Project Management Jumps into Social Networking
It might be difficult to fathom how a “pop” term like social networking could help you manage projects, but smart project managers practiced the tenants of social networking long before the term was coined. This article looks at how social networking can enhance project outcomes in terms of decreased risk, increased customer acceptance and drastic improvements in communications.
There are social networks all around us: our coworkers, customers, PMI chapter members, friends, professional organizations, Linkedin connections, etc. An important thing to remember is access to social networks does not always cost money. While many corporations spend heavily for access to certain social networks, everything I relate here is free!
What’s the big deal?
I’m short on space here but suffice to say, Madison Avenue is spending billions on social networking. Microsoft is under attack from “networked” competitors such as Linux and Firefox. Why? Because social networks don’t play by the rules. They are often radically better at creating, organizing and predicting than are traditional organizations. Harnessing the power of social networks requires an understanding of when and where to use them and how they compliment traditional organizational structures.
No Rules
Let’s play psychologist. The hidden secret behind the success of Firefox, Google and many other socially networked ventures lie in their superior approach to group dynamics. While corporations organize talent by job description and hierarchy, social networks are self-organizing, allowing people to take on tasks they feel comfortable with. Social networks better resemble the way people interact naturally, and that is why they move faster, make less mistakes, and deliver exactly what their customers want. Below are contrasting examples of how projects are viewed from the corporate perspective versus the social network perspective:
Cross-Pollination – Without departments or reporting structures, participants in social networks have nothing to loose when proposing new ideas. Some of the best ideas and solutions come from those outside the subject discipline, who simply looked at the problem from a different viewpoint. You would be surprised how good an HR department is at debugging an IT project.
Isolation from Competition - While companies traditionally 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. Ask your customers if they would be willing to work on a project, most of the time they will say “yes”.
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 to collaboration. The PMI standards are a natural “leveler” allowing members to speak the same language across companies and countries. Social networks develop these same protocols, allowing for more seamless communication.
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. Coke launched “New Coke” even after their customers told them not to. Ego can have devastating effects on a project. Vetting project concepts off trusted networks of experts, outside the corporate firewall can reduce this risk.
Starting With the Answer - Social networks, by their nature, exist 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. Social networks are 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 the network 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.
Social networks keep 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 needs. One of the striking characteristics of groupthink is the more gifted, intelligent and cohesive your team, the more susceptible you are.
The rapid decentralization of expertise with the growth of business and social networks across the Internet is creating monumental change for businesses. These knowledge networks can be powerful tools in the hands of those who know how to access and harness them effectively. Members of these networks – who have “been there, done that” - can be tapped for their diverse sets of knowledge and experiences to solve business problems via the social network platform.
Thursday, April 24, 2008
Thursday, March 20, 2008
Crowdsourcing and Its Impact on New Product Development
Two Crowdsourcing Stories
In 1714, British Parliament established a prize of £20,000 to anyone who could accurately determine the position of a ship by longitude. Today, we can look at low cost GPS device and know exactly where we are at any time. However, in 1714 sailors only had a rough idea of their position north and south, and an even foggier idea about east and west. It is certainly difficult to build an empire this way. John Harrison, a working class joiner from Lincolnshire who had scant forma l education built and repaired clocks in his spare time. Mr. Harrison won the longitude prize by producing the first portable and reasonably accurate chronometer. He took on the scientific establishment of his time and won the prize through his gifted mechanical insight and pure determination.
While £20,000 was a fortune in those days, the government received exactly what it wanted and risked nothing in return. The value of the prize drew the best minds in the world to the challenge and Harrison’s chronometer was quickly improved. The tiny chronometer allowed for accurate navigation and map-making giving the British supremacy of the seas that lasted for decades.
A more recent and extraordinary example is the 1999 case of GoldCorp, a Toronto-based gold mining outfit whose 50-year old Red Lake, Ontario mine was declining in production. In an unprecedented move, CEO Rob McEwen released all geological records to the public through the “Goldcorp Challenge”, offering $575,000 to anyone who could find more gold.
The contest drew about 1,200 people from 50 countries. The results were but another example of the power of crowdsourcing: 110 sites were identified of which 50% were new, and 80% of these produced gold. Over 8 million ounces were found, and Goldcorp’s value soared from $100 million to over $9 billion. The cost was a pittance compared to the value generated – over $1,500 generated for every dollar invested in the contest winnings!
Crowdsourcing in the Modern Age
Today, there is a confluence of communication technologies and social networking that makes the practice of crowdsourcing even more potent than it was in 1714, or even in the case of GoldCorp. Many companies such as Procter and Gamble, Netflix, Hilton Hotels, Boeing and Dell are also taking advantage of this open form of product development.
So what is crowdsourcing really? As it applies to product development, crowdsourcing is the process of accessing groups of people with known or defined characteristics, and tapping their knowledge to create something of value. In the case of new product development, it is casting a net for new ideas well beyond the inner sanctum of a modern organization’s typical market research, product development and marketing functions.
The days of internal teams working in secret, designing carefully controlled products in the hopes of appealing to their target audiences are being challenged by breakout companies that are looking to crowds for help in product design, i.e. crowds of employees, customers, vendors, external subject matter experts, consumers and the even the general public. The rewards can be impressive indeed. Just consider the success of these crowdsourcing pioneers:
• Proctor & Gamble
• Hewlett Packard
• Netflix
• Google
• Boeing
• Dell
If we look at the decades leading up to the internet age as a period of satisfying supply, with limited media outlets to market products and consumers making purchasing decisions independently. Now contrast that with the demand economics of today. Consumers are customers with ready access to many products, other customers, and the ability to broadcast their love or hatred of products to the world. It becomes clear that many aspects of traditional product development, while no means yet obsolete, are being superceded by leading-edge companies that recognize and leverage a consumer culture that is:
• More inter-connected than ever
• Increasingly fragmented in media consumption
• “Prosumer” in their ability to hack into, mix and match products and technologies (just look at what’s happened with Apple’s iPhone!)
• Carrying more “man in the street” clout or “streetcred” in the way people interact with products, share dirty little secrets, and provide feedback to manufactures
• More democratic in how ideas are shared and filtered across organizational boundaries, and willing to give away proprietary information of tremendous value (e.g., open source software, Goldcorp mining data)
Crowdsourcing’s Role in New Product Development: Consumers as Creators
Leveraging crowdsourcing as a defined business process of competitive value requires a different paradigm than traditional product development. The word “consumer” historically has carried the connotation of companies producing and marketing while consumers cheerfully “consume.” Crowdsourcing blurs the lines between consumers, designers and marketers. The person who contributes to a product design one day can turn around and recommend it to a friend the next. Entering into an open conversation with all your business constituencies is the key first step.
Let’s look at crowdsourcing within a traditional framework of new product development, from idea generation through to marketing and distribution.
Idea Generation
Opening up the new product design process to the “crowd”, i.e., your customers, vendors, employees, consumers, outside subject matter experts, and even the general public (all of your current and potential business constituencies) places a greater demand on the company to know exactly what it wants and what it is willing to pay for a functioning product. Many companies enter the process hoping consumer studies and focus groups will provide the right product definition. This inevitably leads to a greater risk of failure due to: a) the limited size and breadth of these groups, and b) focus groups for example capture opinion but not actual behavior.
Examples from the past and present clearly demonstrate the value of casting the broader net: the British “product” definition said, “Deliver a device capable of locating a ship at sea to within 60 nautical miles and we will pay £20,000.” Today Netflix is running a contest to improve its movie ratings service. “Deliver a ratings service 10% better than our current system and we will pay $1,000,000.”
Idea Screening
If you believe the best screeners are customers themselves, then you believe in a key aspect of crowdsourcing. Many of today’s crowdsourcing techniques came from the world of open source computing. If you use the Firefox web browser or visit web sites in general, you are an open-source product consumer. Open-source software products, consumer and financial products following open-source design principles, allow product creators and related communities to perform idea screening via a more democratic process that more accurately reflects what people will do. Cambrian House is a Canadian firm that encourages members of its online community to submit product ideas and vet them through an open system of voting called “Idea Warz.” Winning ideas are matched with financing and put into production. Prosper, an online bank, allows its members to bid on loans they wish to fund. Loan proposals with the best ideas are funded regardless of underwriting risk.
Concept Development and Testing
Lego crowdsources its concept development and testing by sponsoring the online Lego Factory. Here anyone can design virtual Lego scenes, customizing blocks and colors. Rules built into the system prevent customers from building blocks that cannot be reproduced in the physical world. Lego product people now have a lab running 24/7 where they can observe customers developing and purchasing products.
Threadless is a T-shirt company that produces shirts created by members of its online community. Every week, member’s vote on which shirts will be produced and the company follows the group’s recommendation. In a business where companies are lucky to sell 20% of their production at full retail, Threadless has never failed to sell out of its shirts.
Marketing and Distribution
Following the primary tenants of crowdsourcing: community, inclusion, and democracy of ideas, marketing and distribution is a breeze right? Right, because companies that take the time to include their customers, vendors, employees and anyone else who would listen in their development process, now have an army of loyal people willing to help market and distribute the products they helped create. Proctor &Gamble, record companies and milk producers all use committed groups of their customers to go out and evangelize their products. You might think mobilizing forces large enough to make a difference would be cost prohibitive, but most of their brand evangelists work for free or supply product samples. It is the uniqueness of a company asking for help that makes the company-to-customer bond stronger and sets the stage for real grass-roots marketing.
Conclusion and Call to Action
Crowdsourcing has clearly arrived and is here to stay. Corporate executives should seek to explore ways to leverage an untapped treasure trove of knowledge from all available sources: outside subject matter experts, employees, customers, consumers, and even the general public, and not only for new product and service development, but also for optimizing channel management and customer satisfaction.
If your company is not yet considering crowdsourcing, you may be missing out. Beyond that, leading-edge companies will next be seeking ways to build crowdsourcing as a genuine business process and strategic capability for competitive advantage.
In 1714, British Parliament established a prize of £20,000 to anyone who could accurately determine the position of a ship by longitude. Today, we can look at low cost GPS device and know exactly where we are at any time. However, in 1714 sailors only had a rough idea of their position north and south, and an even foggier idea about east and west. It is certainly difficult to build an empire this way. John Harrison, a working class joiner from Lincolnshire who had scant forma l education built and repaired clocks in his spare time. Mr. Harrison won the longitude prize by producing the first portable and reasonably accurate chronometer. He took on the scientific establishment of his time and won the prize through his gifted mechanical insight and pure determination.
While £20,000 was a fortune in those days, the government received exactly what it wanted and risked nothing in return. The value of the prize drew the best minds in the world to the challenge and Harrison’s chronometer was quickly improved. The tiny chronometer allowed for accurate navigation and map-making giving the British supremacy of the seas that lasted for decades.
A more recent and extraordinary example is the 1999 case of GoldCorp, a Toronto-based gold mining outfit whose 50-year old Red Lake, Ontario mine was declining in production. In an unprecedented move, CEO Rob McEwen released all geological records to the public through the “Goldcorp Challenge”, offering $575,000 to anyone who could find more gold.
The contest drew about 1,200 people from 50 countries. The results were but another example of the power of crowdsourcing: 110 sites were identified of which 50% were new, and 80% of these produced gold. Over 8 million ounces were found, and Goldcorp’s value soared from $100 million to over $9 billion. The cost was a pittance compared to the value generated – over $1,500 generated for every dollar invested in the contest winnings!
Crowdsourcing in the Modern Age
Today, there is a confluence of communication technologies and social networking that makes the practice of crowdsourcing even more potent than it was in 1714, or even in the case of GoldCorp. Many companies such as Procter and Gamble, Netflix, Hilton Hotels, Boeing and Dell are also taking advantage of this open form of product development.
So what is crowdsourcing really? As it applies to product development, crowdsourcing is the process of accessing groups of people with known or defined characteristics, and tapping their knowledge to create something of value. In the case of new product development, it is casting a net for new ideas well beyond the inner sanctum of a modern organization’s typical market research, product development and marketing functions.
The days of internal teams working in secret, designing carefully controlled products in the hopes of appealing to their target audiences are being challenged by breakout companies that are looking to crowds for help in product design, i.e. crowds of employees, customers, vendors, external subject matter experts, consumers and the even the general public. The rewards can be impressive indeed. Just consider the success of these crowdsourcing pioneers:
• Proctor & Gamble
• Hewlett Packard
• Netflix
• Boeing
• Dell
If we look at the decades leading up to the internet age as a period of satisfying supply, with limited media outlets to market products and consumers making purchasing decisions independently. Now contrast that with the demand economics of today. Consumers are customers with ready access to many products, other customers, and the ability to broadcast their love or hatred of products to the world. It becomes clear that many aspects of traditional product development, while no means yet obsolete, are being superceded by leading-edge companies that recognize and leverage a consumer culture that is:
• More inter-connected than ever
• Increasingly fragmented in media consumption
• “Prosumer” in their ability to hack into, mix and match products and technologies (just look at what’s happened with Apple’s iPhone!)
• Carrying more “man in the street” clout or “streetcred” in the way people interact with products, share dirty little secrets, and provide feedback to manufactures
• More democratic in how ideas are shared and filtered across organizational boundaries, and willing to give away proprietary information of tremendous value (e.g., open source software, Goldcorp mining data)
Crowdsourcing’s Role in New Product Development: Consumers as Creators
Leveraging crowdsourcing as a defined business process of competitive value requires a different paradigm than traditional product development. The word “consumer” historically has carried the connotation of companies producing and marketing while consumers cheerfully “consume.” Crowdsourcing blurs the lines between consumers, designers and marketers. The person who contributes to a product design one day can turn around and recommend it to a friend the next. Entering into an open conversation with all your business constituencies is the key first step.
Let’s look at crowdsourcing within a traditional framework of new product development, from idea generation through to marketing and distribution.
Idea Generation
Opening up the new product design process to the “crowd”, i.e., your customers, vendors, employees, consumers, outside subject matter experts, and even the general public (all of your current and potential business constituencies) places a greater demand on the company to know exactly what it wants and what it is willing to pay for a functioning product. Many companies enter the process hoping consumer studies and focus groups will provide the right product definition. This inevitably leads to a greater risk of failure due to: a) the limited size and breadth of these groups, and b) focus groups for example capture opinion but not actual behavior.
Examples from the past and present clearly demonstrate the value of casting the broader net: the British “product” definition said, “Deliver a device capable of locating a ship at sea to within 60 nautical miles and we will pay £20,000.” Today Netflix is running a contest to improve its movie ratings service. “Deliver a ratings service 10% better than our current system and we will pay $1,000,000.”
Idea Screening
If you believe the best screeners are customers themselves, then you believe in a key aspect of crowdsourcing. Many of today’s crowdsourcing techniques came from the world of open source computing. If you use the Firefox web browser or visit web sites in general, you are an open-source product consumer. Open-source software products, consumer and financial products following open-source design principles, allow product creators and related communities to perform idea screening via a more democratic process that more accurately reflects what people will do. Cambrian House is a Canadian firm that encourages members of its online community to submit product ideas and vet them through an open system of voting called “Idea Warz.” Winning ideas are matched with financing and put into production. Prosper, an online bank, allows its members to bid on loans they wish to fund. Loan proposals with the best ideas are funded regardless of underwriting risk.
Concept Development and Testing
Lego crowdsources its concept development and testing by sponsoring the online Lego Factory. Here anyone can design virtual Lego scenes, customizing blocks and colors. Rules built into the system prevent customers from building blocks that cannot be reproduced in the physical world. Lego product people now have a lab running 24/7 where they can observe customers developing and purchasing products.
Threadless is a T-shirt company that produces shirts created by members of its online community. Every week, member’s vote on which shirts will be produced and the company follows the group’s recommendation. In a business where companies are lucky to sell 20% of their production at full retail, Threadless has never failed to sell out of its shirts.
Marketing and Distribution
Following the primary tenants of crowdsourcing: community, inclusion, and democracy of ideas, marketing and distribution is a breeze right? Right, because companies that take the time to include their customers, vendors, employees and anyone else who would listen in their development process, now have an army of loyal people willing to help market and distribute the products they helped create. Proctor &Gamble, record companies and milk producers all use committed groups of their customers to go out and evangelize their products. You might think mobilizing forces large enough to make a difference would be cost prohibitive, but most of their brand evangelists work for free or supply product samples. It is the uniqueness of a company asking for help that makes the company-to-customer bond stronger and sets the stage for real grass-roots marketing.
Conclusion and Call to Action
Crowdsourcing has clearly arrived and is here to stay. Corporate executives should seek to explore ways to leverage an untapped treasure trove of knowledge from all available sources: outside subject matter experts, employees, customers, consumers, and even the general public, and not only for new product and service development, but also for optimizing channel management and customer satisfaction.
If your company is not yet considering crowdsourcing, you may be missing out. Beyond that, leading-edge companies will next be seeking ways to build crowdsourcing as a genuine business process and strategic capability for competitive advantage.
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