Over the past 24 hours the term innovation has been bantered about without clear definition.  Depending on who you ask at you will get the following feedback on what innovation means to them:

• Access to new knowledge
• Access to new markets
• Access to new suppliers

The first session I attended was on mergers and acquisitions.  Here's my premise - companies that are created in a collaborative or open source space have more inherit value than those that are built independently.  This assumption was validated in a session this morning (more on that in a later post).

I posed a question to a panel partners from M&A International on how they value companies that are built on this kind of platform - where multiple individuals and companies are putting forward ideas to create a market driven solution.  My question was, "How do you place a value on companies that are built in an open source environment?"  The short answer is that from the M&A perspective collaborations cannot be valued because that value is based upon the output (or what is created).  Here are the problems with this response:

1. If we are looking at innovation, and innovation in today's economy is built on collaborative and clustered efforts, then the very economic value of a business that uses this as a platform has intrinsic value.
2. By saying there is no way to value a company based in this during an M&A process prevents us from developing incentives around enhancing this platform and making M&A accessible to these new companies that are built in this space.

How this ties into generating social capital -

Communities are built on many ideals.  Two of these ideals that are intrinsic to generating social capital are trust and respect.  It is my belief that for businesses to grow and thrive they should be modeled on community ideals.  This thought is supported by what Peter Drucker shared in his models on corporate management systems.  If this is the case, then businesses who source each other out through the community sphere will be stronger, grow faster and meet the demands of the clients more effectively than those that choose not to be a part of a community.

So arguing the M&A point that businesses cannot be valued based on their open source/collaborative/community space - I would say that businesses have MORE value if they are built in this vein because of the access to the ideas and the innovation that comes out of them.

In fact, one of the benefits to identifying strategic community/charitable partners is the end result of financial gain.  This works by making B2B connections THROUGH the charitable activites, not as a result of charitable activities.  The driver in today's economy is the ability to network and form collaborations.  This is where business value is generated, not necessarily the output of the activities.