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Davos Does Second Life and YouTube.

Posted by: Bruce Nussbaum on January 27, 2007

There’s this weird disjunction at Davos with enormous attention being paid to Second Life, YouTube and everything that smacks of social networking and innovation yet most of the business people don’t understand any of it. All they know is that they should.

Part of it is simply age. There are 100 YGLs (Young Global Leaders to you) running around who are clearly into the open source culture and spend half their life online. But talk to senior business people, especially the Europeans, and it’s not so. One group that does get is is the Indians. They are totally into networked organizations.

The really best stuff at Davos these days can be found in the small workshops, not in the big forums. The CEO workshop series is one of the best and I went to Collaborate to Innovate Friday morning (it’s 1:40AM Saturday now in Davos and I’m wide awake after a blowout day and yet another Bill and Melinda Gates Foundation event that included Bono, Tony Blair, Rubert Murdoch, the new President of Liberia, John Kerry, two other senators, the guy who started wikipedia, Paul Allen…).

The goal of the workshop was to show how social networking and community- based approaches radically shift the way companies operate. So the leaders offered up 3 models for the participants (packed room of 40 plus—it was sold out). One was open source, with wikipedia the best example. A blend of democracy and meritocracy, 5% to 10% of the participants do 50% to 80% of the work and folks labor away not for great riches (it’s hard to make profits with this model) but for peer recognition and fame.

The other was Al Queda, which used a biological, organic, cell organization. A small central group sets values and goals and a very loose coalition of cells executes. The cells merge, coalesce, break apart rapidly. Very agile networking model. Very good at disruptive innovation.

The third model was the marketplace, web 2.0, where buyers can be sellers and collaboration is the norm. Think where users design t-shirts and vote for the most popular or (sorry, still on dial-up and can’t link) where R&D gets done through network collaboration.

Pretty cool, huh. I broke into a group that was led by C.K. Prahalad, the guy who gave us the concepts of core competence, co-creation and bottom of the pyramid. Totally great person who has a paper on networked production coming out in HBR.

My observations of the workshop? A good third to maybe half of the folks understand the vast cultural and organizational change involved in moving to these networked models. The other business people either don’t get it or resist it. We had one top businessman who kept asking Who makes the decisions? Who makes the decisions. We repeated again and again that decisions evolve and emerge from the participation and conversation. He wouldn’t budge. Just a command and control kind of guy.

The workshop itself was stimulating. We broke into teams to discuss the models and we had to create a new company based on one of them. Then the entire group voted on the best idea. My team’s concept got the fewest votes. We wanted to use gaming culture and the open source model to create a new kind of movie—with people participating in designing the narrative, stories ongoing forever, etc. We used World of Warcraft as a model. The leaders of the session loved the concept, even if the audience didn’t get it. I demanded a revote but was turned down. Alas, we was robbed.

What did come through the discussion was that managing big networks is tricky and complex. There are tight networks that manage and loose networks that produce, large and small, constant and changing. You need good technological platforms for social networking to occur and transparency to make it work. You need clear incentives to get people to work, and it may not be monetary. You need clear measures of profit. Large numbers are important as well as diversity in network composition if you’re dealing with consumers (and narrowness if you’re dealing with genius scientists who can solve problems).

The take-away is that changing culture is hard but building an innovation culture is necessary. On that everyone seemed to agree.

One word of praise—the CEO workshop is put on by MG Taylor Corp., with the MG standing for Matt and Gail. They walk the talk—they’re open, collaborative, iterative, insightful and just plain smart.

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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