In a cutthroat world, some Web giants thrive by cooperating

By Greg Ferenstein
Special to The Washington Post
Saturday, February 19, 2011; 4:46 PM

In a hard-knuckled, free-market economy built on competition, the most successful Internet companies put a high stake in another value: cooperation.

They haven't lost a step in Wall Street's cutthroat business culture. And in fact, they may well be transforming ideas of work in America.

Take Google, which gives away much of its most valuable information, yet made $29 billion in revenue last year. Or Facebook, which manages employees through consensus. Or Twitter, which maintains a small-business feel even as its growth has spurred speculation it could raise $10 billion in an initial public stock offering.

The allure of cooperative economics is that it might not just be good for individual businesses but also build industries and even economic communities. Friendly competition is the explanation often given for the unique success of Silicon Valley, the birthplace of Google, Twitter and Facebook.

But it's rooted in something much less friendly: lawsuits. During the '90s tech boom, California courts refused to uphold noncompete agreements commonly used on the East Coast to keep former employees from working for competitors. Such rulings produced a lucrative revolving door of local talent. Combined with the start-up culture of constantly opening and closing new ventures, Silicon Valley developed a tight-knit sense of community, according to AnnaLee Saxenian, dean of the School of Information at the University of California at Berkeley.

Across the Internet industry, the most successful organizations compete by cooperating. It's a modern strategy based on two assumptions. First, innovation is collaborative. Second, the rapidly expanding market of online products is limitless. Businesses that focus on the process of free-wheeling creation - rather than squashing the competition - gain dominance and profit.

Google this: cooperation

Search giant Google dedicates a team of engineers to help users "move their data in and out of Google products," as the company puts it, free of charge and in a format that can be easily uploaded to competitors' Web sites.

The Data Liberation Front, as the team is called, adorns its products with an insignia of a clenched red fist breaking shackles. Outgoing Google chief executive Eric Schmidt writes on the project's site: "How do you be big without being evil? We don't trap end users. So if you don't like Google, if for whatever reason we do a bad job for you, we make it easy for you to move to our competitor."

Google is, first and foremost, an advertising company, with most of its revenue coming from clickable ads. As user demand expanded from searches to e-mail, online documentation, shopping and social networking, Google built applications such as Gmail and Google Maps that gave prime real estate to its own advertisements. Under the principle of cutthroat competition, then, Google should attempt to lock users into using its products. It doesn't.

"All of us benefit when Facebook or Twitter get more users because it means people are spending more time online," Schmidt said in an article in Wired UK.

Other firms do, of course, see Google as competition. And not everyone trusts its intentions. Firebrand technology author Michael Arrington writes, "Make no mistake, the touchy-feely talk about user experience is little more than a coat of paint on top of a monumental hatred of Microsoft."

Microsoft's Internet Explorer has long dominated the browser market. Google, with aggressive advertising of its Web browser, Chrome, has steadily eaten away roughly 10 points of Explorer's 56 percent market share since its launch three years ago, according to the analytics firm Net Applications.

And yet, Google Chrome is free.

"Remember," said Hal Varian, Google's chief economist, "Chrome is open-source. So any other browser that wants to incorporate pieces of Chrome into their system, they're welcome to do it."

So Microsoft could copy entire chunks of Chrome's programming code without asking permission or paying a fee - and use it to build a better Internet Explorer, which theoretically could lead to other Internet advances.

Why would any business give away a product built on expensive man-hours to a competitor?

For one thing, it's a way to support the company's own innovations. Google has expanded its notion of "search," and the current generation of Web browsers generally cannot support features such as Body Browser, Google's interactive, three-dimensional rendering of the human body where users "can peel back anatomical layers, zoom in and navigate to parts that interest." They can "click to identify anatomy, or search for muscles, organs, bones and more."

The tool could be popular with users, and also with advertisers. For instance, an organization like Stanford Medical School's Cardiovascular Institute might pay top dollar to get the attention of a user spending lots of time online poking around in the circulatory system.

Chrome is one browser where users could surf such a tool. As Google promotes its use far and wide, perhaps Chrome is helping to trigger a tectonic shift toward Web standards that permit more sophisticated search products.

Of course, one tech giant is not like the others. Apple, which is the second-largest U.S. company after Exxon Mobil, has a grip on tech consumers' imaginations and money and has built a war chest of more than $50 billion to expand its own powerhouse business in tech gadgetry. Sharing is not its thing.

"Open systems don't always win," Apple Chief Executive Steve Jobs said at a quarterly profit announcement in October. The visionary behind the iPhone called Google's competing mobile operating system, Android, a "mess, for both users and developers."

Compared to Apple's managed oversight over iPhone manufacturing and personal approval process for all third-party iPhone applications, Google's unmanaged policy leaves the Android platform more fragmented. Not only are manufacturers encouraged to develop competitors to Google's Nexus phone, applications can be published without prior approval. Yet, both Android and the iPhone are wildly successful, suggesting competition and cooperation each have their place.

How Facebook avoids face-offs

Cooperation is not just a strategy between Internet firms but within them as well. Facebook, with its systematically hands-off managerial policy, is a departure from old-school American business culture.

Some history: Convinced that capitalism's adversarial nature would disrupt employee teamwork, the 20th-century architects of modern management adapted the military's chain-of-command model for the corporate leadership chart. Frederick Taylor, the intellectual father of industrial management, contended that the inevitable conflicts between peers required the authority of a superior to arbitrate.

An "over-foreman is to smooth out the difficulties which arise between the different types of bosses who in turn directly help the men," Taylor wrote. "If two of these bosses meet with a difficulty which they cannot settle, they send for their respective over-foremen, who are usually able to straighten it out. In case the latter are unable to agree on the remedy, the case is referred by them to the assistant superintendent." A neatly stacked chain of command would lead straight to the CEO, whose ultimate authority and unifying vision could impose order on otherwise chaotic disputes.

Tech start-ups ignored the old-style model. Instead, employees at Facebook, Google and Twitter work in semiautonomous teams, usually made up of experts from each department: design, programming, marketing, etc.

Intimate cooperation between teams, combined with the probability that any colleague could be a future teammate, presents a unique challenge to managers: How are conflicts resolved?

At Facebook, intractable disputes from any corner of the company often go directly to Chief Executive Mark Zuckerberg. That's right, Time's 2010 Person of the Year is also one of the chief conflict resolvers at his own company.

Jared Morgenstern, a product manager, describes how such a scenario might evolve: "So we disagree on this particular piece of strategy. Let's see what Zuck has to think."

Zuckerberg doesn't arbitrate the conflict. The parties are expected to arrive at their own resolution. Rather, Zuckerberg engages in the conversation and offers his perspective.

And he expects others to offer a perspective, Morgenstern says. The most valued team members "can effectively challenge Zuck and change his mind on things. Those are the people he ends up reaching out to."

Keeping the culture at Twitter

Twitter become a household name almost overnight. In five years, Twitter has gained worldwide popularity - it has 190 million users - and has become a key player in major geopolitical and social events. Its explosive growth has kept founders Isaac "Biz" Stone and Evan Williams preoccupied with the challenge of ensuring that the start-up intimacy isn't lost in a sea of new faces.

"Twitter's growing really quickly, and something that allowed us to do so much with so few people early on was this culture of trust, where you knew people around you were smart and had the best of intentions," Mark Trammell, a user research analyst at Twitter, says, discussing the corporate culture efforts for the first time.

In order to integrate the growing number of strangers into their midsize San Francisco office, Twitter's leaders developed "TeamTeam," a forum for employees to gather around common interests.

Instead of organizing corporate picnics or lining the halls with motivational banners, Trammell spends roughly 10 percent of his time helping his colleagues build personal relationships around "things that people are passionate about."

TeamTeam uses Twitter's own communication platform to build lists of followers where employees with common interests - say, hiking or rock climbing - broadcast smiling photos of past gatherings and announce future events.

Psychologists have long known that commonality is an underestimated force in social interactions. Judy Olson, a professor of informatics at the University of California at Irvine, has pioneered research showing how powerful friendly chatter can be in negotiations. Banter about similarities, however superficial or unrelated to business, dramatically increases trust and the likelihood of successful negotiation.

"We tell people to get to know each other," she says. "Once you find this connection, you would start to trust somebody more because you know what to expect from somebody 'like that.' "

For Trammell, this new side project is a fascinating fun-house mirror image of his former role running "morale, welfare and recreation" on a Navy battleship. "A lot of this stuff on the Navy is certainly more top-down," he says. On the battleship, there was one activity, and Trammel more or less picked it. At Twitter, anyone can get involved or even lead the crowd.

'Win-win side of things'

Governments around the world, eager to enjoy the fruits of innovation, have consulted former Silicon Valley chief executive and Harvard fellow Vivek Wadhwa on how to foster their own tech enclaves. The key, he says, is "the people."

"The difference in thinking between Silicon Valley and others places is that you compete one moment and you cooperate the next moment," Wadhwa says.

Likewise, iTune's top podcaster, comedian Adam Carolla, hosts his competitors' radio shows for free - much to the chagrin of his corporate affiliates.

The competitive mentality, Carolla says, is systemic in radio and television. "They just don't understand the win-win side of things."

As his successful run on morning radio and Comedy Central came to an end, he saw a chance to manage his own brand online, without the corporate red tape. With more than 50 million downloads in the first year, he is creating his own podcast network, a pioneering move based on the bet that platforms are the Web's future.

"The good news is, I mentioned and the podcast about 15 times on the competition's show," Carolla says, "and we got a nice big bump."

Ferenstein is a writer who investigates the intersection of technology and society.

© 2011 The Washington Post Company