Wikinomics: How Mass Collaboration Changes Everything, by Don Tapscott and Anthony D. Williams, December 2006. This book explores how some companies in the early 21st century have used mass collaboration (also called peer production) and open-source technology such as wikis to be successful.

Strategy guru Gary Hamel constantly warns us that it is not competitors’ product or service innovations that can ruin our businesses, but rather business model innovations. A new business model can quickly make our entire business irrelevant.

In a previous blog, I wrote about the ‘wiki society.’ (From Wacky to Wiki – Jan. 4).  The wiki society apparently has come to business. In this fascinating book, Tapscott and Williams show how companies expand the borders of their business to include their clients and customers, as active and creative members of their innovation system. 

Wikinomics includes some really insightful economics. They site Coase’s Law:

A firm will tend to expand until the cost of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction on the open market.

In the wiki society, the Law is inverted, the authors believe:

A firm will tend to expand until the cost of carrying out an extra transaction on the open market become equal to the costs of organizing the same transaction within the firm.

What they mean is that with the cost of communication and networking dropping rapidly, what was done outside the firm can now be done more cheaply by the wiki principle: organizing communities of users and clients, and expanding the borders of the firm. Recall Gary Hamel’s 4-box theory of strategy, which included “configuration,” or what the company does internally and what it does externally, linking its core strategy with its strategic resources.   Suddenly, with the wiki (user community), the borders of the firm expand dramatically. And the core strategy must change equally dramatically.

Has your business created a wiki? If not, can you? How? What will its goals be?  

If you have not begun to grapple with these questions, it is already very late.