Every chapter of Living Networks is being released on this blog as a free download, together with commentary and updated perspectives since its original publication in 2002.

For the full Table of Contents and free chapter downloads see the Living Networks website or the Book Launch/ Preface to the Anniversary Edition.

Living Networks – Chapter 5: Distributed Innovation

Intellectual Property in a Collaborative World

OVERVIEW: Innovation and intellectual property increasingly dominate the economy. As technology advances, no firm has the resources to stand alone, and collaboration with others is becoming essential. This means that new business models are needed for developing intellectual property and sharing in its value. Open source software provides us with valuable lessons that can be applied to many other aspects of business and innovation.

This chapter on innovation and intellectual property was one of the most important in Living Networks, I thought, and is absolutely as relevant today as five years ago. Innovation is the source of the majority of value-creation in a networked world, and how we deal with intellectual property can either enable or block human progress, on every level.

The nature of the intellectual property landscape is that the structures are highly rigid, by definition being set by legislation. However attitudes are rapidly changing, and new approaches such as Creative Commons have gained enormous traction over the last years. Certainly innovation is seen more today than as something that happens across boundaries, though most organizations are still hesitant to open up. The critical next phase is in innovation in innovation models.

The chapter begins by explaining a few basic shifts:

* Innovation and intellectual property increasingly dominate the economy.

* Greater complexity means collaboration is essential.

* Changing flow is reshaping the role of intellectual property.

* We need new business models.

It goes on to explore the role of intellectual property, beginning with a telling anecdote:

In 1421 the government of Florence awarded the world’s first patent to Filippo Brunelleschi for a means of bringing goods up the usually unnavigable river Arno to the city. He demanded and was duly awarded legal protection for his invention, being given the right for three years to burn any competitor’s ship that incorporated his design.

Fast forward almost six centuries, and the global economy is dominated by intellectual property, and the flow of information and ideas. This “property” exists in the space of our minds rather than under our feet, yet it is by far the most valuable economic resource that exists today.

The key issue is the fluidity of intellectual property. One of the developments over the last years has been the growth of so-called patent trolls. The negative impact of the patent landscape on innovation is gradually being exacerbated.

The chapter then goes on to look at the open source movement, and how the principles can be adapted for other commercial ventures. I used the story of Goldcorp, the gold miner which opened out its geological information in order to get better insights on where to drill. Don Tapscott’s book Wikinomics, coming out four years later, opens with the same example.

I also discussed Creative Commons, then a new idea, as a way of increasing the fluidity of ideas. I am delighted that this has gained enormous ground since then, now being a staple of the Web 2.0 world of blogs and content sharing.

The last section of the chapter focuses on implementing distributed innovation and value creation. This is still an issue I spend much of my time on, as this is going to be one of the most important economic issues of the next decade. If we can find effective ways to create and share value from innovation across diverse and distributed groups, the global economy will be transformed. I offer five key principles, followed by the example of how Hollywood does it, as they’ve been successfully using business models for distributed innovation since the 1930s.

Every chapter of Living Networks is being released on this blog as a free download, together with commentary and updated perspectives since its original publication in 2002.

For the full Table of Contents and free chapter downloads see the Living Networks website or the Book Launch/ Preface to the Anniversary Edition.

Living Networks – Chapter 2: Emerging Technologies

How Standards and Integration Are Driving Business Strategy

OVERVIEW: Standards are the foundation of communication, and of all networks. Building on the existing foundation of powerful standards and connectivity, there are three sets of emerging technologies that are driving the next stage of the networks: XML and web services; peer-to-peer; and network interfaces. In the connected economy, standards and network strategy are at the heart of all business.

Chapter 2 of Living Networks – Commentary and updated perspectives

It would seem likely that a chapter written in 2002 about emerging technologies would date very quickly. However the emphasis of this chapter was on standards and integration, which have absolutely been at the foundation of technological change over the last five years, and continue to be firmly at the center of what dominates technology today.

The (very) gradual shift to open, accepted standards (see below in the text for explanation)

I selected three sets of emerging technologies to focus on in this chapter: XML and web services, Peer-to-peer networks, and Network interfaces.

Shortly after Living Networks was launched XML celebrated its fifth birthday, and it has now reached the august age of ten. While XML is still not highly visible other than to software developers, and other data interchange formats have arisen, it still provides the core foundation of the networked world of today. AJAX, a key foundation of Web 2.0 technologies, stands for Asynchronous Javascript and XML, using the underlying technology in new ways. Talk of ‘web services’ has shifted to Service Oriented Architecture, but the concept remains the same.

There has been less talk about peer-to-peer networks today than five years ago, but the concept underlies how the Internet is evolving. The five domains for peer-to-peer domains I described remain totally relevant: Distributed content, Distributed computation, Collaboration, Distributed processes, and Markets. My definition of Web 2.0 is “distributed technologies, built to integrate, that collectively transform mass participation into valuable emergent outcomes.” The value of what the Internet has become today is that it is almost fully decentralized. Technologies are distributed, with single applications rarely trying to do everything required on their own. They are built to integrate, to draw on other applications, and often to be available to other applications, forming a peer-level network of data and applications.

What I called ‘the interfaces that merge people and technology’ are still fundamental to our future. I have more recently spoken and being interviewed about the current state of our interfaces with technology and the potential they hold. Despite the rise of voice recognition and video glasses, we are far from transcending clunky keyboards, and the true merging of humans and machines is yet to happen.

When we launched Living Networks, the idea that most captured the imagination of the media was ‘proximity dating’, leading to interviews on national breakfast television and substantial newspaper coverage. While I have been interviewed many times about mobile social networks over the last five years, their prime time is yet to come. However the next year or two is likely to see broad adoption, as social networks transcend computers and shift to mobile devices.

The final section of the chapter is on Standards and Network Strategy. While business strategists now often implicitly understand these concepts, standards strategy is rarely fully thought through by major organizations.

The diagram at the beginning of this post illustrates the shift to open, accepted standards. In the chapter I wrote:

Since the trend to open, accepted standards is clear, it is far better to go with it rather than fight it. Long-term success must be based on aligning yourself with these shifts. Over time, the greatest rewards will go to those who provide effective leadership towards standards, while implementing clear

strategies on how they are positioned and create value within the unfolding landscape.

The shifts in attitude of Microsoft, IBM, Google, and others demonstrate that this position is now pretty well accepted. Strategy needs to unfold within this playing space.

The examples I used in my four action steps for developing network strategies included Flash, the Amex Blue card, instant messaging interoperability, Bluetooth, FXall and the Xbox. There are any number of new case studies that could be used, with HD and HD disk standards among the most visible. I think a useful addition to the literature over the last years has been The Slow Pace of Fast Change by Chakravorti, which examines how game theory can be applied to standards strategy, however the fundamentals transcend any specific technology or epoch.

The book is available for purchase on Amazon.com and other major booksellers. In addition every chapter of the book will be available for free download from this blog and the Living Networks book website. Over the next weeks I will serialize the chapters on this blog, with commentary and updates for each chapter with the benefits of over five years of hindsight. So just come back to the blog or Living Networks website regularly or subscribe on your RSS reader. Below is the table of contents and Preface to the Anniversary Edition, which describes in more detail the background to the relaunch.

Since writing the preface, and having re-read the book in more detail, I find myself startled by how contemporary it is. In a way I think much of the book could in fact be more relevant and useful than it was in 2002, now that our networked world has been truly born and begins to mature.

Living Networks – Table Of Contents

Preface to the Anniversary Edition (below)

Chapter 11 – Future Networks: The Evolution of Business

Preface to the Anniversary Edition

It is fascinating to reflect on the five years that have passed since Living Networks was first published in November 2002. In many ways that was the dawning of the age of networks, though by then it hadn’t yet been widely recognized. In those days the idea that the networks were coming to life was a pretty radical idea. Today many people simply nod in immediate understanding at the concept of the living networks.

Soon after the publication of Living Networks, the emergence of Friendster, MySpace, LinkedIn, and Facebook – to name just a few among a vast proliferation of social networks –provided literally hundreds of millions of people across the planet with a direct, personal experience of the rise of a networked world.

The first words of Living Networks were about how companies were using blogs. Since I first came across blogs I have believed they were a transformative tool. Certainly the intervening years have borne that out, with now over 100 million blogs existing worldwide, and blogs now comprising over 20% of the 100 most popular online media sites. My own blog Trends in the Living Networks (rossdawsonblog.com), launched five years ago to accompany this book, has been central to the extremely pleasing growth of my companies.

Organizational network analysis, which I described in Chapter 6, has since become a mainstream business tool. The success of the University of Virginia’s Network Roundtable, a consortium of 100 leading organizations where I am now a research leader, has demonstrated the power of network approaches to improving performance across business and government.

Living Networks is founded on extensive examples and case studies of actual corporate practice. It’s interesting to see that many of the stories I used are still very current. Some of the most prominent business books out in the last year, including Wikinomics, The Starfish and the Spider, and Open Business Models, have used many of the same case studies that I did five years earlier. Stories such as Canadian miner Goldcorp’s use of open source approaches, Collabnet, Innocentive, Procter & Gamble’s Connect & Develop program, and many others described in Living Networks are still viewed as cutting-edge examples years later. “We the Media,” a section title in Chapter 1 of Living Networks, was later used as the title for a book.

So why am I relaunching Living Networks now? In hindsight, the book came out before most people were ready for the message, and in the depths of the dot-com bust. As such, the book probably didn’t get the attention it might have if it were released a year or two later.

Five years after it was first published, certainly some of the value of relaunching Living Networks is as an historical document, in seeing where things stood as the networks were being born.

In some ways the world has moved on substantially over the last five years. The rise of what is now called Web 2.0, assisted by new technologies including AJAX, has changed the nature of the Internet. The landscape of digital rights management has changed dramatically from the playing field of 2002. Software-based services have progressed substantially over the last five years. Word of mouth marketing has become an entire industry with its own assocation.

However much of what was covered in Living Networks is still at least as relevant today as five years ago. Standards strategy is shaping industry structure more than ever. The power of distributed innovation is even more compelling today, and still barely tapped by most corporations. In our hyper-connected economy, trust, relationships, and personalization only increase in importance. Participative strategy development is finally becoming a common approach to strategy and leadership. The free agent economy is becoming ever-more enabled by the living networks as years go by.

The flow economy framework for business strategy I proposed in Chapter 7 is if anything even more relevant and useful today than five years ago, as many of my clients have discovered. Most importantly, collaboration across boundaries is becoming increasingly critical to the future of business, making executives’ attitudes to this issue absolutely central to their success.

Two years ago I founded Future Exploration Network, what is now a global strategy and events company that helps organizations understand – and create – the long-term future of business. Much of my speaking and consulting work today is about the future of business.

Journalists love to find out what ‘futurists’ have predicted in the past so they can see how right – or wrong! – they were. In Chapter 11 of Living Networks I made 10 predictions for the future of business. Many of the predictions were long-term, so we can’t