Peer Production
“When costs of participation are low enough, any motivation may be sufficient to lead to a contribution.”
In his book, “The Penguin and the Leviathan“, Yochai Benkler remarks that “for decades we have been designing systems tailored to harness selfish tendencies, without regard to potential negative effects on the enormous potential for cooperation that pervades society”. Peer production is a long term shift caused by the Internet which has dramatically reduced the overheads to collaboration. It’s a way of producing goods and services that relies on self-organizing communities where the efforts of a large number of people, also known as produsers, are coordinated towards meaningful projects which are often without financial compensation.
“We will see people increasingly comfortable participating in situations where the social value is really about people caring enough rather than being paid to provide.”
Peer production must be modular, that means that objectives must be divisible into tasks or components that can be independently produced and later combined with the efforts of others. One of the most prominent examples of peer production online is Wikipedia, which has become the largest and most popular reference on the Internet with over 21 million articles written collaboratively by volunteers around the world. It is also testament to the power of self-governance rather than relying on market forces or an authoritarian management structure.
The wide scale adoption of peer production has been enabled by a fundamental change in economic strategy from push to pull. The push model tries to anticipate consumer demand, create standardized products and bring the product to the market using standardized distribution channels and marketing. In contrast the pull model is open and adaptive, producing customized products and services that serve localized needs. The social dynamics of pull models are highly centred on creating relationships of trust, sharing knowledge, and close cooperation among network participants. Pull allows each of us to find and access people and resources when we need them, while attracting to us the people and resources that are relevant and valuable, even if we were not even aware before that they existed. For example Amazon uses the pull model to build a community around its online store where you can find information about products from people with similar interests.
“The best people (to solve any given problem) don’t work for your organization.”
At the rate technology is changing, no firm can fully keep up in the innovations needed to compete. No longer is it be a viable investment strategy to horde intellectual property. Rapid innovation will happen in the crowd, outpacing the dense pools of talent in corporate research labs. Open innovation is a way of applying the pull model to innovation, whereby customers and other stakeholders take an active role in the process of research and development of products and services. Brands increasingly need to offer experiences of participation in their goods and services. The result is closer relationships with customers and suppliers, along with more rapid feedback and greater scalability.
Crowdsourcing is a form of peer production whereby companies and organizations outsource projects by leveraging the so-called “wisdom of the crowd” through distributed collaboration. In contrast to outsourcing, with crowdsourcing the task is performed by an undefined public rather than a specific agent. This is creating new opportunities for microjobs and freelancing. A good example is Amazon Mechanical Turk which enables programmers to co-ordinate the use of human intelligence to solve problems that computers currently can’t. Workers can browse and complete small tasks which make up part of the given problem and in return receive monetary payment as set by the requester. Crowdfunding is another popular type of crowdsourcing whereby people pool their money together to support creative work such as blogging, journalism, music and independent film. It is enabling a new form a social fundraising and source of seed money for innovative startups where other sources of finance are unavailable.
“Power is migrating to actors who are skilled at developing networks, and at operating in a world of networks.”
The digital economy has levelled the playing field for both buyers and sellers of all shapes and sizes by squeezing the inefficiencies out of many systems, removing intermediaries and lowering the requirement for capital outlays. As society becomes more hyperconnected, increasingly firms will be pressured into adopting pull models and abandoning the market frictions of centralization which threaten their ability to innovate and compete with smaller and more agile firms.
When everyone has an Internet enabled device, then everyone has the capability to produce information goods. Instead of organizing together physically, we can organize virtually to connect, work, learn, share and so on. With the arrival of affordable 3D printing devices there is the potential to completely decentralize production by turning every household into a factory or “fab lab” as their called. Paired with open design based production and recyclable materials, people will be able to design and fabricate components together and share them with other people. One day fab labs and advanced industrial automation might be able to produce most of the physical goods that people need with a fraction of the amount of human labour and distribution costs.