6 Questions: One-on-One with Don Tapscott, chairman, nGenera

Tech guru on the role of collaboration in innovation.

An increasingly web-connected world is allowing for an unprecedented level of global collaboration. In his book Wikinomics , re-released in April 2007, Don Tapscott explores what this mass teamwork means for business and innovation. Tapscott, a Toronto-based consultant, speaker and author, is a leading authority on the role of technology in business and society, having written 11 books on the subject. He is chairman of the business strategy think tank nGenera, which he founded in 1993. Tapscott also passes on his knowledge to students at the University of Toronto, where he is adjunct professor of management with the Rotman School of Management. Coming off a speaking engagement at Canadian Business Online’s Innovation in Action Online Summit, we asked Tapscott six questions.

What is the greatest challenge currently facing nGenera and what are you doing about it?

As a fast-growing global company, our greatest challenge is scaling our own infrastructure and leadership to successfully stay ahead of our growth needs. This means applying our own “Next Generation Enterprise On Demand” platform to ourselves. It also means using mass collaboration to orchestrate our employees’ ability to self organize teams and expedite decisions as well as interact with customers, affiliates and collaborators around the world.

Who else — person or company — do you admire for their innovative work and in what way?

Douglas Englebart. In 1964 he wrote a paper describing how computers could augment human intellect and communications. I met him in 1997 and he had built an augmented knowledge workshop using workstations, hypertext, a mouse, and many of the tools we now take for granted. More than anyone he was the father of the collaborative tools we have today.

How would you describe your leadership approach/style?

I prefer to lead by example. What I want to see in others — such as honesty and integrity — I strive to practice myself. Having said that, I believe leadership can be shown by anyone in an organization, regardless of his or her level in the hierarchy. The beauty of social media tools such as wikis being introduced within companies is that everyone can have a voice. Peter Senge was right 20 years ago when he said the person at the top can’t learn for the organization any more — things have become too complex. Many of the most important leaders at Best Buy (NYSE: BBY), for example, are young people at the bottom of the organization. Brad Anderson, the CEO, doesn’t give executive sponsorship but rather executive license to innovate.

Many people attach innovation to technical gadgets. But aside from implementing the latest technologies, how can companies leverage innovation to thrive in today’s economy?

The pace of innovation used to be glacial. Now it’s real time. Innovation today is driven not by technology but by people. Smart companies understand that they cannot have all of the best and brightest thinkers on their payroll. An office equipment manufacturer or a camera manufacturer simply couldn’t afford the world’s best designers on a full-time basis. So these companies reach out to collaborate with companies such as Porsche to acquire their insights. Courtesy of the Internet, anyone can participate in this process.

Consider the story of Procter and Gamble (NYSE: PG). About six years ago P&G was struggling, and its market value had collapsed. The company was stagnant. The new CEO, A.G. Lafley, realized that if P&G was going to grow at 7%, it had to create a $5 billion business annually. It had to be an innovation engine.

At the time there were 7,000 researchers employed by P&G. But it occurred to Lafley that there were hundreds of thousands of bright researchers that weren’t on the P&G payroll. So if P&G is looking for a molecule that will take red wine off a shirt, it doesn’t go to its own R&D department, it goes to an “ideagora”. This is a term we use in Wikinomics. It’s an agora, like the Roman agora market [where people assembled to trade or hear rulers speak] for ideas — but the product is ideas. It’s like an eBay for innovation.

One of these ideagoras is called Innocentive. There are 90,000 chemists, and they put out the request for the molecule, and somewhere out there is a retired chemist in New York or a grad student in Stockholm who can find the molecule, and they get paid for it. P&G comes to market much faster, and they saved millions of dollars and they now have 22 brands that are worth more than a billion dollars each.

How has the role of IT evolved and what does an innovative, next generation IT function look like today?

The vast business information systems of today have a prosaic origin — the double-entry accounting system and the general ledger. Information technology grew from the challenge of automating accounting. As nGenera CEO Steve Papermaster puts it: “Corporations today are structured like giant income statements and for decades IT has been about automating old transactional processes.”

IT has been backward-looking, transactional in nature and locking companies into old business practices and old organizational structures. Technology was not used to change the nature of work but to automate old ways of working — in other words, paving the cow path leading to the general ledger. Transaction systems, based on accounting, determine the flow of information. As a result, companies remain saddled with legacy systems that are impediments, rather than catalysts, to change.

Transaction-based systems are inadequate for the demands of the global economy. A new age of collaboration is emerging where, thanks to the Internet, companies can now use IT to orchestrate capability, innovate and engage with the rest of the world in powerful new ways.

The transactional DNA of information systems must give way to a new DNA — one based on interactions, and enabling human collaboration. nGenera has spent millions in research that shows how companies that embrace these new models perform and compete better — a lot better.

What does innovation mean to you?

The definition is not changing — just the modus operandi. Today, powerful new collaboration tools such as wikis, blogs, social networks, search, tags, RSS feeds, jams, telepresence and content management enable what we call “knowledge collaboration.” This approach is a key to unleashing and harnessing the knowledge contained within and external to an enterprise and in turn, accelerating innovation and increasing competitive advantage. Companies that adopt the principles of peering, openness, sharing (some) intellectual property and acting global, tend to be more innovative and perform better.