Social Media & Open Innovation

14 February 2011

Web 1.0

• Early websites were static– Content was coded once off and users could

merely consume information

• Later websites were more dynamic– Backend database– More functionality– Content Management Systems

Web 1.0

• Essentially web 1.0 technologies do not facilitate user participation– User can only consume content provided by the

website– E.g. Ryanair; Aer Lingus;

Web 2.0• Goes beyond web 1.0 to engage with users

• Not just consumption of information

• Users empowered to actively participate with website.

• Users can rate content, post comments, link to other content, share with friends etc

Web 2.0

• Examples – – Blogs allowing users to comment on content

consumed– YouTube videos: users can rate videos; can

dislike videos; engage in conversations with other consumers of the video

• Essentially, individuals can give their “two cents”

SLATES - Components of Web 2.0– Search: Content must be searchable beyond

traditional hardcoded search– Links: Linked content across sites enriches search

engine to suggest what is important– Authoring: Blogging, commenting, and so on– Tags: Users must be allowed tag content so as to

enrich content categorisation– Extensions: Automating some of the categorization

of content e.g. Amazon recommends you might also like this

– Signals: Updates of changing content e.g. Twitter updates and RSS news feeds

Source: Andrew McAfee (2006) Enterprise 2.0: The Dawn of Emergent Collaboration – MIT Sloan Mgt Review

Social Media

• Built upon the foundations of web 2.0 capabilities.

• Social Media would not exist without Web 2.0

• Social Media occurs through users active engagement with web 2.0 technologies– E.g. Facebook users can search; link to other

groups, people, etc; author comments, status, etc; tag photos; extensions suggest friends you may also know; signals alert of status changes, of events, etc

Social Media Example: Facebook

• Users engage with content beyond mere consumption: users produce, edit, delete, comment, and so on with content.

• Furthermore, producers of content actively engage with other producers of content – e.g. Mike comments on Janes status update; or John clicks like to Cork Jazz Festival Facebook page

Social Media Example -----

• Allows users to upload videos; comment; rate; like/dislike; engage in video related discussion and so on

• Minority of YouTube visitors upload videos• Huge amount just consume the videos

• Large number comment, rate, like etc

Some other Social Media Examples

• Twitter • Myspace• Facebook• YouTube• Wikipedia• LinkedIn• Reddit

Possible Issues

• Groupthink – Surowieki (2004) suggests collaboration and participation is good only so long as we remain as independent as possible whilst collaborating, participating, and so on.

• Example: People looking up in the air example ….

Possible Issues

• Majority of users consume information and capitalise on the contributions of a relatively small group– E.g. Most YouTube users consume the videos

uploaded by the minority of YouTube visitors

– McAfee (2005) What impact does this have for bringing Social Media within the boundaries of the firm? Will people contribute?

Open Innovation

• Henry Chesbrough – Open Innovation is a move away from the traditional internally focused and essentially “closed” approach to innovation

• Traditional Approaches to Innovation– R&D team tasked with giving a solution– Small Group of individuals– Secretive => protecting Intellectual Property (IP)

Open Innovation

• Open Innovation approach– Built on idea that more heads are better than 1– Tasking many (rather than just a few) with

coming up with solutions

Open Innovation Example: Gold Corp

• Company struggling to find more gold to mine

• Goldcorp Internal Experts suggesting a few possible locations to locate gold.

• Goldcorp harnessed the power of open innovation – collective energy of the crowd

• Competition to suggest where Gold Corp would find gold – Prize Money $550,000+

Open Innovation Example: Gold Corp Continued

• The Result– Internal Experts’ suggestions were not so

successful– Many entrants to the competition– Many different ideas based on many different

world views – Successful solutions – The competition reward was a fraction of

the monetary benefits of mining more gold!!!

Open Innovation Example: Novartis

• Novartis released all research (previously highly secretive) they conducted on type 2 diabetes for free on the internet

• They had invested millions of $ in this research so why would they do this??– They knew that if they could spark some

breakthroughs by smaller research groups that they would be able to pump resources thereafter to further that research

Open Innovation Example: IBM• IBM heavily invested in an open source software

development project – namely Linux and Apache• Linux is a freely distributed open source alternative

to proprietary Operating Systems (OS) • Apache is a freely distributed open source

alternative to web servers• Why would IBM invest heavily in these

communities??

• Their investment arguably enabled a greater refinement of Linux– IBM no longer have to invest in their own OS and

Servers– Instead they use Linux OS and Apache Servers

Open Innovation

• In summary:– Open Innovation involves harnessing the

collective energy of many individuals

– Purports moving away from traditional closed innovation approaches

– Changes the dynamics of how things work!

Open Innovation and Social Media

• Social Media makes possible the active engagement of individuals with each other and their content

• Open Innovation involves the harnessing the collective energy of many individuals

• These two contemporary phenomena are often complimentary– Social Media facilitates many Open Innovation

endeavours (e.g. LinkedIn Groups; P&G Connect Develop)

Example Case - Ebay

• Customer to Customer (C2C)• How has social media facilitated this– Sellers performance (reliability, delivery times,

etc) are rated by buyers– Customers can give feedback that can be seen

by all– Suggestions from Ebay as to what else you may

like to buy

Useful Videos – Open Innov & Social Media

• http://www.ted.com/talks/lang/eng/rachel_botsman_the_case_for_collaborative_consumption.html

• http://www.ted.com/talks/lang/eng/alexis_ohanian_how_to_make_a_splash_in_social_media.html

• http://www.ted.com/talks/lang/eng/james_surowiecki_on_the_turning_point_for_social_media.html

Books and Articles used

• Tapscott, D. & Williams, A.D., (2007) Wikinomics

• Surowieki, J. (2004) Wisdom of the Crowds• Chesbrough, H.W. (2003) Open innovation:

The new imperative for creating and profiting from technology

• Article: McAfee, A (2006) Enterprise 2.0: Dawn of Emergent Collaboration