Business model innovation may be the most important impact of social business

I attended the IBM Connection conference this week, and it led to a slew of thoughts about the role of social business in innovation, many of which will simmer in the back of my mind for some time, but some of which showed up on GigaOM Pro immediately.
In particular, I was struck by the implications of Joseph Gordon-Levitt’s HITRECORD, where he described the open collaboration process used to develop a short movie — The Man With A Turnip For A Head — that went on to play at Sundance. But as intriguing as the production side is, the business side is more compelling:

Stowe Boyd, HITRECORD’s open collaboration is the future of open business
All of this would be something in the art section of the New York Times, except for the money side of things. The HITRECORD approach to sharing the proceeds of these artistic creations is open as well. In the case of a simple upload — for example, if I uploaded a poem and someone wanted to pay to publish it — I’d share with HITRECORD. But in the case of an elaborate multi-player deal like TMWATFAH they published a page with all the contributions made, including those not selected, and asked all involved to consider the value of the contributions. Then Gordon-Levitt and others at HITRECORD processed those inputs into a spreadsheet and posted it. They had another few weeks of discussion among the group, and then made a final decision, and posted that. An open and (reasonably) democratic approach, although not requiring absolute consensus.
So, I think there is a lesson to be learned here: one that reflects on the premises of remix culture and how an ‘open business’ might work in the near future.
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With open systems like Github and Kickstarter, and the open collaboration model pioneered by HITRECORD, we could see a way to an innovative scaling up of freelancers into something considerably more than just acting as professional temp workers. Instead, ad hoc connectives of contributors could rival the productivity of corporations, and without the overhead and friction involved in trying to get everyone pulling according to a single, collective long-term strategy.

I also got to speak with Mike Rhodin and Ed Brill, two senior managers from IBM. Mike and I discussed social business innovation, which I had written about earlier that same day in Balancing risk and social business innovation:

If social tools offer competitive advantage then experimenting with new tools and new approaches to tool-mediated sociality is a necessary aspect of corporate innovation. After all, innovation isn’t limited to the R&D group. Innovation can happen across the board: in how we work, how services are delivered, and how products are designed, delivered, and applied. One of the most fertile areas for innovation is the interplay of people in the business, and between company staff and people outside the business: clients, partners, and the broader marketplace.
Yes, experimentation carries risks, and costs. But these are a necessary part of innovation of all sorts, and a necessity in social innovation as well. Certainly, we want to bound risks, and to structure our experiments so that we can fail fast, but what we cannot do is optimize all risks out of the business at the expense of innovation.

I went on in that post to make the argument that large corporations that select a single social business platform for the sake of minimizing risk, cost, and disruption to the business might be trading away social business innovation, and that could be a far greater cost and risk. The same topic popped up in the discussion with Mike Rhodin:

Stowe Boyd, Mike Rhodin discusses social business innovation
Boyd: There is a second tier of thinking about innovation regarding social business, where social business offers avenues for ways of innovation in the way your business works, not just tweaking the cement formula. [Which was the point of departure for Balancing risk and social business innovation.]
Rhodin: Business model innovation.
Boyd: Yes, you change your business model so you are shifting the way parts of the company deliver value to their clients, for example. You can change the way people organize themselves at a social level. That’s a secondary or additional kind of innovation offered from social business. Do you know of examples of that going on? Where companies move from old business processes to something new?
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Rhodin: A lot of that happens inside IBM. All of our engineering groups are connected together socially, and a lot of ideas come out: how we should change our business, what business we should get into. This came from the ground up  out of the engineering communities first, then spread into the consulting communities, and now our client teams, the ones on the large accounts are can now create client hubs and client communities for everything that goes on. It becomes a central place to find out what IBM is doing with any client. Now it’s to the point when you leave a meeting you might post that I was here today, this is what I learned, this is what we talked about, they client said something which someone may want to follow up on, this goes onto the client hub and everyone is organized around it.

My talk with Ed Brill was really about the difference between IBM’s thinking about ‘social email’ as meaning ’email brought into a social context’, while I am still hoping for ‘social email’ in which email threads are social objects, like large and growing structured documents. Interesting, but not as critical as the theme of social business innovation.
I wrote a piece wondering, ‘if social business is such a large and growing trend, where are the must-attend conferences?’ And, while I received additional thoughts from others, it still seems like the central conference for the industry is missing. Meanwhile, I criticize the technorati who use the headline ‘social business is dead’ to promote their own axe-grinding or social business tool.
There were a trickle of posts on the future of work: ‘revolving door’ careers, creativity enhanced by moderate background noise, and small business use of LinkedIn for social media. And here’s the piece that I will probably refer back to the most over the next year:

Stowe Boyd, How is social business like urban traffic?
I think there is an important parallel between urban travel and social business. There is a now well-understood but counter-intuitive law in traffic engineering, called Braess’ paradox, where closing streets can lead to better traffic flow.

Linda Baker, Removing Roads and Traffic Lights Speeds Urban Travel
The brainchild of mathematician Dietrich Braess of Ruhr University Bochum in Germany, the eponymous paradox unfolds as an abstraction: it states that in a network in which all the moving entities rationally seek the most efficient route, adding extra capacity can actually reduce the network’s overall efficiency. The Seoul project inverts this dynamic: closing a highway—that is, reducing network capacity—improves the system’s effectiveness.

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My belief is that this is quite like the adoption of social principles in business.
The equivalent to these traffic analogies in social business is pretty direct. The most important decision in a connected world is deciding who to follow. And by picking people to follow, you are defining your pattern of connection to everyone else in the network, which is analogous to laying out the streets and boulevards through which information finds its way to you. The equivalent to shared streets is transitioning to open social communication models, where we are operating at social scale, eye-to-eye, not simply following the directions of traffic signals, without considering the other people we share the streets with.
And the paradox in social is this (Boyd’s Law): that by being willing to put aside personal goals momentarily and being willing to respond to others’ requests for help, we increase the productivity of the network as a whole. Since when I help someone make progress, they and the group they are working with then make progress, collectively. And that radiates outward, cascading across the entire network. This is like Braess’ paradox, since we drop the concept of the more selfish individual productivity as the highest good and instead aim for network productivity instead.