BC Business
The open-source revolution will change the way you do business. It will reshape the very essence of our democracy. It will empower ordinary citizens and consumers as never before. Unless, of course, it doesn’t.
Clay Tippett and Kenny Duncan maybe aren’t the first two guys people would conjure up in their imaginations when they think of how the Internet and its social-networking possibilities are changing the world. They are not goateed 20-somethings with blogs or Twitter accounts. Instead, the two men in their late 50s are longtime specialists in industrial equipment for Ritchie Bros. Auctioneers Inc., the half-century-old Richmond-based company that’s the world’s largest industrial auctioneer of such things as cone crushers, articulated dump trucks and vibratory padfoot compactors.
But Tippett and Duncan found themselves going through the portal into the Digital Power to the People world two years ago when they got into an argument at a Dubai trade show about a particular loader-backhoe. After bickering at the show and on the bus trip back to their hotel about who the original manufacturer of that type of loader-backhoe was – Ford or New Holland – and various other details dredged from their memories, they thought this kind of information should be collected somewhere because guys like them aren’t going to be around forever to remember.
Dave Ritchie, one of the three brothers who founded the company, had always wanted something like that. But instead of gathering what they and others had to say in a book or even a library, the Ritchie Bros. team decided to create a “wiki” in order to collect everyone’s knowledge on industrial equipment. At first RitchieWiki was open only to employees, who wrote detailed descriptions of everything from, well, loader-backhoes to chip trailers. As of last September, the wiki is up on the Ritchie Bros. website and is open to customers and manufacturers as well, who can add their troves of information about the history and assets of various kinds of machinery.
That’s not the only way that Ritchie Bros. has tapped into the new world. Another part of the website, rbauction.com, allows potential buyers to look at the last two years of prices that people have paid for equipment sold at Ritchie auctions – an unusual move for a business that has typically relied on people not knowing that sort of information. Imagine if realtors selling houses provided prospective buyers with a complete list of what everything in the neighbourhood has sold for in the last six months. Or if car dealers provided you with a list of what people have paid for the car you’re interested in buying.
“We had always kept that data very secret. We thought that it was a competitive advantage,” says COO Bob Armstrong. And then they figured, What the heck, let’s open up the doors. The idea was that transforming the company into the go-to information bank would attract buyers. That turned out to be true.
“It’s the second-most popular feature on our site. It has helped to establish us as a central source of information,” says Armstrong. “Yes, it gave our competitors our data, but it turned out to be more of an advantage to give our customers the data than it was a drawback to give it to our competitors.” The site got five million unique visitors in 2008, and the company has seen an increase in bidders, both live and online.
What’s happening at Ritchie Bros. is just part of a seedling revolution in how businesses, governments and institutions talk to their consumers, employees and citizens – and how those groups talk to them. In the old world, the people in charge gathered information and hoarded it, dispensing it only as needed to justify a decision they were making or a limited choice they were presenting to their publics. Experts drafted policies and sent them out to the public for “feedback,” which usually resulted in only the most minor of changes (think Gateway project).
But in the era of tell-all Facebook, Wikipedia, instant news and blogs, those in charge are realizing that it’s a different world out there. People want to participate, they think they have something to say and, thanks to all the new technologies that allow them to broadcast their opinions and information, watch out – they’re going to say it. There’s barely an institution in existence that hasn’t felt the effects of that in the past five years, from Canaccord Capital (pursued by a group of Facebook-joined investors demanding the company make amends for bad advice on asset-backed commercial paper) to the RCMP (never sure when a cellphone video is going to become a piece of evidence) to Wal-Mart, the entire real estate industry, and the makers of Land Rover, which have all found themselves the target of specific blogs dedicated to exposing dubious practices.
But besides just trying to keep up, some companies and governments are trying to tap into that turbulent river of “Regular Joe” power, discovering there’s a benefit to throwing their information out to the crowd and reaping its collective wisdom. There are all kinds of names for the different parts of this movement. “Crowdsourcing” is the term businesses use for getting customers to participate in their operations, by testing software or developing applications. “Open source” is a term used more by governments and software developers to describe their initiatives to make information more available or allow large groups of people to collectively design policy or software. And “wiki” – from the Hawaiian word for “fast” and made famous by Wikipedia, the monstrously popular online encyclopedia – is becoming the generic name for any collaboratively developed body of information on a website that anyone can edit. Whatever the term or the particular practice, it’s a new form of conversation between those who have traditionally held all the information cards and those who traditionally have not.
“We’re entering a new ecosystem where the more transparent you are, the more efficient you are,” says David Eaves, a Vancouver-based freelance public-policy consultant, negotiator and open-source advocate who is part of the new generation pushing governments, in particular, to expose themselves to the new world. Eaves, also a board member of the Vision Vancouver party, has been a key driver behind Vancouver city council’s recent move to what some call “open-source government.” In May council passed a directive to staff to look at ways to release as much of the city’s enormous data collection to the public as possible, keeping security and privacy in mind. The idea is to allow anyone who wants to – a media outlet, a programming company, a passionate amateur – to develop uses for that data that city staff don’t have the time or resources to do themselves.
“Everybody outside city hall knows more, collectively, than the people inside city hall,” says Eaves. So why not use that knowledge – freeing up information for them to manipulate in creative ways and designing systems so that the city can absorb what residents have to tell them? Eaves imagines a time when Vancouverites, for example, could have an application on their iPhones that lists 10 common problems in the city – potholes, blocked grates, garbage in a lane – and any time someone passed by one of those, she could just hit a button and the location would be instantly transmitted. “All of a sudden, the city would get flooded with data.”
Those are ideas that other city governments have been tinkering with. Last fall, Washington, D.C., ran a competition called Apps for Democracy and invited participants to do whatever they wanted with random streams of city data that were put out in a form that could be easily picked up and played with. There was data on building permits, liquor licences, parking meters, crime, bike trails and a couple dozen more items. The city got 47 entries that combined data and maps to come up with different applications.
One, called Stumble Safely, mashed up the city’s crime statistics, liquor licences and maps to show which areas around city bars had the most crime, helping the inebriated to plan a safe trip back to their cars or the nearest subway station. The city shelled out $50,000 to organize the competition and give out prizes, and estimates it got $2 million worth of useful products in return. (In the obligatory Barack Obama reference required for all things progressive, the man who put together the Washington competition, that city’s chief technology officer, Vivek Kundra, is now at work in the White House developing plans to transform the federal government into a more open system.) Toronto is looking at trying to perform a similar liberation of information, while many American cities have experimented with Google partnerships, where Google develops applications for their information.
[pagebreak] Another Vancouver organization tinkering with the new tools, albeit internally, is Telus Corp. For the last two years, the company has operated wikis to problem-solve on new projects or gather in one communal place information that had been dispersed in obscure corners of departments across the country. Recently, through one wiki, 100 employees, free to edit and correct each other’s additions, wrote 2,000 pages of documentation for the company’s many complex technical processes. The company guidebook, which in a previous decade might have been assigned to a team of writers who would have struggled with it for years and still produced something with dozens of mistakes, has become an Internet resource that employees use heavily – and continue to edit. As well, senior leaders of that Telus team wrote a group blog, which generated another 1,000 comments from employees on how to improve those processes. “The Internet is becoming a very dynamic place for collaboration for us,” says Dan Schick, the (here comes another job description you never knew existed) social-media manager for Telus.
This is all different from the first wave of Internet excitement when what companies and governments mostly saw themselves doing was providing the same (restricted) information that they’d been giving out over the phone or on paper. “The first iteration was very much the dissemination model, broadcasting out. It was offloading communications,” says Gerri Sinclair, one of Vancouver’s pre-eminent information-highway gurus and the head of the new Centre for Digital Media on Great Northern Way. The new wave is about inviting the people “out there” to provide information themselves or about releasing information to them in ways that it can be played with. “People who used to be passive are now creative,” says Sinclair. She mentions an upcoming trip to Spain to consult for Telefónica SA, which is working on a gaming platform called Movisphere designed to welcome content from independent developers.
So why do people do these things – spend hours compiling entries for Wikipedia or improving software – for free? “It’s amazing what people will do for free,” says Ron Cenfetelli, a professor specializing in information management at UBC’s Sauder School of Business. Cenfetelli studies the way people have adapted to doing things for themselves that businesses used to do for them, like checking themselves onto their flights at airports. “A lot of people like that control,” he says. “They perceive it as taking less time, even if it’s not. And they see themselves as part of the service process.”
That attitude carries through when it comes to updating company websites or developing applications for iPhones. “People do it for the fame and the recognition,” he says. “Or they think maybe they’re the one person who figures out the one application that you can sell for 99 cents. Or it’s to solve a particular issue they have and it doesn’t really cost them anything to share that technology with the rest of the world.”
Sinclair suggests another reason: altruism. “The open-source movement tapped into that really strong sense of generosity.”
Whether relying on those human instincts is a viable model for business or government is an open question, however. Michael Brydon, an SFU business professor who specializes in technology and decision-making, agrees that Wikipedia – an eight-year-old resource that now has some nine million contributors and 10 million daily users – has proven successful by becoming a “virtuous circle.” But he’s not sure it’s one that can be copied indefinitely. “Wikipedia somehow became popular enough to attract lots of people, and some of these people made contributions, and these contributions made the site better, which attracted more people, and so on. But,” he warns, “this ‘somehow’ is enormously tricky. The vast majority of open-source software projects go nowhere. Only a tiny number spark the virtuous circle and become viable.”
In the industry research Brydon has done, what he’s seen are two principles of human behaviour that run counter to the open-source faith. One is that people with really specialized expertise don’t want to give it away because then they are no longer the go-to person in that universe. Secondly, people like to see a tangible reward for what they do. “The fundamental issue is that novel technologies do not permanently roll back economics and the role of incentives in human behaviour. Firms routinely install fancy new knowledge management systems to capture the expertise of people – their ‘most valuable resource,’ yada yada – and, for a time, many people log on to the new knowledge management system and post something,” he says. “But after a while, the novelty wears off and almost all these initiatives fail due to a mismatch between the personal costs of contributing knowledge and the personal benefits that accrue.”
Brydon thinks crowdsourcing can work – if the crowd is rewarded. That’s what a Massachusetts-based pharmaceutical company called InnoCentive does. It posts significant research problems that it wants answers to and offers rewards of $5,000 to $1 million for whoever can solve them. (For those who are interested, a recent call was for a “functional envelope trimer of the human immunodeficiency virus.” Reward: US$150,000.)
But as for the public sphere, Brydon has his doubts about how much impact citizens can really have on governments through these new conversations. “Most of our government – technology or no technology – is not wired to accept unsolicited analysis from amateurs. In my experience, the only way individuals can impact governments is to organize into groups with sufficient critical mass to be heard. But this is not open-source government; it is something else.”
Even David Eaves acknowledges that there are limits to what can be done through new mechanisms. The city government in Melbourne, Australia, for instance, has been conducting an open-source planning exercise that allows people to enter and edit the 10-year plan for the city. Eaves doesn’t think that the Melbourne exercise is realistic. “There are real limits to what can be crowdsourced. Wikipedia works because the goal is very clear. It’s as much fact as possible with a fairly obvious true-false dichotomy. But public policy has no true-false dichotomy.”
On the other hand, releasing data allows people outside city hall to come up with their own analysis of how well city hall is doing and what a future course of action to solve a problem might be. And what if that data is used by particular interest groups to generate a very slanted argument? Eaves believes in the power of information: “If you have a really bad analysis, it’s going to be exposed very quickly and it won’t go beyond your core constituency.”
The open-source movement is so new that it’s hard to say who’s right about its potential – the optimists such as Eaves, who think there’s a new generation of citizen or consumer activists panting to get involved if there’s a way, or more conservative analysts such as Brydon, who think that being given more data and new technology aren’t necessarily going to change the realities of human behaviour. But it’s clear that both sides will have evidence to study in the coming years, as the Internet continues to evolve and all kinds of organizations tinker with the possibilities.
And if the optimists are right, it won’t be just experts weighing in on whether “control by crowd” is realistic and a step forward. Everyone will have their say – on a blog, on a wiki, on a Facebook site, on a citizen-journalist news site – somewhere.