Here below is an excerpt from and a link to a report just published by the recent Aspen Institute’s Communications and Society program.

In a previous post I mentioned a growing awareness of the impact of the interconnected digital infrastructure and digital natives on the Enterprise 2.0 market.  The publication of this Aspen Institute report is to me just one more piece of evidence that it’s real and growing … and it’s a credible source (though not quite a tangible case study

David Bollier reports from his OnTheCommons blog about "The Rise of Collective Intelligence: Decentralized Co-Creation of Value as a New Paradigm in Commerce and Culture” (pdf) published by the Aspen Institute.

It may be that the serious jargon of the term "collective intelligence" will put some (or many) off, but increasingly it seems to be becoming clear that the interactive social construction of knowledge put to use in response to constantly dynamic markets is demanding some new business logic, new points of friction with which to fashion transaction and new ways of designing and managing the work that leads to the creation of economic value.

The Rise Of Collective Intelligence

Most forwarding-thinking businesses are starting to realize that they need to come to terms with the open Internet environment. This means making some radical changes in how they think about markets, how they structure their own enterprises and how they treat customers.

[ Snip … ]

On the Internet, people have acquired considerable powers of their own. They have developed their own sustainable micro-cultures. They can create their own commons to carry on conversations among peers and develop new forms of reliable “collective intelligence.”

This bottom-up knowledge empowers ordinary individuals to approach market transactions on a more equal footing with sellers, who have historically had greater market power and knowledge. The commoners are able to capture more of the knowledge they create, and use it to their own advantage. Indeed, the commons can be regarded as a source of cutting-edge R&D for companies, as MIT professor Eric von Hippel has shown in his book, Democratizing Innovation.

The phrase that the conference used to describe this phenomenon is “decentralized co-creation of value.” It means that the market is not the sole source of value-creation; dispersed online communities are now sources of value that businesses must collaborate with in order to generate value.

The commons stands on a more equal footing with the market. Instead of all “value” coming from centralized players like corporations, increasingly, value is coming from the “ends” of the Internet – the periphery, where new ideas and innovations first materialize. Value comes from individuals, and groups of individuals, operating in the free space of the commons, where overhead is low to nonexistent, and creativity is not regimented to service prearranged market niches. Thanks to the Internet, social niches are becoming “staging areas” for viable niche markets, a phenomenon also known as the “Long Tail.”

All of these developments create a real crunch for traditional large corporations because large companies like to have extreme control. That’s how they deliver predictable results to investors and protect their brand reputation. But on the Internet, control and predictability are not viable strategies. In fact, they are counter-productive.

Value is generated by having less control. Customers won’t trust a company that tries to use digital rights management or bullying tactics to assert too much control. In a sense, companies are not just competing against other companies, but against the freedoms of the commons.

The challenge for businesses, then, is to develop new sorts of “open business” models that can respect the social dynamics of the Internet, while still monetizing certain forms of value (e.g., selling advertising to the Web users who like your site). Companies have to realize that brands are forms of socially created value; brands are not simply the result of advertising and image campaigns. Online communities create and promote a brand every bit as much as mass media.

One of the most fascinating parts of the report is about the next generation of computing, often known as “The Cloud.” Bill Coleman, the entrepreneur who started BEA Systems and recently started the Cassatt Corporation, describes the Cloud as the convergence of voice, data and video in a networked system that also combines computing, telecommunications and the Internet. You plug your computing appliance into The Cloud – and all your data and stuff is “there,” not on your personal computer.

Everyone at the conference agreed that the current trends in economics and technology will make The Cloud inevitable. Software and hardware will become commodity products, computing will become a service provided by very large utilities, and a handful of these Cloud providers will eventually put the telephone service industry, the cable industry and Internet service providers out of business.

I have been for some time been calling the emergent organizing principle that I believe underpins the necessary new business logic and models, derived from social-interaction-driven market niches, "wirearchy" - a dynamic two-way flow of power and authority based on knowledge, trust, credibility and a focus on results, enabled by interconnected people and technology.

I am heartened this report has come out (emerged, let’s say) from a group of bright and aware people at the Aspen Institute.  I suspect that it makes those of us who feel something big and different is going on bit by byte, link by link … a bit less iconoclastic.