Wikinomics

Key takeaways

Wikinomics belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Wikinomics to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Wikinomics from memory before moving on to harder problems.

Reference excerpt

Wikinomics: How Mass Collaboration Changes Everything is a book by Don Tapscott and Anthony D. Williams, first published in December 2006. It explores how some companies in the early 21st century have used mass collaboration and open-source technology, such as wikis, to be successful. The term 'Wikinomics' describes the effects of extensive collaboration and user-participation and how relationships between businesses and markets have changed as a result.

Concepts According to Tapscott, the use of mass collaboration in a business environment in recent history can be seen as an extension of the trend in business to outsource: externalize formerly internal business functions to other business entities. The difference however is that instead of an organized business body brought into being specifically for a unique function, mass collaboration relies on free individual agents to come together and cooperate to improve a given operation or solve a problem. This kind of outsourcing is also referred to as crowdsourcing, to reflect this difference. This can be incentivized by a reward system, though it is not required. The book also discusses seven new models of mass collaboration, including:

Peering: For example, page 24, "Marketocracy employs a form of peering in a mutual fund (Mutual fund: MOFQX) that harnesses the collective intelligence of the investment community... Though not completely open source, it is an example of how meritocratic, peer-to-peer models are seeping into an industry where conventional wisdom favors the lone super-star stock advisor." Ideagoras: For example, page 98, linking experts with unsolved research and development problems. The company InnoCentive is a consulting group that encapsulates the idea of ideagoras. Prosumers: For example, page 125, where it discusses the social video game Second Life as being created by its customers. When customers are also the producers, you have the phenomenon: Prosumer. New Alexandrians: This idea is about the Internet and sharing knowledge. The last chapter is written by viewers, and was opened for editing on February 5, 2007.

Central concepts of wikinomics in the enterprise According to Tapscott and Williams, these four principles are the central concepts of wikinomics in the enterprise:

Openness – which includes not only open standards and content but also financial transparency and an open attitude towards external ideas and resources; Peering – which replaces hierarchical models with a more collaborative forum. Tapscott and Williams cite the development of Linux as the "quintessential example of peering"; Sharing – which is a less proprietary approach to (among other things) products, intellectual property, bandwidth, scientific knowledge; Acting globally – which involves embracing globalization and ignoring "physical and geographical boundaries" at both the corporate and individual level.

Coase's Law In the chapter The Perfect Storm, the authors give an overview of the economic effects of the kind of transactions Web 2.0 permits. According to the authors, Coase's Law (see Ronald Coase) governs the expansion of a business:

A firm will tend to expand until the cost of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction on the open market. However, because of the changing usage patterns of Internet technologies, the cost of transactions has dropped so significantly that the authors assert that the market is better described by an inversion of Coase's Law. That is:

A firm will tend to expand until the cost of carrying out an extra transaction on the open market become equal to the costs of organizing the same transaction within the firm. Thus, the authors think that with the costs of communicating dramatically dropping, firms that do not change their current structures will perish. Companies who use mass collaboration will dominate their respective markets.

Reception A review of this book in the Harvard Business Review states "like its title, the book's prose can fall into breathless hype." A review of this book in Choice recommends the book for "general readers and practitioners," but cautions that the authors "present an optimistic overview of successful collaborations and business ventures", "use unique terms (e.g., marketocracy, prosumption, knowledge commons)", should have given "more consideration [to] the darker sides of human motivation as well as groupthink and mass mediocrity", and "primarily draw on their own observations of businesses and trends for the ideas presented". Tapscott and Williams released a followup to Wikinomics, titled Macrowikinomics: Rebooting Business and the World, on September 28, 2010.

Worked examples

Example 1 — a first encounter with Wikinomics

Start with the simplest possible case. Write down what Wikinomics claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Wikinomics before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Wikinomics ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Wikinomics

In research: Wikinomics appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Wikinomics in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Wikinomics is common in secondary-school and first-year university syllabi. It links to neighbouring topics 2006 non-fiction books, Business books, Wiki concepts, so understanding it makes those chapters shorter.
In everyday life: Look for Wikinomics outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

How to study Wikinomics in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Wikinomics means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Wikinomics out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Wikinomics in simple terms?

Wikinomics: How Mass Collaboration Changes Everything is a book by Don Tapscott and Anthony D. Williams, first published in December 2006.

Why does Wikinomics matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Wikinomics?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Wikinomics.