Philip Evans

A Silicon Silicon Valley?
Virtual Innovation and Virtual Geography

Innovations Case Discussion: Second Life

Virtual worlds represent the “collapse” of geography, as Cory Ondrejka asserts.
They are also its vindication.

In the large, as with other Internet platforms, virtual worlds bring together
people who in reality are dispersed across the globe. And within the virtual world
people fly or teleport with an ease of which the patrons of real-world red-eyed air
transportation can only dream (if they can sleep at all). This amounts to the “death
of distance” among both real-world participants and also among their alter-ego
avatars.

But in the small, it is precisely geography, or “spatiality” as we might call it, 那
makes virtual worlds interesting relative to other Internet platforms. I can strike up
a conversation with the person at the virtual water cooler, bump into a stranger
and ask directions, guess at someone’s personality from their appearance, ask
someone lingering hesitantly by the dance floor to tango, recognize an acquain-
tance on the street, look someone in the eye and gain their confidence, or conspic-
uously cross the road to avoid them. All of these nuanced communications require
空间, adjacency, 方向, the physicality of bodily position. The real world is by
far our best platform for this kind of emotional broadband. Indeed we value it so
much, that we pay the price of long-distance travel to indulge in the richness of
short-distance physical co-location. The unique potential of virtual worlds lies in
their promise of the latter without the former: the benefits of spatial proximity
without the costs of spatial distance. That is what makes them interesting.

Interesting—to borrow Richard Bartle’s famous taxonomy—for “hearts”,
“clubs” “diamonds” and “spades”: people respectively seeking friendship, a fight, A
world to explore or opportunities to make stuff.1 But interesting as a platform for
real-world innovation?

Philip Evans is a Senior Partner and Managing Director in the Boston office of The
Boston Consulting Group. He founded the firm’s Media and Internet practices. 他是
author of a number of articles in the Harvard Business Review, and of the book
“Blown to Bits: How the New Economics of Information Transforms Strategy.”

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Philip Evans

GEOGRAPHY AND INNOVATION

Geography in the real world is both a driver and an inhibitor of innovation.
Biologists attribute the evolutionary deviations of some species to the divisive
effect of natural barriers, and they attribute the often superior fitness of species
evolving in large, flat land masses to their greater opportunity for genetic intermix-
真实. Some major biological discontinuities occurred precisely when previously
separated populations were conjoined.2 Similarly the variegated innovativeness of
Italian renaissance city-states has been attributed not only to their maritime com-
merce, but to their mutual separation by a mountainous interior. The innovative
Silicon
advantage of
Valley has been attrib-
uted to the depth and
scale of the local meme
pool as defined by fluid
labour and capital mar-
kets.3 And Ronald Burt
has shown that “bro-
kers”, who span other-
明智的
unconnected
团体 (也许, 但
not necessarily, separat-
ed by geography) 是
more likely to be inno-
vators.4 So physical sep-
配给, dense co-loca-
tion and connection
across divides can all, 在
their different ways,
spur innovation. The focus of so much economic development strategy on geo-
graphical “clusters” is testimony to the intimate, perceived connection between
geography and innovation.5

Is Second Life or any other virtual
world therefore a cluster, 或者 (甚至
更好的) a cluster of clusters? Is it
really a densely-populated
geography where some of the
characteristics of physical space are
replicated with sufficient fidelity to
enable interesting innovation? Is it a
silicon Silicon Valley?

Is Second Life or any other virtual world therefore a cluster, 或者 (even better) A
cluster of clusters? Is it really a densely-populated geography where some of the
characteristics of physical space are replicated with sufficient fidelity to enable
interesting innovation? Is it a silicon Silicon Valley?

The simplest validation would be a compelling list of innovations for the real
world that originated in the virtual. Stories such as that of Tringo, a video game for
avatars (please ponder this concept before proceeding). Tringo is a cross between
Tetris and Bingo, developed and test-marketed within Second Life by “Kermitt
Quirk”. Kermitt licensed the code (for about $50 我们) to operators of virtual night-
clubs and other magnet locations, enabling them to open Tringo parlours. It very
quickly became a craze: so successful that Tringo transactions at one point
accounted for about one quarter of the Second Life economy. Capitalizing on that

创新 / summer 2007

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A Silicon Silicon Valley? Virtual Innovation and Virtual Geography

in-world success, Nathan Keir, Kermitt’s unaltered-ego, licensed Tringo’s real-
world rights to Crave Entertainment for deployment on other platforms. Tringo is
now available as a casual game on the Game Boy, XBox and a number of cell
phones.

This is a great story, and impossible without many of the innovation precon-
ditions that Ondrejka describes: the generic Second Life scripting language that
enables complex artifacts to be built from simpler modular components, the zero-
cost of deploying videogame consoles when those consoles are themselves virtual,
a dense, fashion-conscious, fluid community where word-of-mouth flows at the
speed-of-light, and a property rights regime which gave both Quirk the ability and
incentive to franchise within Second Life and Keir the ability and incentive to
license the game to a real-world distributor. Tringo is thus an innovative product,
developed in the virtual world and exported to the real. Remarkable. But let’s be
honest: what is remarkable is how it was developed, not that a video game that
cross-breeds two pre-existing games is in itself a particularly important real-world
创新. As Dr. Johnson famously remarked about a dog walking on his hind
legs “It is not done well, but you are surprised to find it done at all.”

This example could be dismissed as a straw man were it not that so far there
are very few other examples of innovations exported from the virtual world to the
真实的. Some virtual dress designs have been made up in real garment factories.
Machinima—movies, filmed within Virtual Worlds—are popular on You Tube and
some are quite creative. But the number of specific and implemented real-world
innovations originating in a virtual world is small. Of course Second Life is replete
with innovative products, 服务, 社区, collaboration patterns, and busi-
ness models. But as long as they these innovations reside solely within the virtual
世界, then how does that persuade a skeptic unconvinced that virtual worlds mat-
ter except as entertainment? Such innovations would matter to someone immersed
in such a world, and obviously to the platform operator and its competitors, 但
not really to anybody else. Perhaps football is an extraordinary platform for the
development of innovative tactics, but if nothing is exportable to other domains,
why would anybody other than the players and fans care?

More generally, the literature on virtual worlds has focused largely on the
remarkable and counterintuitive way that they replicate real-world institutions
(most notably an economy), and on the low-cost of innovation within such
worlds. While surely necessary, neither point is sufficient to make the case for vir-
tual worlds as a platform for real-world innovation. Evidence that the Petri dish
nurtures exotic flora is not proof that it will yield us penicillin.

What we really have is an hypothesis: the hope and expectation that because
some preconditions known to be important for innovation in the real world can
also be satisfied in the virtual, innovations will flourish there that are of value in
the real. And there is an extraordinary amount of experimentation going on to test
that hypothesis. It is not a criticism of Ondrejka’s argument to point out that the
bottom-line results are simply not yet in.

创新 / summer 2007

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Philip Evans

COMMONALITIES: VIRTUAL WORLDS
AS ANOTHER INTERNET PLATFORM

All Internet platforms “collapse geography” in the large: people from across the
world transact and collaborate via email, wikis, chatrooms, listservs, blog posts,
eBay, Craigslist, InnoCentive, and so forth. These platforms, including virtual
worlds, enable innovation for a number of obvious reasons:
• Beyond possession of a computer and a network connection, there are in gen-

eral negligible barriers to participation.

• Communication occurs at essentially zero incremental cost.
• Very large communities can form, enabling people with varied and comple-
mentary skills, 兴趣, or ideas to find each other. Just as division of labour
deepens with the size of the market, so do affiliation, collaboration and trans-
action around unusual commonalities.

• The size of the community is in itself a motivator to contribute: people can eco-
nomically market to customers in miniscule segments, advertise themselves
and their skills, or simply bask in the imagined applause implicit in a large
观众.

• Reputation mechanisms (assuming persistence of identity, and at least pseudo-
nymity) create social capital that is both a measure and a partial guarantor of
trustworthy behavior. 而且, since reputation is specific to the community
(unlike pairwise reciprocity which is specific to a transaction relationship),
trust can be ported from one transaction to another within that community at
very low cost. The community can therefore continuously and cheaply “rewire”
its transaction pattern.

• The ease-in-use of the underlying code (as embodied in Ward Cunningham’s
famous question “what is the simplest thing that could possibly work?”6)
enables many individuals to make casual yet useful contributions.

• The loosely-modular, standards-based architecture of the platform allows such
small contributions to be aggregated and concatenated in useful ways. 和
generally at extraordinarily low cost. Data beget metadata. Simple components
need surprisingly little engineering to be formed into more complex systems.
• Property rights are often structured to lower transaction costs and thus maxi-
mize the cumulation of contributions. This can be by simple rules assigning
property rights clearly (例如. the courtship rules between Seekers—companies
with unsolved
scientists—in
InnoCentive), by “piracy” (例如. anime music videos7), by various forms of com-
mons (such as the GPL governing Linux), or regimes by which “some rights are
reserved”.

Solvers—individual

problems—and

The result can be genuine and dramatic innovation. The Free/Open Source com-
munity has produced not only a remarkably robust family of software applications
but some genuine innovations such as Freenet (a distributed, anonymous infor-
mation-storage and retrieval system).8 In the commercial domain, equally striking

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A Silicon Silicon Valley? Virtual Innovation and Virtual Geography

is InnoCentive, a sort-of eBay for scientific problems where on average one-third
of the problems posed (problems that major corporations were unable to solve
internally) are solved.

These principles can also apply to virtual worlds and, by conscious design,

apply to Second Life.

DIFFERENCES: UNIQUE CHARACTERISTICS OF VIRTUAL WORLDS
AS INNOVATION PLATFORMS

Where virtual words go beyond the other Internet platforms is in their articulation
of geography in the small: spatiality. Not as well as the real world of course, not as
well as the elaborate, immersive virtual-reality setups of just few year ago, 并在
some ways (例如, communication of facial expression) not as well as videoconfer-
encing, but instead with all of the Internet platform advantages enumerated above.
Spatiality permits perhaps eight kinds of behaviour conducive to innovation:
Fun. The simplest point is perhaps the most important. A three dimensional
high-resolution environment engages more senses and coheres more than do other
媒体. People get more immersed, they get more emotionally-engaged, they stay
involved longer. Fun engenders play, which in turn permits whimsy, 以及什么
Ondrejka calls “a culture of experimentation”.

Experiential learning. The interactive exploration of complex three-dimen-
sional objects. IBM scientists built a model of a rhodopsin molecule (the retinal
chemical that responds to light) within Second Life, each chemical bond a virtual
meter in length and the molecule the size of a virtual skyscraper. Scientists partic-
ipating in the project use it to teach the physics and chemistry of vision to classes
sitting inside the lattice of its chemical bonds.

Training and simulation. Virtual training and collective learning for groups
that need to coordinate spatially. A good example is Play2train, a series of disaster
“incidents” staged in virtual space to let first responders swarm to the rescue under
conditions of partial chaos and imperfect communication.9 Not as rich an experi-
ence as a real exercise, but orders-of-magnitude cheaper.

Trust building. Body language is a basis for commanding attention and trust.
Numerous clinical experiments in the real world have documented how simple
behaviours such as an experimenter’s eye contact and imitation of the subject’s
hand gestures or facial expressions enhance the subject’s recall and acceptance of
what they are told. A broad programme of research conducted by Jeremy
Bailenson and his colleagues at Stanford is progressively demonstrating surprising
ways in which these results can be replicated among avatars interacting in a virtu-
al space.10 Spatiality, even in a crude virtual form, enables trust.

Experimenting with personae. The adoption of a “fantasy body” that liberates
the individual from constraints that they cannot avoid in the real world. Short peo-
ple can be tall, men can be women, the ugly can be beautiful, stutterers can speak,
the paralyzed can walk. Controlled experiments by Yee and Bailenson have docu-
mented the “Proteus effect”: how people’s behaviour in virtual space is measurably

创新 / summer 2007

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Philip Evans

affected by their virtual appearance.11 While much of this translates merely into
innovative sexual activity, it also frees people from physical limitations and the
prison of low expectations that in the real world might inhibit them from being
confident, gregarious, risk-taking, 领导者.

Chance interactions. The author’s personal experience in participating in
Boston Consulting Group virtual meetings in Second Life is that—like the real
world but unlike (视频)conference calls or chat rooms—they legitimate side con-
诗篇, particularly conversations induced by close proximity. Meetings thus
support multiple connection patterns and multiple agendas, like the real world,
but unlike the monolithic, hub-and-spoke, and therefore linear progress of events
held on other remote collaboration platforms.

Low cost of “artifactual” entrepreneurship. Because the cost of replication is
零, it is inherent in virtual worlds that “physical” goods be many orders-of-mag-
nitude cheaper than they are in the real world. (Intellectual goods and services may
be cheaper also, but that would be true on many Internet platforms. The cost
advantage in producing “physical” goods is unique to virtual worlds.) A real car
requires design and steel; a virtual car only requires design. Manufacture is
CAD/CAM. Therefore the cost and risks (and rewards) of launching a virtual busi-
ness building or making things, are similarly orders-of-magnitude lower. This lets
people learn entrepreneurial skills at low personal risk, permits wild experimenta-
tion that no real-world VC would fund, and enables corporations to conduct vir-
tual experiments prior to real-world test marketing. How valuable all this is
depends on how close is the virtual entrepreneurship to some real-world equiva-
四旬斋. Nike may well learn about sneaker fashions by looking at what avatars cur-
rently wear or by test marketing virtual versions of new designs. Starwood built a
stunningly detailed version of their Aloft Hotel concept inside Second Life, 部分的-
ly as cute PR, but also as a product test. But what value is the feedback on a virtu-
al hotel when it comes from avatars who by definition never sleep?

Experiments in social physics. The physical laws of a virtual word, and many of
the institutional laws (such as property rights, privacy, rules of identity, 政治的
权利, ETC。) are an artifact of the platform and therefore changeable at will. 就像
there are now regions inside Second Life where sound waves carry and others where
他们不, so social laws could be varied at will by the game masters. Does the
stronger “protection” of intellectual property increase or decrease the rate of
investment in new ideas? In a virtual world it would be possible to find out empir-
ically by simply changing the rules of the game in some regions and seeing what
happens. I am not aware that this has yet been tried, but the possibility of experi-
menting with basic legal parameters is intriguing. Some of this applies to the
Internet at-large of course (c.f. the different licensing regimes governing various
open-source projects), but the comprehensive and immersive quality of a virtual
world makes it exceptionally rich as a platform for cheap social experimentation.
These are largely-unique qualities of virtual worlds. In some cases they under-
write interesting innovations within the virtual world. They have the potential to
be springboards for innovation beyond virtual worlds. But not yet. We have not

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A Silicon Silicon Valley? Virtual Innovation and Virtual Geography

learned anything new about rhodopsin. We have not, to my knowledge, designed a
better real-world car or hotel. Virtual spaces have not significantly substituted for
corporate meeting rooms or conference calls, even among most who have tried
他们. We have not learned the optimal life of a real-world patent.

But this platform is only a few year old, and we could. By collapsing geography
in the large, yet reaffirming it in the small, virtual worlds could become a platform
for innovation as important to our century as was the opening of trade routes to
sixteenth-century Europe. They also might not. But given the radically low cost of
experimentation and the evident potential, why not try? So long as we don’t con-
fuse hypothesis with established fact, we might even learn something.

1. See Richard Bartle, “Hearts, Clubs, Diamonds, Spades: Players Who Suit MUDs,” available at

2. For a readable and provocative discussion of the influence of geography on both biological and
social evolution see Jared Diamond (2005), Guns, Germs and Steel: The Fates of Human Societies
纽约: 诺顿.

3. See AnnaLee Saxenian (1996), Regional Advantage: Culture and Competition in Silicon Valley and

Route 128, Boston MA: 哈佛大学出版社.

4. See Ronald S. Burt (2005), Brokerage and Closure: An Introduction to Social Capital. Oxford UK:

牛津大学出版社.

5. See Michael E. Porter (1998), The Competitive Advantage of Nations, Free Press.
6. 看

interview with Ward Cunningham,

creator of

这

the wiki software at

7. On AMVs see the article by Laurence Lessig .

8. 看 .
9. 看
10. 看 .
11. See Yee, 氮. & Bailenson, J.N. (2007, in press). “The Proteus Effect: Self Transformations in Virtual
Reality.” Human Communication Research, 33, 271-290. Available online at . One interesting finding is that the Proteus Effect is detectable even when vari-
ations in an avatar’s appearance are visible only to the owner of that avatar. It is self-image, inde-
pendent of image as reflected in the reactions of others, that can be transformed in a virtual
环境.

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