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iMedia Book Club

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Editor's Note: We launched the iMedia Book Club earlier this month with Don E. Schultz's list of five books that every marketer should read. The goal of the Book Club is for marketers, researchers and thought leaders to share what books, journals or magazines they have on their nightstands and why. If there's a book that you think marketers should be reading, please consider reviewing it for us and let us know by email.


[And now, we're pleased to present our second installment by Dave Chase of Altus Alliance.


"The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations," by James Surowiecki


Surowiecki aims to be the next New Yorker contributor to have a mass appeal book, ala Malcolm Gladwell. He clearly wants to position this book as the next "The Tipping Point" -- combining cognitive science and other disciplines into a book addressing business, politics, society and economies. The book’s relevance to marketing may not be as obvious as The Tipping Point, although there are examples from our industry. As Surowiecki states, “Google is built on the wisdom of crowds. The core of the system is the PageRank algorithm -- a calculating method -- that attempts to let all the Web pages on the Internet decide which pages are most relevant to a particular search.” He goes on to say “With most things, the average is mediocrity. With decision making, it's often excellence. The idea of the wisdom of crowds isn't that a group will always give you the right answer but that on average it will consistently come up with a better answer than any individual could provide.”


While the stakes in marketing may not be as high as space shuttle missions or stock markets (two of Surowiecki's other examples), there are lessons in this book that marketers could apply in a variety of ways. Whether you're making business strategy decisions or developing a marketing campaign, many of us have seen the ill effects of "groupthink" versus bringing together diverse groups within an effective framework. Fortunately, the Internet can enable the elements of a "wise crowd."


This book made me think about how collective wisdom could affect decisions such as ad campaign development (creative decisions, media buying, etc.), product development decisions, industry standards (surely there's a way to move things forward more rapidly) and many other decisions made within your company or across teams representing clients, agencies and technology providers. From my own experience working with technology companies targeting the marketing community, I can see many ways to apply principles in this book to product development, sales and marketing.


Corporations and industry bodies have generally been unwilling to improve their decision making by tapping the collective wisdom of their employees and members. Those who can harness the potential for wisdom that exists within crowds of people will have the world as their oyster.


Perhaps the most significant point for iMedia readers isn’t the perspective Surowiecki provides to the inward-facing, organizational structure/behavior perspective, but rather the outward-facing: how marketers can better understand their customers -- how they think, why they think that way, and how their ability to communicate with each other (rather than just with customer service and technical support) raises their collective IQ.


It could be said that the wisest crowd out there is the billions-big horde of Internet users, who consistently use the Web in smart ways that neither technologists nor marketers would have dreamt up. The companies and marketers who grasp the implications of this will in turn develop products and services more in tune with their customers’ needs, as well as have the accompanying Web sites and marketing campaigns to harness these insights.


While our society often trusts experts and distrusts the wisdom of the masses, Surowiecki argues that "under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them." He uses a variety of examples ranging from simple challenges such as a crowd guessing the weight of an ox to incredibly complex: another crowd located a lost submarine where the best approximation was 20 miles wide and thousands of feet deep. It was eventually found 200 yards from where the group estimated it would be. This despite the fact that no one knew why the sub sank, no one had any idea how fast it was traveling or how steeply it fell to the ocean floor. Other compelling examples include how SARS was solved, and a method for predicting election outcomes with great accuracy.


The author outlines four elements required to have a wise crowd:



  • Diversity of opinion: Each person should have private information even if it's just an eccentric interpretation of the known facts. 

  • Independence: People's opinions aren't determined by the opinions of those around them.

  • Decentralization: People are able to specialize and draw on local knowledge.

  • Aggregation: Some mechanism exists for turning private judgments into a collective decision.

He also cites examples of groups where these elements are missing with sometimes disastrous consequences. Small groups can make very bad decisions because influence is more direct and immediate and small-group judgments tend to be more volatile and extreme. Large groups missing the four elements can also have disastrous results.


One significant example that Surowiecki describes concerns the Space Shuttle Columbia's Mission Management Team (MMT). The team violated nearly every rule of good group decision making. As Surowiecki outlined, “the team's discussions were simultaneously too structured and not structured enough. They were too structured because most of the discussions -- not just about the debris strike, but about everything -- consisted of the MMT leader asking a question and someone else answering it. They were not structured enough because no effort was made to ask other team members to comment on particular questions. This is almost always a mistake, because it means that decisions are made based on a very limited supply of analysis and information.”


One of the consistent findings from decades of small group research is that group deliberations are more successful when they have a clear agenda and when leaders take an active role in making sure everyone gets a chance to speak. In small groups, diversity of opinion is the single best guarantee that the group will reap benefits from face-to-face discussion.


Conversely, in a stock market bubble all the conditions that make groups intelligent -- independence, diversity, private judgment -- disappear. Whether it was the dot-com bust or the run-up of bowling stocks 40 years ago, stock markets have the potential to lose key elements that make them generally effective. As we are on the 75th anniversary of the 1929 stock crash, we need to remain conscious of the limits of the risks when all the elements of a wise crowd are absent.


The following are additional ideas from this useful book that are salient to the four elements of “wise crowds” -- Diversity, Independence, Decentralization and Aggregation:


Diversity of opinion and background



  • When there is a lot of uncertainty, such as in the early days of an industry where the winners and losers haven't been sorted out, it's key to have a system that encourages, and funds, speculative ideas, even though they may have only slim possibilities of success. Even more important is diversity -- not in the sociological sense, but rather in a conceptual and cognitive sense. What makes a system successful is its ability to generate lots of losers, recognize them as such and then kill them off. Sometimes the messiest approach is the wisest.


  • Diversity helps because it adds perspectives that would otherwise be absent and because it takes away, or at least weakens, some of the destructive characteristics of group decision making.


  • We know that the crowds that make the best collective judgments are crowds where there's a wide range of opinions and diverse sources of information, where people's biases can cancel themselves out, rather than reinforcing each other. Individual irrationality can add up to collective rationality.


  • Decision markets are well suited to companies because they circumvent the problems that obstruct the flow of information at too many firms: political infighting, sycophancy, and a confusion of status with knowledge. The anonymity of the markets and the fact that they yield a relatively clear solution, while giving individuals an unmistakable incentive to uncover and act on good information, means their potential value is genuinely hard to overestimate.


  • Studies have found that groups of smart and not-so-smart people almost always do better in decision making than a group just of smart people. The development of knowledge may depend on maintaining an influx of the naïve and ignorant, because competitive victory does not reliably go to the properly educated. My take-away: Teams I've worked on always benefit from the fresh perspective of a newcomer.


  • Homogenous groups are great at doing what they do well, but they become progressively less able to investigate alternatives. It also fosters the palpable pressures toward conformity that groups often bring to bear on their members.


  • Diversity contributes not just by adding different perspectives to the group but also by making it easier for individuals to say what they really think.

Independence



  • Paradoxically, the best way for a group to be smart is for each person in it to think and act as independently as possible.


  • Independence doesn’t mean isolation but it does mean relative freedom from the influence of others.


  • Independence is critical for two reasons 1) it keeps mistakes that people make from becoming correlated; 2) independent individuals are more likely to have new information rather than the same old data everyone is familiar with.


  • If you want to improve an organization's or economy's decision making, one of the best things you can do is make sure, as much as possible, that decisions are made simultaneously rather than one after another.

Decentralization



  • What do we mean by “decentralization?” Power does not reside in one central location, and many of the important decisions are made by individuals based on their own local and specific knowledge, rather than by an omniscient or farseeing planner.


  • Decentralization’s greatest strength is that it encourages independence and specialization on the one hand, while still allowing people to coordinate their activities and solve difficult problems on the other.


  • A decentralized system can only produce genuinely intelligent results if there's a means of aggregating the information of everyone in the system.

Aggregation



  • Groups generally need rules to maintain order and coherence, and when those elements are missing or malfunctioning the result is trouble. Groups benefit from talking to and listening to each other, but, paradoxically, too much communication can make the group as a whole less intelligent.

Dave Chase is a partner with Altus Alliance, which specializes in driving revenue traction for emerging businesses. Before joining Altus Alliance, Chase spent nearly 20 years in the industry with the last twelve years at Microsoft in various senior marketing and general management roles, including his role as MSN’s managing director for industry marketing and relations. In that capacity, he was responsible for MSN taking a leadership role within the Interactive Marketing industry to grow Online’s share of the overall ad market in concert with AOL, CNET, Yahoo!, Google and other market leaders.


Chase played leadership roles in launching several new businesses within Microsoft including Microsoft’s entry into the enterprise software and server business which is now an $8B business. This included co-leading Microsoft’s first vertical marketing efforts where he grew the Healthcare vertical market from virtually no presence to a market leading position. The healthcare business now represents over $400M in revenue for Microsoft.


From there, he was integral in Microsoft’s entry into consumer Internet businesses that achieved both critical and financial success. These included Sidewalk, Encarta and HomeAdvisor, which were among the first profitable consumer Internet businesses for Microsoft and used email marketing heavily to enable their growth.

Collaborative creation


Vyclone and Stringwire are taking on a serious challenge: enabling seamless, real-time collaborative content creation. Both companies use cloud-based online interfaces to sync video coming from a variety of devices to a seamless multi-camera narrative; they combine multiple perspectives to tell the whole story of a shared moment. They're slick. They're simple. They're making sophisticated synchronization technology invisible in the background while intuitive interfaces empower us to merge content into a single awesome piece of reporting in real-time.


Stringwire is more journalistic, with a network of verified, quality content creators baked into the core product. These content creators can be mobilized to cover breaking events at any moment, anywhere across the globe. Imagine what this means for law enforcement. If widely adopted, civilian eyewitness reporting takes on an entirely new meaning. What if every single person with a smartphone virtually became a security cam to capture every perspective of any event, criminal or otherwise, that happens around the world, all in real-time? Omnipresent transparency. Forget PRISM. We're becoming our own Big Brother. But in this case, transparency feels like a good thing.


Vyclone, backed by concert powerhouse Live Nation, focuses more on unique entertainment experiences by enabling attendees to work together and let the world in on the shared experience of live events -- a concert, a sporting event, a wedding, anything. To date, those who watched live events online have had two options: They could watch the "official" produced livestream or piece together clips and commentary broadcast over the social airwaves. But the professional stream can't capture all the nuances of being in the crowd, and fan clips are disparate fragments of the experience.


Now Vyclone powers a whole new level of access, with a cohesive stream from the vantage point of anyone there in person. A recent partnership with Jason Mraz and Madison Square Garden showcased the power of the tool, capturing the entire concert experience from the inside out. Expect more enhanced entertainment experiences like these to come.

New content media


Zeega is a new storytelling platform that empowers people to use various forms of media to easily weave together photos, videos, images, gifs, and music to create content. Think PowerPoint meets iMovie meets Pro Tools meets Tumblr meets Gifbin, built on a cloud-based web interface that enables users to create an entirely new medium of content. It's such a literal embodiment of mash-up culture that it transcends parody and becomes something truly awe-inspiring. The end product hardly resembles any medium of content that we have seen to date, but somehow it still tells a cohesive story and churns out a captivating viewing experience.


And these stories are easy to make. Zeega recently showed off what the tool is capable of at a San Francisco Museum of Modern Art event. The event gathered content creators with real chops to put together a series of vignettes around themes of their choice. But as a novice, it's not that much more difficult to take cultural references, personal and collective, and weave them into a narrative that both tells a compelling story and is captivating in its novelty.

Free market content and the influencer economy


YouTube is far from a startup, but it has paved the way for a new category of content creators who are becoming a trend with momentum that cannot be ignored. The platform empowers content creators to develop their own built-in audiences without any intermediary. But more so than the direct-to-consumer delivery model, the paradigm shift to note here is the diversity of the type of content and "star" that is gaining traction. Whereas the creative industries have historically monetized actors and musicians, the YouTube star has blown the doors off what constitutes celebrity. Today some of the biggest names are really just popular personalities, quite literally cashing in on social currency.


One new social content startup to watch is Pheed, which has recognized this trend and is creating a platform for this new influencer economy. Creators have embraced a model of giving away content that can be ripped, shared, blogged, and tweeted to develop audience. Then, once the fan base is amassed, they then monetize that audience. Currently they build their fan bases on Facebook, Twitter, Tumblr, and so on, and then monetize off these platforms elsewhere, via touring, record sales, or in -- the case of the new creator -- with brand subsidy.


Pheed gives creators of any kind -- from photographers to comedians, musicians, or even just popular personalities -- the ability to build audiences and monetize them right within that very platform. The better the content they give away, the more it is shared and the more their followerships grow. And once audience and demand has been built, creators can choose to put up a pay wall for specific releases (an album, a single, a piece of photography, or even just a well-timed vlog post) and choose the price point. At the end of the day, free market principles apply: If the content is compelling enough and priced properly, people will pay for it. A new-age content marketplace, Pheed gives a new era of creators a platform to build audiences and their careers.


And for brands to get involved in this ecosystem, startups like Outrigger are forming products like OpenSlate that help identify up-and-comers in the creators space. Such solutions enable brands to tap into their potential and find undervalued talent before they're "discovered." Along these lines, in partnership with Outrigger, Digitas is now co-developing the Emerging Talent Tracker to help brands identify, engage, and partner with emerging talent on YouTube before they are discovered by the masses.

Keeping pace: Startups to manage startups


If anything is a testament to the speed of innovation, it's the ever-more common practice of startups that are built on the backs of other startups. Nativ.ly is a startup that was built to discover and help monetize startups. How meta is that?


CallSnap is a brand new startup that was built off the popularity of, and the trends behind, the still nascent Snapchat. While Snapchat lets you send photos and videos to your contacts to open a line of communication, CallSnap essentially lets you do the opposite. It lets you snap a photo and send it after you decline the person's call -- a way of briefly showing the person why you weren't available. The two apps are built for different purposes, but they both rely on the increasing importance of photos via mobile to get your point across.


Waze, brought to the limelight of potential for brands by Nativ.ly earlier this year, was just bought last week by Google for more than a billion dollars, just months after its first monetization efforts. Waze in large part owes its recent acquisition -- at least its valuation, to a certain degree -- to Nativ.ly founders Jared Katzman and Mark Chu-Cheong, for proving its value to brands with a first-of-its-kind program that demonstrated real potential for brand dollars.


The convergence of social, content, and mobile


Are these content startups? Social? Mobile? Yes. From Vyclone to Pheed to CallSnap, all of these startups are blurring the lines between disciplines. They feature collaborative social elements that help create, distribute, and consume new types of content in new ways, across desktop, tablet, and mobile.


As consumers adopt social and mobile as part of their everyday lives, the startups to watch are the ones that don't specialize in any given silo. Instead, they focus on enriching people's lives in new ways, no matter the channel. The ones that will be successful are the ones that are nimble, move fast, and keep pace with the ever-increasing speed of innovation, consumer adoption of new behaviors, and the stream of content that we're consuming more of -- and more rapidly.


Alex Jacobs is vice president and director of social media at Digitas.


On Twitter? Follow Jacobs at @AlexJakes. Follow iMedia Connection at @iMediaTweet.


"Landscape, sunny dawn in a field" image via Shutterstock.

Dave is the CEO and Co-founder of Avado. Avado is a Patient Relationship Management platform that empowers the healthcare parternship between individuals and their health & wellness providers while giving the individual a Connected Health...

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