The Power of We; Companies are using YouTube-like technology to tap the ideas and energy of employees.

Byline: Emily Flynn Vencat

Rebecca Hosch isn't your typical inventor. As an administrative aide at a military software company, she spends most of her time poring over pattern-recognition algorithms and other arcana. But her world opened up after her company, Rite-Solutions, created a kind of online stock market for ideas dreamed up by employees. Each worker would "invest" fake money in the ideas they liked, and values would rise and fall accordingly. Fun wasn't the only point; company founders James Lavoie and Joseph Marino vowed to back the best ideas with real cash. When Hosch suggested that Rite-Solutions exploit its algorithms, used to pick out enemy signals or incoming missiles, to create an educational kids' game, her stock shot through the roof. After spending $20,000 to develop "Win, Play, Learn," Rite-Solutions sold the game last Christmas to toymaker Hasbro for $1 million. Says Lavoie, "This brings forward the quiet geniuses in our organization."

In recent years Internet firms like YouTube, eBay and MySpace have discovered that the most creative, hardest-working teams are often users themselves. That's how eBay became one of Wal-Mart's strongest contenders, Wikipedia moved in on Encyclopedia Britannica's turf and computer games like Sim City and Second Life began attracting as many eyeballs as Hollywood blockbusters. Now corporate managers are hoping to profit from a bit of the same magic, by exploiting the intellectual potential of their employees.

Though still experimental, many of the technologies these companies are using may one day become essential management tools. Stock-market simulations aren't the only ones. Online virtual-reality worlds allow companies to host vast brainstorming sessions. Presentations to global work forces can be made using interactive game-show-style Webcasts, which let employees ask questions and share opinions in real time. The days when corporate strategies were hatched in boardrooms and sent down a one-way pipeline to workers may be ending. Because these technologies allow everyone from the computer technician in Bangalore to the customer in Boston to the CEO in Beirut to collaborate effectively, they're changing the way corporations are managed. "We're moving from a command and control model to one of collaboration and teamwork," says Cisco CEO John Chambers.

Traditional firms, led by communications experts like Cisco and AT&T, are coming up with sharing technologies that mimic those of YouTube and MySpace, Web sites designed to allow users to exchange their ideas, music, art and videos. Most of them developed the systems for their own internal use, and later decided to sell them. Last summer Rite-Solutions launched their stock-market software as a product called Mutual Fun, and say they've licensed it to two multibillion-dollar corporations. Cisco developed software that gives their employees the ability to create and internally distribute video messages like teenagers do on YouTube. The product proved so successful among the staff that last month Cisco released it for sale worldwide.

This past summer IBM hosted a pair of corporation-wide, egalitarian brainstorming sessions called "innovation jams," that were big enough to go down in the record books. The massive company was able to invite all its 300,000-plus employees, their families, and top clients by holding the jam sessions virtually--inside a specially designed section of the immensely popular online virtual-reality game Second Life. During the jams, each employee appeared as an animated avatar, and was invited to dream up futuristic inventions around any of four main themes: transportation, staying healthy, better planet and commerce.

In total, ...