Sunday, March 26, 2006


Network as the Locus of Innovation

One of the big challenges of the network era is to understand the locus of innovation. It's no longer inside corporate hierarchy. It's in the network through a complex network of relationships. And this is where new models of innovation are emerging.

An article in today's NY Times illustrates how companies are innovating by tapping into the collective IQ and expertise of people. The new source of value creation is economies of expertise. This included product knowledge, process knowledge and service knowledge. More importantly, it's about reuse of knowledge with high leverage.

Some of the experiments underway today in the world include:

1. Rite-Solutions. The NY Times article illustrates their ide well..
At Rite-Solutions, the architecture of participation is both businesslike and
playful. Fifty-five stocks are listed on the company's internal market, which is
called Mutual Fun. Each stock comes with a detailed description — called an
expect-us, as opposed to a prospectus — and begins trading at a price of $10.
Every employee gets $10,000 in "opinion money" to allocate among the offerings,
and employees signal their enthusiasm by investing in a stock and, better yet,
volunteering to work on the project. Volunteers share in the proceeds, in the
form of real money, if the stock becomes a product or delivers savings

2. InnoCentive. This is a web-based community matching top scientists to relevant R&D challenges facing leading companies from around the globe. It also has an online forum enabling major companies to reward scientific innovation through financial incentives. It matches solution seekers with problem solvers.

I will post other examples here later as I try to develop a typology of locus of innovation in networks.

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