You'll have to start by defining what your 'source' is.
Data-sheets are usually not restricted, but only the author contributes to it. If you make your data-sheets a shared effort, you are already well on your way. Of-course, you can expand this to all documentation.
Second would be the actual hardware. Do you want your contributors to have a say in what chips to use and how to route your lanes? What colours should be used? What should be the features of the next board? Those are all questions which could be handled in an Open Source way.
The problem with hardware relative to software is the production cost. Software can be shared without cost. Schematics and documentation can as well, but the actual product it results in always needs to be produced. Ergo, it's difficult to completely Open Source hardware projects.
What if only the theory behind the hardware should be freely available? Well, that's where sites like Instructables come in (there are probably better examples around). Somebody states how he build something, uploads some pictures and the next person comes around. He rebuilds it, tweaks it a little, uploads some pictures, etc..
Is it doable? Yes.
Is it more difficult than open-sourcing software? Usually.
How? WIRED recently wrote an article about whether or not open source hardware can work. One of their examples is the Arduino team (do note this may turn out to be a bad example as well, since the Arduino team is currently involved in a naming conflict). The basic idea behind their approach is 'We built something, please copy this!', which doesn't happen often in the hardware business.
A quote from the article (page 2):
Sure enough, that's what happened. Within months, geeks suggested wiring changes and improvements to the programming language.
Another example from the article is the Linksys WRT54G router. It probably wasn't intended as an open source project. Since the firmware was running Linux, hackers took it upon themselves to modify it anyway. Their efforts boosted the sale of that router (and other routers in that series later).