is “largely mature,” it projects that revenues for social platforms specifically will rise from $390 million in 2009 to nearly $2 billion by 2014. The firm says that this growth is being driven by “social business” functions that resemble what we know as the social Web: people connecting, conversing, sharing, and interacting socially online in grappling with common business goals. Essential functions include other familiar features of the social Web: social bookmarking, blogs, microblogs, voting, ranking, RSS, tags, and wikis for what IDC calls “people-centric collaboration and communication” that is “open, synchronous, and unstructured.”

When all of this works, it becomes the “human cloud”—a concept that entered technology circles only a couple of years ago. This is a corporate resource that transcends the corporation, by linking its employees not only to one another but also to customers, partners, suppliers, and third-party resources. “Tools merely offer the potential for collaboration,” argues Evan Rosen, a leading thinker in this field. “Unlocking the value of tools happens only when an organization fits tools into collaborative culture and processes. If the culture is hierarchical and internally competitive, it will take more than tools to shift the culture.” In other words, don’t assume that high-performance collaboration will happen just because you have the tools to make it possible. Collaboration is a social phenomenon, and it has to fit with the culture of an organization.

3. Cherish your experts, not your documents. The most compelling promise of the human cloud is that peer-to-peer networks (or networks of networks) will create value in a business. Patent protection aside, the value of corporate intellectual property diminishes with every passing month, given how quickly rivals can imitate products. Witness how fast HTC matched the touch-screen interface of Apple’s “revolutionary” iPhone using the Android OS. Companies often use a function known as “knowledge management” to retain, classify, and search internal documents, but what happens when the value of those materials goes to zero in record time? The focus changes from the documents to the experts—the people who can create the next innovations.

Consider a recent initiative at Intuit. In the company’s words, it created a platform called Brainstorm as “an innovation management tool to encourage collaboration throughout an organization and help put good ideas to work faster.” It shows the human cloud in action (“get the best talent available regardless of location”). You can’t find talent without “visibility,” so a critical component of Brainstorm is “tagging” experts within the organization. Intuit provided a platform where employees could post challenges, and (taking a page from Google’s playbook) declared 10 percent of its employees’ time “unstructured” to fuel the “supply side.” Further, Intuit recruited a dozen college students into a development program. They, in turn, brought into Intuit any consumer-based collaboration tools they liked, including Facebook, Google Docs, wikis, blogs, and IM. Recognition systems rewarded what mattered most: “people shaping ideas and making connections.” The result? Participation in innovation activities increased fivefold. Time to market decreased by half. And annual new product releases rose from five to 31. Now, Intuit markets Brainstorm to Fortune 1,000 companies, universities, and governments. Intuit itself has seen a tenfold return on its investment from its use of Brainstorm and, according to a GigaOm Pro Special Report, it has witnessed comparable benefits among clients to which it has furnished the tool.

4. Build the 24-hour knowledge factory. I borrow this quaint phrase from the title of a 2004 research paper by two MIT scholars, Amar Gupta and Satwik Seshasai, who observed that managers at businesses with workers in both the United States and India once believed that the misalignment of time zones was a barrier to collaboration. Today, the reverse is clear, as Gupta and Seshasai were among the first to see: link enough time zones together, and you have an organization that never sleeps, conferring a natural advantage in product development cycles or service delivery times.

When global collaboration works, whether within a firm or across firms, the results can be impressive. Conversify, for example, is a social-media marketing agency with principals based in Alaska, Denver, Boston, and the U.K. Even for a small organization, this geographical distribution makes it easy to monitor and manage social media around the clock. It also creates a virtuous time warp: one manager remarks, “When we have something due on Monday, I feel like I have two Mondays in which to do it.” In global enterprises such as Hewlett-Packard, IBM, Cisco, Wipro, Tata, and HCL, this kind of round-the-clock, round-the-globe approach has become commonplace: project teams linked across three or four time zones hand off work continuously and move it forward in a kind of perpetual motion. This is what scholars Morten Hansen and Nitin Nohria defined nearly a decade ago as a source of “collaborative advantage.”

5. Mandate structure within the social cacophony. Businesses should not be lulled into thinking that social media’s conversational metaphors eliminate the needs for structure, discipline, and protocols. On the contrary, strict guidelines and defined terms of engagement become even more critical. The application programming interface (API), closed or open, is a good metaphor. Want to collaborate with Google, YouTube, Facebook, Twitter, Apple, RIM, or Yelp? Want to get an app into one of their app stores? API and Embed Codes specify structures and pathways available for collaboration.

The open-source Web management framework Drupal is another example of how a structure can be set up to enable collaboration in online social environments. (Dries Buytaert, a computer scientist from the Netherlands, created Drupal in 2001 and intended to call it “dorp,” meaning “village” in Dutch; when he mistyped the word while searching for a domain name, he wound up with Drupal and thought it sounded better.) Unlike Linux, an open-source operating system that didn’t become popular until corporate third parties like Red Hat provided enterprise support, Drupal grew through collaboration among Web users and developers. Its strength lies in its simplicity: while it offers a sophisticated API for developers, no programming skills are required to create and administer a basic website. As a result, by 2010 Drupal was running 7.2 million sites on the Web, including and Its modular design, “plug-and-play” extensibility, and free downloads accelerated its popularity. A community supports it, volunteer developers enhance it, and the “collective” uses a heuristics-based approach to improve it. (Drupal has now extended activities into a commercial entity, Acquia, to provide services for building websites.) A similar story of social collaboration has resulted in the popularity of Ruby on Rails.

6. Tap the wisdom of your crowd, and any crowd. Think of crowdsourcing as mass-market collaboration. Either talent or inventory can be sourced on demand.

Crowdspring, an online ad agency, gives users the ability to spec out design tasks (say, a brand treatment, a logo, or a creative ad execution), post structured RFPs online, and await “bids” on the work. A simple request of this kind can generate dozens of design submissions within 24 to 48 hours. Only the winning submission (if the user selects one) gets paid. That’s talent on demand.

Meanwhile, Threadless, started in 2000, is by now the paradigmatic example of crowdsourcing on the Web. It’s an e-commerce retailer that sells T-shirts designed by a community of users, who submit 300 designs to the site a day; the site’s fans vote for the ones they like best, and winning designs earn their creators $2,000 each. The goal is to post seven new shirt designs a week-and sell those designs for three to eight weeks. In 2009, the site generated over $30 million in revenue.

The contrast between these two sites, however, illustrates an important lesson. Collaboration enabled by networked technologies works best in knowledge-intensive and information-based tasks. While Threadless manages an entire business process from design to manufacturing to distribution, Crowdspring does not. Once a “client” has settled on a creative execution, there’s still the task of making it real—printing materials, creating video or online advertising, placing media. In that sense, crowdsourcing underscores a key question for any task completed by technology-based collaboration: how much of the desired outcome or solution does collaboration actually deliver?

An entirely different application of crowdsourcing comes in the form of “prediction markets.” These can be a boon for strategy formulation and product planning. For example, retailer Best Buy uses an internal prediction market, called TagTrade, to tap the collective intelligence of its tens of thousands of in-store employees. In 2003, DARPA also tried to put a prediction market to work: the Policy Analysis Market (or PAM), whose purpose was to anticipate future terrorist attacks. (When members of Congress denounced it as “grotesque” to enable online users to “bet” on “atrocities and terrorism,” PAM was shut down.) These markets represent a third type of crowdsourcing that is, in many ways, the most profound: the means to tap collective intelligence.

7. Keep it real. The downside of knowledge work—the lifeblood of technology-based collaboration—is its intangibility. It’s hard to visualize remote colleagues or a set of abstract tasks and deadlines. The most promising collaboration tools, thus, are those that provide updates from team members, relevant news feeds, project reports, deadline alerts, and other visual reminders that make the intangible tangible. This is especially critical for talent workers who are alone in remote locations or who collaborate on abstract tasks.

For example, DreamWorks Animation has created a global work space called Virtual Studio Collaboration. It combines animation design tools with high-definition videoconferencing and telepresence to let creators around the world work together on feature films. Their collaboration, once sequential, now takes place in real time—and the technology makes their connections palpable and immediate.

Similarly, some argue that the success of Boeing’s 787 Dreamliner was due in part to the way the company integrated collaborative tools with the applications that engineers use to design the products themselves. Rival Airbus, which lacked such high-tech visualization tools and advanced aerospace design software, simultaneously suffered expensive failures, including delays in delivering the A380.

Many leading collaboration tools (including Jive, Traction, and SocialText) specialize in visualization of collaboration “streams.” In addition, technologies such as near-field communications (NFC) can make collaborators even more “real” to one another by tracking and connecting them virtually as they move through the physical world. NFC can instantly synchronize mobile devices with information resources, secure access to encrypted Wi-Fi networks, and coördinate physical movements of remote team members to enhance coöperation, accessibility, and accountability.

I hope these themes prove useful as a lens through which to absorb the articles appearing in Business Impact this month, and to assess the applicability of these ideas to your business now. Please share your views in the discussion section below.

Jeffrey F. Rayport specializes in analyzing the strategic implications of digital technologies for business and organizational design. He is managing partner of MarketspaceNext, a strategic advisory firm; an operating partner at Castanea Partners; and a former faculty member at Harvard Business School. Carine Carmy contributed research to this article.

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