This year’s report from the Center for the Digital Future at the USC Annenberg School for Communication shows that online communities are becoming very important to Americans.  Here are some excerpts of the soon to be released study.

Membership in online communities has more than doubled in only three years. More than half of online community members (54 percent) log into their community at least once a day, and 71 percent of members said their community is very important or extremely important to them. Fifty- six percent of members reported meeting their online counterparts in person.

McKinsey Quarterly offers some interesting observations on a host of key business trends that are being driven by the influence of technology like Web 2.0. Given the recent discussions, more food for thought.

These trends fall within three broad areas of business activity: managing relationships, managing capital and assets, and leveraging information in new ways.

I want to highlight the first and third in this post. Much of what os.a is all about relates to these MQ Trends.

You can find McKinsey entire article here.

Managing Relationships

Distributing co-creation

Technology now allows companies to delegate substantial control to outsiders–co-creation–in essence by outsourcing innovation to business partners that work together in networks. By distributing innovation through the value chain, companies may reduce their costs and usher new products to market faster by eliminating the bottlenecks that come with total control.

os.a Examples: New businesses created around networks versus traditional management hierachy

Using consumers as innovators

Consumers also co-create with companies… But the differences between the way companies co-create with partners, on the one hand, and with customers, on the other, are so marked that the consumer side is really a separate trend. These differences include the nature and range of the interactions, the economics of making them work, and the management challenges associated with them.

os.a Examples: Tapping end users to “co-create” content, product or services

Tapping into a world of talent

As more and more sophisticated work takes place interactively online and new collaboration and communications tools emerge, companies can outsource increasingly specialized aspects of their work and still maintain organizational coherence. Much as technology permits them to decentralize innovation through networks or customers, it also allows them to parcel out more work to specialists, free agents, and talent networks.

os.a Examples: Extracting more value from interactions

Technology tools that promote tacit interactions, such as wikis, virtual team environments, and videoconferencing, may become no less ubiquitous than computers are now. As companies learn to use these tools, they will develop managerial innovations–smarter and faster ways for individuals and teams to create value through interactions–that will be difficult for their rivals to replicate.

os.a Examples: Ride the LongTail , Web 2.0 Adoption by Companies by Global Region

Leveraging information in new ways

Putting more science into management

Leading players are exploiting this information explosion with a diverse set of management techniques. Google fosters innovation through an internal market: employees submit ideas, and other employees decide if an idea is worth pursuing or if they would be willing to work on it full-time. Intel integrates a “prediction market” with regular short-term forecasting processes to build more accurate and less volatile estimates of demand.

os.a Examples: Prediction markets for associations

Revelers in Lafayette Park across from the White House on election night.

Lost in the euphoria and the recent news headlines of the election of our first African American to the Office of the US Presidency is the recognition of a major strategy that guided the Obama Campaign through the primaries and now the Presidential Election.

It was joked and ridiculed at the Republican Convention.  But no one is laughing now.

Community organization won this election.   In fact, it transformed politics in this country forever.

A bottom up strategy giving average Americans a “direct” opportunity to “contribute” their energy, passion, talent and yes MONEY.

Obama won by giving the keys to the inmates in the asylum.

Thousands of unpaid volunteers who never participated in politics previously destroyed two well-heeled political brands (Clinton and McCain) on their way to the White House.

Only in America.  And here is the lesson for associations.

While much of this vaunted Obama machine was web-based featuring tools for e-commerce, social networking, and community organizing,  the lesser known neighborhood volunteer efforts run precinct by precinct made this campaign personal to millions.

Obama used community-centered politics to drive his campaign.

Just like InnoCentive, Ninesigma, ArtistShare, Open Architecture Network, and many others featured on these pages.

The research evidence proves that community-centered strategies that give end users freedom to create and drive innovation boost product and service growth.

Here’s a salute to our new President.  And one more for those brave enough to let the inmates co-create the future in your own associations.

A new study has been completed by Oxford University Internet Institute (UK) and will be published next month that was funded by McKinsey and Company.  Titled “The Wisdom of Collaborative Network Organizations: Capturing the Value of Networked Individuals” the study abstract says…

“Digital networks, particularly the Internet, are used widely to search for information and to share expertise and knowledge between peers. Such collaborative problem solving and co-creation of services and products go beyond traditional organizational boundaries and geographical constraints, raising major questions about how to manage networked individuals and capture the value of their activities. This paper conveys the findings of a series of case studies designed to explore these questions. This led to a framework for categorizing the networks which suggests the management and performance of ‘collaborative network organizations’ will be contingent on the ways in which they are used to reconfigure information and communication flows for the distributed sharing, generation or co-creation of content..”

OII’s research observations included the following:

• Distributed Problem Solving Networks (DPSNs) do indeed present major opportunities to their participants. 
• DPSNs offer clear challenges to managers and professionals who wish to create and sustain them that will address their goals and objectives. 
• DPSNs encompass more approaches than originally envisioned which led the OII team to add new cases during the course of the project and to develop a range of competing typologies of these organizational forms. 

For those of you who need a non-research-centric translation… open innovation (and networking sites whose business models or product/service experiences are “open”) is indeed a significant and viable strategy to use to add member value.  We just need to think through the customer experience, governance, product development, and incentive model.

In the coming months, the OII will be considering ways to further develop selected case studies and topics, such as the investigation of governance structures and the multiple points of control within several distributed problem solving networks.

Among the current case studies is Sermo an online community of 50,000 licensed physicians in the US that we profiled last year on os.a. Physicians can ask and answer questions and surveys posed primarily by doctors and pharmaceutical firms. The Sermo community identifies interesting health trends, case and other novel health insights for the benefit of multiple stakeholders.

The reason my view of Sermo is different than say InnoCentive as a model to consider is in how it constructs participation and information flow.  The former seems opaque to me while the latter is much more transparent.   Sermo needs to be more transparent and one would hope the AMA (if they are still involved) wants that too.

Here’s an interesting story from NBC’s chief science and health correspondent Robert Brazell from last month on Sermo.

There doesn’t seem to be any update in 2008 on this partnership and how it has worked for the AMA. If anyone can provide an update it would be appreciated.

In our Monday session on open business models at the ASAE & Center Annual Meeting, we discussed one of the core tenets of open innovation and its value to organizations in the 21st Century. It is the notion that network-centric systems and processes are often far better structures for delivering value than hierarchies. Or to put it more simply, using more “open” methods of product or service development are far superior to more traditional “closed” methods.

Here’s why…

Presently, association management relies on membership and a cadre of volunteer leaders often vetted by a peer group to serve alongside staff to deliver the membership experience. By and large this model drives almost all association activities. Over time, we have ladened this with bylaws, policies and procedures that are most often governed by the volunteer leader system itself. In addition, a “culture” often exists with “traditions” and other “informal rules” that provides a hidden support system.

This system is deemed “closed” because to get access you must jump a series of hurdles: 1) become a member, 2) seek an invitation to serve as a volunteer leader, 3) follow the rules (as defined above), 4) play the game trying to fit into the volunteer management “culture” and its peculiarities. The latter may require waiting your time to contribute where and when you want or racking up enough tenure and political points to make a contribution.

To say that a growing number of professionals (in many age groups but most especially under the age of 35) prefer to pursue other avenues for creative professional outlets is an understatement. One need only look at renewal rates or the lower levels of younger professionals coming into membership after college to verify this trend.

Some call this a “walled garden” where you have to pay to play.

And then something amazing happens. Thanks to the Internet and collaborative software professionals anywhere can collaborate to create amazing value. In business history, we can point to the rise of the “opensource” software movement for creating “open innovation” practices that are being used by business today with great success. The Linux operating system which has now reached a 30% global market share versus Microsoft is a shining example of the power of “open” methods of product or service development.

So I ask you…if a few hundred software engineers working from a network model could create a product of such complexity and value that it competes successfully against Microsoft (a hierarchy by the way), what makes you think your own members or nonmembers couldnt make you more successful if you tapped into them more effectively?

The problem with our current volunteer leader model is our collective brain is no bigger proportionally than one from a brontosaurs. On average our volunteer leader population is maybe 1-2% of the total membership. That’s all the brain power you have. Contrast that with the ability to tap the entire membership AND nonmembers and your brain power increases exponentially. And we haven’t even talked about how unbalanced our brains might be geographically and how this could leave us less able to tap a more global perspective.

If you attended Dr Satish Nambisan’s thought leader session on Sunday, this is a over simplification of his whole thesis.

So how does one leverage this open approach?

You need methodologies that can work in an online networked world that can help you:

• Define and measure member value
• Create products and services
• Govern
• Adapt your business model

And you need to adapt your culture. Make sure to read Satish’s book. It is much more useful than Wikinomics in this regard.

The good news is we have lots of successful examples from which to study. InnoCentive who spoke at this session on Monday as well as Tuesday is but one example.

So if you have trouble attracting younger members or finding enough good volunteer leaders, try open models for delivering member value.

Some old posts to explore this topic further

A conversation with Satish Nambisan author of the Global Brain

Walled Garden Strategy Loses Another One

Networks vs Hierachies

Thanks to all for attending our session and for Moshe Pritsker, PhD from JoVE and Chuck Davis from InnoCentive for coming to the ASAE and Center AGM in San Diego this year.

Here are our slides from the session titled, “Associations Next Crowdsourcing the Creation of Value.”

Note: Session was recorded by ASAE & Center so you can play them together from here.

Session Introduction provided by Jeff De Cagna of Principled Innovation.

Peter & Chuck’s presentation (download and view in slide mode)

Moshe’s presentation (download and view in slide mode)

Samples of previous posts

What is crowdfunding?

Crowdsourcing news

Crowdsourcing publishing

McKinsey study suports co-creation (e.g. crowdsourcing) practices

Having the courage to adapt your models of engagement

“Father of co-creation” speaks out

Tiny company with 12,000 customer product development community

Lots more by going to the right hand margin under “product co-creation.”

Thanks to all for attending our session and for Chuck Davis from InnoCentive for coming to the ASAE and Center AGM in San Diego this year.

Here are our slides from the session titled, “Associations Next: Using Open Business Models to Create New Value.”

Note: Session was recorded by ASAE & Center so you can play them together from here.

Session Introduction provided by Jeff De Cagna of Principled Innovation.

Peter’s presentation (downloads should be played in slide mode)

Chuck’s presentation (no downloads permitted)

Previous Related Posts

HBR’s take on the importance of openness in innovation

More background on open business models applied to associations

InnoCentive’s business model explored – TV interview

Make sure to review the posts and links of open innovation research from McKinsey, Forrester,etc as well as more examples of open business models from the column on the main page of os.a.

Social media and online communities have great potential for fostering the growth and development of fresh thinking, exciting new products or services, or just to challenge the status quo.   But it is sad that more and more we wade through a thick soup of “I this” or “Me that” in how we communicate or collaborate.

This threatens the very heart of the credibility of Web 2.0 and other new approaches to management thinking among the wider audience who creates and consumes digital content.  The sharpest critics of open innovation of all kinds…the ones who still think email is a productivity tool…that listservs are our best way to collaborate… can happily point to this “me”ans of communication as further proof that the crowd is wrong, that the rank and file should never be allowed to collaborate or have a say in how products or services are developed with volunteer leaders and staff.

Good leaders lead by staying focused on the mission and being passionate without fear of losing the  attribution or critical acclaim.   They are the ones more respected by others because they can see their motives aren’t about self-promotion.

Let’s help ourselves.  Present ideas and opinions with force and passion but with a little less “me.”

Like many association executives…

You see evidence of a growing presence of non-US customer product consumption, attendance at your meetings, or authors of content that you have come to rely upon to supply the IP for new products and services.

Your members, customers, partners and leadership from different regions say your association must be more “present and engaged here” if you want to be more successful.

Meanwhile, your environmental scanning indicates that demographics and business trends show:

• A dramatic shift (see graph and video below) in the movement of non-USA young professionals who no longer come to the USA to study or find employment and now choose to become part of the amazing changes underway in their own countries like – China, Turkey, Brazil, Saudi Arabia, Venezuela, Algeria, Russia, India and South Africa.
• Post 9/11 US immigration policy continues to limit the rest of the world’s best and brightest from coming the the USA.
• To succeed in globalization one must build business relationships in these regions to demonstrate local presence and a willingness to contribute “locally” rather than simply selling what you have from thousands of miles away (See the “The Second World Empires & Influence in the New Global Order” a new book by Parag Khanna).
• Global outsourcing continues to spread to white collar professionals from call centers to the more professional positions like engineering thanks to Business Process Outsourcing strategies.
• 24/7 project management requires inter operable standards & practices from body of knowledge to practices so “one work” is done no matter where or by whom.
• An Asian skills “gap” in the ability to apply knowledge in the business world despite coming from the best schools forces millions who graduate into intensive 14 week corporate training programs costing businesses millions with a high wash out rate.
• Customer service expectation now has “gone global” as global consumers expect the same quality experience whether in New York, London, Dubai, Mumbai or Singapore.
• The Bottom billion (the world’s poor) are now being targeted with innovative business, product design, pricing, and distribution models to turn them into viable paying consumers ….just not at the prices the rest of us pay.

The question is how do you go about building a sustainable business?

What would it look like?

How do we get our Board to support it?

So I am starting a new blog called Grow Globally.org to help answer these questions.

After 16 years of success with US associations, I have learned that building and sustaining growth in today’s international markets requires a global strategy with regional planning and a local infrastructure for execution.

For some it might be leading with products and services while for others it’s all about membership. But regardless of your approach, if you can’t build community you won’t succeed in attracting and sustaining interest among customers, members, partners, funders, or endorsers in any market.

MCI covers 23 cities and 14 countries with a team of 600+ people who traverse a product practice in international association management, PCO, meetings, and Ovation DMC across Europe to Arabia to Asia and Latin America. We’ll share what we have learned and encourage you to contribute your own thoughts and ideas as we explore the world of international association management with you.

The GrowGlobally.org agenda covers what MCI considers to be the core drivers of establishing and sustaining a global business and are featured in “sections” on the horizontal navigation above that are visible on any area of this site.

In the coming months you can look forward to reading actual, practical approaches and solutions to real world challenges that you can use to plan your own projects. Here are some examples:

• Market & Business Plan – sound market analysis with a business plan should become the foundation for a global growth strategy
• Product Management – sell them what they want not what you have… by adapting product to local need
• Membership – community is cultivated by enfranchising local/regional members to help build member value that is meaningful to those in the region
• Member Services – regional and local infrastructure is critical to provide the right competencies and local thinking to execute repeatedly while mitigating risk
• Advocacy - whether it’s regulatory issues, philanthropic outreach, or social responsibility see how others are promoting issues and building support
• Channels – part of your sustainable business model must include Partners, Sponsors, Funders, and Sales Feeders
• MarCom – it isn’t just translating your material but knowing that to communicate and position yourself to maximize opportunities you need to adapt yourself to local markets
• Meetings – from large Congresses to small meeting… find out how to develop strategy, promotion campaigns, and secure the destination resources you need to provide quality meeting experiences anywhere

You will also find third party research and links to other web resources to help you build better international products and services.

I look forward to exchanging views and sharing research, experience and expertise for this exciting new frontier of global opportunity.

If you are a devotee of TED’s videos you know that this event has has some amazing presentations. I have been jealously watching them for years since the event was started by Richard Saul Wurman. But I always wondered whether people walk away from such an inspiring event and feel a little frustrated as the enthusiasm runs through their fingers like so much sand without marshaling that emotion into real projects.

This year TED looks like they are fixing that problem by bolting on a crowdsourcing attendee experience using a new software product called Kluster.

Watch this video to see how they plan to do it. (Click on image)

Over the 72 hours of TED, they plan to use the power of the audience and the rapid-prototyping system and software to develop a tangible product. And we can all join the party. You can sign up here.

Good luck guys.