Flip (26 page)

The whole idea of open source, like rewards for ideas, is not a new one. Although the term 'open source' is alleged to have come out of a strategy session held at Palo Alto in response to Netscape's decision in January 1998 to release its source code (think 'open' source code), its origins are older, and the concept as it is being presented here is far broader in application than simply source code.

Let me give you a great Australian example. CAMBIA is a not-for-profit research centre founded in 1992 by Richard Jefferson in Canberra. Focusing on plants and biotechnology, CAMBIA was an acronym for the Centre for the Application of Molecular Biology to International Agriculture.

These days CAMBIA has evolved into broader life science applications but retains the name CAMBIA, which in Italian and Spanish means 'change'. CAMBIA develops new metho-dologies and technologies for plant improvement and then provides that information to the wider market. In effect CAMBIA is an opensource biotechnology research centre and a driver for much innovation.

The key goal of CAMBIA is to promote open-source innovation in the wider arena of bio-technology. They see open source as an enabler of innovation, and have developed a suite of tech-nologies, patents and licences that in their view will give innovators greater freedom to develop and market new biotechnologies. CAMBIA makes specific reference to helping smaller businesses and ventures, who without assistance in what can be both a scientifically and legally complex space would not gain sufficient access to the market. In a way, CAMBIA helps to create and spread innovation by removing control from the hands of the wealthiest companies.

To close out this section, let me say that I am not suggesting you give everything away for free, nor am I suggesting you expose your sources of competitive advantage to your competition. This would make no sense unless it made your business more profitable. You should however tap into the brilliance that individuals who don't work for you have,whether they be customers, bored scientists in academia or teenage kids with an idea about how to advertise your product better.

INVISIBLE PROFITS: SUCCESS THROUGH 'CO-OPETITION' AND PARTNERSHIP

I had the pleasure of sitting next to a senior engineer from Maunsell Australia on a flight from Perth to Brisbane. His name was Richard Jackson. Richard now claims that one of his great achievements in life is to sit next to me for more than four hours in a confined space and survive. It was the start of a relationship with Maunsell, and now AECOM globally, a company that ranks among the most exciting I have ever worked with. In that conversation one thing stood out and has influenced my thinking greatly.

In the development of huge infrastructure projects, competing firms are often engaged simultaneously to get the project finished on spec and on time. Apparently these 'partnerships' have traditionally been hostile ones.When I asked Richard what the biggest change facing his industry was, he said it was a move away from competition and towards co-operation: the development of win–win relationships with suppliers and traditional competitors, or what I like to call 'co-opetition'.

Only today I was listening to a podcast of a presentation by Bill Clinton, at the annual TED conference in Monterey, California, in which he used the word 'interdependen?' repeatedly. This idea of teaming and partnership even with traditional competitors seems to be gathering real momentum.

A 2000 Booz Allen Hamilton Consulting report notes that more than 50 per cent of business alliances in the 'new wave' of business collaborations (which refers to the massive increase of business partnerships since around the year 2000, facilitated by technology and spurred on by an increasingly crowded market) are between
competitors
, and lead on average to a 7 per cent higher return than traditional collaborations.

Toyota realise that sharing their hybrid technology has real benefits for them. They already have technology-sharing agreements with Nissan and Ford (who use Toyota technology in the popular Ford Escape). Toyota not only enjoy licensing fees and royalties from other companies using their technology, but the more people that use their technology the higher their output volume, so the lower their per-unit production costs become. It's win–win.

Apple recognised that the best way to achieve their goals lay in cooperating with other established companies in partnerships where they could ride each other's innovations. In 2006 they partnered with Intel to deliver Mac computers running off Intel chips. The companies' faith in the power of collaboration is clear when you look at the way they describe the joint venture.

Apple CEO Steve Jobs said, 'Our goal is to provide our customers with the best personal computers in the world, and looking ahead Intel has the strongest processor roadmap by far . . . we think Intel's technology will help us create the best personal computers for the next ten years.'

Intel CEO Paul Otellini said, 'We are thrilled to have the world's most innovative personal computer company as a customer. Apple helped found the PC industry and throughout the years has been known for fresh ideas and new approaches.We look forward to providing advanced chip technologies, and to collaborating on new initiatives, to help Apple continue to deliver innovative products for years to come.'

Just because you haven't figured out a way to make an idea work, it does not mean someone else can't. Sell it, license it, partner on it. Stop keeping it hidden, especially if you are getting no return on the asset. You wouldn't leave a huge piece of real estate or a factory doing nothing. You would work that and your other physical assets as much as possible. It is time we started thinking of our intellectual assets the same way.

According to Ron Sampson, secretary of the not-for-profit National Institute for Strategic Technology Acquisition and Commercialization in Manhattan, 90 to 95 per cent of all patents are idle. Procter & Gamble only use about 7000 of their 36,000 patents according to company spokesman Jeff LeRoy.

Companies will patent any meaningful advance but only work on the ones that fit into their immediate R&D. The worst are the pharmaceutical companies. The phenomenon is called 'the tragedy of the anticommons' – that is, patents keep knowledge in the hands of just a few people (monopoly on knowledge), which is bad for innovation. In fact, in the European Union, a report by a group of Italian academics found that as many as 18 per cent of patents were 'blocking' patents, which are patents taken out not so you can develop them into something but to make sure someone else doesn't. That's not cool and that is not progressive enough for the flip world.

THE ULTIMATE POWER TRIP: LEVERAGING POWER BY SHARING IT

The antiquated 1950s view of business is the boss walking around trying to squeeze every last bit of work out of employees, worried they are ordering Christmas presents online. I actually worry about the opposite, getting my people to take all their vacation time. We have a system that notifies me when someone is about to lose vacation days because they haven't taken them in time. Every one of my direct reports is in danger.
Jonathan Schwartz,
President/COO Sun Microsystems

Some smart people do work for you. Use them! One of the biggest complaints that my own research and that of companies such as Gallup has found is that one of the most frustrating things about work is when your company doesn't fully utilise your skills.

TECHNOLOGY CAN HELP

The same technology that is putting the power back in the hands of the consumer can also help you to generate collaboration and knowledge sharing within your own workforce. Considering the following examples which appeared in an
Australian Financial Review
article in 2007.

Geek Squad, the computer repair company started by University of Minnesota IT graduate Robert Stephens, uses a whole suite of electronic collaborative software to keep teams all across the US working in sync with each other. Geek Squad wikis are accessible and editable by all of their almost 12,000 employees, so they provide
useful
and
up-todate
information all the time. Some evidence suggested that appropriately deployed in-house wikis could cut company meeting times 'in half ' and decrease email traffic volume by 75 per cent.

While some are sceptical about those figures, the direction is right. It's interesting to note that the
AFR
's source for the Geek Squad story, a book called
Wikinomics: How Mass Collaboration Changes Everything,
by Don Tapscott and Anthony D. Williams, is supplemented by a wiki that readers can contribute to and edit online. Recognising that their book's information could quickly become obsolete, the authors say a wiki is the only way to keep it relevant.

I feel in a strange way that a book is the wrong medium to be communicating flips. Editing was a nightmare because the changing marketplace meant that some of my examples were 'old' within a month of writing them. But I decided a book was still the way to go because the principle of flipping will live on even as the examples lose relevance.

The
AFR
article also cited Xerox, where CTO Sophie Vandebroek flipped the whole R&D strategy on its head: instead of the strategy emanating from the boardroom and filtering downwards, she started a company wiki where researchers in the R&D teams could collaboratively define the entire R&D strategy.

Perhaps the most extreme example is IBM's InnovationJam in 2006. The event brought together over 100,000 IBM employees in a moderated series of online discussions over seventy-two hours, where they brainstormed potential new products. Nothing was out of bounds for discussion. Such is their commitment to the project that chief executive Sam Palmisano has committed US$100 million to develop ideas with the most social and economic potential.
¹³

IBM's first jam took place in 1998 and was a single, fullday collaboration between R&D labs. It was so successful that it was turned into a three-day extravaganza and eventually put online. An enormously detailed website for the 2007 jam includes 'tips for successful jammers' that lead off with, 'Don't be shy – you're the expert'. This encapsulates the philosophy of 'To Get Control, Give It Up'.

Also, the jam has now gone way beyond just innovating in products (traditional R&D).Now every one of the 330,000 IBM employees has been explicitly given licence to offer suggestions and 'riff ' on everything from new products and services ideas to new business processes and business models. It really is an innovation free-for-all.

I feel like I am overdoing the Toyota examples, but here I go again. The truth is the company is a flipstar in more ways than one. Toyota became admired first and foremost for its quality manufacturing system. Ford, GM and Chrysler have all sent high-level staff to observe Toyota's assembly lines, and in recent years the Detroit Three have greatly improved the quality of their own vehicles, in large part by copying the Japanese companies that once copied them.

But one feature of the Toyota manufacturing system seems to be too tough for Detroit to emulate. On Toyota's assembly lines, the lowest level worker can shut down the line for any reason, even if it's just the suspicion of a problem. In fact, Toyota's managers start to worry if the line doesn't shut down frequently, because it probably means quality problems are slipping through without being fixed. Yet despite all these stops and starts Toyota produces vehicles in a shorter time than any other car manufacturer in the world.

What a flip! Empowering the lowest level worker to shut down an entire assembly line lifts the entire workforce's dedication, performance and morale. Meanwhile, the Detroit Three, trapped in the bunker of a command-and-control mentality, recoil from distributing such power down to the factory floor, even as their market shares erode and their losses mount. With Ford reporting its biggest ever loss of US$12.7 billion in 2006, it's no wonder CEO Alan Mulally went to Japan in December of that year to discuss a possible partnership with Toyota. Mulally assured everyone that Ford will return to profitability: 'We know where we are. We are dealing with it, and we are on plan.'

I would like to give you some simple day-to-day examples of managers trying to hold onto power, and it having a potentially adverse impact on results. Even though these examples seem quite insignificant, they are the tip of the iceberg and represent a much deeper challenge in businesses today. I confessed earlier to not being a fan of YouTube, and mentioned how I can't understand why people spend so much time downloading what I consider garbage from this and other sites – but remember, regardless of whether you or I do it, millions of others do it every day. And they are both your customers and your staff. It is this kind of attitude that leads to companies trying to ban sites like YouTube from being viewed by their staff at work. And herein lies one of the lessons of 'To Get Control, Give It Up'. If your staff are so bored they are spending hours downloading junk from the internet, you should look at your staff selection processes, and more importantly at the work you are engaging in and the culture that exists. Build a more exciting place to work!

Or consider the insurance company who do not give the majority of their call centre staff access to the internet or even email. Imagine not having email at work. I know for some of you this sounds more like heaven, but seriously email is a ubiquitous business tool and one way that we keep in touch. Oh, and they also banned mobile phones. Imagine doing this in a workplace filled with young people, who can't go to the toilet without phoning five of their friends. The result was that the staff continued to use their phones, they just had to hide it.And staff attrition rose to very expensive levels. This is when I was called in.

My favourite example comes from the airline industry. A senior safety engineer at a leading airline had a problem with his trainee safety inspection officers (or whatever their official title was). They were listening to their iPods while doing routine safety checks on the planes. On first hearing this, being someone who boards literally hundreds of planes each year, this even disturbed me.