The Era of Collective Wisdom

These are changing times. When you see the same theme gaining predominance in many different areas, then pay attention because you are at a turning point in history.

I believe that we are entering into such a time. I call it the celebration of the collective.

This is most obvious in the political arena. Almost completely gone is the Republican mandated rhetoric of trickle down where big government is supposed to serve by abdicating it responsibilities as public servant. Even the most die hard GOP faithful advocate government bailout now. Years earlier, that would have been considered as either heresy or treason by those same people.

President Obama speaks often about how the major players are now the masses. Not only are the people who the government must serve but it is also up to the people to do the hard work of solving our current economic problems.

Crowd-sourcing (sometimes called collective intelligence, sometimes called community sourcing) is the online equivalent of this trend for celebrating the collective. In crowd-sourcing, the choices of the masses are cleverly aggregated to form recommendations to solving complex problems. This is a logical, evolutionary progression to the wikinomic movement where prosumers provide both the attention and the content.

Many companies have started to embrace the collective intelligence approach to solving their problems. Starbucks has launched their own site where you share your product or marketing suggestions for them. Dell has launched their own variation on this theme. Even old school media companies such as NBC and NPR are climbing on board this train.

If your company doesn't have the economic commitment to develop their own from scratch, then there is also a bundle of pure players in this field whose offerings you can leverage. You can either submit your challenges to be solved in their online site or license their software for a white label version of a site that is your own property. Innocentive is perhaps the original pure player in this space. Cogenuity takes the lessons learned from Innocentive and improves on it with a deeper integration of crowd-sourcing with social networking. There are also less corporate focused offerings such as the Why Not? Idea Exchange.

Sometimes it's not so obvious when you are participating in the wisdom of the collective. Every time you link to a another site from your site, you are contributing to Google's prediction market based collective intelligence product known as Pagerank. Netflix and Amazon do something similar with their recommendation engines.

We have entered the era of collective wisdom. Let us hope that the power of the people can prevail where the idolized individual heroes of the past have feared to tread.

Growing Your Business With The Freemium Revenue Model

The Wall Street Journal published an interesting article today on The Economics of Giving It Away. The article describes how, in the past, web startups would use an advertising based revenue model and give away their product/service increasing the size of their audience until they were acquired by a bricks and mortar company willing to pay out the cash for mind-share at a premium. The global recession has changed the efficacy of that game where VC, advertising, and acquisition money has pretty much dried up.

Since the classic exit strategy is no longer available, new ventures need to generate revenue in other ways. It's not as simple as charge for the service for two reasons; the culture of the web now has a tradition of free services so people are hesitant to pay there and people have less discretionary money to spend.

So, what's an entrepreneur to do? The author suggests going the so-called freemium route where you build your network with a free service but allow users to upgrade to a premium service which gives them access to more features. First time and casual users are not likely to pay for your service but passionate users are. You continue to build social capital with the free version but also build economic capital with the premium version.

Enterprise Architecture Talk on Second Life

I've blogged about the current global recession's affect on innovation before. I have blogged many times about the waxing and waning of virtual worlds technology called Second Life. Now, I get to blog about both subjects simultaneously.

I recently attended a presentation in Second Life by Gene Leganza of Forrester Research, Inc called Six Trends for Enterprise Architecture Professionals in 2009. This presentation was held at a meeting space on Second Life owned and operated by a small business development networking brokerage firm called Unique Customer Service Approach International. It looked a lot like a proper lecture hall with some virtual world style embellishments like giant, floating question marks that you click on when you want to ask a question. The speaker used voice chat but you could use the Second Life Instant Messaging feature to ask questions. You also had to click on your chair to cause your SL avatar to clap.

The talk itself was very informative and well thought out. I have blogged elsewhere on the actual content of the presentation but the upshot is this. Times are tough so you Enterprise Architects out there need to actually start doing what you were originally hired to do which was to deliver software development process, methodology, and architecture that is optimized at increasing long term shareholder value. Please excuse my attitude but I am passionate on the subject.

It's Not Your Daddy's PR Anymore

From the time I first heard it, the acronym PR has always had two different meanings to me. PR could stand for Public Relations or it could stand for Press Release. In what the Cluetrain Manifesto called The Long Silence (a.k.a. the days of the Mad Men), these two meanings weren't all that indistinguishable. In today's Wikinomics world, ruled by the prosumer generation, these two meanings are as different as night is to day.

In the old days, a PR group was all about selling media. How much broadcast time on radio and TV and column inches in magazine and newspaper print could you afford in order to condition your prospective clients to chose your offerings? That is still necessary but no longer sufficient in today's world. Now, a PR group has to also be concerned with establishing authentic conversations. Can your community managers effectively attract and keep people interested in interacting with each other around your offerings? Can you establish and maintain buzz? If you can't, then it will be quite a long time before that cat barks.

Your marketing message in the broadcast only world had to be broad and appeal to a wider audience. That won't fly with the prosumers. In addition to your broad message, you also have to develop lots of narrowly focused messages to appeal to a wide array of niche markets. Remember, they are no longer passively taking in your message. They now get to talk about your message with everyone else. So, give them something that they are interested in talking about. How do you create these narrow messages without becoming self conflicting? How do you do all of this on a tighter budget?

No wonder it's so hard to find a good PR group these days.

Following the Heard Off the Precipice

I was fortunate enough to attend the 11th Annual Lynford Lecture at the Polytechnic Institute of NYU where GMO co-founder Jeremy Grantham gave an inspirational and thought provoking talk called Career Risks and Breaking Bubbles.

The net of his talk is this. The true value of most markets (stock, real estate, you name it) is pretty flat. Every now and then, the market experiences a bubble where perceived value sky-rockets way above then plummets down below and eventually settles back on its real value again. On the ascending slope of these mountains of market inefficiency, you always find analysts who claim that we have finally figured out how to run the marketplace so the value is just going to keep going up and up forever. Even with the market wildly over-rated, people stay in it because of the truly irrational aversion to making less money than your peers. That is why the heard of stampeding buffaloes plummets right off the cliff.

He had plenty of charts from past bubbles to back up his claims. This was a most charming and lucid speaker on a fairly abstract topic to a room full of academicians and budding finance engineers.

He made some interesting points in the Q&A session afterwards. This four decade veteran of finance has a complete lack of confidence in the Bush Administration and is hopeful for the Obama Administration. With regards to the bailout of the automobile industry, he said something to the affect that those jobs were lost when the demand for cars plummeted and no fiscal stimulus would bring those jobs back.

Lively No More

I have blogged earlier about the coming of massive, multi-player, virtual on-line worlds before. Permit me to recap here.

• Think of it as a 3D version of the web where you can see and interact with other viewers on any page/room.


• Think of it as a cartoonish version of telepresence on a budget.


• It's a natural fit for an artificial economy or other operant conditioning systems for rewarding desirable behavior.


• It might have entertainment possibilities like a more interactive form of television.


• Obviously, the role based, game playing versions of this have been very successful.

Part of the excitement in this space was the fact that other, fairly big, players were starting to join it. Well, today, one of those players announced that they were leaving the space. Google announced that they were pulling the plug on their version of this space now ironically called Lively.

I never participated in Lively so I can't speak to what the experience was like. Some say that the place was a ghost town. Others say that the performance of the client software was terrible. If you have used the service, then please leave a comment here as to your thoughts about it and any possible reasons why Google made this decision.

Feb 2009 Update:The NY Times mentioned this in piece entitled How Google Decides to Pull the Plug. It was not very in depth. Basically, Google pulled the plug because it wasn't popular. It didn't try to attempt to answer the question as to why it wasn't popular.

Innovation During a Global Recession

I read in the previous Sunday edition of the NY Times an opinion piece called It's No Time To Forget About Innovation.

Author Janet Rae-Dupree uses material from the following two books to further her advice not to completely stifle innovation during these economic hard times; Closing the Innovation Gap by Judy Estrin and Strategic Entrepreneurism by Jon Fisher.

According to Janet, Judy posits that the following core values need to be in equal balance in order to foster innovation; questioning, risk taking, openness, patience, and trust. You may have heard of this as failing fast, From the Outside In, and the long tail. She also advocates "green thumb leadership" where gardens of new ideas are permitted amidst the factory farms.

Contrast this with Jon's position that innovation must be embedded in the daily operation of the rank and file. Entrepreneurs should plan their start in a highly creative and innovative environment then sell the business to a larger, more established company in order to scale up.

I think that what most of these people are trying to say is that innovation, by and of itself, is not optimized for making money; however, innovation can open the door to profitable markets in the future. It would seem to me that the best time to focus on not making money is when there is not that much money available to be made. So, the best time to innovate is during a global recession. It's not like your competitors are going to raise their market capitalization by improving their profitability while you fritter away in the lab.

Of course, I'm not saying that you should throw huge amounts of money at it. Innovators work best when they are hungry. That's another reason why this is a good time to innovate. Think Guy Kawasaki's boot strapping.

To that end, I invite all innovators to join a newly formed and emerging community devoted to innovation on a budget. Code Roller is a place where entrepreneurs and engineers get together to produce the next generation of great applications for the web. Code Roller is a collaborative software development project life cycle management solution that combines time honored, best-of-breed deliverables and work flow with state-of-the-art techniques in social networking and crowd sourcing to deliver custom software faster, cheaper, and better by accelerating discovery. The use of Code Roller is free.