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Working Together in a Networked Economy

Distributed Innovation and Creativity, Peer Production, and Commons in a Networked Economy

A decade ago, Wikipedia and open-source software were treated as mere curiosities in business circles. Today, these innovations represent a core challenge to how we have thought about property and contract, organization theory and management, over the past 150 years.

For the first time since before the Industrial Revolution, the most important inputs into some of the most important economic sectors are radically distributed in the population, and the core capital resources necessary for these economic activities have become widely available in wealthy countries and among the wealthier populations of emerging economies. This technological feasibility of social production generally, and peer production — the kind of network collaboration of which Wikipedia is the most prominent example — more specifically, is interacting with the high rate of change and the escalating complexity of global innovation and production systems.

Increasingly, in the business literature and practice, we see a shift toward a range of open innovation and models that allow more fluid flows of information, talent, and projects across organization.

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Peer production, the most significant organizational innovation that has emerged from Internet-mediated social practice, is large-scale collaborative engagement by groups of individuals who come together to produce products more complex than they could have produced on their own. Organizationally, it combines three core characteristics: decentralization of conception and execution of problems and solutions; harnessing of diverse motivations; and separation of governance and management from property and contract.

These characteristics make peer production highly adept at experimentation, innovation, and adaptation in changing and complex environments. If the Web was innovation on a commons-based model — allocating access and use rights in resources without giving anyone exclusive rights to exclude anyone else — Wikipedia’s organizational innovation is in problem-solving.

Wikipedia’s user-generated content model incorporates knowledge that simply cannot be managed well, either because it is tacit knowledge (possessed by individuals but difficult to communicate to others) or because it is spread among too many people to contract for. The user-generated content model also permits organizations to explore a space of highly diverse interests and tastes that was too costly for traditional organizations to explore.

Peer production allows a diverse range of people, regardless of affiliation, to dynamically assess and reassess available resources, projects, and potential collaborators and to self-assign to projects and collaborations. By leaving these elements to self-organization dynamics, peer production overcomes the lossiness of markets and bureaucracies, and its benefits are sufficient that the practice has been widely adopted by firms and even governments.

In a networked information economy, commons-based practices and open innovation provide an evolutionary model typified by repeated experimentation and adoption of successful adaptation rather than the more traditional, engineering-style approaches to building optimized systems.

Commons-based production and peer production are edge cases of a broader range of openness strategies that trade off the freedom of these two approaches and the manageability and appropriability that many more-traditional organizations seek to preserve. Some firms are using competitions and prizes to diversify the range of people who work on their problems, without ceding contractual control over the project. Many corporations are participating in networks of firms engaging in a range of open collaborative innovation practices with a more manageable set of people, resources, and projects to work with than a fully open-to-the-world project. And the innovation clusters anchored around universities represent an entrepreneurial model at the edge of academia and business, in which academia allows for investment in highly uncertain innovation, and the firms allow for high-risk, high-reward investment models.

To read the full article,  click here.

Yochai Benkler is the Berkman Professor of Entrepreneurial Legal Studies at Harvard Law School and faculty co-director of the Berkman Center for Internet and Society at Harvard University.

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