Wired Pursuits

Posts Tagged ‘Internet

So much about innovation is changing. Globalization, increased need for speed to market, increased costs, mobile workforce, and maybe most importantly the proliferation of the Internet and online collaborative tools. I think O’Reilly’s quote sums it up nicely.

“The central principle behind the success of the giants born in the Web 1.0 era who have survived to lead the Web 2.0 era appears to be this, that they have embraced the power of the web to harness collective intelligence.”

O’Reilly, 2005

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Instead of turning to paid analysts, or internal experts some companies are using the crowd to help improve the accuracy of demand forecasts as well as better manage inventory and manufacturing capacity.

Predictive markets, often also referred to as information markets, aggregate the knowledge of the crowd to make predictions regarding unknown future events. By aggregating distributed knowledge the predictions of the crowd are often more accurate than when companies rely on only a handful of experts.

How do they work?

In prediction markets, individuals buy and sell “futures” or “shares” based on their beliefs regarding the probability of the event taking place. If they are correct, they are rewarded for their efforts. Because of U.S. laws related to online gambling, rewards often take the form of play money, gift certificates, or recognition within the market.

What is interesting about prediction markets is their structure creates incentives for individuals to act on their closely held information. Because rewards are tied to correct predictions, individuals in the crowd who have access to more information, which may aid in their understanding of the market, tend to buy more shares than those who are just guessing.

For example, Google uses over 300 internal prediction markets to assess events such as customer demand for new products (“How many Gmail users will there be on January 1, 2009?”), company and product performance (“When will the first Android phone hit the market?”), and competitor performance (“How many iPhones will Apple sell in the first year?”). In addition to new sources of predictions, Google has used these prediction markets to better understand and improve the flow of information within their company.

Do predictive markets work?

As with many new uses of the crowd, we have only scant evidence regarding the effectiveness of prediction markets. Best Buy reports internal prediction markets designed to predict holiday sales of gift cards were 99.5% accurate compared to a 95% accuracy rate from external consultants. Intel also reports success with their internal “forecasting markets.”

Faced with the difficult task of predicting demand of products requiring lead times of months or even quarters, Intel found their internal markets were at least as accurate as official figures and in some cases more accurate by 20% (i.e., 20% less error).

There is, however, evidence that outside factors can impact results of these markets. Some data suggests employees may be overly optimistic regarding company performance tending to artificially inflate positive results. For publically traded companies, stock performance can influence predictions upward or downward in line with the latest market swings. And finally, there are also numerous issues related to providing the right incentives for participation as well as obtaining executive buy-in for such initiatives.

I ran across this new saying at a panel discussion I was on regarding teaching with technology. Got me thinking. Has Google replaced thinking? Has Twitter replaced speaking?

I don’t think so. I think it’s more a comment on the impact the Internet and social media is having on our culture. Both positive and negative. We now have new ways of learning about new topics and verifying facts.

But with all the user generated content on the web, how do we ensure the accuracy of what we’re reading? Studies on Wikipedia have shown it is as accurate as the Encyclopedia Britannica. But what about other sources? Do sites referenced by a Google search provide us with accurate information?

There used to also be another saying, “If it’s printed in the newspaper it must be true.” Is society transferring that (potentially unknowingly) to the Internet?

No, I don’t mean crowdsourcing is “for the birds,” as in worthless. I literally mean crowdsourcing for birds. Here’s an interesting application of turning to the crowd to generate data – bird data.

Cornell Lab of Ornithology and the National Audubon Society have joined together to leverage the collective productivity of the crowd to accomplish a task they would never be able to do on their own. They have created the online site eBird.org.

eBird enlists the help of bird watchers across North America to collect and document the presence of specific bird species. Using the eBird site, birders can report sightings and access the latest data on bird populations across the western hemisphere.

By leveraging the interests of the crowd and providing the ability for them to easily contribute to a shared cause, site sponsors are now able to accurately track bird populations more quickly and economically than they could with in-house staff. In 2006, more than 4.3 million observations were submitted by bird watchers across the country.

Interestingly, the site doesn’t have any collaborative tools where birders can talk to each other, but it doesn’t appear to need them to generate a sense of community.

If you know of other sites that leverage the crowd to collect data, please let me know.

When the Internet and email first started being used for communications many complained that it would never be as rich as face-to-face communications. It was devoid of emotion, feeling, or personality. You couldn’t really get to know the person you were interacting with. But over time that has changed. Individuals have come up with interesting ways to add emotion and feeling to their communications, and new technologies such as audio and video are allowing individuals to hear an individual’s tone of voice and watch their body language and mannerisms.

We are emotional creatures.

People are by nature emotional creatures. We gain many clues to others by watching their body language, listening to the tone of their voice, and looking them in the eye. How many times have you heard the saying, “it’s not what you say, it’s how you say it comes from?”

With email and the Internet all that was missing in the beginning. Sometimes individuals misunderstood messages because there were no external clues to what the sender really meant. But as social beings, we have come up with many creative ways to add emotion, and therefore understanding, to our electronic communications. I’ve been lucky to be able to see these changes being used by more and more people over the years.

Adding emotion to our electronic communications.

Below is a list of just some of the ways we are putting a face on our communications (well the ones I can think of). I’m sure I’ve missed some, so if you think of others, please add them. Note that I am not including all the design tricks such as color, font, and layout that designers can use to create a “feeling” around a web page. Instead these are things that most individuals can do to convey emotion using a basic keyboard.

  • CAPS LOCK. A simple way to add emphasis. Basically the electronic equivalent of yelling.
  • Bold. Another simple way to show emphasis.
  • Emoticons. Probably the most interesting. Those pesky little characters often added to email, IM, and blog posts to convey feelings. Smile:  :-), wink ;-), shock =o to name a few. Interestingly, emoticons didn’t start with email. There were actually used on the Plato system in the 1970. But the popularity of email has made them more known and common to the general public.
  • Profile photos. Profile photos on Facebook, Twitter, and forums are great ways to send clues about personality (or hide them). Whether they are actual photos or avatars both convey a sense of the person you are communicating with.

The Internet never forgets…

“I’m rubber and you’re glue.  Anything you say bounces off of me but sticks forever in cyberspace.

Why I love the Internet.  (Case in point – posting random thoughts just like this.  Hummm, let’s see what’s going on on Twitter.)

“The beauty of the Internet is that when I want to avoid doing work, I don’t even have to get up to find a distraction.”


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