Netscape’s creation of Mozillia in 1998 gave everyone the chance to work on the popular web browser. Today Mozillia’s Firefox is the world’s number two browser. All this is achieved with volunteers, donating their time and expertise for no other reason than to create an elegant web browser. The two main forces behind the attention economy are: a realization that in an information overloaded world, the value of attention will go up, and (as a result) people will work for recognition alone .
Social networks provide an outlet for creative thinkers who band together in their spare time to produce products that compete against traditionally developed software. Linux competing with Windows, Unix, and Apple. Mozilla competing with Explorer and Safari.
Even though they compete in the same markets as traditionally developed products, social networks and the crowdsourced products that come from them tend to operate in contradictory fashion to the forces that shape large organizations. This is most noticeable in open vs. closed communication behaviors. Organizations often benefit from withholding information and general isolation:
Isolation from competition - While companies develop products in secrecy, open source products draw skills across competitors and industries.
Isolation from customers – Open source projects are often created by the very same people who use them. This outsourcing to the customer eliminates the gap between vendor and customer all together.
Isolation in the form of strategies and tactics unique to one organization - Organizations have slogans to celebrate their unique and proprietary methods; people are “True Blue” for IBM, GE has “Work-Out”. These programs can be great morale boosters but can also serve as barriers when companies or individuals collaborate.
The Internet deconstructs isolationism, information moves too fast to be proprietary, hidden away from customers, or hoarded to be sold over and over again to verticals that enjoy no significant year-to-year change. Isolationist tactics serve to maintain the status quo within a particular organization but also lead to some of the more dramatic missteps of organizations that have been isolated too long:
Failing to consider all the alternatives
Social networks are not shy; they throw everything up against the wall to see what sticks. Although a wasteful process, it is also an adaptive one that succeeds where fixed expert models fail. Consider the following. US automakers continue to make cars with poor gas mileage, long after the realization of a direct correlation between corporate average fuel economy and profit. Based on 2005 numbers, GM lost $1,271 per vehicle in North America, while Daimler Chrysler made $144 and Ford lost $451, Nissan made $2,135, Toyota made $1,715, and Honda made $1,259 . If you look at corporate average fuel economy for the same companies, U.S. manufactures averaged under 30mpg while Honda and Toyota were over 34mpg .
This is not to suggest that all U.S. automakers problems stem from poor fuel efficiency, but it is a fact that the U.S. lags behind Japan and is forced to incentivise sales of SUVs while Japanese hybrids rake in record profits. The startling fact is that many organizations will continue throwing good money after bad until an overwhelming force intervenes. Henry Ford lost many good employees and considerable sales before relenting to building retiring the Model T. Lexis / Nexus maintained a proprietary network for accessing their news & legal database long after the Internet became the media of choice. Social networks assume nothing and crowdsourcing has no organizational memory, no bad habits, or political agendas to silence the voice of the customer.
Starting with the answer
All too often consultants are hired to validate an idea already thought to be a success within the customer company. This practice handicaps the consultant and leads to failure. Crowdsourcing via social networks is a process inherently without preconception. Imagine a hive of bees searching for honey. The hive has no idea where they will find nectar. Every day they canvass the landscape without any preconceptions. Once nectar is found, the hive optimizes its efforts to harvest the found resource. Crowdsourcing is similar to the hive in that it is not reliant on one individual or practice to achieve an outcome. A multitude of potential outcomes and approaches are considered within the efficient framework of crowdsourcing before a decision is rendered.
Groupthink
We as humans have a basic need to be part of a larger group, to be accepted by those around us. The vestigial fragment of genetic code that causes people to not step off the curb first, face forward in the elevator, or look up when others look up, interferes with business decision making and no one is immune to it.
Psychologist Irving Janice coined the term groupthink in 1972 . People who suffer from groupthink exhibit the following symptoms:
- Illusion of invulnerability –Creates excessive optimism that encourages taking extreme risks.
- Collective rationalization – Members discount warnings and do not reconsider their assumptions.
- Belief in inherent morality – Members believe in the rightness of their cause and therefore ignore the ethical or moral consequences of their decisions.
- Stereotyped views of out-groups – Negative views of “enemy” make effective responses to conflict seem unnecessary.
- Direct pressure on dissenters – Members are under pressure not to express arguments against any of the group’s views.
- Self-censorship – Doubts and deviations from the perceived group consensus are not expressed.
- Illusion of unanimity – The majority view and judgments are assumed to be unanimous.
- Self-appointed ‘mindguards’ – Members protect the group and the leader from information that is problematic or contradictory to the group’s cohesiveness, view, and/or decisions.
Crowdsourcing keeps fresh blood and ideas in the decision making mix and can help reduce organizational elements that lead to groupthink: hubris, ideas that fail the logic test, and most importantly, plans made in isolation that don’t represent customer desires and their inevitable failure. One of the striking characteristics of groupthink is the more gifted, intelligent and cohesive your team, the more susceptible you are.
John Maynard Keynes wrote, “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally. ” Companies that suffer from a lack of diversity in their strategy development often die with their boots on in conventional markets they are unfamiliar with. Failures related to groupthink are the corporate equivalent of the famous red neck last request, “hold my beer.” These companies staggered into markets they were unprepared for because their leadership surrounded themselves with like-minded managers who were incentivised to agree with each other and hired consultants to validate what they already thought to be true. And we love to read about them!
"It's not what you don't know, that can hurt you. It's what you think you know, that just ain't so." Mark Twain
Builders Square Kmart's answer to The Home Depot and Lowe's. Kmart tried to compete with Home Depot and Lowe's but failed to match the modernized management and supply chain innovations of the incumbents. Despite a huge investment by Kmart, Builders Square went out of business in 1999.
Segway Human Transport scooter invented by Dean Kamen, holder of more than 440 patents. The self-balancing scooter was marketed as the most important transportation innovation since the automobile. However, Mr. Kamen failed to realize people could buy a truck load of conventional scooters for the $5,000 Segway price tag. Conventional electric scooters go faster and further than the Segway. Conventional scooters do not rely on a computer to keep their passengers from becoming part of the pavement. Mr. Kamen and the inventors of the Segway seemed to collectively rationalize away all of the superior aspects of the venerable electric scooter. Consequently, the Segway only sold 10,000 units in its first few years. It should be noted that Mr. Kamen filed for another patent in an attempt to vastly improve the Segway’s efficiency (United States Patent 6,062,023).
Burger King "Herb" campaign was one of greatest advertising flops of the 80’s. The campaign centered on the faceless "Herb", a male character that was constantly being criticized for being himself. Viewers were invited to join the “fun” for looking out for Herb at Burger King locations. One of the reasons why the campaign failed was that Burger King never told people what Herb looked like. The campaign’s result was a customer backlash at the impossible task of finding Herb with no possible way to do so. “Herb” may meet all the conditions of groupthink, most significantly, collective rationalization in the potential effectiveness of the campaign. Advertising Age magazine called the Herb campaign "most elaborate advertising flop of the decade".
New Coke, introduced in 1985 as a complete replacement to original coke recipe. In an effort to gain market share over rival Pepsi, Coca-Cola's executives commissioned the top-secret "Project Kansas” to test and perfect a new flavor for Coke. Coke management succumbed to the groupthink practice of self censorship by ignoring focus group data suggesting loyal coke drinkers would “stop drinking Coke altogether” if the new formula replaced the old. Public reaction was so overwhelming; Coke was forced to reintroduce the old formula as “Classic Coke” within three months of new Coke’s launch.
In 2005 Sony-BMG decided to include Digital Rights Management (DRM) software in music CDs sold under the Sony label. Sony suffered from an illusion of invulnerability when it failed to inform consumers the music CDs secretly installed software on customer’s computers. The software’s primary function was to prevent illegal copies of Sony music but it also caused computer malfunctions resulting in a successful class action law suit against Sony. What Sony failed to recognize was the outrage customers experienced when they discovered Sony was trying to control their personal computers. This outrage attracted the ire of software hackers who defeated Sony’s DRM product and widely distributed the hack over peer to peer file sharing networks.
Further Reading:
- Herbert Simon postulated that an oversupply of information creates scarcity of attention. See also http://www.firstmonday.org/issues/issue2_4/goldhaber/
- Mozillia http://wp.netscape.com/newsref/pr/newsrelease577.html
- Goldhaber, Michael H. Attention Shoppers! Wired Magazine issue 5.12, December 1997
- Google’s page rank technology explained http://www.google.com/technology/
- U.S. Dept. of Transportation, Summary of Fuel Economy 2005
- Janis, Irving L. (1972). Victims of Groupthink. New York: Houghton Mifflin.
- Keynes, John Maynard, (1935) The General Theory of Employment, Interest, and Money. New York: Harcourt, Brace and Company
- Totty, Michael. How to Decide? Create a Market. The Wall Street Journal, June 19, 2006
- Surowiecki, James. (2004) The Wisdom of Crowds, New York: Anchor Books
- Rubenstein, Sarah. Companies Tackle Worker Maladies; Faced With Weak Output, More Firms Aim to Treat On-the-Job Aches, Pains. Wall Street Journal. January, 2005.
