Innovating Through Competition as the Economy Tightens
Think of a business model where a firm provides services with a global freelance resource base: is it writing? editing? software development? CFO magazine’s article on “Gaming the System” introduces TopCoder, not only as a global freelance software development operation, but one that has participants compete on providing the best code for it’s application work. This is business competition where you have to finish before knowing whether you will be paid or not, because you have to win.
It seems that TopCoder’s success and growth is based on the fact that they were more of a non-business community in the first place where attraction to their “model” was proven out- i.e., coders like to compete and would do it for free. The addition of a monetized-win competitive approach seemed a natural. Also, they actively flesh out their projects with previously built modules and specify “small enough” new modules that they say result in high quality code. They claim that their software development model results in more savings as applications get more complex- interestingly, I didn’t see any client statements to that effect.
CFO asks whether or not this model would work for other types of services that solve organizational problems as economic conditions tighten. More on that in my next post.
What do you think about the quality of work done in an outsourcing, competitive (finish work) environment? Have you seen this business model work in software development? What about other areas?
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Tags: Bob-Turek, business-model, CFO-magazine, competition, economy, economy-tightens, innovation, leadership, mentoring, PMO, project, projectmanagement411, software-development, strategyRelated Stories
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4 opinions for Innovating Through Competition as the Economy Tightens
ActiveEngine Sensei
Jan 26, 2008 at 7:22 am
I have personally worked with a “mixed” model teams comprised of consultants and in-house subject matter expertise and found that this can work really well. The new comers bring different techniques that can inspire others and you can see visibility and productivity jump exponentially.
Another benefit of working with 3rd parties not familiar with your business model is that you have ensure that your mechanisms for communicating what your systems do are top notch, as you have to over come the disadvantage of detailing the why’s and how’s of your processes.
Unless I have had direct experience with team members I am generally against remote outsourcing. Face to face communications conveys so much that is key to success.
Bob
Jan 26, 2008 at 1:19 pm
Sensei- I have a lot of problems with the TopCoder model (I didn’t mention them because I was hoping to draw some comments- also, as you know, I’m not a software developer). Your “direct experience” comment is right on. I like the idea of 3rd party involvement that requires better communications to incorporate their “innovative” techniques. There’s nothinig like getting a new team of pros together who know how to share. I’m not sure, but the TopCoder model seems to be based on individual work (vs. teamwork) and highly dependent on the quality/completeness of the overall spec. The software that each person creates must be pretty small; sounds like a lot of small pieces that have to be integrated. How can they maintain programming standards? What happens when the “package” that is being created becomes very complex? Also, I wonder how many people “bid” (with their completed work) on one piece of code. It seems extremely wasteful of resources overall. Do you have experience, or know of, other companies trying to do this? Sorry for all the questions- this probably deserves a post by someone (you?) who knows something about these business models.
ActiveEngine Sensei
Jan 28, 2008 at 9:13 am
Bob - I posted my comments this morning:
http://activeengine.wordpress.com/2008/01/28/outsourcing-your-activeengine/
Bob
Jan 28, 2008 at 2:37 pm
Sensei- I agree with you. I’m very concerned about the TopCoder model of outsourcing, let alone other forms of outsourcing especially on business critical/business-model-differentiating processes. I suppose the challenge is to draw the line on how to use certain types of outsourcing.
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