Fall+2008+Section+08-PJ+Week+13

=Class Discussion For Week 13=

Here is a Blog site for Collective Intelligence...who would have thought? http://www.community-intelligence.com/blogs/public/ This is how they define it: "Collective intelligence is the capacity of human communities to evolve towards higher order complexity and harmony, through such innovation mechanisms as differentiation and integration, competition and collaboration." Just remember the cow example in class. Moooo.... "Guess what?! I gotta feva' and the only prescription is more cowbell..." http://www.metacafe.com/watch/1017105/more_cowbell/
 * Collective Intelligence**

Best Buy - Blue Shirt Some more information on Best Buy's use of social marketing http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=322857&pageNumber=4

Social Marketing is particularly potent in the realm of social and behavioral change such as smoking cessation and the effective use of birth control. Campaigns that have goals of changing long-term habits benefit significantly from social marketing. Cambrian House is an online web forum where participants log on to share ideas, or Crowdsource, on creating and improving software and/or businesses. At first glance, this seems like a brilliant concept. For example, many inspiring entrepreneurs, small businesses that can't afford professional consulting and businesses trying to cut costs can all log on to Cambrian House to find advice and innovative ideas for free. However, when examined on a deeper level, using Cambrian House's Crowdsource can create problems that outweigh the potential benefits of using such a service. For example, in our class discussion groups, we identified the following problems with Crowdsourcing:
 * Cambrian House: Idea exchange...**
 * How do you put value on or qualify an idea?
 * How can you filter out or qualify the evaluators?
 * Filtering out evaluators will most likely cause a "bottleneck" effect on the incoming flow of ideas.
 * Although you can have the general population vote on "the best" idea, it may be difficult to connect internet voters to the general population.

Also, having the general population vote on the best idea doesn't necessarily bring forth best idea but rather the most popular one. Thus, great ideas may get discarded because they are not popular. Furthermore, it is the idea that differs from the norm which creates a disruption in the market. Market disruptors are not popular nor common ideas.



Inherent Crowd Sourcing Problem:
While companies try to leverage open sourcing and crowd sourcing as a way to innovate without having to foot the bills for the risks that come with hiring a large R&D team, crowd source poses the following dilemmas:
 * Who owns the rights to the idea? The one who came out with it, the company, or no one?
 * Why wouldn't a small, more agile company take the idea and implement it more quickly?

How do you place value on opinions?
Do you place a value on higher education or certain advance degrees? Is it more important to be an executive or high school student? It's hard to quanitify the qualifications needed for good crowd-sourcing.

How do you incentize innovation?
From http://www.xprize.org/

Why X PRIZEs Work
There are many types of competitions and awards around the world, but an X PRIZE is in a class by itself. What sets us apart from other non-profit organizations is our ability to frame a challenge and incentivize a solution in a way that our efforts and funds are multiplied exponentially by the teams who strive to compete and win the prize. There are three primary benefits of well constructed prizes and media savvy global competitions: they are a high-leverage and efficient investment, a powerful innovation strategy, and an effective change strategy.
 * Leverage and Efficient Investment**


 * Prizes are efficient. Sponsors pay the winners when and if the goal is accomplished. Prizes are performance-based investment.
 * Prizes are very high-leverage. Competitors spend 10 - 40 times the amount of the prize purse to achieve the goal.
 * Prize sponsors receive early benefits from launch, registration, and prize related activities and make the majority of their payments when and if there is a winner.


 * Powerful Innovation Strategy**


 * Prizes result in unexpected and unconventional approaches to problems without a clear path to solution.
 * Prizes result in multiple entries and often have the potential of multiple winners resulting in a new generation of solutions.
 * Prizes drive increased risk-taking by mavericks competing to win. Increased risk taking speeds innovation and results in breakthroughs.
 * A prize attracts teams from around the world, across boundaries.


 * Effective Change Strategy**


 * Prizes create hope and inspiration; the day a prize is launched the question changes from “Can it be done?” to “When will it happen?”
 * Highly visible prize launches and global competitions attract worldwide attention increasing the understanding of the problem and preparing markets for rapid innovation adoption.
 * Prizes create heroes symbolic of what’s possible.
 * Prizes can create or reshape an inefficient or blocked market more rapidly than market mechanisms.
 * Prizes result in rapid and widespread investment against a defined goal compared to the traditional philanthropic theories (i.e., research, pilot, demonstration, legislation, investment—a process that can take decades).
 * Prizes are low-bureaucracy and encourage non-traditional players to enter and bring non-traditional solutions.
 * Prizes force rapid policy change to accommodate competitions when an innovation is apparent (e.g., FAA regulations allowing suborbital trials due to the Ansari X Prize)

Three books that champion the concept of Prediction Markets: [|The Wisdom of Crowds]  by James Surowiecki How to Measure Anything: Finding the Value of Intangibles in Business by Douglas Hubbard Infotopia by Cass Sunstein 
 * Prediction Markets**

Prediction marketing In addition to the optional reading here is another article on prediction marketing (slightly outdated) and it's future presence in pharmaceuticals:

http://social.eyeforpharma.com/node/1832

Predicting New Product Demand 1. Survey target customers 2. Ask a pool of experts

Prediction Markets 1. Iowa Electronic Market: http://www.biz.uiowa.edu/iem// 2. Hollywood Stock Exchange: http://www.hsx.com/ 3. Intrade: http://www.intrade.com/