The first cool story of openness that Tapscott profiles is Goldcorp, which is a mining company in Canada. Goldcorp had an underperforming mine, and though they thought that the mine had large reserves, the corporate geologists were unable to discover the location of the large lodes they believed were present. So Goldcorp put out a prize pool of $575,000 and all of their proprietary geological data on the web, and rewarded people whose analysis led to new and rich lodes. They ended up receiving over 1000 entries from virtual prospectors, and were able to find several new target locations with a better success rate than their own geologists. There was a substantial increase the market capitalization of the company with their new found wealth (pun intended) from 100 million to 9 billion.

The next piece that really opened up some eyes for me was the discussion of Proctor & Gamble’s use of innovation markets like yet2.com and InnoCentive (ideagoras is the consultantese that Tapscott uses to describe them). What fascinated me was the crowdsourcing of their patents and allowing other companies to use their innovations which they are not using, or are under-utilizing. One example from P&G is the material used to make diapers absorbent is now licensed for use in oceanic transcontinental telecommunications cables. My grandfather, Paul Vickers, worked in GM’s R&D arm for the bulk of his career. One of the interesting projects that he still discusses is his work with an artificial heart. It seems that this would not be a place that GM would be spending its money on today. However, if they were able to license the innovation for someone else to use, people would be encouraged to continue with the research and innovation knowing that it will help the R&D division’s budget. The other half of this for Proctor & Gamble is putting problems out to a portal with a reward amount for someone who is able to solve the problem. They are targeting to have 50% of their products R&D come from these innovation markets.

As one might expect a good chunk of the book is dedicated to Web 2.0 business models and how to monetize and incent businesses within. He discusses how all of the big players (Google, Amazon, SAP, etc) are publishing public APIs to allow others to innovate on top of their platforms in the form of mash-ups and general extensions. He also devotes a good deal of time to discussing how IBM is providing a great deal of support to Open Source initiatives such as Apache and Linux, and what their payoffs are for doing so. Mostly he cites the ability of IBM to leverage its knowledge with these tools to help compete on consulting, and deliver higher quality peer reviewed code to their clients.

This is where I think my initial thoughts were centered in terms of how to make the open sourced and crowd sourced business models payoff, and while I still believe that there is a lot of strength to that business model, this book has made me examine it one step further. First though, I’d like to discuss what the implications of the open source model might mean for a global consulting company. Think about all of the bench (non-billable) time that their employees have a year being spent on furthering, or founding open source projects for the niche that they work in. Now think about taking those open source products to market with stable versions, which the employees know inside and out. This would be a great competitive advantage, as the compelling market message is not only do you not need to purchase enterprise software, but we know the open-source software that you should be implementing inside and out. You can check out the percentage of the code that was written and tested by the employees who will be helping to implement here at your firm.

One of the things that Tapscott points to is a greater meritocracy with flatter organizational structures in the future. This struck a chord with me as I thought about how it might apply within a consulting organization. What intrigues me is the possibility of outsourcing the consulting itself which may mean commoditization of consulting to a degree. At this point we’re already well into the out-sourcing of work to global areas with less expensive labor, and while that trend will continue, where will the next innovations come from?

The next logical step from my point of view would be to set up a market internal to the company and take the projects that they have won, and put them up for bid to the employees within the company. There are obviously difficulties that would need to be worked out here, but brushing past them for now, what if we let individual small teams compete for solutions to problems with real financial bonuses attached to the results? By this I’d be referring to incentives that were tied to the project financials and were rewarded to the individual programmers, testers, and consultants.