Wikinomics
Summary
Tapscott and Williams argue that falling coordination costs allow large numbers of people outside a firm to collaborate on work that firms previously did internally, and that companies which organise for this outperform those that do not. They name four principles: being open, peering, sharing and acting globally.
The cases are the substance. Goldcorp published its geological data on the internet and offered prize money for identifying drilling targets, which produced discoveries its own geologists had missed. InnoCentive posted research problems from corporate laboratories and paid outside solvers, many of whom came from adjacent disciplines. Linux and Wikipedia illustrate peer production without price signals or managerial direction. Boeing's 787 programme is presented as distributed design across partner firms. Procter and Gamble's Connect and Develop programme sourced a growing share of innovation externally. The authors also cover what they call prosumers, meaning customers who modify and extend products, and ideagoras, meaning markets for problems and solutions.
The theoretical claim rests on Coase's account of the firm: firms exist because internal coordination is cheaper than market transactions, so falling transaction costs should shrink firm boundaries and increase outsourced collaboration.
The book is heavily promotional in tone and selects successful cases without examining failures. Several examples aged badly, most notably Boeing's 787, where distributed design produced years of delay and billions in overruns. The broader prediction that peer production would displace firm-based production has not happened at the scale claimed. What did happen instead, the concentration of platform power in a small number of companies that capture the value of user contributions, is largely absent from the analysis.
Key takeaways 7
- Falling coordination costs move the boundary of the firm outward, so work previously done internally can be sourced from outside contributors.
- Publishing proprietary data can produce more value than protecting it when outside solvers hold knowledge the firm lacks.
- Problems posted to open markets are often solved by people from adjacent disciplines rather than by specialists in the field.
- Peer production communities coordinate large complex projects without prices or managerial authority.
- Companies should measure the share of innovation sourced externally and treat internal research as one option among several.
- Customers who modify products are a source of product development, and firms that suppress them lose that contribution.
- Distributing design work across partner firms creates integration risk that the coordination savings may not cover.
Who should read it
Executives considering open innovation or external collaboration who should read the cases critically, since the failures are omitted.
About Don Tapscott
Canadian business author and consultant, co-founder of the Blockchain Research Institute, who wrote The Digital Economy and Wikinomics.
The Digital Economy set out early how networks would redraw firm boundaries, and Wikinomics documented mass collaboration - open source, peer production, crowdsourced research - as a working production model rather than a curiosity. Blockchain Revolution extends the argument to distributed ledgers and their business applications.
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