WIKINOMICS How Mass Collaboration Changes Everything ¥ xs Don Tapscott and Anthony D. Williams Portfolio8. THE GLOBAL PLANT FLOOR Planetary Ecosystems for Designing and Making Things omewhere in rural Ghana a team of students are working on low-cost designs for mobile refrigeration. They hope that one day soon their re- frigerator designs will be manufactured in local villages across Africa, not by General Electric or some other multinational, but using a fabrication laboratory supplied by $25,000 worth of technology from MIT. Ina small remote village in India local villagers are using an identical fab Jab to make replacement gears for out-of-date copying machines, reliable tools for testing mil contents, and diagnostic devices for human blood. In the Lyngen Alps of Norway, shepherds are keeping track of their flocks from afar, using fab lab-constructed wireless networking devices. Local fish- ‘ermen are using the same technology to keep track of their boats at sea. ‘The all-purpose machine behind this local innovation and manufac- turing was put together with off-the-shelf, industrial-grade fabrication and electronics tools, wrapped in open source software written by re- searchers at MIT's Center for Bits and Atoms. They call ita “fab lab,” but think high-tech workstation meets assembly line. It has everything you need to make just about anything, including nifty gadgetry such as laser cutters to etch out 2D and 3D structures, digital carving tools for making circuit boards and other precision parts, and a suite of electronic compo- nents and programming tools for constructing cheap microcontrollers. Putting a fab lab in every home, says MIT professor Neil Gershen- feld, would deliver a profound change in how we design and assemble physical goods. Just as the information revolution placed the means to ma- nipulate information and media in the hands of everyone within reach of @ computer, a similar wave of digital fabrication technology could eventually put the means to produce physical objects in the hands of every household214 % WIKINOMICS and community. This, in turn, would radically transform the way we pro- duce, consume, and interact with physical objects, perhaps even making us genuine producers of the everyday objects that have long been the province of large-scale industrial manufacturers. In theory, its true that many things people want could be manufactured right in the home to the exact specifications required. But whether having a personal factory in your home is at all practical, or even desirable, is debat- able, to say the least. Its unclear, for example, how people would procure the raw materials for individualized production, or whether personal fabri- cation would ultimately be cheaper than today's mass-production systems One certainty is that it will be many years before we even know whether personal fabrication of the kind envisioned by Gershenfeld is even feasible ona large scale.! [And yet, the idea that participation and collaboration are on the up- swing in the design and assembly of physical things is not far out at all. In fact, we edge closer to a more collaborative reality every day as we design + and develop physical goods in ever more decentralized networks of indi- viduals and firms using methods that increasingly mirror those used to produce intangibles like knowledge. Soon the collaborative methods of ‘open source software developers will be as amenable to cars and airplanes as they are to software and encyclopedias. All of this, in turn, is part of a momentous change in the manufacturing-intensive industries, as a truly «global plant floor emerges to replace the traditional patchwork of national and regional production facilities. Peer production of physical things is ‘coming of age, and smart companies are getting with the program. RISE OF THE GLOBAL PLANT FLOOR ‘A key message in this book is that the old monolithic multinational that creates value in a closed hierarchical fashion is dead. Winning companies to- day have open and porous boundaries and compete by reaching outside their walls to harness external knowledge, resources, and capabilities. Even the stodgy, capital-intensive manufacturing industries are no exception to this rule. Indeed, there is no part of the economy where this opening and blur- | ring of corporate boundaries has more revolutionary potential ‘As long as humans have a need to eat, and to be mobile, housed, 2THE GLOBAL PLANT FLOOR * 215 clothed, and healthy, physical things will be important to the economy. Now the companies that design and make these goods are beginning to adopt the four principles of wikinomics: openness, peering, sharing, and acting global. We're witnessing the rise of distributed networks that build and distribute goods—typically on a global basis. The plant floor is going global, and its harnessing mass collaboration to design and assemble things more efficiently. ‘This is a sharp discontinuity from the reigning model of multinational production. The quintessential multinational was modeled on a hub-and- spoke architecture. A head office drew up plans and issued commands to an international network of satellite production facilities that built prod- ucts for local markets, The corporation was a collection of subsidiaries, business units, and product lines, not a unified global operation. Local production had and still has its advantages. Producing locally Provided an opportunity to tailor products to local tastes. Hiring local tal- ent created jobs and wealth in the local economy, which in turn boosted demand for consumer products. By avoiding international trade, compa- nies escaped tariffs, exchange controls, and other trade barriers that came with the protectionism of the nation-state era. This market-by-market approach to organizing production no longer ‘makes sense in a global age. National silos gave rise to bloated and expensive bureaucracies that deployed inefficient, incompatible, and often redundant processes for making and marketing products locally. Insufficient knowl- edge transfer across organizational boundaries and departmental silos ‘meant that most multinationals failed to seize opportunities for innovation and cost reduction. Now that global business standards and information technologies envelop the planet, the cost of coordinating a distributed global business organization is infinitely cheaper than just a few decades ago. Meanwhile, receding barriers to trade are freeing goods, knowledge, capital, and people to circulate according to their own market logic. ‘Companies that appreciate these changes are moving to a new ‘model—a truly global firm that breaks down national silos, deploys re- sources and capabilities globally, and harnesses the power of human capi- tal across borders and organizational boundaries. This is not an old ‘multinational with a new twist. Smart firms are abandoning the multina- tional model completely.216% WIKINOMICS nits place leaders are building globally integrated ecosystems that en- compass hundreds, if not thousands, of firms. These new global enterprises assemble components of business activity and production on a global basis to produce goods and services for customers. Everything from conceiving the customer offering through to its delivery is loosely orchestrated in a seamless global collaboration, It also not simply a new spin on the old supply chain. Suppliers have growing power and increasingly play critical roles in everything from de- sign and manufacturing to distribution and aftermarket repair services. Rather than thinking of them as “suppliers” it makes more sense for com- panies to view them more like partners, in some cases even peers. Multibillion-dollar manufacturing specialists like Celestica, Jabil Cir- cuit, Foxconn, Flextronics, and Solectron build computers, cell phones, video-game consoles, network routers, televisions, and other devices for pretty much everybody in the consumer electronics industry. But they are arguably more than suppliers. They contribute to product design, testing, distribution, and repair. They have each made significant invest- ments to do this work. If they fail to have almost perfect quality their clients could be discredited, or even fail in the marketplace. The term “supply chain” was appropriate for the old hierarchical corporation, butit, is not for the twenty-first-century firm. ‘Today chains are becoming value networks, In fact, the rise of planetary ecosystems for designing and building physical goods marks a new chapter in the corporation's evolution. As IBM chair and CEO Sam Palmisano recently put it, “The emerging glob- ally integrated enterprise fashions its strategy, its management, and its operations in pursuit of a new goal: the integration of production and value delivery worldwide.”? Not since the nineteenth century have our systems of production endured such large and fundamental changes to their architecture? As with all of the new business models discussed so far, the rise of a global plant floor presents tough choices for managers regarding how to ‘mark the boundaries of the firm. When the membrane of an organization becomes porous, and companies network together to create value, how do you decide what should be in and what should be out? ‘The new reality in manufacturing, as in other spheres, is that 4