Computing and Automation

Competitive Advantage

Networking applications and the cloud have made it easier for individuals and businesses to collaborate. Meanwhile, the digitization of data [big data] has made it possible to identify collaboration partners and subsequently execute the outsourcing and offshoring of services and commodities as never before.

Mike Weaver

How big data collaboration can remove boundaries between “inside” and “outside” an organization

Networking applications and the cloud have made it easier for individuals and businesses to collaborate. Meanwhile, the digitization of data [big data] has made it possible to identify collaboration partners and subsequently execute the outsourcing and offshoring of services and commodities as never before. Earlier, I wrote about laboratories being on cloud nine and made the case for competitive advantage through collaboration and the analysis of your company’s raw data.

Collaboration of the fittest

Nature can teach us a lot about collaboration. In some instances species that collaborate with partners stand a better chance of survival. In nature collaboration is used to survive a harsh world or to compete for scarce resources. There are numerous examples where collaboration is far more important than competition in the game of survival. Ants and the bullhorn tree have created an intricate interdependency for the benefit of both.1 Lions sometimes hunt in groups to catch larger prey than they could have caught alone. Zebras like to stay close to giraffe herds to use the giraffes’ long necks as an advantage. If the giraffes run, so do the zebras. Zebras have outsourced the lookout function to giraffes because they have the optimal vantage point of the surrounding area.

Could this collaboration phenomenon also be true in business? There are examples of businesses reflecting nature’s collaboration with cross-selling initiatives, such as credit cards offering deals from other vendors. This has been done for quite a while. However, to better understand corporate collaboration, let’s define the reason there are boundaries between corporations in the first place.

Cost of business

In a free market, the need for a product or service will be benchmarked against supplier competition for the best possible price. Why then would a company not look to this open market to fulfill all its needs instead of hiring and building its internal business? Why worry about the training, legal implications, and benefit structures that come with the organization of individuals internal to your business? Why not let a freelancer do the work and skip the insincere charade of discussing employee development plans and tedious HR policies altogether? It’s uncomfortable for everyone, and we all know that no one is getting a promotion here.

The answer is transactional costs.2 The cost of doing business solely with the “outside” results in a pricing mechanism and other costs that make it too expensive to tender every task to the market. Pricing costs are the costs expended to find the correct service, to negotiate a price, and to buy and control the service. All this takes effort, and it makes the price of the service or project more expensive than if it were procured internally. Think about it this way: If your laboratory hired a contract firm to calibrate your instruments, the process of finding a suitable firm, negotiating a price, and then controlling the service for each calibration would be outrageous. It would be much more cost-effective to hire qualified staff to conduct the calibrations as they are needed. In reality, you could hire a calibration firm for longer periods, cutting the frequency of negotiation and planning, but until your organization becomes quite large and requires many calibrations, the task would be best done internally. The larger an organization, the more costly internal operations and coordination of the activities become, thus shifting the balance back toward the free market. So maybe not all is lost in your upcoming annual review discussions with employees, as you can remind them that a raise in compensation would just shift the balance toward the free market, thereby eliminating their positions.

The granular cloud

Getting back to the advantages of collaboration, it should be noted that if the transactional costs can be attenuated, then it would make good economic sense to begin more frequently asking some questions such as “Why are we a company?” and “Should we do this task?” Technology is lowering the transactional costs of doing business, and the cloud makes a great case for offering a wide array of services that were not available before. Collaboration is the essence of an organization and has traditionally meant group meetings and smaller teams. Cloud computing and collaboration offer a unique combination of putting the user back in control, removing boundaries between “inside” and “outside.”

What’s your collaboration strategy?

Does your organization have a strategy for collaboration? Is it driven by a business need or technological capability? These questions can be key to the survival of your business in the future. As discussed thus far, a well-focused collaboration strategy can lower direct costs, but there are other advantages as well. Competitive advantages such as the retention and attraction of talent, finding solutions to complex issues, and better connections with your customers are just a few.

Collaboration and talent

Assemble a team of recent graduates for a project and within minutes they will be exchanging Skype IDs and setting up a collaboration medium in Google Docs, Skitch, or SharePoint. The team’s goals and deliverables are clearly defined, but how they carry out the project is relatively open and left to their discretion. Some will work late at night, others early in the morning, and some on weekends. The expectations of these “social, digital natives” put pressure on organizations looking to attract the best talent. When support is not available in the company, these employees will look beyond to the cloud for answers. If these items are off-limits, they will move on to a company where they can work the way they like because collaboration and networking are a natural way of getting things done. In fact, recent examples point to how collaboration is not just a means for procuring deliverables but sometimes the best way to find solutions to complex problems.

Crowdsourcing issues

Your organization has an issue that is holding it back from a major competitive advantage. To solve this issue internally would take too much time, money, or both. Enter cloud crowdsourcing to the rescue. Wired’s contributing editor Jeff Howe first coined the term crowdsourcing in 2006.3 By his definition it can be described as a distributed problem-solving method and production model. Usually the problems are broadcast to an unknown group of solvers and an open call is given for solution. Users, known as the crowd, typically form into online communities, and the crowd submits solutions. The crowd then participates in sorting through the solutions, finding the best ones. The best solutions are then owned by the entity that broadcast the problem, called the crowdsourcer, and the winning individuals in the crowd are usually rewarded.

A recent example of the success of crowdsourcing has to do with a small company, JetPac, and their need to develop a photo algorithm that found the best quality photos. 4 Instead of putting their limited internal resources on the issue, they offered a $5,000 prize on a crowdsourcing site (Kaggle, in this example) to the individual or organization with the best solution. In a relatively short time they had multiple solutions that worked extremely well. So well, in fact, that they were able to leverage the solution within their existing business to create hundreds of thousands of dollars in additional business value. That’s quite a return on investment.

If your laboratory or business operation doesn’t require complex algorithms to make its business better, that’s not a problem. All kinds of innovated solutions can be crowdsourced. For example, Procter & Gamble has achieved the objective of increasing external development of new products from 20 to 35 percent by using crowdsourcing networks as a way of reaching independent talent. Crowdsourcing firms for companies in regulated industries exist too, such as Innocentive. Established by Eli Lilly & Co. but open to anyone to use, it is a network of 80,000 independent, self-selected problem solvers in 173 countries.

So the use of crowdsourcing is as far-reaching as the cloud itself. Could your business benefit from greater product usage and awareness by using the cloud to publicize your crowdsourcing challenge to the right individuals?

Connecting with the customer

The Industrial Revolution caused the demand and supply model to shift in favor of the producers. Machinery enabled organizations to serve vast numbers of consumers simultaneously. These organizations were cut off from their end customers and from direct feedback. Corporations assumed that they knew best, as they were fed information only through middle sellers who may not have had proper incentive or the ability to report customer satisfaction back to the producer to improve output.

Cloud collaboration

The cloud can foster customer engagement in the same way it can foster employee retention, engage in crowdsourcing, and lower transactional costs in outsourcing. It breaks barriers and opens a new stream of communication and relationship data that levels the playing field for those open to adaptation and collaboration.


1. Acacia cornigera, Wikipedia, March 2012 http://
2. The Concept of the Corporation, Peter Drucker. (John Day, 1946.)
3. “The Rise of Crowdsourcing,” Wired, Jeff Howe, Issue 14.06 June 2006, 14.06/crowds.html
4. “Using Kaggle as a Startup,” Kaggle blog, Pete Warden, July 2012,