INNOVATION IN THE AGE OF GLOBAL COLLABORATION

by

SAADICK DHANSAY

This thesis is submitted in fulfilment of the requirements for the degree

Master of Technology: Information Technology

in the Faculty of Informatics and Design

at the Cape Peninsula University of Technology

Supervisor: Prof. Andy Bytheway

Cape Town

March 2010
 DECLARATION

I, Saadick Dhansay, declare that the contents of this dissertation/thesis represent my own
unaided work, and that the dissertation/thesis has not previously been submitted for
academic examination towards any qualification. Furthermore, it represents my own opinions
and not necessarily those of the Cape Peninsula University of Technology.

Signed Date

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 ABSTRACT

The rapid development of new technologies has given rise to new forms of collaboration.
Organisations are able to collaborate on a global scale with individuals around the world, in
order to conduct R&D activities as a result of Web 2.0 tools and technologies. This study
focuses on three areas relating to global collaboration; people, processes and technology.

The purpose of this study is to understand the motivational factors of people that partake in
global collaboration, the change of process with regard to bringing to new products and
services to the market and how technology has changed the way organisations collaborate
to achieve this. The research was conducted in the form of case studies to analyse how
products were brought to the market through the use of global collaboration. This was
achieved by examining two organisations, On Point Technology and SunNight Solar, making
use of global collaboration platforms, TopCoder and InnoCentive.

The findings reveal that motivational factors can be classified in two categories; direct and
indirect. Both play apart and are significant. The process of opening up an organisation to
collaborate on a global scale differs significantly from collaborating internally within an
organisation, bringing greater benefits and new risks. It was also found that Web 2.0
software tools assist these organisations collaborate on a global scale.

Keywords

Global Collaboration, Crowdsourcing, Open Innovation, Wikinomics, Commons-based Peer

Production, Collective Invention, Web 2.0.

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 ACKNOWLEDGEMENTS

I would like to thank:

• My family,

• My supervisor, Andy Bytheway, for his teachings and guidance,

• TopCoder and On Point Technology for assisting with case study research, and

• InnoCentive and SunNight Solar for assisting with case study research.

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 TABLE OF CONTENTS

1 Chapter One – Introduction .................................................................................... 10

1.1 The Social Software of Web 2.0 ............................................................................. 12
1.2 Global Collaboration - Goldcorp’s Discovery of Gold......................................... 13
1.2.1 How Goldcorp Inc. threw away the rule book...................................................... 14
1.2.2 Risks and consequences .................................................................................... 15
1.3 Research Roadmap................................................................................................. 17
1.4 Research Problem................................................................................................... 17

2 Chapter Two – Literature Review........................................................................... 19

2.1 Introduction ............................................................................................................. 19
2.2 Collective Invention ................................................................................................ 20
2.2.1 Background ......................................................................................................... 20
2.2.2 Technological and Market Uncertainty ................................................................ 23
2.2.3 Social Network Perspective ................................................................................ 24
2.2.4 Platform ............................................................................................................... 24
2.3 Commons-based peer production......................................................................... 25
2.3.1 Background ......................................................................................................... 25
2.3.2 Participation in Commons-Based Peer Production ............................................. 26
2.3.3 Incentives ............................................................................................................ 27
2.3.4 Large Scale Collaborations ................................................................................. 29
2.3.5 Governance......................................................................................................... 30
2.4 Wikinomics .............................................................................................................. 34
2.4.1 Background ......................................................................................................... 34
2.4.2 Openness ............................................................................................................ 35
2.4.3 Peering ................................................................................................................ 36
2.4.4 Sharing ................................................................................................................ 37
2.4.5 Acting Globally .................................................................................................... 37
2.5 Summary of the Literature Review ........................................................................ 41

3 Chapter Three – Research Methodology............................................................... 44

3.1 Background ............................................................................................................. 44
3.2 Approach to the research....................................................................................... 44
3.2.1 Design the Case Study ....................................................................................... 46
3.2.2 Conduct the Case Study ..................................................................................... 47
3.2.2.1 Selection of Case Studies.............................................................................. 48

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 3.2.2.2 InnoCentive and SunNight Solar Data Collection .......................................... 50
3.2.2.3 TopCoder and On Point Technology Data Collection .................................... 50
3.2.3 Analyse the case study evidence ........................................................................ 51
3.2.4 Develop the conclusions, recommendations and implications............................ 52

4 Chapter 4 - Case Studies ........................................................................................ 53

4.1 Introduction ............................................................................................................. 53
4.2 Platform Operator - TopCoder ............................................................................... 54
4.2.1 Background ......................................................................................................... 54
4.2.2 Software Development Lifecycle ......................................................................... 56
4.2.3 Client Organisation – On Point Technology ........................................................ 58
4.2.4 Case - Recover ................................................................................................... 60
4.2.5 People ................................................................................................................. 65
4.2.6 Process ............................................................................................................... 67
4.2.7 Technology.......................................................................................................... 70
4.3 Platform Operator - InnoCentive............................................................................ 71
4.3.1 Background ......................................................................................................... 71
4.3.2 InnoCentive Challenge Lifecycle ......................................................................... 72
4.3.3 Client Organisation – SunNight Solar ................................................................. 75
4.3.4 Case – Solar Powered Flashlight........................................................................ 76
4.3.5 Case - Solar Powered Mosquito Repellent ......................................................... 77
4.3.6 People ................................................................................................................. 81
4.3.7 Process ............................................................................................................... 83
4.3.8 Technology.......................................................................................................... 84

5 Chapter 5 – Case Studies Discussion ................................................................... 86

5.1 Introduction ............................................................................................................. 86
5.2 People ...................................................................................................................... 86
5.3 Process .................................................................................................................... 92
5.4 Technology .............................................................................................................. 99

6 Chapter 6 - Conclusion, Limitations and Further Work ..................................... 104

7 References ............................................................................................................. 108

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 LIST OF FIGURES

Figure 1: Goldcorp Inc. model ............................................................................................... 15  

Figure 2: Research roadmap ................................................................................................. 17  

Figure 3: Case studies ........................................................................................................... 53  

Figure 4: Role players in the TopCoder approach................................................................. 54  

Figure 5: TopCoder member ratings...................................................................................... 55  

Figure 6: TopCoder SDLC ..................................................................................................... 56  

Figure 7: In depth ratings card ............................................................................................... 68  

Figure 8: InnoCentive lifecycle............................................................................................... 72  

Figure 9: BOGO Flashlight charging...................................................................................... 77  

Figure 10: Mosquito nets draped over a bed ......................................................................... 78  

Figure 11: A prototype design submitted by Kruer ................................................................ 79  

Figure 12: Components of the design.................................................................................... 81  

Figure 13: The process of innovation on a global scale ........................................................ 93  

Figure 14: Multiple submissions in global collaboration......................................................... 95  

Figure 15: Conceptualisation of global collaboration ........................................................... 104  

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 LIST OF TABLES

Table 1: Research problem and questions ............................................................................ 18  

Table 2: Differences between open and closed innovation ................................................... 40  

Table 3: Details of the data collection.................................................................................... 50  

Table 4: Details of the data collection.................................................................................... 51  

Table 5: Recover’s top 10 downloaded .NET components.................................................... 64  

Table 6: Direct and indirect motivations................................................................................. 92  

Table 7: A summary of organisations making use of collaboration ..................................... 102  

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 GLOSSARY

Terms/Acronyms/Abbreviations Definition/Explanation

BOGO Buy One Get One

FOSS Free Open Source Software

GPL General Public License

GNU Recursive acronym that stands for "GNU's Not Unix"

IRC Internet Relay Chat

OSS Open Source Software

R&D Research and Development

RFP Request for Proposal

RSS Really Simple Syndication

SDLC Software Development Lifecycle

UML Unified Modelling Language

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1 Chapter One – Introduction

Information technology is allowing people around the world to collaborate on a global scale.
Activity of this nature can be said to occur "on the Internet" and working this way significantly
changes who is involved in a business process, and the ways in which they share
information and ideas. Chesbrough (2003:36-37) finds that organisations such as Cisco,
Nokia, Intel and Genentechare are moving from a closed, to an open approach with regard
to innovation. In a closed approach to innovation organisations require control and there is
an emphasis on ”self-reliance”. This means that organisations would come up with their own
ideas, as well as develop, manufacture, market and distribute the product or service by
themselves. In an open approach, organisations are now using external ideas together with
internal ideas to create value for the organisation.

Brabham (2008:75-76) finds a similar trend in the creative industry whereby organisations
have progressively relied on crowdsourcing to find solutions to problems. Crowdsourcing is
the act of taking a task performed by an employee or contractor and outsourcing it to a large
network of people in the form of an open call. One way of embracing this open approach to
innovation is through online communities. An online community is a network of community
members that interact using specific media, which could potentially cross-geographical
boundaries.

Lakhani and Panetta (2007:97) remind us “No matter who you are, most of the smartest
people work for someone else”1. With some of the most knowledgeable individuals residing
outside the boundaries of an organisation, it is both a challenge and an opportunity for
management to find ways to gain access to this knowledge.

This problem could potentially be overcome with the emergence of communities of like-
minded community members willing to contribute to solving an organisation’s problem.
These communities can draw together a vast array of people from all around the world, with

1
Lakhani and Panetta are actually referring to “Joy’s Law”, attributed to Sun Microsystems’ co-
founder: Bill Joy,

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the Internet providing a platform to aid the collaboration. These communities are producing
products and services in a manner, which is vastly different from the traditional, hierarchical,
organisational manner and could serve as a source of opportunity. Because of the potential
to access the intelligence and energy of large numbers of people, organisations are looking
towards these communities, as a new and valuable resource.

Rollett et al (2007:98) finds that with the emergence of Web 2.0 more sharing is occurring on
the Internet via communities. Rollett et al (2007:89-96) defines Web 2.0 as a term used to
sum up a group of key features that aid collaboration, information sharing and interoperability
that web applications showcase. The term Web 2.0 has been used by a lot of people since
the Web 2.0 Conference first took place in 2004. Rollett et al (2007:98-99) explain that at the
centre of Web 2.0 are communities that facilitate dialogue whereby community members
engage with fellow members and knowledge transfer takes place. New technologies have
made this sharing of knowledge possible together with Web 2.0 web applications that have
implemented social aspects.

Lakhani and Panetta (2007:98) find that practitioners and academics did not foresee the
emergence of an open approach to innovation and highlight the success of many open
source projects. Software systems running critical applications are developed by online
communities, which are made up of mostly volunteer software developers. More astounding
is that some of the largest holders of intellectual property like IBM, Sun, Apple and Oracle
have embraced open source software (OSS) communities with their own staff contributing to
projects and incorporating OSS solutions into their own products and services.

It is particularly interesting when a large, global business adopts this approach, especially as
this is a relatively new phenomenon with uncertain risks and benefits. Brabham (2008:76)
finds that this is an emerging and successful business model. This particular model is
complex and requires time and effort in order reap the benefits. It is therefore important to
understand this emerging business model and how organisations could reap the benefits to
aid innovation.

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1.1 The Social Software of Web 2.0

Rollett et al (2007:93) explain that the social software that makes up Web 2.0 aids
collaboration amongst the webs users in order to share ideas, communicate and work
together. This was possible before the emergence of Web 2.0 however this form of
collaboration required technical expertise and was complex to setup. The emergence of
wiki’s and blogs went a long way to solving these problems.

The word wiki comes from the Hawaiian word “wiki wiki” which means “quickly”. Wiki
software allows for the creation of a website using the web browser to create web pages
using wiki syntax. A number of users can work together to create this website.

Blogs are a self-publishing tool in the form of a website. It is a short form of the word
“weblog” coined by Peter Merhoz in 1999. Blogs consist of blog entries, which are sorted by
the newest first. A blog entry consists of a title, publication date, and the body text that can
be assigned to categories and tags. Another feature of blogs is the ability to aggregate the
blog articles for syndication using RSS (Really Simple Syndication) or Atom feeds. Feeds are
made up of XML (Extensible Markup Language), which is a standard set of rules to encode
documents for use electronically. This allows other software to read or use the content of the
feed. Furthermore Web 2.0 is made up of other social software such as microblogging,
instant messaging, social networks and online forums.

Finin, et al (2007:56) find that microblogging is a new form of communication and blogging
that allows its users to update their current status in a short post, which is then distributed to
followers. The authors cite Twitter, Jaiku and Pownce as examples providing these services.
These services allow a user to broadcast a message to multiple followers at once. Instant
messaging also caters for communication but for one on one communication with contacts.
Rollett et al (2007:94) explain that instant messaging provides the ability to communicate
with contacts using a web browser as provided by Google using Gtalk.

Lampe et al (2006:167) explain that social networks such as MySpace, Friendster, MeetUp
and Facebook have been gaining popularity amongst college students in recent years.

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Social networks assist interactions between its users. Wilson et al (2009:206) find that
Facebook is the largest social network in the world and the largest photo sharing website in
the world. Facebook allows its users to create a profile, which includes information such as
name, birthday, relationship status and other interests. Users befriend other users on the
website known as “friends” but are limited to 5000 friends. Users can then interact with
friends by posting messages on a users profile “wall”, posting pictures in albums and tagging
friends as well as joining groups with a shared interest. Users can also comment on pictures.
Users are also provided with a feed of what their friends have been doing on Facebook.

Copes and Williams (2005:73) explain that Internet forums are an online community that has
its own rules, guidelines and discussion subjects. This website is a bulletin board that allows
its community members to post messages. These posts form threads and other community
members post their own messages within the thread in a conversation like manner. Posts
are organised chronologically.

Social software assists with the creation of a global collaboration platform. The platform is
where the client organisation collaborates with the community and social software could be
used to assist.

Social software compromises a number of software systems and is not limited to the ones
profiled above. Social software has become increasingly popular and could potentially be
used by organisations to collaborate with online communities. It is therefore important to
understand whether social software can be used to assist organisations to tap into the
knowledge base of communities.

1.2 Global Collaboration - Goldcorp’s Discovery of Gold

An early example of an organisation that took this approach is Goldcorp Inc. In 1999, Rob
McEwen, CEO of Goldcorp Inc was about to deliver bad news to the organisation as the firm
had been struggling with debts, high costs of production and strikes, all of which had caused
the organisation to stop mining operations. Analysts predicted that the organisation's fifty-
year old mine was dying and the outlook for Goldcorp Inc. was not good. As a result of this,

13
he handed his geologists $10 million to find gold in its mine. After weeks of drilling, rich
deposits of gold were found. The problem for McEwen was that the geologists could not
provide an estimate of the gold’s value and exact location (Tapscott & Williams, 2007:8).

Despite mining being a secretive industry, McEwen went against the norm and decided to
release all his geological data publicly, in the hope that ’global collaboration’ would solve the
problem of value and location. It did solve the problem, thus ‘global collaboration’ is a phrase
that we can use to identify this new phenomenon.

The “Goldcorp Challenge” was launched with prize money to the value of $575,000. All
information was released on Goldcorp Inc.’s website, with over 1000 people taking part and
submitting a total of 110 targets, of which 50 percent had not been identified by the
organisation. 80 percent of the new targets brought substantial quantities of gold. As a result,
the organisation went from being worth $100 million to $9 billion (Tapscott & Williams,
2007:9).

1.2.1 How Goldcorp Inc. threw away the rule book

Goldcorp Inc. provided a platform that encouraged participation by people from around the
world in a single challenge – something that had rarely if ever happened before on this scale,
and in such a context. The platform came in the form of a website whereby information about
the potential of its mines was distributed to the public (Figure 1). Individuals analysed the
information and then submitted potential gold targets on the same platform. Hence, the web
played the central role in facilitating the connection of Goldcorp Inc. with the participants.
Although the challenge predates Web 2.0, principles of sharing and collaborating with a
community took place.

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 Figure 1: Goldcorp Inc. model

As will be shown here, the role of the web in the subsequent expansion and adoption of this
phenomenon is, of course, central. Without the web it simply would not have been possible.

1.2.2 Risks and consequences

Goldcorp Inc. followed a new process of discovering gold, by allowing community members
from around the world to participate in the exploration. Goldcorp Inc. was a successful case,
as the geologists did not previously identify 50 percent of the targets subsequently identified
via the Goldcorp Challenge. It was of course fortunate that 80 percent of these additional
targets brought in gold, but the success rate could have been much lower. Further, the risk
remains that with all this transparency of working, competitors could submit false targets in
an attempt to sabotage Goldcorp’s project. Deliberate sabotage and the need to identify
dubious submissions are areas that need investigation.

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The communities involved in global collaboration are comprised of different kinds of people.
They all possess knowledge that is potentially useful to the client organisations (Goldcorp
Inc.), but patterns are only now being established and the casual nature of the involvement is
a risk. Why do people get involved? Is it because they seek the kudos, or do they seek
financial reward? Whilst tapping into the ‘knowledge base’ that they represent could be
beneficial by providing innovative solutions to difficult problems, the phenomenon is affected
by the changing attitudes of the ever-growing Internet user base, as more individuals from
around the world recognise the opportunity and choose to get involved. It is also affected by
the need for client organisations to change the way their business is conducted.

The reasons why people choose to get involved, the way in which technology facilitates this
involvement, and the consequences for organisational processes are all questions that need
to be addressed. Brabham (2008:88) explains that we should remain critical of this model as
a result of what it might do to people and this area needs more understanding.

Lakhani and Panetta (2007:111) explain that this model needs to be seen as an alternative
to approaching innovation and should supplement existing innovation strategies. Brabham
(2008:88) finds that this model can amass talented individuals, who could make use of their
talent and therefore reduce costs (as well as deliver innovative solutions) in a timely manner,
so that cost and time comparisons with traditional approaches are needed. These findings
need to be further quantified in order to substantiate global collaboration as a viable
innovation strategy that has a complex mix of risks and potential benefits because with
openness and freedom comes responsibility. The three rules of open source software
(nobody owns it, everybody uses it and anybody can improve it) have proven to be great
factors to innovate, but could also be its biggest downfall (Tapscott & Williams, 2007:86). A
challenge facing organisations embracing global collaboration is maintaining quality in an
open environment. The three rules could prove to be a hindrance to quality, as openness
could cater for this. Benkler (2002:73) finds that this area provides an untapped area for
research and specifically a focus on the process, the role of technology and the motivation of
people.

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1.3 Research Roadmap

A general outline of how this thesis will proceed is highlighted in Figure 2. The first step is to
identify the research problem, questions and sub-questions. Based on this a literature review
will be completed. A research methodology will then be decided upon followed by the
presentation of case studies in order to answer the research problem of the study with the
final results presented.

Figure 2: Research roadmap

1.4 Research Problem

The research problem is that in some well-reported cases, global collaboration has been
shown to be beneficial, but the general potential and risks are not yet understood. In
particular, the role of people, the impact on business processes and the ongoing potential for
new technologies need to be investigated. Table 1 presents the research problem and
research questions.

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 Table 1: Research problem and questions

Research Problem Global collaboration has been shown to be beneficial,

but the general potential and the risks are not yet
understood. In particular, the role of people, the impact
on business processes, and the ongoing potential for
new technologies needs to be investigated.

Research Question How do organisations create a platform for global

collaboration that encourages the participation of
individuals and at the same time manages the impact
on business processes and deals with the risks
involved?

Research sub-question Research method(s) Objectives

What experiences do Literature Review. To identify what and how

organisations have in opening organisations are allowing
up, to provide a platform for outside individuals to
others to participate in their contribute to critical
operational activities? operational activities.

Why do individuals partake in Investigate how global To identify what drives

global collaborating projects? collaboration platforms individuals to partake in global
have built up a collaboration projects.
community willing to
contribute.

How do you attract individuals Analysis of To establish how

to partake? investigation. organisations can attract
individuals to partake.

How does global collaboration Case Studies. To identify the process of

differ from current means of global collaboration.
operation?

Who are the role players Analysis of literature To establish who is involved in
involved in global collaboration? review and case the process of global
studies. collaboration.

How do organisations reach a Analysis of literature To identify the technological

global community to solve review and case tools involved with global
problems? studies. collaboration

What are the risks involved with Analysis of corporate To identify the dangers of
opening up an organisation to and individual creating a platform and how to
global collaboration? responses. avoid these situations.

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2 Chapter Two – Literature Review

2.1 Introduction

In order to gather evidence for a review of the current situation, various sources were
consulted, including:

• Online and traditional libraries,

• Academic journals,

• Books,

• Interviews,

• Magazines,

• Newspapers, and

• Blogs.

In the available academic literature gathered, a scan was conducted and it was found that
there is early work about collaborative approaches to innovation (Allen, 1983:1-2). However,
the early work gathered did not cover collaboration with the aid of technology as a medium to
engage individuals on a global scale. This aspect of the phenomenon is new and emerging,
with literature about the subject (for example detailed case study examples) only surfacing in
more recent years (Meyer, 2003: 5-6).

The emerging literature has provided an appropriate body of work to base the literature
review upon. However, it was found that the academic literature focused on successful
examples, with little exploration of unsuccessful examples, and little critical analysis of global
collaboration as a phenomenon. The literature review also addresses the research sub
question; what experiences do organisations have in opening up, to provide a platform for
others to participate in their operational activities? This helps to identify the issues arising
when organisations allow outside individuals to contribute to critical operational activities.

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The academic literature revealed that different academics referred to global collaboration
under different names over a period of time. Namely in chronological order:

• Collective Invention,

• Commons-Based Peer Production, and

• Wikinomics.

The three areas cite cases of use by companies and organisations, and highlight common
factors garnered from the literature. They cite examples chronologically throughout the
literature review. A chronological view highlights the changes in this field over a period of
time, and confirms that it is still an emerging field.

2.2 Collective Invention

In 1983, Robert C. Allen coined the term “collective invention” in a study of iron production in
19th Century England (Allen, 1983:1-2). Allen described collective invention as exchanging
information about techniques and designs amongst firms in an industry.

2.2.1 Background

Research into the area of collective invention by Meyer (2003:5) discovered an example of
collective invention, the steam engine. In 1769, James Watt patented a new design for a
steam engine. This design was far superior to any other steam engine at the time. Mine
owners did not like the patent, as it was not licensed cheaply. As a result of this, illegal
copies of Watt’s design were used by mine owners in the Cornwall region of England to
pump water out of their mines. Meyer established that after the patent expired, information
was shared via a publication called “Lean’s Engine Reporter”, which provided technical
comparisons of steam engines. As a result, changes were legally made to Watt’s design with
few filing patents, and thus, steam engines improved significantly throughout Cornwall as a
result of collective invention.

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Allen (1983:1-2) observed that research and development (R&D) was not prevalent in the
early European iron industry, as governments were not funding research and universities
were rarely publishing findings. R&D is an activity with the goal of discovering new
knowledge and using the knowledge to develop or improve products, processes or services.
Allen referred to traditional R&D in his findings whereby an organisation conducted R&D by
using internal resources with no external resources being used. As a result of the lack of
funding and research, technical information was publicly revealed amongst firms in the
industry at meetings of professional societies from the 1850s through to the 1870s. After
examining the blast furnace industry, Allen found that people were building upon each
other’s findings as a result of information sharing. The fact that the efficiency of the blast
furnaces improved during this period proved that collective invention was a viable alternative
to traditional R&D. The sharing of information amongst competitors is what allowed collective
invention to prosper.

Allen (1983:21) found that since the start of the 20th century the importance of collective
invention had diminished and had been replaced with traditional R&D, which could be the
reason why the next case described by Meyer originated in 1975. A computer club known as
“The Homebrew Computer Club” was formed at Stanford University, consisting of computer
hobbyists with a keen interest in computer chips; this preceded the emergence of the
personal computer industry.

The club was open to anyone and had no official membership. It allowed members to meet,
show and discuss the making of computers. At meetings members developing competing
products would discuss them, and give each other advice on how to improve them. A
newsletter was also published that provided information to members for free.

One of the members, Steve Wozniak designed a computer and allowed other members to
duplicate the design, as he believed in information sharing. He named the machine “Apple”,
and went on to form the Apple Corporation with Steve Jobs. The Homebrew Computer Club
had a free flowing culture of sharing information that supported collective invention.
However, as soon as the hobbyist began manufacturing computers, attitudes of members

21
shifted, with them no longer willing to share information; this change in attitude ultimately led
to the demise of the club (Meyer, 2003:12-14).

A current example of collective invention investigated by Meyer is open source software

(OSS) and free open source software (FOSS). In projects of this nature the source code of
the project is made available publicly. With the use of development tools an executable
computer program can be generated, and, by making the source code available publicly,
changes can be made to the program by anyone (Meyer, 2003: 5-6). Early forms of FOSS
have been traced back to the 1950s and 1960s. However, it wasn't until the 80s that FOSS
began to gain momentum, when the Massachusetts Institute of Technology (MIT)
researcher, Richard Stallman, founded the Free Software Foundation (FSF) in 1983, which
provided the basis for the open source movement. Stallman started a community
development called GNU (a recursive acronym that stands for "GNU's Not Unix"), whose aim
was to develop an operating system. GNU tools and utilities provided a basis for the Linux
operating system (Hars & Ou, 2001: 1-2).

The Linux project began in 1991, when Linus Torvalds decided to share code that he had
created for a computer operating system in the hope of getting feedback from others on how
he could improve it (Elliott & Scacchi, 2008:20). Torvalds released the software under the
General Public License (GPL), which allowed anyone to use it for free on the condition that
changes that they made were also made available under the same terms. Raymond (2000)
found that traditional software projects were “built like cathedrals, carefully crafted by
individual wizards or small bands of mages working in splendid isolation, with no beta [i.e.,
no preliminary test version] to be released before its time.” Open source projects on the other
hand “seemed to resemble a great babbling bazaar of differing agendas and approaches.”
Raymond found that the Internet created a platform for the bazaar model.

Carr (2007:1-3) notes that the corporate world has started to embrace the bazaar model as
explained by Raymond (2000) but argues that it has its limitations. Carr finds that these
projects draw upon a wide variety of individuals and, while diversity is essential, this can be a
weakness if the project is large, as it would require management as a result of complexity
emerging. The open source model works best when individuals participating donate their
time and resources, or are rewarded for their efforts. Carr finds that a central authority does

22
exist to help manage the community. This authority has the power to make decisive
decisions. As a result, Carr concludes that, in the case of Linux, the cathedral coordinates
the bazaar and that the distinction made by Raymond is too incisive. These two approaches
rather work together, and he states, “without the bazaar, the cathedral model moves too
slowly. Without the cathedral, the bazaar model lacks focus and discipline.”

Meyer’s work on collective invention (Meyer, 2003:15) revolves around three important
factors, which can be considered characteristics of the phenomenon:

• Technological and Market Uncertainty,

• Social Network Perspective, and

• Platform.

The following paragraphs summarise some of his comments in the current context.

2.2.2 Technological and Market Uncertainty

Meyer (2003:15-16) finds that in the cases of collective invention, participants were hopeful
about the future, but were unsure on how to proceed with the development. Nobody could
forecast what was going to happen in any of the cases he considered. Meyer further argues
that if an industry can predict what technology they will be using, then it would not be
beneficial to share information.

He sees a timeline for the adoption of collective invention as follows:

• An opportunity arises, which can be built upon,

• A period of uncertainty occurs,

• Interested parties form a social network,

• Development commences, which includes hobbyists and organisations,

• Other organisations see opportunities and use the technology for profit, and

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 • Once a market is established and profits occur, the uncertainty reduces and collective
invention dies out.

2.2.3 Social Network Perspective

Meyer (2003:17-18) notes that these cases consist of developers with links to the projects
and other members and this can be seen as a social network. A social network is made up of
a group of individuals whereby exchanges of information and ideas occur which could be
administered by moderators.

The members of these networks consist of a variety of individuals that include hobbyists,
employees and organisations who all want to share. Meyer also notes that if value is to be
derived from a social network the members need to have different expertise and
experiences. Members of these networks share information as its deemed ethical and they
have a feeling of enrichment about it. These social networks also assist with building a
reputation, which could provide benefits such as entrepreneurial opportunity and prestige.

2.2.4 Platform

Meyer (2003:16-17) finds that the examples of collective invention had a common platform
from which participants could garner and share knowledge. The steam engine, blast furnace
and Homebrew Computer Club either had meetings or used paper-based resources, such as
newsletters or the Lean Engine Reporter. The Linux example made use of the Internet,
whereby a wider audience could be reached, as evidenced by the increase in the number of
active participants.

The documented cases of collective invention are all based on a social network where
information was exchanged without intellectual property restricting them (Meyer, 2003:27).
These networks formed naturally as a result of a shared interest in a subject. People partake
because they feel that they can make a contribution, which could give them joy, or a financial
return if that is available. Because there is no established market, participants share what

24
they know, as they don’t have much to lose, but gain when others contribute to their own
ideas (Meyer, 2003:17-18).

The literature on collective invention highlights cases throughout time whereby collaboration
has occurred in the production of products. The literature does not reveal any cases beyond
open source software.

2.3 Commons-based peer production

2.3.1 Background

Harvard professor Yochai Benkler examined the area of collaboration and found cases that
have occurred after open source software emerged. Benkler (2002:1-2) argues that we are
seeing a new mode of production emerging, defined by Benkler as “commons-based peer
production”, that has been exemplified by the development of FOSS and OSS. Benkler
(2002:8) defines commons-based peer production as a model of economic production in
which a large group of individuals are coordinated with the aid of the web with the aim of
completing projects without the traditional hierarchical organization. Benkler (2002:4) states
that, unlike other products or services, FOSS projects do not rely on markets or managerial
hierarchies and pose a challenge when viewed in terms of conventional organisation theory.

Benkler (2002:6) explains that while there has been a focus on OSS development to
illustrate production by peers, this extends into other sectors other than software
development. An example of this is NASA’s use of commons-based peer production with
their Clickworkers experiment. The aim of NASA Clickworkers was to see if volunteers would
work for a few minutes to do scientific analysis that would, under normal circumstances, be
done by a scientist or graduate student.

The experiment was run by a part-time software engineer who had input from two other
scientists and allowed users to scan and mark craters and honeycombs on Mars via a simple
user-interface on a website. The experiment proved to be successful with over 85 000 users

25
visiting the website in the first six months and over 1.9 million entries being made. A study
examining the quality showed that the quality of the work done by the Clickworkers in
identifying Mars craters was identical to that of a geologist with years of experience (Benkler,
2002:16).

Benkler (2002:17) concludes by stating that the experiment shows that intricate tasks that
would need highly trained paid professionals can be reorganised to be completed by
thousands of volunteers, for much less cost.

Another example cited by Benkler (2002:23) is the Google search engine. Benkler finds
Google to be the most efficient search engine, in part by the adoption of an innovative
process of ranking search engine results known as PageRank. The concept of PageRank is
that the more links there are to a webpage, the more useful its content is. Hence, when
website owners make links to other web sites it affects the rankings of what is being
displayed by Google, by associating the number of external links with relevance. PageRank
therefore places a reliance on the link structure of the World Wide Web, putting the
relevance of PageRank in the hands of web content owners.

Benkler’s work on commons-based peer production focuses around four common factors:

• Participation,

• Incentives

• Large Scale Collaborations, and

• Governance.

2.3.2 Participation in Commons-Based Peer Production

People participate in these commons-based peer production projects of their own free will,
which those who doubt the reliability of the phenomena will highlight as a problem, as this

26
brings the long term sustainability of these projects in to question: people who participate
don't have proprietary rights (Benkler, 2002:51).

However, according to Benkler (2002:52-54) people like to create and if an opportunity

arises, people will participate. After examining the OSS industry, Benkler found that there are
indirect benefits for people involved with OSS, as they gain reputations and the opportunity
to provide consulting and customisation services. Organisations that they work for gain their
knowledge and can use it in proprietary based products. Service-type relationships account
for about two thirds of revenues in the software industry and can therefore be lucrative for
those offering services.

Hars and Ou (2001:2) define these as external (reward) factors for participants. While
participants in these projects participate for individual needs, there are external factors that
could provide rewards to motivate participation. Certain participants view their time and
energy spent on these projects as an investment that could yield future rewards.

Organisations provide commercial support for open source projects and therefore a need
arises for people with skills to provide consulting, training and support. Open source software
developers increase their human capital by participating in open source projects that could
lead to better job opportunities. Since software developers can choose which parts of a
project they want to participate in, they can select where they want to improve. The open
source community provides a platform for participants to show their capabilities and to
market themselves. This provides an opportunity for commercial vendors to see whom they
can employ. Participants gain peer recognition, which fulfils a desire for fame and esteem.
These communities provide feedback on the quality of their work and show participants that
people are using their contribution, which spurs participants to pursue perfection.

2.3.3 Incentives

It has been noted that some role-players doubt the viability of commons-based peer
production, because participants join of their own free will. Bringing together a group of

27
individuals who like to create, and providing them indirect benefits that they truly desire,
could solve this problem. People participate for a range of different reasons that need to be
understood, so as to explain (for example) why certain projects are able to attract many
people while others do not.

Leadbeater (2007:75) finds that a minority of participants do it for charitable motives and
work in projects that do not pay them. The majority of participants do it because they enjoy
the work and gain recognition amongst their peers, which gives them a sense of
achievement – not quite the same thing as charity. Leadbeater, like Benkler, also finds that
some do it in order to better their career prospects by gaining a reputation in the
communities in which they participate.

Benkler (2002:61-62) finds that providing financial incentives will not necessarily provide
motivation for people to participate in peer production. There are also certain instances
where financial incentive is small compared to hedonic and socio-psychological incentives.
Teenagers and young adults fit into this category as they have few financial commitments
and have a long time ahead of them, to earn and save money. Another category comprises
those people who have enough money to serve their current and future needs, but also have
a taste for hedonic and socio-psychological incentives that they could not get from financial
means. Academics, along with the volunteers of Internet projects, fit into this category.
People whose current needs are being met, but whose future needs demand increased
financial support might take part if the socio-psychological returns do not negatively affect
their reputation. The problem of motivating people can be solved if enough people can be
brought together.

Hars and Ou (2001:2-4) explain that people like to partake in pastimes like collecting coins or
playing games; this is known as “intrinsic motivation” and participants who merely seek a
sense of enjoyment display that. It was found that participants who take part in open source
communities for this reason would therefore spend more time on open source projects.
Another source of motivation is altruism. Altruism is defined as performing a task that
benefits others. In the case of open source software developers, they are producing software
for others to use by forfeiting their own time and costs. By taking part in open source
projects, participants belong to a community and provide belonging. Participants with this

28
source of motivation do it to help others within the community. Hars and Ou (2001:2) classify
these motivations as “internal rewards”.

Hars and Ou (2001:3) go on to explain that “external rewards” also play apart in motivation
with the most obvious being money. This can also be called “extrinsic motivation”. While a
majority of open source software developers are not compensated, income can be earned
from selling support services or increasing industry marketability as working on open source
projects increase software developer’s skills.

Hars and Ou (2001:7) conducted a survey whereby 389 people involved with open source
projects were asked about their reasons for participation. Results from the survey found that
although people participate for indirect reasons, external rewards provide a greater weight
for motivational factors. Factors that promise a return on investment, such as gaining
knowledge and marketing, play a part. Hars and Ou point out that a personal need for a
software solution is also a key factor that has not received much attention.

There are also different groups participating. People who do it for a hobby are mostly
motivated by internal factors whereas salaried programmers want to sell products and
services. The open source community draws upon a wide range of people who participate for
different types of motivations with a large part based on external rewards.

2.3.4 Large Scale Collaborations

Benkler (2002:62-64) further states “peer production is limited not by the total cost or
complexity of a project, but by its modularity, granularity, and the cost of integration”

Modularity is a property whereby a project can be broken up into smaller parts called
modules. These modules can then be produced in parallel, following which they are
integrated into one final product. This allows contributors to choose what they want to
contribute to, which allows flexibility for participation in the project, but may be constrained as

29
well as facilitated by the platform that is used. Leadbeater (2008:110-111) also emphasises
the importance of a modular architecture by explaining that this is a key success factor as to
why people participate in global collaborative projects. This allows participants to contribute
to the parts of a project that they prefer, and for which they have the right skills.

Granularity relates to the size of the modules with regard to the effort and time that an
individual has to put into a module in order to produce it. If the granularity of a module is
relatively ”fine”, then the opportunity to contribute is fairly simple; this means that many
people can contribute. If the granularity of a module is relatively ”coarse”, then the size of the
potential group of contributors decreases.

Integration is concerned with bringing together the different modules in order to produce a
finished product. Integration can be split into two different components; a process for quality
control and a process for merging the modules into a whole.

Leadbeater (2007:69) finds that every innovative community begins somewhere similar to
when Linus Torvalds started with the kernel for Linux. Leadbeater calls this the “core” and, in
order to attract a community, this core needs to be solid and unfinished. This would mean
that the core could be improved upon with opportunities for others to make changes. Carr
(2007:2) agrees with Leadbeater and finds that peer production serves its best purpose
when building upon the old, rather than inventing something new, and cites the case of the
kernel for Linux as an example.

2.3.5 Governance

Carr (2007:3) finds that the size of the community is important in solving problems, but even
more vital is the diversity of the community, as like-minded individuals will look for the same
things. This raises issues of governance – the make up of the community has got to be
managed in some way, to some extent.

30
Leadbeater (2007:79-81) cautions that unless people participating in global collaborative
projects are governed by rules agreed upon by themselves, chaos will occur. This is a
challenge, as a clear hierarchy does not exist. Leadbeater explains that the solution is self-
governance, and yet this is a challenge as successful communities are made up of diverse
people. People with different values tend to not agree, but diversity is essential for
innovation. This often leads to arguments, with differences leading to conflicts, causing the
whole project to be ineffective.

An example of a self-governing community would be the open-source community that

produces the Linux distribution Ubuntu. The governance rules their start with the founder,
Mark Shuttleworth, who is the “benevolent dictator”. Shuttleworth is the overall lead and has
the right to make certain decisions. The community also includes a technical board that
makes decisions regarding technical standards. Anybody can propose new policies (or
changes to policies) via the technical board meeting agenda that is made available on a
Wiki.

The technical board meetings can be attended by anybody, but Shuttleworth and four other
board members, who are selected by the community via a vote, make the final decisions. A
separate council governs the creation of new projects and assigns team leads for different
parts of the project. There are also teams whose goal it is to promote Ubuntu in their country.
The core developers known as “The Masters of the Universe” have their own council to
decide who can be allowed to enter their community. Anybody can see what is happening
inside these meetings and make suggestions, but not everybody has a decision-making
vote.

Open-source communities provide motivation for participants to participate, as the work is

interesting, with interesting people who pose interesting questions in judging the work of their
peers. This approach appeals to the younger generation who want more control in what they
do and receive recognition for it. These communities give people acknowledgement and a
sense of belonging, which modern corporations do not (Leadbeater, 2007:110-111).

31
Benkler (2002:24-27) cites the news service Slashdot as a community governed from within,
whereby users submit an article from another website. The link is accompanied by
comments from the person who submits the link. Others users then submit comments about
the article that often-illicit debate – some articles provoke hundreds of comments.

The submission of Slashdot articles is a process whereby the relevance of the article is taken
into account. When a user submits a story, paid editors then filter the content. Articles are
filtered out for a variety of reasons including technical reasons, language and being obsolete.
The peer review element in this example is the users of Slashdot scouring the web for
articles so that others can read.

Moderators are selected from registered users (volunteers) according to certain criteria, and
are required to judge user comments based upon a moderation system. Every comment has
a starting score and moderators decrease or increase the score by a voting process. A
moderator also characterises comments, which allows users to figure the usefulness of
comments such as “funny” or “off topic.” Each moderator gets five points, which can be used
on 5 different comments. The 5 points expire after three days, after which they get renewed.
This system ensures that many users have a small amount of power and decreases the
chance of users who want to influence results out of spite or poor findings.

This system allows high quality and relevant posts to be published by Slashdot. Slashdot
could have employed experts to provide this function, but instead they opted for a peer
production approach.

Another online community that has implanted a self-governing community is Wikipedia.

Wikipedia is a project run by volunteers working together to create an encyclopaedia via a
Wiki. According to Wikipedia (Anonymous, 2008) all pages can be edited anonymously or
with a registered account except for certain pages that incur “editorial vandalism” and are
locked for editing. Only administrators can edit these pages. All entries must be
encyclopaedic in nature and are deemed so if backed up by noteworthy, reliable, secondary
sources. Wikipedia does not present new or original work and therefore the work must
already be documented. Every article has a “History” and “Discussion” page. The History

32
page links to every revision of the article, and the discussion page is used to organise work
between editors. A “bot” which is a computer program is also used to scan and remove
vandalism.

According to co-founder Jimmy Wales (2005), Wikipedia runs on 90 servers managed by

volunteer system administrators. All changes go to a “Recent Changes” page, which is fed to
IRC (Internet Relay Chat) channels, RSS feeds and e-mail notification mailing lists that are
watched by subscribers. IRC is real-time Internet messaging. Wales finds that a community
made up of 600-1000 people makes the vast majority of changes. If information is disputed,
the community, which is more of a discussion, takes a vote and, as long as somebody can
offer a suggestion from a notable source, the change is kept. Votes also follow a weighted
model deemed by reputation within the community. Wales plays the role of “Monarchy” and
is the overall leader of the project who has the right to change the rules.

The policies of Wikipedia are followed and enforced by its members with the aim of running
the project in a constructive manner. Wikipedia does not strive to write an objective view on a
subject, but rather strives to present all views on a matter. During the first 18 months, 30 000
articles were produced. Wikipedia is an example of a group of individuals collaborating to
create a medium to high quality encyclopaedia (Benkler, 2002: 17-18).

By June 2006, Wikipedia had 4.2 million articles in 250 languages, which had been
contributed to by more than 300 000 volunteers, who had made at least 10 changes each. A
study by the Journal Nature found that the quality of articles in Encyclopaedia Britannica to
be only slightly higher than Wikipedia (Lakhani & Panetta, 2007: 110). Terdiman (2005)
reveals that Nature had experts peer review competing articles in both encyclopaedias. The
experts were not told what encyclopaedia the article came from. The study revealed that
Wikipedia had on average 3.86 mistakes per article, while Britannica had an average of 2.92
mistakes per article.

The various cases of commons-based peer production highlighted by Benkler occur in a

networked environment where the web is used to facilitate the work of large groups of
individuals. Benkler’s work suggests that the uptake of collaborative approaches is now

33
affecting the way organisations work, in producing goods and delivering services. This notion
has been investigated in an in-depth manner by Don Tapscott and Anthony D. Williams in
their book “Wikinomics: How Mass Collaboration Changes Everything.”

2.4 Wikinomics

2.4.1 Background

Tapscott and Williams (2007:1-3) consider that history shows that corporations have
consisted of hierarchal lines of authority, with most people having a subordinate. While
hierarchal structures still exist, changes in technology, demographics and the global
economy are allowing new models of production to emerge based on community,
collaboration and self-organisation.

With websites appearing on the Internet that demonstrate the principles and practices of
Web 2.0, strategy-consulting organisation New Paradigm conducted several multi-client
investigations to understand how Web 2.0 is changing the way organisations innovate, build
relationships and compete.

The authors concluded from these investigations that individuals actively participate in
innovation, wealth creation and social development, and that organisations that embrace
these online communities are discovering the benefits of global collaboration. They believe
that this affects every sector of society, with a new way of conducting business emerging that
they refer to as “wikinomics.” Tapscott and Williams agree with Benkler (2002: 6) that this
extends into almost every sector, and they cite Goldcorp Inc. amongst other organisations
making use of wikinomics.

Tapscott and Williams (2007:20) state that leaders need to embrace collaboration, which is
changing the way organisations operate based on four factors:

• Openness,

34
 • Peering,

• Sharing, and

• Acting Globally.

2.4.2 Openness

Organisations used to compete by holding onto their most valuable resources, believing that
human capital provided a foundation to compete. This is changing with progressive
organisations now allowing external individuals to participate in R&D with their ideas, and
thereby outperforming other organisations that are not embracing these principles. A key
driver in the emergence of openness is the rapid advancement of technology, but other
factors are involved. In particular, a willingness to share information that would previously be
kept secret, with partners, employees, customers and any other interested participants, is a
feature of successful global collaboration. This allows others to see the true value of what is
being offered.

The first major insurance organisation in the world to have a website was Progressive Auto
Insurance. A year after launching the website in 1995, customers could search the website
for Progressive's rates and compare them with those of their competitors. Although
Progressive had better rates in most cases, there are certain instances when competitors
had better rates. It might not seem like a good idea to advertise your competitors’ rates from
the outset; however, since implementing this feature, the organisation grew an average of 17
percent a year, with annual premiums going from $3.4 billion to $14 billion (Tapscott &
Williams, 2007:20-23).

Research conducted by Valerie Trits and Gerald Haubl indicates that customers are more
likely to shop at organisations like Progressive, as they appear trustworthy (Goldstein et al,
2007:192:194). This research is backed up Tapscott and Williams (2007:22) as well as
Goldstein et al (2007:194) who agree that sharing competitors pricing, even when they are
not as good, customers respond by giving trust.

35
2.4.3 Peering

As explained by Benkler, hierarchies have provided a model for wealth creation. Hierarchies
have arranged people into layers of superiors and subordinates in order to fulfil objectives.
However, a new horizontal organisation is emerging to create products or services, which is
now known as “peering”, because of the co-operation between peers.

The Linux project is an example whereby an informal organisation emerged to manage the
software development process with input coming from thousands of volunteers. The project
has been successful, as evidenced by its extensive use as a host operating system for web
servers and databases.

The ease and success with which people collaborate in such projects has begun to influence
other industries. The Australian biotech institute GAMBIA, who were concerned that
multinational firms were pricing out people who couldn't afford licensing fees to exploit
genetically modified crops, are releasing their results under BiOS (Biological Open Source
Licenses). This allows them to reach a wider audience of scientists in order to find solutions
for farmers who require them.

Linux and GAMBIA are examples of a new way of producing goods or services.
Communities embracing peer production are moving into areas that are dominated by profit-
making organisations, perhaps increasing the possibility of financial motivations for being
involved (Tapscott & Williams, 2007:23-24).

Tapscott and Williams (2007:25) believe that participants in peer production communities
partake for different reasons, including recreation or to achieve something that has a direct
value to them. These communities do have a structure with certain people having authority.
However, they do differ from hierarchal environments as explained in the cases of Ubuntu
Linux, Wikipedia and Slashdot.

36
2.4.4 Sharing

Many industries believe that knowledge resources and innovative capability – intellectual
property in today’s parlance – should be protected via patents, copyright and trademarks. If
this intellectual property rights are infringed, then the law should take its course. The music
industry has decided to take this approach and has been slow to adopt new business models
to embrace the opportunity to have musicians and consumers at the centre of value creation.
This stance has angered music listeners and alienated them.

In its digital form music is easy to copy and distribute, making it difficult for record
organisations to recoup fix-cost investment. Hollywood’s solution, via digital rights
management technologies, is to charge a fee to access services provided (Tapscott &
Williams, 2007:25-27).

2.4.5 Acting Globally

A global IT platform that encourages collaboration using tools to make this possible will allow
different part of a business and a organisation’s external partners to prosper. This will
provide access to new markets and ideas. In order to do this, organisations need to think and
act globally. It is becoming easier to build a global business, due to open IT standards
(Tapscott & Williams, 2007:29-30).

Another organisation embracing these factors is IBM. IBM became a leading hardware and
software organisation by selling proprietary software that would only work on IBM computers.
If a client wanted to move IBM's software to another vendor’s hardware this was not
possible, as IBM prevented this from happening.

Despite IBM's initial success, as noted by Chesbrough (2003:36) its proprietary software
products were having a difficult time making an impact, while its rivals were overtaking them
in the hardware and software sectors. In a move to unseat rivals IBM took a different

37
approach and began to establish teams to assist the Apache and Linux open source
communities (Tapscott & Williams, 2007:78-79).

The history of Apache goes back to 1995, when the Apache Group, consisting of a team of
software developers, began building an open source web server that has become the most
popular web server (Hars & Ou, 2001: 2). Statistics show that the Apache HTTP Server has
a market share of 50.42%, with its nearest rival being Microsoft's proprietary offering with a
market share of 35.33% (Netcraft, 2008). IBM had developed a web server product called
Domino, which had less than 1% of the web server market and was struggling to compete
with the Apache HTTP Server.

In 1998, IBM made the decision to join the Apache group with IBM employees participating
in software projects like other contributors. The Apache group also received a financial
contribution from IBM to setup the Apache Software Foundation that provides support for
open source projects. Shortly after joining the Apache Software Foundation IBM began to
package the Apache HTTP Server with its WebSphere product and provide support for it.
This proved to be a success for IBM who began to realise the benefits (Tapscott & Williams,
2007:78-79).

After the success of working with Apache, IBM began to work together with the Linux
community. IBM allowed their developers to contribute to Linux distributions, such as Red
Hat and Suse. This has allowed IBM to compete with its rivals, such as Microsoft and Sun
Microsystems. IBM learnt that by embracing open source software they would be able to
grow quicker than proprietary based software organisations (Tapscott & Williams, 2007:81).

IBM recognised that they did not have the resources to develop a successful web server, as
demonstrated by the lack of market penetration of their Domino web server. They decided to
use the expertise of people outside the organisation (Apache and Linux developers) and
combine it with the expertise of their own developers to create the WebSphere product. This
fits with the concept of open innovation put forward by Henry Chesbrough (2003:35), that
organisations need to realise that not all the brightest people work for them and that, in order
to innovate, internal R&D needs to work together with external R&D. More interestingly, IBM,

38
combining as they did with open source communities, is an example of global collaboration
(in the terminology of Tapscott and Williams) or commons-based peer production (in the
terminology of Benkler).

By investing in open source projects, IBM followed a new model of value creation. IBM have
benefited from the work from its own software developers by encouraging them to partake in
open source projects to produce software with thousands of developers around the world.
This has enabled them to compete with rivals, where they were previously losing ground.
IBM changed their mode of production from a proprietary based software producer to a
organisation that partners with the open source community and thus embraces global
collaboration projects (Tapscott & Williams, 2007:82). By following this approach IBM
estimates that it has saved $900 million per year compared with the cost of developing their
own operating system software (Tapscott & Williams, 2007:94).

Chesbrough (2003:35) notes that historically, traditional R&D was seen by organisations as a
strategic asset. Competitors who wished to enter a market found it increasingly difficult with
R&D being a hindrance. This is changing, with large organisations facing competition from
start-ups that do very small amounts of research on their own.

When Lucent Technologies inherited a large share of Bell Laboratories, many thought
Lucent would have a strategic advantage in the telecommunications equipment market. Bell
Laboratories was a large research organisation that produced a range of cutting-edge
technologies. Despite this, Cisco Systems managed to keep abreast of Lucent, even
eclipsing them to the market with certain products, despite not having large internal R&D
competence. Cisco achieved this by acquiring technologies from outside the organisation by
investing in promising start-ups.

Chesbrough (2003:36) explains that this allowed Cisco to keep up with Bell without
conducting much research within the organisation. This is not the only example, with IBM
being surpassed by Intel and Microsoft in the hardware and software business and Nokia
managing to overhaul Motorola and Siemens in the wireless telephony market.

39
Chesbrough (2003:36) suggests that there is a shift in how organisations are bringing new
ideas to the market. In the past, organisations hired the brightest people to conduct R&D and
believed that innovation required control and would therefore develop ideas themselves. This
allowed them to get to the market first and gain most of the profits that were protected by
intellectual property.

This particular model worked well for most of the 20th Century, but changed towards the end
of the century. Playing a key part in the rise of Open Innovation was the rise in the mobility of
knowledge workers. This made it hard for organisations to keep hold of propriety inventions.
The availability of private venture capital firms, who assist with financing new organisations
ideas and commercialise them, has proven to be another factor in the change in which
organisations innovate. These factors have caused a shift from closed innovation to open
innovation. Table 2 explains the differences between closed and open innovation.

Table 2: Differences between open and closed innovation

Closed Innovation Open Innovation

The brightest people work for an organisation. Not all the brightest people work for an
organisation, so it is necessary to use
expertise outside the organisation.

In order to ensure a return on R&D, an organisation External R&D can contribute to the
must discover and develop ideas. business, with internal R&D used to claim
a piece of the value.

If an idea is discovered by an organisation, then the Ideas don't have to be discovered by

organisation will get it to the market first. internal R&D, in order to gain profit.

If the organisation creates the greatest and In order for success to be achieved, a
substantial ideas, then success will follow. organisation needs to use internal and
external R&D.

An organisation should use intellectual property, so
that competitors don't gain from the organisation’s
ideas.
An organisation should gain success from
others use of intellectual property and
purchase another organisation’s
intellectual property, if it can advance the
business model.

(Adapted from Chesbrough, 2003: 38)

40
Chesbrough (2003:41) believes that an internal and centralised approach to R&D has
become outdated. Knowledge is ubiquitous and must be used; otherwise, it will be lost. This
change in thinking brings new opportunities. Despite this, organisations still need to perform
the laborious work in order to take a promising idea and convert it into a product or service.

2.5 Summary of the Literature Review

An increasing number of organisations have realised the benefits of collaboration and for
some it is becoming a major factor in formulating corporate strategy. Isolated cases in the
19th and 20th centuries found the sharing of knowledge to be beneficial in the creation of
innovative products. Recently, as demonstrated in the cases explored here, there has been
an uptake in adopting collaborative principles, with this now happening on a global scale.
This is quite different to the early examples of the steam engine, iron blast furnace and the
Homebrew Computer Club, that drew smaller numbers of participants and where information
sharing was by means of meetings, newsletters and other publications; collaboration took
place, but didn’t reach large audiences.

This particular mode of creation, using global collaboration, began to gain popularity when
interest in the Internet began to gain momentum in 1993-1994, as noted in the case of Linux
(Raymond, 2000). All cases following Linux occurred through collaboration using the
Internet. Tapscott and Williams (2007:1) found that millions of people are now making use of
Web 2.0 software like blogs, wiki's and chat rooms to create dialogue and debate.
Organisations such as SAP, eBay, Google and Amazon are creating platforms via an API
(Application Programming Interface) that create partnerships with software developers, by
opening up their software services and databases for them to access (Tapscott & Williams,
2007:184).

The web allows organisations to reach large audiences, which was not possible before.
Organisations that make use of global collaboration have realised that to be competitive they
cannot always rely on their own resources to solve problems, they have to seek the
assistance of those that are not directly employed by them. Goldcorp Inc. and NASA realised

41
that they did not employ the best geologists and IBM found that they did not employ the best
software developers. These organisations decided to either create a platform or use an
existing one to better the chances of solving a problem and reach the masses to achieve
this. Not all situations cater for global collaboration, with the web providing a platform and
therefore, it is important to understand under which circumstance to leverage talent that
exists outside the boundaries of an organisation.

It can be seen that global collaboration goes a long way beyond open source software,
which for many people was the first manifestation of the idea. It is a new way for individuals
to learn, create, socialise and (in the process) create online communities. The organisations
cited in the literature review indicate that relying on internal resources for growth and
innovation is not sufficient to match consumer expectations. These organisations have found
how to leverage external resources as a supplement or substitute for an R&D department,
and to combine them with internal resources to create value.

The examples presented show that a concept evolves when it is shared. Goldcorp Inc.
reaped the benefits of sharing its geological data. The steam engine design improved
significantly after the patent expired and was shared via a publication. The same pattern
emerges for the Linux, Apache, Wikipedia and NASA examples. As will be seen as this
research develops in later chapters, the tools available via the web allow this to happen at a
rapid pace and on a global scale. Individuals around the world can now present their ideas
via blogs, microblogs, wiki's, social networks, discussion boards and instant messaging. This
can be great for self-expression, but real value is created when all these ideas are shared
amongst each other via dialogue. And, in the research at hand here, these vehicles for
communication provided valuable primary data for analysis.

Organisations are sharing information via various channels with individuals, who use it to
contribute back to business processes that would normally be performed by individuals
working within the organisation. These organisations are realising that they can’t hire all the
smartest people and in order to reach the smartest they are embracing global collaboration.
They understand that in order for an idea to prosper it needs to be revised, modified and
extended, which occurs when it is shared amongst people who have different opinions and
thoughts. This platform is essential to the success, as it allows individuals to be reached and

42
allows them share and thus contribute. Innovation comes from communities and at the
centre are people. The technologies allow these communities to prosper. The needs of
people in these communities have to be fulfilled in order to attract a wide scope of individuals
and ensure the sustainability. What the needs are requires further investigation.

Community members who partake in these online communities are vital to their success.
Without attracting members, these communities would not exist. Members participate for
various reasons and keeping them interested is a challenge, as if they lose interest the
benefits will not be realised. Members participate for various reasons, including recognition,
the ability to gain knowledge, financial reward, altruism, personal career development and
self-marketing. In order to satisfy these needs, a project needs to be of a modular nature to
allow individuals to contribute where they want. As noted by Carr (2007:3), the size of the
community matters, as it brings diversity that is essential. It is important to understand what
the motivational factors are, in order to build and maintain a thriving community that makes
contributions. Without the community, this process will not be able to prosper. People will
have to be understood for their motivation, capabilities and the expected rewards.

Finally, the process or processes used in global collaboration are central, as it is vital to
understand how information is protected for both parties involved and to protect intellectual
property. The dangers involved with sharing and opening up an organisation could lead to
chaos and possible destruction. This relates to quality, which is essential when a product or
service is being produced. With a global community at hand, difficulties will ensue. These
communities need to have rules, as they attract diverse people who might not agree with
each other and could lead to conflicts. Linux, Wikipedia and Slashdot are examples of self-
governed communities who have successfully implemented this model. These organisations
have followed processes by engaging and collaborating with their communities. A change in
process could be a real challenge for organisations as this a vast shift. The process must
also incorporate quality control in order for it to prosper.

The underlining pattern emerging from the literature review highlights three key areas:
people, processes and technology. These three areas require further investigation in order to
establish how organisations can benefit from global collaboration as mentioned by Benkler
(2002:73).

43
3 Chapter Three – Research Methodology

3.1 Background

Existing literature about the topic was reviewed in order to gain a detailed understanding of
the existing state of global collaboration as a phenomenon, and to identify existing research.

Organisations that have used global collaboration as a source of innovation in recent years,
via an open call, were examined in order to gain an understanding and to assess potential
candidates for the case studies. It was found that there are a limited number of organisations
making use of global collaboration. This is a new phenomenon that has gradually been
adopted by different kinds of organisations.

The research approach for this study was qualitative, and based on two global collaboration
platforms, from which were drawn three case studies. This allowed for an investigation in a
real-life context taking into account the three key areas as found in the literature review:
people, process and technology

3.2 Approach to the research

Research is generally seen as qualitative or quantitative in nature. Sometimes a mix of the

two approaches is used. Qualitative research focuses on a phenomenon in the “real world.”
Quantitative research focuses on identifying the distinctiveness of a phenomenon, or
exploring the colorations among two or more phenomena. It is not the intention of
quantitative research to determine the relationships of the phenomenon (Leedy & Ormrod,
2005:179). Quantitative research begins with a theory and uses formal instruments to find
the norm via statistical models; hence the researcher must know what they are looking for at
the start, in some detail.

44
It follows that qualitative research is more appropriate for this study, as a discovery needs to
be made about what and who is involved with the phenomenon, and what relationships
emerge from analysis of the data gathered.

Leedy and Ormrod (2005:134-135) explain that qualitative research serves one or more of
the following:

• Reveals the settings, processes, relationships and people involved with a

phenomenon,

• Allows the researcher to gain new insights into a phenomenon and/or find problems
within the phenomenon, and

• Allows the validity of assumptions to be examined.

Within the qualitative paradigm, using case studies allows the investigation of a complex
problem in a real life environment, by taking into account as many variables as needed.
Leedy and Ormrod (2005:135) argue that a case study may be suited to a situation where
little is currently known or understood. Berkwits and Inui (1998:195) also highlight that
qualitative research is applicable to a new situation. Since this project concerns a complex,
new phenomenon, about which little is yet known; case study research is therefore
applicable.

Yin gives an approach to qualitative research that can be followed here (Yin, 2003:2):

• Design the case study,

• Conduct the case study,

• Analyse the case study evidence, and

• Develop the conclusions, recommendations and implications.

The following paragraphs explain how each step has been addressed here.

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3.2.1 Design the Case Study

The first step was to review the objectives of the project and determine how data can be
accessed about the cases chosen. In anticipation of interviews, questions were drawn up to
assist in the data collection phase. When selecting a specific case, locality and accessibility
was taken into account, as this could be an obstacle in the data collection phase.

The objective is to understand how organisations create a platform for global collaboration
that encourages the participation of individuals and at the same time manages the impact on
business processes and deals with the risks involved.

Possible potential issues identified include:

• Reluctance from organisations to reveal information due to protecting intellectual

property,

• Case locality and accessibility,

• The need to make use of online resources, such as blogs and discussion boards,

• The complexity of the three parties, platform operator, client and community,

• The rapidly changing global understanding about technology and its application to
global collaboration, and

• The lack of community member involvement in the research due to identities being
protected and community members signing confidentiality agreements to protect
intellectual property.

Requirements to be part of the case study included:

• A platform with a global presence,

• The platform had to give permission in order to assist with data gathering,

• The organisations making use of the platform had to give permission, and

46
 • The product or service conducted would have a time constraint deadline and would
have been completed by the time data gathering began.

Sample generic questions asked via Skype and email interviews include:

• What were your motivations for selecting global collaboration?

• What benefits does global collaboration have over using traditional R&D?

• Did the project yield any benefits with regard to operational, technical and financial
aspects?

• What problems were encountered throughout the process?

• In terms of quality of the final product, did the community meet expectations?

• Could global collaboration be used for future projects?

• Were time, cost and quality improved?

• Are there any risks involved with opening up to a community, as opposed to just one
organisation dealing with their own staff completing work?

• As a result of a platform providing a global presence of members, many submissions

could be submitted. Is the process of finding the best solution complex?

• What happens in the case of nobody submitting solution?

3.2.2 Conduct the Case Study

The primary objective of this phase was to collect data. The data collection enhanced the
internal and external validity of the case study. Sources of data could come from (Yin,
2003:86):

• Documentation,

• Archival records,

47
 • Interviews,

• Direct observation,

• Participant observation, and

• Physical Artefacts.

Data was collected from multiple sources in order to avoid bias opinion. This was achieved
by retrieving data from:

• Reviewing existing academic literature,

• Conducting interviews with those implementing global collaboration,

• Observing via discussion boards, mailing lists, wikis and blogs, and

• Taking part in global collaboration projects.

3.2.2.1 Selection of Case Studies

After reviewing various pieces of academic literature, establishing what platforms exist and
taking into account the case study requirements, it was decided to approach InnoCentive as
the platform for global collaboration and establish whether organisations making use of their
community members to solve problems would be willing to be part of the case studies. Initial
contact was made with InnoCentive via the microblogging service Twitter. An introductory
interview was conducted via Skype with Enterprise Marketing Manager, Connie French.

InnoCentive were willing to be part of the research. French explained that InnoCentive had
set up a blog that had contributions from the CEO, InnoCentive staff, community members,
academics and organisations that used InnoCentive’s services. French explained that they
had received numerous requests to be part of studies and found the blog to be a useful tool
to gather data about InnoCentive. The question of validity of using a blog for academic data
gathering was discussed. French mentioned that InnoCentive had to ensure that the
information presented in the blog was reputable, as it had a reflection on InnoCentive to its
clients and was no different from gathering information about InnoCentive through its

48
corporate website. It was also mentioned that when organisations approach InnoCentive,
their identity is withheld from community members in a majority of cases due to the
protection of intellectual property. There are certain organisations that do reveal who they
are and would stand a better chance of gaining interviews with them, as they would be more
open to be part of the case study.

After browsing the InnoCentive website and blog, it was established that options were limited
with regard to organisations who were willing to reveal their identity. However, an
organisation that has been fairly open about their use of InnoCentive for two products put
forward to the InnoCentive community is SunNight Solar. It was therefore decided to select
their two products as case studies. Permission was gained via InnoCentive and it was
confirmed that SunNight Solar were willing to be part of the case study. InnoCentive and
SunNight Solar both met the criteria to be selected as a case study. InnoCentive has a
global presence and had an established client base and large community of contributors.
The process of making use of global collaboration to solve the two problems had already
been completed which matched the criteria.

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3.2.2.2 InnoCentive and SunNight Solar Data Collection

Table 3: Details of the data collection

Data Type Details

Interviews InnoCentive Enterprise Marketing Manager - Connie French

CEO SunNight Solar - Mark Bent

Blog post InnoCentive Client Services Team Member - Gabriel Eichler

InnoCentive solver - Tom Kruer

InnoCentive Client Operations Manager - Elly Madrigal

InnoCentive Client Services Team Member - Peter Lohse

Press Release InnoCentive Enterprise Marketing Manager - Connie French

Magazine Articles Time Magazine

Websites InnoCentive

SunNight Solar

Video InnoCentive’s YouTube Channel

Participation Taking part in challenges

Observation Twitter

An interview was completed with the CEO of SunNight Solar, Mark Bent. Various feedback
reports via blog posts were analysed during the data collection. InnoCentive’s YouTube
channel that contained interviews with Mark Bent was also used as data gathering tool.

3.2.2.3 TopCoder and On Point Technology Data Collection

While reviewing various academic literatures to gain an understanding of which

organisations and platforms could be potential candidates, contact was made by Dave
Messinger, Chief Architect of TopCoder, indicating that TopCoder could be a potential
candidate as a case study via Twitter. An interview was setup via Skype where TopCoder
was discussed and permission was given to use TopCoder as a Case Study. Director of
Communications, Jim McKeown, provided academic literature of which TopCoder was a

50
part. McKeown then provided case study literature conducted by TopCoder, which profiled
cases of organisations making use of TopCoder's platform. From this list On Point
Technology was the only organisation willing to be part of the study. McKeown then set up
interviews via email with TopCoder President, David Tanacea and CFO and VP Product
Development of On Point Technology, Ron Burkhart. TopCoder had a global presence with
an established client base. It also has a large community of software developers. The
product required by On Point Technology had also gone from development to production and
would therefore serve as an ideal candidate.

Table 4: Details of the data collection

Data Type Details

Interviews Chief Architect - Dave Messinger

President TopCoder - David Tanacea

CFO On Point Technology - Ron Burkhart

Case Studies On Point Technology

Marketing Documents TopCoder marketing presentations

Websites TopCoder

On Point Technology

Participation Taking part in challenges

Observation Discussion Boards, Twitter and mailing lists

3.2.3 Analyse the case study evidence

The purpose of this phase was to examine, categorise and combine the evidence gathered,
which addresses the purpose of the study. Yin (2003:116-127) recommends that analytical
techniques be used such as:

• Pattern-matching,

• Explanation building, and

• Time-series analysis.

51
For this study, explanation building was chosen. The data was analyzed and an explanation
was given in the form of a discussion. The three key areas identified were used as a
guideline to compare the findings of the different case studies.

3.2.4 Develop the conclusions, recommendations and implications

In the final chapter, the findings of the analysis are presented with an explanation of the
meaning of the results gathered. This assists in assessing the achievement of the objectives
set out for the case studies, as well as the objectives for the thesis.

52
4 Chapter 4 - Case Studies

This chapter now proceeds to present and analyse the data collected of the case studies
selected.

4.1 Introduction

The case studies focus on three cases from two platforms operators, TopCoder and
InnoCentive (Figure 3). The TopCoder platform examines a case called “Recover” from a
client organisation, On Point Technology. The InnoCentive platform examines 2 cases,
BOGO Flashlight and Solar Powered Mosquito Repellent, from a client organisation,
SunNight Solar.

Figure 3: Case studies

This chapter provides background information for each platform operator followed by the
lifecycle undertaken to ensure a client organisations case is completed. The case is then
presented followed by an analysis of the people, processes and technology involved.

53
4.2 Platform Operator - TopCoder

4.2.1 Background

Jack Hughes founded TopCoder in November 2000, after selling his software organisation
Tallan for $920 million (Howe, 2008:122). TopCoder acts as a software vendor for
outsourced projects to its customers. The objective of TopCoder is to develop better quality
software, on time and on budget.

The approach used by TopCoder to achieve this differs from a traditional labour-based
model. In a labour-based model, software developers would be paid for the hours spent on a
project and not on what is delivered only. In the TopCoder approach client organisations
approach TopCoder to develop a software product. TopCoder then breaks up the project into
modules and a community of software developers are invited to develop each module in a
competition format (Figure 4). In the competition, each module has a set time period that it
has to be completed within and the best solution wins a financial prize.

Figure 4: Role players in the TopCoder approach

TopCoder licenses the software developed by the community. The individuals involved with
the creation of the software earn royalties from the sales. Developer ratings and performance

54
metrics are kept and made publicly available (See Figure 5 for an example) to track a
developer’s standing within the community, and to include skill ratings and a history of
submissions. Chief Architect, Dave Messinger (2009), explains that community submissions
are reviewed with community members receiving feedback so that “they can improve in
areas where needed”. The TopCoder platform also provides exposure for the community
members, as TopCoder is also a recruitment centre where organisations can find the best
software developers from around the world.

Figure 5: TopCoder member ratings

(Taken from TopCoder, 2009)

TopCoder President Dave Tanacea considers that a labour-based model for software
development is inefficient and costly with significant risk around project delivery. TopCoder’s
model for software development removes much of the inefficiency, reduces cost and
improves time to market, he argues, which is a high priority for TopCoder’s customers.

Since the inception of the organisation, TopCoder has managed to establish a community of
180 000 members from over 200 countries with over 30 000 members being regarded as
active as of February 2009. This community has grown through word of mouth among like-
minded individuals.

55
There are over 1200 reusable software components. Inc. magazine publishes an annual list
of the 500 fastest growing private organisations in the USA and have ranked TopCoder for
two consecutive years as one the fastest growing software organisations. Client
organisations of TopCoder include ESPN, AOL, Google, Yahoo!, Microsoft, Motorola and
Merrill Lynch.

Tanacea (2009) admits that adoption of his model could be daunting for client organisations.
He even uses the term “paradigm shift” to describe it, which implies a radical level of change
to the strategies, processes and procedures of client organisation. Nevertheless, over the
past few years, their experience is that innovative organisations have made increasing use
of the TopCoder platform. In 2009, TopCoder has seen adoption increase faster than ever,
which could be attributed to the current economic times where there is no room for monetary
waste.

4.2.2 Software Development Lifecycle

The lifecycle (Figure 6) followed by the TopCoder community aims to ensure that quality and
standards are applied throughout. Three independent members of the review board evaluate
the submissions received for the competition. Industry research shows that there are six
defects per 1000 lines of code. TopCoder states that their projects have revealed that there
is less than 1 defect per 1000 lines of code.

Figure 6: TopCoder SDLC

In the Conceptualisation and Specification phase, the requirements of the project are
interpreted using Unified Modelling Language (UML), prototypes and specification
documents. Although both phases define the project requirements the outputs differ.

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During the Conceptualisation phase community members collaborate with client
organisations in the TopCoder forums to document their requirements in the form of a high-
level business requirement document.

During the Specification phase definitive requirements are written whereby winners of the
Conceptualisation phase collaborate with community members to define the Application
Requirements Specification. The outputs from this phase are peer-reviewed in order to
ensure that quality criteria are met. The outputs include application requirements documents,
use cases, activity diagrams and a storyboard or prototype.

The Application Architecture phase breaks down the application into a component-based
architecture that is defined using UML and Architecture competitions. During this phase,
previously built components are singled out if they are applicable to the project. Outputs of
this phase include module and system design specification, module and system sequence
diagrams, module and system interface diagrams and component designs.

The specifications developed during the Application Architecture phase are used for the
Component Production Phase. This phase is completed in Component Design, Component
Development and Component Testing Competitions. A component developed can be
categorised as catalogue or custom. Catalogue Components are added to the TopCoder
Component Catalogue. The custom components are handed over to customers who own the
intellectual property. Outputs of this phase include component requirement specifications,
component sequences, class and use case diagrams, component source code, and
component documentation and component unit tests.

The Assembly phase is completed in a competition format, whereby the components are
pieced together into modules and then the modules are pieced together into applications.
The community forms teams during this phase and compete against each other to piece
together the application. Outputs of this phase include a fully assembled application and a
deployment document.

57
Once the application has been assembled, Certification is met through testing competitions
and bug races to ensure that the requirements have been met. Outputs of this phase include
an automated application test suite. The final phase is Deployment, whereby the project
deliverables are tested and deployed in the production environment.

TopCoder follows a SDLC like many organisations, but what differentiates it from other
software development organisations is that the work during each phase is completed in a
competition format by a community of software developers not employed by the platform
operator or client organisation.

4.2.3 Client Organisation – On Point Technology

On Point Technology, founded in 1996, is an American independent solution provider that

has a focus on providing web-based applications for State Governments that assure
accountability and integrity for their unemployment insurance programs. On Point
Technology has deployed application solutions in more than 20 states.

On Point Technology’s aim is to establish a network of knowledge for the Unemployment

Insurance community, whose stakeholders are made up of the Federal Government (DOL),
53 State Workforce Agencies, employers (FUTA and SUTA taxes) and claimants. State
Workforce Agencies distribute over $30B in unemployment insurance settlements yearly.
Approximately half of the $7B of FUTA taxes collected by the Federal Government is given
to the State Workforce Agencies to cover the administrative costs of the program. On Point
Technology’s customers are the State Workforce Agencies.

According to On Point Technology, a majority of these agencies are running legacy

mainframe systems dating back to the 1970s. On Point Technology estimates that
approximately 20% have made an effort to modernise their programs with less than
favourable results. Most of these software development projects, with costs of around $40 -
$100 million, are run by organisations such as IBM, Accenture and Bearing Point.

58
On Point Technology required several software systems and wanted to improve their
software design and development methodologies. In an interview with CFO and VP Product
Development, Ron Burkhart, he revealed that On Point Technology had attempted delivering
software under three different scenarios, all of which had failed to deliver projects on time
and on budget. The three scenarios were:

• Using their own employees to develop software,

• Outsourcing development to an off-shore organisation in India, and

• Hiring consultants that were paid by the hour, which increased On Point Technology’s
development team.

On Point Technology’s failure to deliver software on time and on budget is not uncommon in
the software industry. A 2004 report by the Standish Group found that 28% of software
projects are successfully completed on time and on budget. The annual “CHAOS” study that
includes data from several thousand projects also found that 18% of projects were cancelled
before they were completed and 51% of projects were completed over-budget, behind
schedule and had fewer than the required features (Tesch et al, 2007:1). The Standish
Group report also shows that the average percentage of cost above their original estimate in
2004 was 56% (Johnson: 2006).

The Standish Group was not the only group to identify problems in the software industry.
Independent watchdog agency, the European Services Strategy Unit (2007:3-6), identified
105 outsourced public sector ICT contracts with cost overruns, delays and terminations.
Contractors involved include IBM, Accenture and Atos Origin amongst others. The report
reveals the following:

• 57% of projects had cost overruns which totalled £9.0 billion,

• The average percentage of cost overrun was 30.5%,

• 33% of contracts suffered major delays, and

• 30% of contracts were terminated with no results.

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On Point Technology set out to overcome these obstacles by becoming a client organisation
of TopCoder and following the TopCoder SDLC to deliver a project on time and on budget.
On Point Technology decided instead of every phase being completed by the community, On
Point Technology’s own staff would be involved with certain parts of the SDLC and the
community involved with the rest. This was because On Point Technology’s long-term goal
was for their employees to take over the managerial and architect roles and author the
documents for the project plan. TopCoder’s purpose would then be to ensure that standards
are adhered to, to conduct reviews, and to play a mentorship role with employees and assist
with the determining what the financial reward for the competitions should be.

4.2.4 Case - Recover

The first system that was required is known as “Recover.” The system has an aim of
improving overpayment collections, which could be achieved by automating parts of the
process. This would allow On Point Technology to deploy staff to other critical areas and
improve the recovery rates. This system would require the use of complicated business
rules-based decision support processing.

TopCoder set out to achieve project goals and deliverables using its component based
SDLC. The aim was to develop a system from already built software components where
possible. These components would have already been tested and used in a production
environment. Each component is built following a process. Each component had a set of
deliverables and quality criteria that had to be met within time requirements. This particular
process allows for parallel development which speeds up development time. Parallel
development can be used when a system needs to be modified along two or more paths at
the same time. This can be useful if you have multiple people working on a system and want
a separate area for each person or group of people or if a new version of a system is being
developed and at the same time changes need to be made to the current system.

60
On Point Technology’s staff were responsible for the business specifications, project
management and quality assurance. TopCoder staff led the architecture and launching
competitions.

The first step for On Point Technology was to gather the requirements. This project started
with the specification phase as a conceptualisation phase was not required. This phase was
driven by On Point Technology, which was approved by TopCoder staff after review. The
specification effort spanned over 72 weeks with TopCoder only brought into the process in
the last 5 weeks. On Point Technology spent 2357 hours on the business specification, while
TopCoder approved the business specifications after 4 weeks.

The next phase was the architecture phase, whereby, with the assistance of the On Point
Technology team that was made up of two architects, it was established that TopCoder
already had 58 generic components in their catalogue that could be used for this project.
These components would have already been developed and tested. 13 new custom
components were to be built using the TopCoder SDLC from scratch. The architecture phase
was completed during week 13.

These 13 custom components progressed through the architecture, component production,

and assembly and certification phases. The TopCoder community completed this process in
competitions. Before any development could happen, each component would need to be
designed. The community members choose which components to work on. Once the
designs are submitted, a review board is selected by the TopCoder staff from the community,
based on qualifications, and that board evaluates the designs so as to identify the winners.

The next phase is made up of the winning designs being posted with the community being
asked to code the component according to specification and design. These components
follow another review, whereby the best components are chosen as winners. The component
production phase was completed in week 23.

61
Once the components are completed, they need to be integrated into the final system. This
is achieved during the assembly phase, wherein members from the community again
participate. However, members who partake in this phase are asked to sign non-disclosure
agreements. The components are then integrated into applications. The assembly phase
was completed in week 30.

TopCoder was also assigned with creating the automated test scripts for the certification
phase. On Point Technology handled the QA during the certification phase with the
TopCoder community fixing bugs and changes to the project in a competition format. A
TopCoder deployment architect worked with On Point Technology to create deployment
scripts, which would assist with the deployment of the application. The certification phase
was completed in week 50. Once the application passed the certification phase, On Point
Technology deployed the final application and user acceptance testing was completed.

The application was successfully built using TopCoder’s SDLC, component catalogue, staff
and members. The project had

• 1 TopCoder project manager,

• 2 TopCoder Architects,

• 2 On Point Technology Architects,

• 58 Generic Components,

• 13 Custom Components,

• 29 Different Members won Design Competitions,

• 38 Different Members participated on 3 Person Design Review Boards,

• 37 Different Members won Development Competitions,

• 69 Different Members participated on 3 Person Development Review Boards, and

• 123 members involved with design, development and review of components.

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Burkhart states that the project yielded many operational, technical and financial benefits.
The “Recover” product that was delivered added to the organisation’s revenue. The latest
technologies, which included Microsoft .NET 3.5 and Windows Workflow Foundation, were
adopted. However, On Point Technology had no experience with these technologies
internally. The TopCoder process allowed On Point Technology to improve collaboration
amongst their own business analysis, development and quality assurance team and improve
their implementation of projects. Burkhart (2009) notes that there were problems during the
process:

“We felt the quality produced by the TopCoder design competitions were
better than the development competitions. We severely underestimated
the time needed to complete assembly & integration phases.”

After the project was completed, those members involved with the component development
were still receiving financial compensation, as the components were being sold to other
interested parties. Table 5 shows the Top 10 downloaded components from the Recover
system.

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 Table 5: Recover’s top 10 downloaded .NET components

Number of Downloads
Component Description

Report Generator 1.0.0 2,857

Self Documenting Exception 1.0.0 521

Configuration Manager 2.0.1 497

Object Factory 1.2.0 430

Configuration API 1.0.0 424

WCF Base 1.0.0 382

Object Factory Config Plugin 1.1.0 292

Exception Manger 1.0.0 269

Data Access Interface 2.0.0 267

File Based Configuration 1.0.1 208

Burkhart (2009) concludes that On Point Technology can rely on TopCoder as a software
development partner and further states:

“TopCoder provides us a very efficient way to add to our internal

resources if growth suddenly accelerates.”

On Point Technology has already used TopCoder for two other projects; Norm and Enforce.
As a result of using component-based design, On Point Technology was able to reuse
components and save on the development time and costs. A breakdown of the components
is as follows:

• Norm Product,

o 78 Generic Components,

o 85% of Recover’s generic components reused,

o 15 new generic components,

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 o 31 Custom Components,

o Enforce Product,

o 77 Generic Components,

o 100% reuse from Norm, and

o 20 Custom Components.

4.2.5 People

Community members participate for a variety of reasons. Compensation is major

motivational factor. Tanacea (2009) mentions that, in the possibility of nobody submitting a
solution, one remedy could be to increase the financial compensation for competitors.
TopCoder have also implemented a Digital Run bonus structure that compensates members
that don’t win, but do place highly. Recognition plays a major factor. TopCoder has found
that members will put in the effort, if it means that they will be seen as the best amongst their
peers.

As mentioned, the feedback from the review board provides feedback in the development of
TopCoder members. TopCoder Chief Architect Dave Messinger (2009) mentions that
according to statistics, people might not do well at the beginning, but get better as a result of
the learning from how others have done it, which allows them to pick up new techniques.
TopCoder also acts as a recruitment centre that provides further motivation for the
community.

When TopCoder members signup their identities are protected, making it difficult to gain
interviews with members. In order to garner an understanding of the people involved with
TopCoder, TopCoder forums were used to learn about this aspect as well as other academic
studies.

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A TopCoder member wrote about getting a job via the TopCoder Employment Service on the
TopCoder forum (Anonymous, 2005). The member mentions that other recruitment agencies
don’t compare to TopCoder and cites their inability to follow up and the fact that TopCoder
continually requests changes to a resume as reasons to why TopCoder is better. The
member explains that, of the two interviews conducted, the interviewers explained that they
were looking to hire candidates who can complete the work and have problem-solving skills,
as these candidates can pick up new skills swiftly. The member believes that this is
beneficial to active TopCoder members, as there are organisations continually looking for
candidates.

A discussion on the TopCoder forum (Anonymous, 2009) about motivations amongst five
members shows that money is not the only reason for participation. The first member in the
discussion explains that, at first, participation in TopCoder contests was about earning extra
money. This did not materialise for the member and s/he does it now for fun and to learn,
which allows the member to improve his/her skills. The member also mentioned that
TopCoder is something that can be added to the resume, which adds to the motivational
factors.

The second member mentioned that the member participates for the challenge and the
financial reward. The third member mentions that the member became interested in
programming questions in 2007 and participated in a number of different programming
competitions, but preferred TopCoder amongst all the other competitions tried out. This
member has solved more than 1000 problems.

The fourth member was impressed by the third member achieving so much in so little time
and praised the member and asked the third member to share their experiences. The third
member then responded by saying the member practices in the following way:

• Attempts to solve 3 problems in 75 minutes and runs a system test after that,

• If it can’t be achieved in 75 minutes continue to write after the time and run the
system test, and

• If the solution fails the system test, a debug is done, after which it is submitted.

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If the member can’t solve the problem, editorials are consulted and he/she attempts to solve
it with the knowledge gained. The member also mentions that the member reads solutions
provided by highly rated coders’ solutions. The fifth member mentions that participation first
started for fun, but after a few years TopCoder became this member’s job.

Independent software engineer Tim Roberts managed to secure a variety of contracts with IT
services organisations - with one contract spanning seven years and another contract
spanning six years. Roberts finds that these opportunities are becoming scarce, as a work is
now being outsourced to overseas organisations and notes that rates that are half what they
were in the past. In order for Roberts to improve his skills, he partakes in TopCoder
competitions. Besides the cash prizes, winners also get contract opportunities from
organisations that require skills. Roberts states that in order to improve one’s skills the best
way to do it is to compete with others, as you get better via necessity and looking at how
others accomplish things. Roberts secured a client via contact with other TopCoder
members (Kranz, 2004).

TopCoder provided a platform for On Point Technologies to harness the skills of a

community that spans the world. This community is made up of some the best software
developers in the world. The winners are financially compensated on an ongoing basis via a
royalty program, if the components that they were involved in are sold to other organisations.
Those that were not successful in the various competitions were provided feedback on their
work that points to areas where they could improve. TopCoder has successfully managed to
cater for internal and external rewards to ensure that the community continues to grow.

4.2.6 Process

Making use of the TopCoder SDLC is not just about giving a description of what is needed
and writing the code, a rigorous process is followed and adhered to, with a review board
making sure that things are done to proper standards. This, of course, is what thousands of
other software development organisations strive to do.

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What separates TopCoder from other software development organisations, is that a
community of software developers from all around the world now participates in parts of the
process, where conventionally internal staff would complete all parts of the design and
development of the software system. This significantly changes the way software is
developed and introduces a different set of possible benefits and pitfalls.

TopCoder has built into their process a peer review mechanism to ensure quality. A review
board reviewed every submission in the On Point Technology case. A scoreboard card,
which is specific to each competition, is used to rate the submissions. The metrics are then
used to determine the winner and are tracked by the member who receives feedback (Figure
7).

Figure 7: In depth ratings card

(Taken from TopCoder, 2009)

Quality could be an issue and uncertain results would severely undermine the merits of the
TopCoder idea. Tanacea (2009) explains that the quality is “extremely high” and attributes
this to the competitive nature of the “resourcing” of the process. Community members that
compete on a regular basis are amongst the best in the world. Tanacea (2009) finds that the

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reason for this is that the notion of competition scares away most of the mediocre talent with
the remaining confident enough to demonstrate the talent that they have.

Others, outside the TopCoder community, can see problems with the way that they work.
Moshe Vardi, at Rice University, states that although we have technology to work remotely
from all around the world, in some cases stakeholders involved with a project do not know
what they want until they see code. The TopCoder model makes it a challenge to make
ongoing changes if the team implementing them work remotely. Vardi also notes that
informal communication is valuable when communicating with team members; simple
questions such as “How’s it going?” or “What’s happening?” (Arnoldy, 2006) are important in
keeping things under control.

The possibility of nobody coming forward to develop software for a component could occur.
Tanacea (2009), explains that TopCoder plans meticulously to avoid this situation. Metrics
are taken for each member that includes ratings for each competition and the member’s
reliability. Tanacea (2009) reveals:

“We have algorithms within TopCoder that allow us to predict with good
certainty the probability that we will receive a high quality submission for a
competition.”

When this is not possible TopCoder reviews the inputs to address the problem. In most
cases, it could be attributed to one of the following two causes:

• The specification is inaccurate which means that it needs to be narrowed or broken

up, or

• The financial compensation is low and therefore needs to be increased.

By sharing information with the community, the risk emerges that this information could be
used by the community, or even competitors, for the wrong reasons. It should be noted that
this risk exists in the more traditional model of software development where projects involve

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contractors and offshore developers. Tanacea (2009) notes that most of the worst disasters
arose where internal employees made inappropriate use of their access to production
applications Tanacea (2009) further explains:

“The key to security is to imbed it into the process as opposed to trying to

find “good” or “safe” people. Every TopCoder competition has a
corresponding scorecard and every scorecard has a section for security.
In this manner security is consistently and rigorously employed.”

TopCoder has achieved and evolved a process that ensures software is developed in a
timely manner. Statistics indicate that the software developed by TopCoder is of much
superior quality to that which is developed by more conventional means. By using a
component-based methodology, code reuse is possible. The system developed for On Point
utilised generic components that made up 75.01% of the application. The rest of the
components were developed from scratch and made up 13.37% of the application with the
rest of the application not developed using components. TopCoder has built into their
process ways that ensure quality and minimize the risk of not meeting the standards
required.

4.2.7 Technology

The uptake of the web since its inception has meant that people from around the world have
been able to form communities with a shared interest. Web 2.0 has allowed organisations
like On Point Technology to collaborate with these communities to create products.

Web 2.0 has allowed for two-way conversations to happen. TopCoder members are notified
via email, twitter, calendar and RSS feeds of competitions or recruitment opportunities. One
of the benefits of using a RSS reader is that the user can have multiple feeds in one place
and does not have to visit many different websites at different locations. A forum is also
available for members to discuss various topics. Members communicate with each other

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posting questions and answers with topics varying from TopCoder specific questions to
general questions about software.

Members also get badges and cards. Members are allowed to place badges on their resume
or website which indicate that the member has been rated by TopCoder. The TopCoder
cards are a digital interpretation of member’s statistics. TopCoder provides a platform for
collaboration that is not just about publishing information. The platform allows a problem to
be solved. In the case of TopCoder, the problem concerns the development of software.

TopCoder provides customers like On Point Technology with a virtual workforce of over 180
000 members from over 200 countries and gives them access to a diverse global workforce.
According to TopCoder, the quality produced surpasses industry standards. This would
mean lower maintenance costs. On Point Technology also saved, as a result of paying only
for software that was developed.

4.3 Platform Operator - InnoCentive

4.3.1 Background

InnoCentive, founded in 2001, created a platform for organisations to collaborate with a

global community to solve R&D problems. Statistics provided by InnoCentive show that the
global community is made up of over 165,000 individuals as of January 2009.

Commercial, government and non-profit organisations such as Procter & Gamble, Avery
Dennison, Pendulum, Eli Lilly and Organisation, GlobalGiving and The Rockefeller
Foundation seek the assistance of this global community to solve R&D problems. According
to Tapscott and Williams (2007:98), 35 Fortune 500 organisations had made use of
InnoCentive’s platform and global community.

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Client organisations, known as “seekers”, work with InnoCentive to post problems on the
website anonymously. The global community of individuals, known as “solvers”, are then
asked to provide solutions to the problems. The seeker then selects the best solution. If a
viable solution has been found, the solver receives a financial reward. The financial rewards
range from $5,000 to $1 million. The seeker holds the intellectual property once the money
has been awarded. Gabriel Eichler (2008), a member of InnoCentive’s Client Services team
explains:

“the primary responsibility of InnoCentive in its role as a trusted

transaction broker is to provide clear expectations of both parties and to
facilitate an efficient and equitable outcome for all parties”.

Statistics provided by InnoCentive show that seekers have submitted a total of 800
challenges to the community of solvers, and that 348 of these challenges have been solved
with 11,872 submissions provided. A total of $19.25 million in award money has been
posted, but with only $3.7 million of that amount having been awarded, which gives an
indication of the actual success rate of the challenges.

4.3.2 InnoCentive Challenge Lifecycle

InnoCentive follows a three-phase challenge lifecycle (Figure 8) that requires the input of the
InnoCentive Team Members, seekers and solvers (Madrigal, 2009).

Figure 8: InnoCentive lifecycle

The first phase involves information gathering and conducting research in order to develop
the challenge. This phase generally lasts two weeks. The seeker submits a one or two

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sentence idea, which will then be reviewed by an internal InnoCentive team member with the
seeker in order to understand the details of the problem. The InnoCentive team member
would then conduct research about the details that surround the problem to gain a better
understanding. A draft copy of the challenge would then be drawn up, which would be
adjusted with the seeker until both parties agree upon the contents (Madrigal, 2009).
InnoCentive’s Client Operations Manager, Elly Madrigal explains:

“the focus here is to ensure that the seeker’s confidential information is not
revealed, while conveying critical information that solvers need to Solve
the problem.”

After the seeker approves the content of the challenge, it is posted on the InnoCentive
website with a deadline, and the second phase commences. Solvers are then able to view
the challenge. They are able to submit any questions they have concerning the challenges. If
InnoCentive cannot answer the question, it is passed onto the seeker who will provide a
response. This phase lasts 1 to 3 months (Madrigal, 2009). Solvers have an online secure
space called a “project room” for each challenges. In the project room, solvers access
confidential information about the challenges, submit solutions and ask questions about the
challenges. InnoCentive has different types of challenges and each challenge is classified as
one of the following:

• Ideation,

o A brainstorm in order to present new ideas, which is usually, fewer than two
pages. This challenge has a guarantee of at least one solver being awarded
the prize money. The solver grants the seeker a non-exclusive license instead
of a transfer of intellectual property for the ideation,

• Theoretical,

o A detailed description of the solution is required from the seeker with the
solver willing to transfer the intellectual property of the solution. A submission
is usually a proof of concept. The winner(s) will win a financial prize if a
suitable solution is found with those that are not chosen receiving technical

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 evaluation of the work. Seekers do not have to select a winner if a suitable
solution is not found,

• RTP (Reduction to Practice),

o Like a theoretical challenge, in a RTP challenge a detailed description is
required with the exception that solvers must provide physical evidence that
the challenge does work and is better than other solutions submitted. These
types of solutions generally have longer posting periods. The winner(s) will
win a financial prize if a suitable solution is found with those that are not
chosen receiving technical evaluation of the work. Seekers do not have to
select a winner if a suitable solution is not found, or

• eRFP (Electronic Request for Proposal),

o eRFP challenges allows a seeker to request a partner or supplier. The cash

reward is negotiated directly between the winners and the seeker.

The third phase starts after the deadline for submissions has passed. The submissions are
passed on to the seeker, who will evaluate and select the best solution and assess its
viability and practicality. The seeker can take anything from 15-60 days depending on the
complexity of the challenge. Certain challenges are evaluated in seeker labs and goes
through testing. Once the seeker selects the best solution the winning solver is notified
(Madrigal, 2009).

The closing steps in the procedure follow the third phase and formalise the outcome. The
seeker provides InnoCentive with the following documentation:

o A Notarized Affidavit that reaffirms the solver agreement,

o A signed waiver if intellectual property is transferred,

o A photo of the solver, and

o Banking details for the money transfer.

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Finally, solvers whose submissions were not successful are notified of this and the
intellectual property is transferred back to the solver.

4.3.3 Client Organisation – SunNight Solar

SunNight Solar is a renewable energy organisation founded by former US Diplomat and oil
executive Mark Bent, who had lived in Africa for over 20 years. Inspired by seeing friends,
employees and children living without electric light in Eritrea, Bent decided to form SunNight
Solar with the goal of providing solar powered flashlights light to Africans who have a lack of
access to electricity (SunNight Solar, 2009a). Two billion people worldwide rely on kerosene,
candles and traditional battery flashlights as a medium to light up a room (Walsh, 2009).

The cost of using these traditional means of illumination can be huge for those living in the
developing world. The World Bank and International Finance Corporation estimates that the
cost of lighting can cost between $8 to $10 dollars a month, which is as much as 30 percent
of a family’s disposable income in the developing world (SunNight Solar, 2009a). Due to the
general rise in the cost of petrochemicals, the cost of kerosene increases. This money (and
the precious kerosene) could be used for other purposes if a renewable energy solution
could be used instead.

Bent set out to improve the lives of many by eliminating the need for kerosene, candles and
battery flashlights with a solar-powered flashlight. After investing $250,000 of his own money
into developing a solar-powered flashlight, Bent ran into problems with the flashlight
developed. Although the flashlight managed to provide 5 hours of illumination after a 10-hour
charge, testing in Kenya revealed that the flashlight could not light up an entire room like a
kerosene lantern.

Instead of hiring engineers to solve the problem, Bent approached InnoCentive to assist,
having heard about it from the Rockefeller Foundation. According to Bent (2009), the reason
why SunNight Solar decided to go with InnoCentive is that it gave them access:

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 “to the best and smartest people who could assist from around the world“

4.3.4 Case – Solar Powered Flashlight

After receiving funding from the Rockefeller Foundation and venture capital organisation
Spencer Trask, SunNight Solar became a seeker on InnoCentive asking solvers to improve
SunNight Solar’s BOGO (Buy One Give One) flashlight. This was an ideation challenge,
which means that at least one solution must be selected and the $20,000 being awarded.

Bent found that the most exciting part of making use of InnoCentive was the unexpected
innovative solutions provided by the community. A solution submitted by Russell McMahon
(an Electrical Engineering Masters degree graduate from Auckland University) was selected
as the best solution and awarded $20,000. The solution provided a better design that makes
better use of the solar battery and LED’s (InnoCentive, 2008). McMahon had 22 years
experience at a New Zealand telephone organisation. Bent explained that McMahon had
convinced him via science how to rearrange the LED and power management system.

The design makes use of three Nickel Metal Hydride (NiMh) AA batteries that will provide
light for 750 to 1000 nights, 8 hours per night. C or D cell batteries require replacement after
around 15 hours of use. The cost of using 2 D-cell batteries for the equivalent of 750
nights/6000 hours at $3 would amount $1,200. By adopting the solar powered flashlights, the
reduced use of kerosene would help reduce the emissions of carbon into the atmosphere.
According to SunNight Solar, there are two billion people still relying on kerosene lanterns.
The replacement of kerosene lanterns with solar powered flashlights would reduce the
number fires and possible injuries and deaths that could occur as a result of the fires
(SunNight Solar, 2009c). The benefits of the BOGO flashlight design include:

• Reducing greenhouse gas emissions from the kerosene lanterns,

• Reducing groundwater contamination from batteries containing mercury,

• Less people are exposed to the fumes from kerosene lanterns,

• Reducing the risk of accidental fires, and

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 • Reducing the spread of malaria via mosquitoes, as they are not attracted to the white
light of the solar-powered flashlight.

Figure 9: BOGO Flashlight charging

(SunNight Solar, 2009b)

The distribution of the BOGO flashlight (Figure 9) is done through the Buy One, Give One
program, whereby for every purchase in the developed world, a second identical flashlight
will be given to an organisation that will distribute it to someone in the developing world. You
can even choose where to give the flashlight. At the time of writing, programmes had also
been set up to distribute lights to American troops in Iraq and Afghanistan, as well as to
families affected by the war in Gaza.

4.3.5 Case - Solar Powered Mosquito Repellent

Inspired by the results of using InnoCentive, Bent decided to progress SunNight Solar’s next
project in the same way. SunNight Solar requested a design for a low cost solar-powered
device from the community of InnoCentive, to prevent or limit the spread of malaria.
Currently the most common form of prevention is insecticides or nets (InnoCentive, 2009).
See Figure 10.

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 Figure 10: Mosquito nets draped over a bed

(Taken from Handy, 2008)

According to SunNight Solar the problem with using insecticides is the danger of human
poisoning, and the fact that mosquitoes can build up a resistance to the insecticides from
one generation to the next. The problem that lies with using nets is that one has to stay
under them all the time, in order for them to be effective.

Every year there are between 300-500 million cases of malaria with over one million deaths.
A child dies every 30 seconds from malaria. While living in Africa, Bent had contracted
Malaria twice. He also had friends die as a result of malaria (InnoCentive, 2009).

Bhattarai et al (2007:1790) affirms these statistics by finding that malaria is the cause of
about one million deaths every year. However, Bhattarai et al finds that it can be controlled
with insecticides treated nets and is being strongly promoted as a way to prevent malaria.

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The RTP challenge was set with a prize of $40,000, funded by The Rockefeller Foundation,
and the InnoCentive community submitted 18 proposals. Bent expected a solution similar to
the BOGO Flashlight, whereby electricity stored in rechargeable batteries would power a
device. It turned out that a majority of the proposals matched this expectation. The winning
solution, however, did not work anything like the majority of solutions. InnoCentive solver,
Tom Kruer’s, solution (Figure 11) was selected and awarded $40,000 for a low-tech
approach to solving the problem (InnoCentive, 2009). One solver complained that the
solution submitted did not meet the stated requirements. Bent explains that the winning
solution stood out from the rest and took to the term “think outside the box” as stated in the
requirements.

Figure 11: A prototype design submitted by Kruer

(Taken from Kruer, 2009)

Kruer, who is a Product Development Engineer and has founded several organisations, had
already solved four other challenges before winning the SunNight Solar challenge. Previous
challenges solved include a cost-effective machine to manufacture bricks in Pakistan and a
machine to grind grain in India. Kruer is a contributor to Wikipedia and makes use of open
source software, such as Linux, and felt that participating in open innovation was a natural
step.

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Kruer (2008) says:

“Beyond the financial benefit, which is wonderful, I have a unique

opportunity to ‘give back’ in a way that takes advantage of my skills and
background.”

Another benefit Kruer found was connecting with like-minded individuals. Kruer explains that
the InnoCentive solvers are starting a new way to conduct business and feels that open
innovation can be applied to other sectors. Kruer finds that the model can be used to turn the
world’s problems, such as war, poverty, oppression and water shortages, into opportunities.
Kruer says:

“Opportunities for grass roots efforts of creative and motivated people

from all types of backgrounds and disciplines to come together and
implement much-needed changes.”

The design submitted by Kruer can be developed for under $10. While conducting research
together with his son, they found that mosquitoes are attracted to humans under the
combination of the following factors (Kruer, 2008):

o When the human temperature reaches approximately 29 degrees Celsius,

o The skin releases moisture, and

o The scent of a human and resident micro flora.

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 Figure 12: Components of the design

(Taken from Kruer, 2009)

Based on the research Kruer designed a device that could draw, catch and kill mosquitoes
using the 3 factors uncovered by the research. The ingredients for the device to trap
mosquitoes are paraffin wax and human sweat. The wax absorbs solar energy during the
day. During the evening the heat is released at roughly the temperature of a human body as
the wax hardens. Together with the human sweat, the device mirrors the scent, moisture and
temperature of a sleeping human, which would attract mosquitoes, which are then trapped
(Figure 12).

4.3.6 People

InnoCentive provides seekers with a platform to collaborate with a global community to assist
with solving R&D problems. This platform differs from the traditional approach of hiring the
best talent and requesting from them solutions to problems.

InnoCentive’s seeker’s provides solvers with various different challenges to choose from. In
a platform where many challenges are available, InnoCentive do try and match up solver’s

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preferences to challenges that match their skills and interests. Upon completing the
registration process, solvers are asked to indicate what their areas of expertise and interest
are, so that InnoCentive can recommend challenges to them. Disciplines include:

• Business/Entrepreneurship,

• Chemistry,

• Computer Science/Information Technology,

• Engineering/Design,

• Food/Agriculture,

• Life Sciences,

• Math/Statistics, or

• Physical Sciences.

This allows solvers to select areas where they would like to solve challenges and where their
area of expertise lies. InnoCentive’s Innovation Program Manager, Michael Albarelli (2008),
investigated the commonalities among successful InnoCentive solvers. Albarelli found that
there is not just one typical solver, but also a rather diverse range of solvers. Experience
varies from undergraduates to retirees with over 30 years of experience. Some are heads of
large research organisations, with others to assist them, while some are consultants who
work on their own. They come from different backgrounds that include academia,
government and non-profit organisations amongst other industries.

The winning solvers tend to be analytical and love to solve various real world problems that
will make an impact on the world. Winning solvers do not just work on any challenge, they
choose challenges to solve if they have an idea of how to solve it. Prolific solvers have a
success rate of up to 50%. Winning solvers tend to focus on areas where they can contribute
and where their strengths lie. They often provide detailed explanations when they submit a
solution and do not assume obvious points. They go into detail as to where to find materials
needed for a solution. Winning solvers also relate to a similar problem that they have solved
or seen being solved. There have been instances where different industries have been
linked as a result of somebody from the outside looking in. Albarelli cites a particular

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challenge where a solver who had knowledge of the cement industry solved a challenge
concerning frozen oil. The winner of this challenge used some of the money awarded to fly
out to the location of the frozen oil to see how the process was going. The fact that this
solver flew out at their own expense indicates that financial compensation is not the only
incentive.

Tom Kruer, the solver of the mosquito challenge, was a repeat solver of InnoCentive
challenges, having also solved four others. Kruer highlighted that InnoCentive brings benefits
beyond financial compensation. Kruer cites the reason of “giving back,” which would concur
with Albarelli’s (2008) findings, that solvers want to make an impact on the world. Kruer goes
onto further highlight that open innovation can be used to solve other problems like war and
water shortages. Kruer makes the point that it’s not only about the money, but also about
solving challenges that can make a difference in the world.

4.3.7 Process

Mark Bent explains that the traditional or closed innovation process is a challenge, especially
in the case of a start-up, as this would require the start-up to pay staff a full salary plus
additional costs like insurance. InnoCentive allows for a one-time payment that reduces
costs. Bent anticipates that more organisations will make use of platforms like InnoCentive,
as a result of cost reduction that is a huge benefit. InnoCentive provides seekers with a
platform with over 165,000 people and an immediate global presence of personnel that could
contribute to a project. SunNight Solar’s investors responded positively to the use of
InnoCentive’s global network of solvers.

For the BOGO flashlight challenge SunNight Solar received 25 submissions; for the
mosquito challenge they received 18. SunNight Solar got to select the solution that they
thought was the most qualified. Bent explains that SunNight received a wide variety of
submissions for the mosquito challenges; 80% were rated “good” to “very good,” with 20%
rejected on the grounds that they were not going to work (it was decided that this was largely
because the solvers concerned did not have an understanding of the nature of life in Africa).
Bent highlighted that it is important to explain the requirements correctly, as incorrect

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requirements will mean incorrect solutions. While the SunNight Solar case yielded positive
results, InnoCentive employee Peter Lohse (2008) reveals that often challenges do lack the
information that is required.

This comes as a result of organisations not wanting to release certain details as the
information is confidential, or they do want to release proprietary knowledge to reduce risk.
Lohse highlights that in order for InnoCentive to be successful, confidentiality and intellectual
property needs to be protected. InnoCentive have created processes, services and
agreements that protect the information presented in a challenges. Despite this, seekers
have been reluctant to provide detailed information.

InnoCentive follows a lifecycle that allows seekers to protect their identity. It also gives the
community a chance via the project rooms to seek out further information. InnoCentive and
SunNight Solar highlighted the importance of stating in depth requirements, as this can have
a direct impact on the validity of the submissions.

By opening up to a global audience, an organisation could be at risk of alerting competitors

of what they are doing. Bent notes that while this is a risk, nothing stops another organisation
from taking apart the BOGO Flashlight and rearranging the circuit board and saying that it is
unique, thereby avoiding patent and copyright issues.

4.3.8 Technology

The web is the enabler that allows organisations like SunNight Solar to collaborate with their
community. These individuals have knowledge in various disciplines which could assist
seekers and allow them to work on challenges that they have the expertise in.

InnoCentive encourages solvers to share what areas their interests and expertise lie. This
allows InnoCentive to match up challenges with these areas of expertise and interest and
suggest challenges for solvers to partake in. In addition to this, a weekly challenges bulletin

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is emailed to solvers highlighting various challenges. RSS feeds for the various disciplines
are also available for solvers to add to their RSS aggregators. A twitter feed is also available
that publishes challenges as they become available.

The InnoCentive website has a section devoted to a specific user’s challenges, which can
include open, closed and awarded challenges. For every challenge that a solver wants to
partake in, a project room is opened up. If information has been omitted, solvers have the
opportunity to ask questions via these project rooms created for every challenge. If
InnoCentive cannot answer the question, it will be passed onto the seeker to answer,
providing that the answer does not contain confidential information. Eichler (2008), a
member of the InnoCentive Client Services team, reveals that in 2007 the team answered
nearly 7000 questions. If the same question is being repeatedly asked, it will be posted to a
Q&A addendum to the challenges.

In order to attract and serve the needs of a community of solvers, communication is

imperative. The web and all that comes with it has made this possible. The challenges not
only needed to reach solvers, but also needed to be targeted at solvers who have the
expertise in this area. InnoCentive does this by matching up profiles with challenge details.
Another important aspect is notifying the solvers about challenges. As mentioned,
InnoCentive are using various Web 2.0 tools to achieve this, such as blogging, micro-
blogging, RSS feeds and email. This platform is what enables organisations like SunNight
Solar to reach outside their own boundaries to solve problems at a low cost.

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5 Chapter 5 – Case Studies Discussion

5.1 Introduction

The information gathered from the three cases of global collaboration had the goal of
answering the research questions, which will be addressed in the following discussion. The
discussion focuses on the three areas uncovered in the literature review:

• People,

• Process, and

• Technology.

5.2 People

Two research sub-questions addresses the area of people; why do individuals partake in
global collaborating projects, and how do you attract individuals to participate? This section
attempts to answer these questions.

In order to understand how to attract individuals to partake, it needs to be understood why

individuals partake. In projects with an open call to solve problems (such as TopCoder’s and
InnoCentive’s), multiple solutions could be presented with the best viable solution being
selected and the rest being overlooked. A key success factor for TopCoder and InnoCentive
is to continually grow their community base and encourage those that are not successful to
try again in other projects. The data gathered shows that TopCoder has managed to
implement a model that has benefits for both those that win and those that do not.
InnoCentive has also achieved this, but not to the extent and detail that TopCoder has.

The benefits to people who partake in TopCoder and InnoCentive projects can be classified
in two categories, direct and indirect. Direct benefits are those that are guaranteed from the
platform like money. Indirect benefits are factors that come as a result of participation but are

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not guaranteed by the platform and can be seen as beneficial by the community members
and play a part in motivating members to partake.

Direct benefits for TopCoder include:

• Financial compensation for winners of competitions,

• Financial compensation for members who do not win, but do place highly in rankings,
and

• Financial compensation from components that are sold to other TopCoder customers,
which are in the component catalogue.

Direct benefits are guaranteed for individuals within the community of TopCoder. With
TopCoder, individuals can win specific competitions, but they can also receive financial
compensation over a period of time if they partake in the development of components that
are in the component catalogue, and are sold to other organisations that have need for the
component. These members could possibly receive income long after they developed or
designed the component, as a result of sales thereafter. InnoCentive use a similar model to
cater for direct benefits, but not as in much detail as TopCoder.

Direct benefits for InnoCentive include:

• Financial compensation for winners of challenges, and

• Financial compensation if a solver recommends another winning solver and the

challenges prize money is over $2500 for the first challenges.

There is no financial compensation for those who do not win, only the winners are rewarded.
It should also be noted that not all challenges have to award a winner. Only Ideation
challenges have a guarantee that a winner is selected. So there is a possibility that a seeker
could receive multiple solutions to challenges and not select any one of the solutions,
meaning that nobody from the community is rewarded financially except in the case of an
ideation challenge.

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As noted in the literature review, Benkler (2002:61-62) finds that providing financial
incentives will not necessarily provide motivation for people to participate. Other motivational
factors will have to be provided to community members, in order to encourage participation.
These Indirect benefits for TopCoder include:

• Community members pick up new techniques from others,

• Community members work on parts of a project where they want to and where their
areas of expertise can be utilised,

• Community members work on parts of a project where they want to get more
experience,

• Feedback is provided, whereby community members are told where they need to
improve,

• Peer recognition is provided via developer ratings, which are publicly available,

• Meeting link-minded individuals and networking, and

• Career Advancement.

Indirect benefits provide members with a view that their time spent on these projects is an
investment that could yield future rewards. The TopCoder platform provides members with a
chance to show their capabilities and provides a platform to self-market one. This provides
an opportunity for organisations to see whom they can employ. TopCoder provides feedback
on the quality of their work and shows members that people are using their contribution,
which spurs participants to pursue perfection. Indirect benefits for InnoCentive include:

• Community members work on parts of a project where they want to and where their
areas of expertise can be utilised,

• Community members work on parts of a project where they want to get more
experience,

• Feedback is provided whereby solvers are given a technical evaluation (but for
Theoretical and RTP challenges only),

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 • Peer recognition is provided via the InnoCentive website, where a list of winners and
the biography is posted, and

• Meeting like-minded individuals and networking.

The Indirect benefits of InnoCentive are not as extensive as TopCoder. Again, only winners
seem to get recognition. For two types of challenges feedback are provided. Solvers, who
submit and do not win, do not receive feedback for Ideation and eRFP challenges. The
winning solutions in a majority of cases are not published, so those who were not successful
do not learn from others like those in the TopCoder community. This could be attributed to
organisations not willing to let the intellectual property become public knowledge.
InnoCentive does provide a wide variety of challenge types, which means that they do cater
for different types of people’s expertise and experience. Solvers have noted that participation
is about making a difference, which indicates that financial compensation is not a major
factor.

The literature review also noted that Leadbeater (2007:75) finds a majority of users do it for
recognition amongst their peers for the work that they enjoy, which gives them a sense of
achievement. Leadbeater, like Benkler, also finds that some do it in order to better career
prospects, by gaining a reputation in the communities that they participate. TopCoder and
InnoCentive to an extent provide members with a platform to achieve this.

A web-based survey study of 166 scientific problems from InnoCentive revealed the following
(Lakhani et al, 2006, 8-11):

• 65.8% of solvers have a PhD,

• Winning solvers spent twice as many time solving a problem as non-winning solvers,

• 10.6% of respondents work in teams attempting to solve a problem,

• The average team size was 2.8 members,

• 83.3% of winners did not consult with others,

• 73.8% of non-winners did not consult with others, and

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 • 72.5% of winning solvers based their solutions from work of others.

A majority (65.8%) of the respondents had a PhD qualification, which indicates that
InnoCentive attracts a community with high intellectual capability. The winning solvers tend
to work alone and spend double the amount of time solving a problem than those who do
not. Another important aspect to note is that 72.5% of winning solvers based their work on
that of others. This indicates that research of previous information plays a critical role in
solving a problem. The same could be attributed to TopCoder. With TopCoder, participants
mentioned that learning new techniques was a motivational factor for participating. The more
these members learn the better chance they have of improving their own skills, as well as
solving problems.

The same study asked the respondents to rate motivations for attempting to solve an
InnoCentive challenge. The findings revealed that although there is financial prize, indirect
motivations are more significant motivational factors. InnoCentive solver Tom Kruer (2008)
mentioned that although the financial benefit is wonderful the opportunity to “give back”
provides greater satisfaction.

The study by Lakhani et al (2006: 1-5) further revealed that solvers managed a 29.5%
resolution rate. This rate might not be significant, but it should be noted that these problems
had previously remained unsolved using traditional R&D methods by solving problems within
their own laboratories, and over extended periods of time.

The study also found that this success rate is due to InnoCentive being able to attract
specialised scientists with a diverse range of interests. The background of the two winning
solvers backs this up. Tom Kruer was a Product Development Engineer and has founded
several organisations. Kruer had also solved four other challenges. Russell McMahon was a
Electrical Engineering Masters degree graduate from Auckland University and had 22 years
experience at a New Zealand telephone organisation

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It was also found that solvers managed to provide solutions to challenges that were not in
their field of expertise, which indicates that openness can provide a transfer of knowledge
from a scientific field to another. Furthermore, the study revealed that solvers mainly relied
on information from solutions that had already been developed.

The study also found that challenges had a better chance of being solved if the solvers had
fewer scientific interests and were more specialised. The number of submissions per
problem had no significant impact on the analysis, which the authors speculate means that
diversity prevails over the number of submissions from similar fields (Lakhani et al: 2006, 8-
9). The winning solution for the malaria solar powered device was not what SunNight Solar
were expecting. It did not even work anything like a majority of the solutions. One solver
even complained about this the solution was nothing like what was expected. SunNight Solar
received 18 qualified proposals, each with a different viewpoint on how to solve the
challenge.

The various and diverse areas offered allows solvers to provide solutions to areas where
their particular area of expertise lies and focuses on their strengths. From the disciplines, it
can be concluded that InnoCentive has a wide range of diverse challenges that would need
wide range of diverse individuals to partake in challenges. Solvers are notified via various
different means of challenges.

Why individuals participate and how to attract them can be broken into the two motivations
indirect and direct (see Table 7).

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 Table 6: Direct and indirect motivations

Direct Indirect

Financial compensation for Provide feedback so that community members can learn from
winners. their experiences.

Financial compensation for those Keep metrics to measure performance amongst community
who do not win but place highly. members.

Public recognition. Break a project into smaller modules, which allows community
members the opportunity to work on parts of a project that they
want to.

A platform to meet like-minded individuals.

Networking.

Cater for career advancement like TopCoder that acts as a

recruitment agency.

Both these motivations will have to be catered for in order to attract a community willing to
solve problems. Global collaboration has only begun to gain momentum as a result of the
Internet connecting client organisations to community members all around the world who
could provide expertise in a particular area. While it is useful that winners are rewarded with
money, the next challenge for these platform operators is to cater for motivations for those
that do not win with incentives to return and partake in challenges and competitions so that
they can always provide the customer with a pool of talent.

5.3 Process

Three research sub-questions addresses the area of process. The first two are dealt with
mutually; “how does global collaboration differ from current means of operation?” and “who
are the role players involved in global collaboration?”. The third sub question; “what are the
risks involved with opening up an organisation to global collaboration?” are answered as a
result of examining the process and role players involved.

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To establish how global collaboration differs from the current means of operation the process
followed by TopCoder and InnoCentive were investigated. Each step of the process was
planned meticulously.

What separates this process from traditional means is that organisations like On Point
Technology and SunNight Solar are no longer hiring the best software developers or
engineers to innovate and create products for their businesses. These organisations are
appealing to the masses to solve problems and collaborate with individuals on a global
scale.

Figure 13: The process of innovation on a global scale

This process as defined in Figure 13 also reveals three critical role players, the client
organisation with the problem, the platform operator and the community who provides the
solutions to the problems.

The process is triggered when a client organisation recognises that it has a need that might
be fulfilled by a process of global collaboration; then, to succeed, the process requires that
there are willing participants within the global community, who will respond to an open call.

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InnoCentive and TopCoder provide a platform for organisations like SunNight Solar and On
Point Technology to collaborate with people on a global scale. These platforms are made up
of community members that are willing to solve problems that are challenging and provide
rewards. Another key element of the platform is communication to the members. This is
provided through a website of InnoCentive and TopCoder. The tools that make up the web
make this possible. Email, RSS feeds, blogs, micro-blogging and social networking. These
tools bridge the gap between the customer like On Point Technology and SunNight Solar
with a global community that could spur innovation. The platform links the organisation with a
problem to a community that is interested in solving the problem.

There is great reliance on these platforms, as they have an established community willing to
participate. There is no point in an organisation posting a problem if there is little or no
community willing to participate. One of drawbacks of having an open call is the risk that
nobody comes forward to offer solutions to the problem. With an established community the
chances are reduced.

These communities then provide solutions, which are evaluated by the organisation
providing the problem. Once the winners have been decided upon (if there is a winner), the
reward is given. The final step would be the transfer of intellectual property if applicable. The
success of this process will come down to whether time, cost and quality has improved.

TopCoder measured this by comparing the time spent on the business specifications phase
of each project. Over the course of the three projects, Recover, Norm and Enforce, there
was a 54% reduction in cost, as time spent on this phase went from 2544, 1787 to 1179
hours respectively. Duration was reduced from 72 to 23 to 28 workweeks. The number of
submissions required achieving a passing scorecard grade measured quality. Originally,
Norm required 3 submissions over 5 weeks. Recover originally required only one
submission.

After every component was delivered during the design and development phases, payment
was made to members of the community involved. Payment is reduced, as it is made on

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delivery. On Point Technology would only have to pay if a component has been completed.
In a labour-based model, an organisation would have to pay for hours spent delivering a
project whether or not the project has been delivered on time.

Making use of TopCoder’s global workforce decreases the chances of a project failing. In the
case of On Point Technology, 13 custom components were required, each of which was
made up of many tasks to complete a project. Each task represents a point of possible
failure. If the component were not developed, the project would not be complete. By
harnessing the TopCoder community many people compete to complete a single
component, which means multiple submissions could be submitted for each component.
Having multiple people at each point of possible failure minimises the risk and increases the
probability of project success. If somebody can’t submit a solution, there will still be others to
submit a solution (Figure 14).

Figure 14: Multiple submissions in global collaboration

Not only could these communities produce multiple submissions, which decrease the
possibility of failure, but also multiple people are looking at each task with a different point of
view. This diverse and multiple viewpoint at attempting to solve the problem has been found
to be beneficial in certain scenarios. Using data from TopCoder competitions Boudreau et al
(2008:27) found that a rise in competitors had a negative outcome on an individual
competitor’s performance. However, when the problem being solved was complex, the effect

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on the average and best individual score was found to be more positive when increasing the
number of competitors.

There were a total of 123 members of the TopCoder community involved with the Recover
project. On Point Technology managed to tap into a wider range of talented individuals to
develop better quality software, on time and on budget. Previous methods employed by On
Point Technology (like hiring own staff, hiring offshore developers and bringing in
consultants) had proved to be unsuccessful.

There are possible drawbacks, although not prevalent in the Recover project. The project
could have failed if there were not enough participants with the right skills. At the time of
writing, TopCoder had an established community of over 180 000 members from over 200
countries with over 30 000 members being regarded as active. Even with an established
community there is no guarantee that the community will build a particular part of a project or
have the necessary skills. TopCoder do plan meticulously to avoid this. They make use of an
algorithm to predict whether a high quality submission will be received. If this is not possible,
TopCoder finds that the specification is inaccurate, which means that it needs to be
narrowed or broken up or the financial compensation is low and therefore needs to be
increased.

Despite this, there is no guarantee this will improve the situation. Unlike a contract whereby
an organisation providing outsourcing services can be held contractually liable for projects
that they fail to deliver, this is not possible when having an open call to community members.
TopCoder do use a pay-per-performance model, and so in the event that a suitable
component is not delivered, the client organisation will not have to pay. If this affects the
project deadline, this would mean that the time to complete the project would have increased
and the risks pass back to the client organisation. On Point Technology felt that the quality of
the design was superior to the quality of the development and we find that the issue is one of
trading off time against quality. If the platform operators like TopCoder can help manage that
trade-off more effectively, as they seem to do, then this is a clear benefit and would add to
the argument to use global collaboration.

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Projects of this nature, especially in the software industry, could be susceptible to targeted
malicious damage. Every competition entry goes through a review board that ensures that
this is not the case. By opening up to global workforce, On Point Technology managed to
deliver the Recover project with better quality, shorter times and less cost.

SunNight Solar experienced similar success to TopCoder with regard to time, cost and
quality. Bent mentions that for the BOGO Flashlight, the timing was greatly reduced, from
about 18 months of development down to six when compared to the first BOGO flashlight,
which couldn’t light up an entire room. He also mentioned that it is hard to quantify the
quality authoritatively. It was also hard to assess these for the mosquito trap as SunNight
Solar had not attempted to make one previously.

Mark Bent had already spent over $250 000 developing a solar powered device, but it did
not light up an entire room, which was a requirement if the device was to replace kerosene
lanterns. In a traditional approach to R&D, SunNight Solar would have to hire staff to find a
solution. This would also have additional costs associated with it. The Ideation challenge
would mean that at least one solution would have to be chosen. The award was $20,000,
which means that SunNight Solar would have spent a maximum of $20,000 to attempt to
solve the problem. This is far less than the $250,000 originally spent to develop the version
of the flashlight that did not perform adequately.

The challenge was solved by Russell McMahon, who had extensive electric engineering
experience, which Mark Bent utilised to solve the challenge. With a closed innovation
approach, the chances of Bent gaining access to the knowledge of McMahon, who is based
in New Zealand, would have been unlikely. SunNight Solar adhered to one of the principles
of open innovation, whereby organisations cannot hire all the best employees to assist with
R&D. InnoCentive provided SunNight Solar with a platform to reach solvers that could
possibly provide a solution at a lower cost than traditional means. If no suitable solution were
found, SunNight Solar would have been forced to award the money to at least one solver
due to the rules of the challenge type. SunNight Solar could possibly have come out of this
challenge with nothing, yet still spend $20,000 as the type of challenge means that at least
one solution must be chosen. However the same risk is associated with traditional methods
of R&D.

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The malaria challenge was an RTP challenge, which meant that the $40,000 reward would
only be awarded if the design submitted, was proven to work. This is another pay-per-
performance example like the TopCoder competitions. This means that SunNight Solar
would only have to pay if a submitted design works. Adopting this model reduces the
investment risk.

Both SunNight Solar challenges received multiple submissions with different solutions from
different points of view. This comes as a result of opening up to a global platform, which
brings in different solutions to problems from all around the world

There also risks associated with making use of communities from around the world like
InnoCentive, although not evident in the SunNight Solar examples. A point of failure could
have been the lack of qualified submitted solutions for challenges. InnoCentive has an
established community of over 165,000 members at the time of writing and this reduces the
risk. The study of 166 challenges found that 29.5% challenges were resolved. Opening up to
solvers around the world does not guarantee results. For three of the challenge types, the
money does not have to be awarded, so the organisation posting the challenge will suffer a
loss of time and not direct monetary losses. InnoCentive does match up users’ interest areas
with challenges and recommend challenges as to notify solvers of applicable challenges, but
this does not mean that the solvers possess the necessary knowledge to solve them.

As a result of the process, organisations can benefit, however, there are pitfalls that could
prove not to be beneficial. Patterns emerging from the case studies show the following
benefits and risks of global collaboration:

o Benefits:

o Payment is made on delivery in certain circumstances,

o Communities bring diversity,

o Community members choose to work on challenges based upon their

strengths with specialised skills,

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 o Organisations have access to global talent pool which is not present within a
single organisation, and

o More people work on a problem, which increases the likelihood of it being

solved.

o Pitfalls

o Increase in deadlines if a suitable submission is not found,

o No written contract to ensure penalties when no delivery is made,

o Possible decrease in quality, and

o Community does not have people with the skills needed to solve the problem.

5.4 Technology

One of the research questions was to identify how organisations reach a global community to
solve problems. As was clear from the start of this thesis, it is technology - specifically the
web – that enables organisations to collaborate with potential problem solvers on a global
scale

The web has allowed individuals to form communities through shared interests, and through
a shared motivation to participate for rewards (albeit of different kinds). These communities
offer knowledge and capability that could potentially create products such as software (in the
TopCoder case) or solve scientific or engineering problems (as with InnoCentive). This is
consistent with the findings of Rollett et al (2007:98) who mentions that with the emergence
of Web 2.0 more sharing is occurring on the Internet via communities.

Web 2.0 technologies have provided opportunities for special interest but global communities
to form, and display their skills and capabilities in a manner that benefits other community
members as well as client organisations that might require these skills and capabilities. The
process of global collaboration involves three key role players: the organisation with the
problem, the organisation providing the platform and the community who offer solutions to

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the problems. In order for global collaboration to happen, these three areas have to come
together. The web is what makes this possible. A key element is publishing these problems
to communities that could solve them. This is done via the web. TopCoder and InnoCentive
make use of email, the micro-blogging website Twitter, the social networking website
Facebook, RSS feeds and online forums. TopCoder even developed algorithms that allow
them to predicate the probability of a software task being completed. InnoCentive matches
up solvers’ skill sets with tasks, in order to recommend challenges that could interest the
solver. These platforms also publish the in-depth details of the tasks and challenges on their
website, which is the central and pivotal point of the platform.

InnoCentive offers a project room, which is a virtual space that contains information about
the challenge. Solvers can also ask questions regarding a challenge in these project rooms.
These questions are either answered by InnoCentive staff or by the organisation posting the
challenge. Solvers can also view the terms and conditions of the challenge that they agree to
by entering the room. The communication of the idea on a global scale is critical in amassing
solvers to provide solutions and the Internet is what makes this possible.

In the data gathered about motivations to participate, TopCoder members mentioned that
learning from winners assisted with improving their own skills. The Internet allows TopCoder
to broadcast this to other members. Peer recognition was also highlighted. TopCoder
provides this via developer ratings while InnoCentive publishes a list of solvers that win a
challenge if they wish so. InnoCentive also allows solvers to publish an online profile similar
to what social networking websites offer.

In order to succeed in these communities, the ability of the community members is what
matters. The “normal” criteria to partake in work projects like software development do not
apply, such as location, gender, race, age and qualifications. What matters is what the
individual can produce. This means that quality, reputation, credibility and creativity matter
most. Location is no longer an issue as a result of the connected world we live in as a result
of the web connecting people. These communities have a pool of talent from which they can
select.

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Technology is what allows collaboration to happen on a global scale, for organisations like
SunNight Solar and On Point Technology to seek the assistance of individuals within
communities with the necessary skills to assist in the innovation process. These community
members co-create or design products with platforms such as TopCoder and InnoCentive
together with client organisations controlling the entire process. Technology is allowing these
organisations to delegate the work to outsiders and create partners. This allows
organisations to potentially bring products to the market faster and cheaper with quality
standards adhered to.

Technology is allowing these organisations to distribute work to people that have the
required specialist skills. TopCoder did this by using 123 software developers to complete
the Recover project. SunNight Solar managed to use the expertise of Russell McMahon who
had extensive electric engineering experience and Tom Kruer who thoroughly researched
the mosquitoes to design a repellent to stop the spread of malaria. These people had the
knowledge and without technology and an open call SunNight Solar and TopCoder would
have been able to reap the rewards. These organisations have shown by making use of Web
2.0 tools, that highly specialised work can be completed by those that sit outside the
boundaries of the organisation, while maintaining their organisational structure.

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 Table 7: A summary of organisations making use of collaboration

Start End Year Platform Contributors

Year

Steam engine 1811 1904 Lean’s Engine Reporter About two dozen

Iron blast furnace 1850s 1870s Meetings -

Homebrew computer 1975 1980s Meetings and Many Dozens

club Newsletters

Open source - Linux 1991 Ongoing Internet Thousands

Slashdot 1997 Ongoing Slash -

Google 1998 Ongoing Websites Millions

IBM 1998 Ongoing Internet Thousands

Goldcorp Inc. 2000 2001 Website 1000

NASA Clickworkers 2000 2001 Website Thousands

TopCoder 2000 Ongoing Website 180 000

InnoCentive 2001 Ongoing Website 165 000

Wikipedia 2001 Ongoing Wiki 300 000

It has been noted that global collaboration is the result of an evolution of ideas about
collaboration, originally constrained (in history) by the limited available means of
communication, but now dramatically unconstrained in the “information age”. The question
arises: where do we go next?

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Table 7 summarises the examples highlighted in this thesis. The steam engine example had
about two-dozen individuals taking part, while the examples following Linux show a dramatic
increase in the number of participants with some communities boasting over 100 000
individuals. This increase could be attributed to the uptake adoption of the Internet. The
Internet is allowing organisations to collaborate with more people than ever and comes as a
direct result of technology enabling it. No longer are organisations restricted by geographical
constraints when it comes to utilising the best talent.

Technology provides the basis for the platform, which allows for the connection of
organisations like On Point Technology and SunNight Solar with community members from
around the world. Technology also allows for these problems to be communicated effectively
at a low cost. The InnoCentive and TopCoder platforms make use of Web 2.0 tools to
achieve this. They both have a website which is the starting point. This website is a central
place for community members to come together and form into a community. The problems of
On Point Technology and SunNight Solar are then circulated to the members of these
communities in order to find a solution.

InnoCentive and TopCoder are platforms that enable collaboration. These platforms form the
communities needed to complete the task at hand. The platform has the task of translating
the requirements so that the community can understand them. Another critical aspect of the
platform is to distribute the problem to the community, handle the submission process and
act as a transaction broker between the community and organisation with the problem.

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6 Chapter 6 - Conclusion, Limitations and Further Work

The notion of opening up problems to a world outside the boundaries of an organisation on a

global scale is still new and emerging. On Point Technology and SunNight Solar together
with TopCoder and On Point Technology have managed to successfully demonstrate some
of the potential.

As a new and emerging concept, this is a radical shift away from traditional thinking, where it
is assumed that the best talent and best ideas sit within the four walls of an organisation. The
notion of opening up and sharing problems with global communities, with some investment in
management and control, is fundamental to reaping the benefits of global collaboration such
as reported and reviewed here.

Figure 15: Conceptualisation of global collaboration

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The main research question set out to understand how organisations could create a platform
for global collaboration that encourages the participation of individuals and at the same time
manages the impact on business processes and deals with the risks involved. The research
sub questions and objectives surrounding the three main areas; people, processes and
technology addresses this and is conceptualised in Figure 15.

The platform provides the foundation for global collaboration. The platform operator
facilitates the global communication (using technology) with the people (community
members) in order to complete the process of global collaboration.

Two objectives had the goal of understanding the motivations of people that could then be
used to find out how platforms could attract people to participate. People play an integral part
in global collaboration. The correct and justifiable incentive will have to be provided in order
to build a community. Organisations need to be careful of exploitation by not providing the
appropriate incentives and think that community members will solve problems without being
appropriately compensated. Community members participate for a variety of reasons, which
platforms will have to cater for. A direct benefit should not be the only source of motivation
for participation, as a minority of members are actual winners. Platforms will have to cater for
the rest by catering for indirect motivations that TopCoder has successfully implemented as
summarised in Table 6.

Two objectives surrounded the second area of the process. The first was to identify what the
process is and the second who the role players involved are. The process of global
collaboration and who is involved was identified (Figure 13). The client organisation, platform
operator and community members where identified as role players. The client organisation
presents the problem with the platform operator interacting with the community members to
have the problem solved. The process takes care of the execution of global collaboration
with the evaluation and ratings of the problem solutions built into the process.

Another objective was to discover the tools used in global collaboration and the third area,
technology, addresses this. Technology allows the platform operator to facilitate
collaboration on a global scale. The objective was to identify what technological tools could

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be used to facilitate global collaboration. These tools were identified with the Internet and
Web 2.0 tools playing an important part. Tools such as micro-blogging, RSS feeds, email,
wiki’s and online forums are being used by platform. These tools allow for collaboration on a
global scale. Platforms such as TopCoder and InnoCentive provide community members
with highly specialised skills. Without these members the project is setup to fail. The
platforms are responsible for connecting organisations with talented individuals to solve
problems, as well as distributing the problem to the community those posses the skills to
achieve this.

Modularisation and streamlining problems into correct channels is critical in having problems
solved. TopCoder does this by breaking software up into modules and piecing them
together. InnoCentive streamlines problems into different categories to allow for more
specialised community members to identify problems that could be solved.

Used under the correct conditions, collaboration with individuals from around the world can
be beneficial in the innovation process. A key enabler in allowing this to happen is the
Internet drawing together communities that posses highly specialised skills to complete
various tasks.

Various organisations have used global collaboration to their benefit. Examples highlighted
in this thesis include IBM, Wikipedia, Google, Linux Foundation, NASA, On Point Technology
and SunNight Solar amongst others. These organisations have selected to forgo traditional
means of innovating in certain circumstances and accepted risks involved as part of the
process. With more organisations adopting this model global collaboration could become
more widespread.

Risks are a reality and final objective was to identify them. Although an open call can yield
many different solutions to a problem, the possibly exists that nobody submits a suitable
solution. If payment is made on delivery only then money could be saved as opposed to
hiring a team to solve the problem, although time spent on a problem will have increased.
Quality could be a risk, but TopCoder have put a process in place, which ensures rigorous
reviews in order to maintain standards. This review also provides feedback to the

106
community, which caters for an indirect benefit. InnoCentive allows organisations to run
various tests on a solution before a winner is selected and only in the case of an ideation
challenge must a solution be selected.

While access to data was available direct access to the community could have assisted in
understanding more about the people aspect. It would have been ideal to have more case
studies especially from a South African perspective to understand how organisations if any
are making use of global collaboration. Further research that could be beneficial is examining
the attitudes of people within an organisation with regard to shifting attitudes towards global
collaboration.

107
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