Crowdsourcing

Chapter 6: The Most Universal Quality—Why Diversity Trumps Ability, Cont.

When A Crowd Isn’t a Crowd

Diversity is essential to animating the collective intelligence that emerges in models like the MATLAB contest, but the existence of diversity isn’t enough. It must also be maintained. Get enough people together—be it in a bar or a chat room—and a mysterious dynamic kicks in. People either accentuate their differences and polarize into opposing camps, or they downplay their differences altogether in order to reach a consensus. Both phenomena have the same net effect: the diversity within the crowd is diminished. Humans have evolved over many millennia into highly social creatures. In many circumstances, our ability to reach an amicable agreement meant the difference between life and death: “A mammoth is charging. Shall we run or poke him with our spears?” But when collective intelligence is in play, as it is in such crowdsourcing models as information markets and problem-solving networks, consensus is an undesirable outcome.

In 2004 James Surowiecki published The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. The title of Surowiecki’s book is a winking reference to Charles Mackay’s 1841 classic, Extraordinary Popular Delusions & the Madness of Crowds , a stern indictment of the herd mentality that lead to such disasters as the Dutch tulip mania. (Needless to say, the term crowdsourcing owes a debt to both authors.) While theories of group intelligence pre-dated Surowiecki’s book by decades, and in fact had recently come back into vogue in fields as disparate as sociology and business management, The Wisdom of Crowds captured the popular imagination in a way no other work on the subject ever had. The book contained an array of persuasive examples in which the crowd proved itself wiser than its smartest member. How did a crowd of fairgoers in rural England guess the weight of a prize-winning steer within one pound? How did a classroom of students guess the number of jelly beans in the jelly bean jar? How did the audience for the game show Who Wants to Be a Millionaire consistently beat the experts? Through the wisdom of crowds. Such anecdotes have acquired an almost magical patina, entering the collective imagination and becoming fodder for cocktail conversation and water cooler discussion. Unfortunately they were shorn of Surowiecki’s careful analysis.

Urgent Appeal! Crowdsourcing.com in Search of the Crowd

Let's call a spade a spade: I'm a terrible blogger. Or at least, I've found the demands of a (young) family and (merciless) book to be incompatible with the kind of constant attention a healthy blog requires. The predictable response is that traffic fell off last year while I concentrated my efforts on the book at the expense of the blog.

While I look forward to putting the blog back on the front burner in a few weeks when I've given my publisher final changes to my book, that will be too late to make my own little crowdsourcing experiment a success (For late arrivals, this consists of publishing excerpts of the book on this blog, then collecting the most incisive, witty and informative of the resulting comments in an appendix that will be published in my upcoming Crowdsourcing Book). The problem: Too few comments and, more to the point, too few commenters. This is a shame because I'm confident that given enough eyeballs this limited but, to my mind, significant act of crowdsourcing would constitute a nifty new model of book publishing. Why, in this age of instantaneous publishing, should critics wait until the publication of the book to make their views known? Wouldn't the reader be better served by being able to encounter multiple viewpoints in one handy volume? Or at least that's my three-quarter-baked idea.

At any rate, I'm not only asking you to start reading and writing on crowdsourcing.com, but also to spread the word. I know at least a few of my regular readers write influential blogs of their own. If you support my effort or even—especially—if you think my ideas deserve a good old fashioned literary beat down, lend me a hand.

Chapter 6: The Most Universal Quality—Why Diversity Trumps Ability

I'm out of town visiting family this week, but stole a few minutes away at the local library to post Chapter 6. This chapter begins the second section of the book, which explores Crowdsourcing in action (as opposed to the first section of the book, which is devoted to the conditions that made crowdsourcing possible-nay-inevitable. For anyone just tuning in, I'm hoping to collect critical comments on these excerpts, which will then be published in an appendix in the crowdsourcing book due out this July.

Chapter 6

“There were never in the world two opinions alike, any more than two hairs or two grains. Their most universal quality is diversity.”        — Michel de Montaigne

Looking for a diversion one winter evening in 1995, Caltech professor Scott E. Page built a computer model in which “artificial agents”—little computer programs that interact according to rules written into their computer code—tried to solve a difficult problem. Such computer simulations are helpful to economists because they provide a controlled environment in which to test how humans, that most unpredictable of species, interact in complex systems like financial markets.

Page ran his simulation using two groups of agents. One was meant to represent the best and the brightest possible solvers—we’ll call this the Mensa group. The other group was composed of agents with a wide variation of problem-solving ability—some of the agents were talented, but many were not. It was as if he’d stopped by the faculty lounge at a mid-tier university and culled out everyone wearing brown socks. To Page’s great surprise, the brown socks outperformed the Mensa agents. As a random collection of mathematicians could hardly be expected to outperform Mensa’s best minds, Page decided to fiddle with his simulation, changing the rules by which the agents interacted. He got the same result. Still incredulous, he rewrote the program in a different computer language. The brown socks still won, over and over and over again. Page wanted to know why.

What began as a study break blossomed into a decade-plus research project, culminating, in 2007, with a book entitled, “The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies.” By applying logical rigor and mathematical precision to collective intelligence, Page has created a theoretical framework to explain why groups often outperform experts. Why did the brown socks beat the Mensa agents so consistently? The brown socks weren’t as talented as the Mensa members, but they had something better: Diversity.

Chapter 5: The Rise and Fall of the Firm, Cont.

New readers: I've been posting excerpts of the book in order to elicit critical comments. These will be published as an appendix in the hardcover version of Crowdsourcing, and may even make it into the margins of later editions. Full credit given, naturally, to the commenter. Below is the continuation of Chapter 5: Turning Community into Commerce:

What We Talk About When We Talk About Work

By one measure at least, YouTube is a very small company. Before being acquired by Google its 67 employees fit into two floors of an unremarkable San Bruno, California office building. That’s exactly one fewer employee than works at the average American nursing home. But by another measure, YouTube is a far larger company. At the time of its acquisition by Google, YouTube was valued at $1.65 billion. That number could seem unreasonable by conventional measures, but, YouTube is hardly a conventional company.

Google didn’t pay for the expertise housed within that San Bruno office, or even Youtube’s powerful brand. It paid for the millions of users who create and submit videos to Youtube, and for the traffic they drive to the site. It paid, in short, for the community—the people who use it to engage in a conversation in a language of moving images. YouTube is far from the only company whose primary asset is its community. Facebook employs roughly 700—a skeleton crew for a company that was valued, at the time of Microsoft’s investment in the social networking site, to be in the region of $15 billion. As of early 2006 Wikipedia employed only two people, one of whom worked part-time. By contrast, Britannica employed 350 in that same period. In these cases, the community is taking the place of the corporation.

The conventional corporation isn’t going away anytime soon, but its hegemony is certainly under assault. Despite its unchallenged reign throughout the 20th Century, the traditional corporate structure is an artifact of the industrial revolution. The company’s primary function, as British economist Ronald Coase observed in his 1937 essay, is to reduce transaction costs. Coase pointed out that contrary to the prevailing view, the market is not always efficient. Because a commodity is rarely immediately available in exactly the quantity he or she might want, at precisely the time they want it, there are additional costs that must be factored into its purchase. How long did the buyer search for it? Did they have to risk revealing their business strategy, or a trade secret, in acquiring it? All this and more should be factored into the transaction cost, Coase argued. And his central insight was that a firm emerges when it becomes more efficient to produce a commodity in-house than to contract an outside vendor to provide it, and that firm will continue to grow until it begins to buckle under its own weight, at which point it once again becomes cheaper to outsource the work using the marketplace . This makes intuitive sense to us today, and indeed the firm continues to be the basic unit of economic production. 

Chapter 5: The Rise and Fall of the Firm: Turning Community Into Commerce

For anyone who hasn't been following the blog these past few months, I've been posting excerpts of the book in order to elicit critical comments, or supplementary material I might have overlooked. These will be published as an appendix in the hardcover version of Crowdsourcing, and may even make it into the margins of later editions. Full credit given, naturally, to the commenter. Here is the beginning of Chapter 5:

If the means of production and distribution are now within the grasp of the individual, if the line between producers and consumers is blurring, where does that leave the “firm,” the organizational structure that has governed how people make and deliver goods and services. What constitutes an “employee” or a “manager” or “president” in a crowdsourcing environment? Of course, corporations aren’t candidates for the endangered species list quite yet. But it’s useful to recall that the firm, that most conspicuous icon of the industrial era, is hardly immutable, and even of fairly recent vintage.

We’re not accustomed to thinking of communities in economic terms. But this wasn’t always the case. Originally humans gathered into communities for reasons of survival. Larger groups made for better hunting and provided greater security against rivals. The industrial revolution changed all that. The company organized labor into a paid workforce, and the community became the social space in which we rested from work—a respite from economic production and competition, engaging instead in religious, philanthropic or purely social activities. Now the Internet has started to turn this paradigm on its head. The company clearly offers advantages when productivity is weighed by the pound—You’ll always need a factory to produce steel. But in the realm of information production, the community is beginning to rival the corporation for primacy.

Four developments created a fertile ground in which crowdsourcing could emerge. The rise of an amateur class was accompanied by the emergence of a mode of production—open source software—that provided inspiration and practical direction. The proliferation of the Internet and cheap tools gave consumers a power once restricted to companies endowed with vast capital resources. But it was the evolution of online communities—with their ability to efficiently organize people into economically productive units—that transformed the first three phenomena into an irrevocable force. 

The End of Chapter 4: Faster, Cheaper, Smarter, Easier

For anyone just tuning in, I've been publishing select excerpts from my upcoming book, Crowdsourcing: How the Power of Crowds is Driving the Future of Business. The published book will include the most trenchant comments in an appendix. Here's the final bit from Chapter 4:

The New Distribution Network

The members of Hawthorne Heights have no business being rock stars. They play a strain of punk that has consigned innumerable bands to the obscurity of dive bars and pirate radio. For the past three decades, a devotion to this stripped-down, anti-commercial music has meant never quitting your day job. And yet here they were on a dusty summer day in Pomona, California, playing for thousands of adoring fans. The kids in the audience - a multiracial mix of teens from across the SoCal region – were in a transcendent state, crashing against each other like pin balls and screaming each lyric with red-faced intensity. They’d memorized the entire set.

In the summer of 2005 I followed Hawthorne Heights to concerts in Pomona and Cleveland. The band was a big draw for that year’s Warped Tour, in which more than 300 bands play some 48 concerts at venues across America. I flew coach, but the members of Hawthorne Heights toured the country in a plush tour bus. The quintet’s debut album, The Silence in Black and White, had already sold 500,000 copies, a healthy performance for a down market. The group had recently appeared on “Jimmy Kimmel Live” and MTV. These five young men from Dayton, Ohio had achieved the rock’n’roll dream, but like M dot Strange they had taken an unorthodox route to success. The band achieved its popularity without significant radio or TV airplay, a feat unheard-of a few years earlier. They weren’t signed to a major label and they didn’t have an industrial-strength, multi-platform marketing campaigns. Further, they didn’t have fleets of trucks delivering CDs to Wal-Marts across the country.  “A major label can be thought of as a bank with trucks,” says longtime industry veteran Jim Griffin. “The bank loans the money to the band to make and promote the album, and the trucks carry the product to the stores.” Distribution used to be the point in the supply chain at which big companies could control the market. If smaller players couldn’t get their product to retailers, they couldn’t compete. The Internet turned this upside down by making the distribution of anything capable of being digitized as easy as hitting send on an email. Hawthorne Heights didn’t need the bank or the trucks. Instead it had the crowd. 

Chapter 4: Faster, Cheaper, Smarter, Easier, continued ...

Thanks for all your comments. My intention has generally been to encapsulate the best of them into an appendix that will be included in the book, but sometimes they're so astute (or even obvious) that my only recourse is to change the text accordingly. To wit: I agree that it's a reach to say the "consumer" will become antiquated. At any rate, here's the next selection from Chapter 4:

A Template for Revolutions to Come

The 2005 Christmas season marked an important milestone, though few recognized it. For the first time a six megapixel camera fell below $300, considered to be a magic price point—the amount a middle class family will spend on a point-and-click camera. This might seem like a fairly mundane event, of interest only to the dedicated shutterbug, but the impact of this development touches us all. A professional photographer could now perform his or her job with a point-and-click camera. Or more to the point, the barrier to entry for an amateur dropped below the price of a cross-continental airline ticket.

Chapter 4—Faster, Cheaper, Smarter, Easier: Democratizing the Means of Production

Valued readers old and new: Thanks for your patience. I've recently wrapped up another all-consuming round of edits on the book, confirming—for the thousandth time—the truth in the adage that writing is easy, it's re-writing that's hard. At any rate, I'm jumping in right where we left off on our "Crowdsourcing the Crowdsourcing Book" experiment. For anyone just tuning in, Crown Business and Random House UK will be including an appendix containing the most trenchant comments and criticisms elicted by the pre-publication excerpts posted on my blog. I won't always agree with all of you, but  that's all the more reason to include you in the book. And now onto the book. Here's Chapter 4:

The “consumer” may one day be an antiquated concept. The term implies passivity in a process that is in fact becoming more collaborative every day. If the rise of the amateur provided the crowdsourcing engine with fuel, and the open source software movement provided it with a highly adaptable design, it is the wide availability to the means of production that is blurring the boundary between creators and consumers. Thanks largely to the Internet and the rapidly falling cost of the silicon chip, the ability for the people formerly known as consumers to play a meaningful role in the marketplace—of ideas, as well as more tangible goods—has reached unprecedented levels.

Media—publishing, filmmaking, photography and music—comprise the vanguard in this movement—suddenly given access to cheap equipment, user-friendly software and cost-free distribution, an entire generation of aspiring musicians, filmmakers, writers and other creatives are choosing to bypass the way “product” has traditionally been generated, marketed and sold. And these same dynamics are beginning to affect other fields as well, whether that involves high school students participating in astronomy projects, audiophiles building their own electronic gadgets or craftspeople using the Internet to sell their own handmade goods. So far we’ve looked primarily at the companies doing the crowdsourcing. Here we’ll look instead at the people who make up the crowd, and what—given the means—they’re choosing to produce. People who have eschewed every traditional route to making it in their respective industries. People who are creating new business models simply by virtue of following their instincts and their hearts. People like Mike Belmont.

Chapter 3: From So Simple a Beginning, Continued

The comments I've been getting have been very helpful—thank you all. One quick request, however. I got the sense from one commenter that he felt I might have been off in my facts. He asked whether I would be publishing my sourcework. The answer is an emphatic yes, but that doesn't mean I wouldn't love a correction now! That's part of the experiment here. I'm posting pre-polished copy. While I'll be scrubbing everything to within an inch of its life before publication, if you see that I've erred, tell me.

I'm going to jump right back in, though not quite where I left off. After my short history of the open source software movement I write about the fateful moment when Larry Sanger and Jimmy Wales decided to apply then-new Wiki technology to their online encyclopedia, which was called "Nupedia." The world, suffice to say, hasn't been the same since. I end the chapter with the passage reproduced below, which illustrates how mainstream open source principles have become, and what incredible promise their application holds for a wide range of fields, including one of our government's most moribund agencies, the US Patent and Trademark Office. Without further ado, here's the final segment of Chapter 3: From So Simply a Beginning:

From Peer to Peer to Patents

It’s funny how fate often turns on last-minute decisions. In late October 2005, the Berkeley political scientist Steven Weber was bringing some of the smartest people he knew into a Manhattan conference room to talk about the future of business. Weber and a co-author were writing a book about “open source methods of value creation” and wanted some heavyweights to “beat up our argument.” Invitees included a former adviser to Vice-President Al Gore, an editor from Harvard University Press, and various top executives at New York consulting firms. Then, just one day before the gathering, Weber’s host suggested he invite Beth Noveck, a professor at the New York School of Law and something of a provocateur in the legal fields. Weber vaguely remembered sharing bagels and lox with a smart, self-possessed woman at an Upper West Side deli a few years before, and extended the invitation. Noveck nearly turned Weber down. She was booked all day, she explained, but would try to stop by for an hour or two.

The following day dawned sunny and warm. Weber’s brain trust gathered inside a windowless conference room inside the plush offices of Monitor Consulting Group on Madison Avenue. Noveck showed up shortly after 11 AM. Weber sat her next to David Kappos, a lawyer who managed IBM’s patent portfolio. The two were soon engaged in an intense conversation. Noveck had recently created Do Tank, an online community of lawyers, scholars and students devoted to collaborative efforts at legal reform. Noveck was one of the legal field’s chief proponents of opening closed systems to public scrutiny, and the patent system was right in her cross-hairs.

The Eyes and Ears of the Crowd ...

This one's so obvious I can't believe I didn't already suggest it to my own home team, the New York Yankees. Why rely on professional scouts—few in number, limited in resources—when you can animate the power of the crowd to do the scouting for you. Last week The Wall Street Journal reported on how the St. Louis Cardinals are asking their fans to identify baseball talent that might otherwise go unnoticed.

The "One for the Birds" contest is meant to help the team find talent at smaller, non-Division I colleges that don't get much attention from scouts. Fans file entries by going to the Carindals' Website and filling out a form, including the player's name, statistics and a summarized recommendation of up to 300 words and other information. When the submissions are in, the team plans to send its own scounts to evaluate a handful of the most interesting prospects. ... The winning fan gets a trip to St. Louis to see a pair of games.

I'd like to tease out two themes here. The first is that by offering so little in the way of compensation—one fan gets to see two free games—the Cards are recognizing what's come to be an accepted fact of crowdsourcing efforts: We ain't in it for the money, we do it for the fun.

More interesting, and more important, is something else entirely: The "One for the Birds" program also recognizes that what the crowd excels at isn't so much analysis as it is data collection. This has become a central theme in my book as well. We're entering a period that can be thought of as Crowdsourcing's second iteration, and a big part of that involves downscaling what we expect from the crowd.

I'll close by pointing out a close parallel from a wildly divergent field, journalism. Amanda Michel, my former colleague from our crowdsourced journalism experiment, Assignment Zero, now runs Off the Bus for the Huffington Post. She's also come to recognize that her community works best when it aims small. Proof of this is the recently launched Off the Bus Super Delegate Investigation. Did she ask people to write features about the delegate process? Or to write Op-Eds on whether Super-Dels should go with the will of the people or the will of the party elite? Nope and nope. She gave them a questionnaire and assigned each volunteer to ask a series of uniform questions to every one of the Super Delegates. It's a task that would have overwhelmed the physical resources of any newsroom (though importantly, not its intellectual resources.) But for a few hundred geographically dispersed volunteers it's a breeze, requiring neither training nor a large commitment of time.

These are the kinds of models that hold enormous promise, and that I predict we'll see much more of in coming months and years. Humble in intellectual pretense but ambitious in scope, they are well-suited to that most salient characteristic of a crowd: it has numbers on its side.