I do research for a living. A lot of it tends to centre on the Web 2.0. And the Chairman of my research group wrote Wikinomics. So I spend quite a bit of time out looking for new companies and business models, with a particularly keen eye for things that are “opening up”. But to be honest, there are quite a few situations where it becomes obvious that being open isn’t always a great thing.

For example, one easy technique for locating new “lighthouse case study” ideas is searching through various contests that are floating around out there. Two of the more well-publicized ones recently are the TechCrunch 50, and the Mashable Open Web Awards. The first provides a nice list of start-ups to consider, and the various stories swirling around them point to many more. Great resource. I also had high hopes for the Mashable Open Web awards as a pointer towards great case studies. But thus far have been mostly disappointed.

The reason is that I suspect the system is being gamed, and I don’t know what to make of many of the results I’ve seen. For example, I was really interested in “Twitter user of the year”, particularly since there are many, many interesting Twitter users out there. I watched the updating list for a few hours last week. @ivetesangelo proved quite popular. In fact, my rough count indicated @ivetesangelo was getting about 60% of the votes. @sookiebontemps and @tommcfly were also quite popular. I greatly suspect that the system was being gamed. I scanned through a variety of other lists, saw voting patterns that defied all logic (at least in relation to what the contest intended), and moved on.

In some ways it’s not really fair to compare the two directly – but since both are seeking to identify the “best” in a relatively similar space, I think the difference between the two experiences is important. By applying some structure, expertise, and filtering, TechCrunch provides a lot of value to me; by being almost entirely open, the Mashable Web Awards are left open to gaming, and various different interpretations of what’s going on. I have a hunch of some expert panel had narrowed down a list of the best things going on out there (perhaps guided by voter input) and let people work from there, the output would be more interesting – and useful.

I see this kind of thing pop up a lot. In general, I find open to be good – to a point. But there’s a reason things like hierarchies emerged out of self-organizing systems.

In early July I published a post on the wikinomics site arguing that if you are an NBA owner looking to save money, you should consider firing your scouting staff. The reasoning was simple – there is an extraordinary network of bright people following the preparations of players for the draft. Many of them share information regularly. Over time, you start to see a general consensus emerge through all the collaboration taking place – which is highlighted by the striking similarity of many mock drafts. And lo and behold, if you watch the draft it is remarkable how similar the results are to the consensus projections. In turn, why bother paying your own staff when you can just leverage this collective intelligence instead?

Almost exactly one month later the Memphis Grizzlies are doing exactly that – they have fired their entire scouting staff.  The key point that the GM made was that in the NBA teams only make a couple of picks per year, and pretty much everyone knows who the top players are, and in what order. They didn’t exactly say they are just going to use consensus mock drafts to make their pick, but they might as well have. What else are they going to do?

So am I excited about this experiment? Well, only sort of. As I mentioned later in my original post, teams that consider firing their scouting staff should re-direct their resources to ensure that they have a great GM. While I mentioned long suffering Clippers and Timberwolves fans as those that know the importance of having a “uniquely qualified mind” in the GM spot, I really should have had the Grizzlies at the top of the list. Their front office is an ongoing and epic disaster.

For example, those that follow basketball will recognize the Grizzlies as the team that traded Pau Gasol to the Lakers for Kwame Brown, Javaris Crittenton, Aaron Mckie, Marc Gasol, and a couple of late first round picks. It was easily one of the worst trades in NBA history (the Sports Guy might have to come up with something worse than the pu-pu platter for that collection of “talent”), which did nothing for the Grizzlies and basically turned the Lakers into champions. For non-basketball fans, the trade basically amounted to swapping a perfectly good Ferrari for a couple of old pick up trucks, two gently used hyundais, and the rights to buy a couple of Chevy sedans in the future.

Since then, the Grizzlies have notably managed to act as facilitators (based on available cap space) in complicated multi-team trades that makes everyone better except them, and acquire a PF to fill Gasol’s spot (Zach Randolph) that makes about the same amount of money as Gasol, but basically nobody wants. Reasons include the fact that every team he leaves tends to get immediately better, and he’s (ahem) known for getting in trouble. Basically, very little that they do makes any sense at all.

So I’m really not sure what to think. On one hand, it will be interesting to watch the experiment play out, because I think the logic behind certain teams shedding salaries in the scouting department makes sense. On the other, the team that has adopted my strategy has what is widely seen as the worst front office in the league. This unnerves me a little bit – when the worst GM has the same idea you do, it’s somewhat unsettling. But in terms of the experiment, it concerns me more that what might be the right strategy, holding all else equal, will be blamed if the team continues to flounder due to other circumstances.

Upon reflection, there is a great analogy for this. Once upon a time the movie Snakes on a Plane decided to launch an extremely innovative social media marketing strategy. When the internet buzz didn’t translate into box office revenue, many people jumped to the blanket conclusion that social media was ineffective for putting butts in seats. But what they didn’t really adjust for was the fact that it was a bad movie – the refusal to allow critics to see the movie ahead of time being a strong data point backing this assertion. Watching it provides another strong indicator.

The Memphis Grizzlies may well be the “Snakes on a Plane” of the NBA. so if they do fail at this experiment, and I have a hunch that team is going to be a mess for many years, remember to distinguish between whether the approach was wrong, or the underlying product was just too messed up to use it effectively.

I’ve been looking at a variety of potential frameworks in relation to the topic of prosumerism / customer co-creation. I linked to a couple last week, and have developed a few of my own over the past few years, but I continue to find 2 x 2s to be an interesting way to explore the issue (and many issues for that matter). In turn, I’ve been playing around with a couple that I’ll be writing about over the next few weeks. Here’s one of them (some of them might have to be moved around a bit, but I think you’ll get the idea…):

The X-axis looks at what the prosumer engagement focus is on – wisdom of crowds vs. uniquely qualified minds. Regular readers of this blog will notice I bring this topic up a lot, because I think it’s very important. In some cases, companies are looking to engage a large community of people, and it is the collective action of the group that creates value; in others, companies are looking to connect with a particularly uniquely qualified mind to deal with a certain problem. “Preferred” member communities – i.e. a select group of customers that companies engage with to help develop the value proposition – fall somewhere in between.

The Y-axis builds off of the OMC report referenced last week – is the “locus of value creation” prosumer driven, or company driven? For example, the value on Digg is almost entirely created by the activity of prosumers on the site; if you look at something like the “Innovative with Kraft” program, the company is looking for ideas that they can use to create value (i.e. new products). These seem like two very different things to me.

Next in this series: X-axis the same, Y-axis focused on incentives (intangible vs. financial).

I’ve been involved in research tied to the principles of wikinomics for quote some time. Most of the stories that emerge tend to be positive in terms of the transformation taking place, both within the economy and society in general. But there is a definite dark side to it as well – one that I try to touch on every once in a while, but perhaps not enough. That dark side is that while openness, sharing and all the rest create many new opportunities, they can also lead to massive job losses, and destroy the business models that support things that are important to society – such as newspapers.

I was reminded of this today when I was enjoying one of my favorite diversions from work – a Sports Guy column. Bill Simmons, one of the most popular sports writers on the web, is a die-hard Boston Celtics fan, and the column was primarily about how the recent news that Kevin Garnett will be sitting out the playoffs. But in his second reaction to the story, he provided a great articulation of the hidden sub-story, centered around the fall of newspapers – and the journalists who find the real stories behind what’s going on.

As he points out, while professional sports in general shouldn’t be taken too seriously, they are important to a lot of people – and there would certainly seem to be enough interest in the topic to sustain a business of reporting on what’s happening. The Kevin Garnett injury story – he’s been sitting out for basically two months, while the team said all along he’d be back for the playoffs, and now it is clear he won’t be – is a big enough deal, particularly in Boston, that SOMEONE should have cracked this. But no one did – not even close. Everyone just talked about whatever the “official” message was, being managed by “official” sources.

Everyone knows the reason – newspapers are dying quickly as their business model evaporates. The economics just seem to not be working in terms of paying for people to do the digging anymore. Instead, what we end up with are more people like Bill Simmons – fabulously entertaining writers, offering their opinions on stuff on the web, but not doing REAL reporting.

And again as Simmons points out, the implications of this are not good. If nobody can crack the real story behind an injury to the top player on the defending champs in a sports-mad market with a massive target audience, who is going to crack all the other real stories that have far greater implications for society, but which people are generally even less likely to pay for? What does it mean when the economics behind finding the facts dissolve to the point where, on a micro level, no one seeks them out anymore – so on a macro level, we all end up shouting increasingly uninformed opinions back and forth at each other?

I know this isn’t a new topic, and millions of people are talking about it. But it’s something that really hits home with me, because when I dissect the issue it sure seems like how the principles of wikinomics are being applied here, an important part of society is falling apart, and there is no obvious solution for it. And as I referenced in the opening, it makes me think about some of the other problems wikinomics can cause as what LOOK to be positive things (more openness, transparency, sharing, efficiency, etc.) cause massive short-term, and maybe even long-term, dislocations in terms of employment, innovation, etc.

One example I’ve mentioned before on this front ties right back to that first story in Wikinomics – GoldCorp – and also applies to Innocentive, and a variety of others. Many of these examples boil down to winner-takes-all contests, where numerous people compete to create a solution, and only the winner (at the discretion of the company) gets paid. The economic case for companies to take such an approach is very, very strong – particularly in today’s economic climate. But what does it mean for society if the trend continues? While only paying for proven success looks good on short-term income statements, what are the long-term implications of the model? Will the number of people innovating shrink and shrink because everyone that doesn’t win doesn’t get paid, leading to less and less innovation, etc.?

There are many more I could ask, but I need to end it there. After all, this is just me offering an opinion on my blog, and there isn’t much of a business model in that right now either – have to get back to my real job.

The concept of the long tail has many links with the ideas behind wikinomics and mass collaboration. However, throughout my ongoing research, I’ve started to question whether the long tail is actually as important to the future of certain businesses as many people now commonly believe. One that I’ve  been particularly focused on is YouTube – the platform that asks you to Broadcast Yourself, and a site that has so many videos that one would think that the Long Tail might dominate. But based on what the data is telling me, this perception may be off – and YouTube might have a lot more of the “blockbuster” model characteristics than many people think.

As I thought about this, my emerging hypothesis was that the way data is being commonly presented in relation to the long tail – in graph form – is often very misleading. For example, take a look at the following two charts – a traditional “Long Tail” graphic, and an index of the views a new video posted on YouTube can expect to receive in the first month (from viral manager).

At first glance, you might argue that YouTube video views certainly have long tail characteristics – and you might even argue that the tail looks FAR “thicker” than in the first diagram, so it might be even more important. However, look at the scale on the Y-axis. It’s not proportional. In “equal steps”, it goes from 1 to 10 to 100 to 1,000 to 10,000 to 100,000 to 1,000,000 to 10,ooo,ooo. In turn, it doesn’t really provide an accurate visualization of the reality of video views distribution.

So why do they do it that way? The simple answer is probably that it’s the only way to fit it on a screen. As it’s currently presented, the space from “1 to 10″ is about one centimeter. If I wanted to make an accurate visual that goes up to 10,000,000, I would need a Y axis that is about 1,000,000 centimeters long. Or 10,000 meters. Or 10 kilometers. Very few video screens that could contain that. So if I increase the scale to fit a one meter long screen (which is pretty big), 10 video views would be represented by 1/1000th of a centimeter, and 100 video views would be represented by 1/100th of a centimeter. In other words, the entire long tail would basically be invisible.

So why does this matter? Well let’s look at it another way. To make the math simpler, assume for a second there were exactly 100 videos uploaded to YouTube. The bottom 50 would be viewed, on average, about 40 times each (roughly) according to the graphic. That amounts to a total of 2,000 views. The top video would be viewed at least 500,000 times. In turn, that one most popular video is seen a few hundred times more than the bottom 50 combined. By extension, the top 1% of videos are viewed a few hundred times more often than the bottom 50% combined.

So do you see what I’m saying? Looked at in this light, the bottom part of the long tail doesn’t really seem THAT important on YouTube – the top 1% absolutely dominates it. And even if you extend the analysis out to look at the issue from the 80/20 rule, the story doesn’t change that much – the video right at the 20% cut-off receives about 500 views, so using the same “100 total videos” approach the bottom 80% would received (approximately) a little under 10,000 views combined – about 50 times less than the top video alone.

So am I missing something here, or is the long tail not really that important for YouTube? It sure looks like a blockbuster model to me…

I’ve been doing research tied to the Web 2.0 (and it’s various buzzword predecessors) for the better part of the last decade. Throughout this time, I’ve been involved in regular and ongoing debates between two opposing points of view:

1. Context is King

2. Content is King

I’ve I go back far enough, I can recall a previous version of my company approaching this issue through a 5-layer model: context on top, content underneath it, and then three other layers including infrastructure… and a couple I don’t recall. But in regards to media properties, it’s the top two that really matter – is it better to be a context provider (generally aggregating and directing people towards the content they are interested in), or the content provider?

Why this debate matters is that, in many cases, emerging context providers have effectively been commoditizing various content providers. Think of, for example, Google News – if there’s a big story, the odds are literally thousands of different content providers (from traditional media to bloggers) writing about it. As more and more people use Google News as their context provider, content providers get squeezed – and lose control of ever-important customer relationships and associated marketing opportunities. Suffice to say, it’s very different to have people coming directly to your site for news, versus potentially coming to it based on where Google ranks your take on a particular story.

What’s got me thinking about it again is some experiments we’ve been doing with chTONGUEeek, a comedy / satire site that I’m involved with that started up a few months ago. Suffice to say, we have a lot of competition, and it’s a challenge to draw traffic. We’ve been trialing a bunch of different approaches (with the only rule being it has to be “free”), and by far our most successful have been through the Reddit Funny page. We started posting certain stories up there about a month ago, and the two that attracted the most attention (here and here) are responsible for almost as much traffic as all of or other posts combined.

So we’re loving the Reddit right now, and are also enjoying reading all the other funny stories that people put up there. But as I monitor what’s going on, from a research side I constantly question the emerging “relationship” between our sites. Notably, even when we get a fair bit of traffic from Reddit, the “time on the site” metrics seem to be much, much lower than traffic that comes from other sources. As of yet, we don’t seem to be developing too many “relationships” with these readers, and thus we’re continually subject to the meritocratic competition on that site to draw people in.

Hopefully, if we keep posting stuff people find funny this dynamic will shift a bit – but I’m not expecting it to shift TOO much. While I’d love to have that many more people coming directly to our site, as someone who enjoys funny content I realize I generally only go to sites like Reddit – where the community directs me towards the funniest stuff. In turn, it leads me to thinking that context may indeed be king – but still a very different sort of king than has existed in the past, and one that I’m relatively happy to bow down to.

So what does that make it (and other such sites)? Does the term “benevolent King” seem appropriate? Or, due to the democratic nature of such sites, should we be dropping the whole “King” thing all together?

Similar to the Intel logo thing, there’s another graphic I like to use to get people thinking about what prosumerism really means – a bit of a play on one of the more famous political speeches of all time:

Think about how dramatic of a mind-shift that could be for many companies – instead of solely focusing on being a producer / creator of value for others to consume, you become a platform that enables customers to create value for each other. There’s lots of interesting examples of this is the Web 2.0 space, but the idea also plays very well in the “real” world…

The ideas around prosumerism – particularly around customer co-creation – appear to be becoming ever more popular with companies, even if the term itself isn’t widely used. In addition to the Dilbert example I like to open presentations with (and part II of that series is coming soon), there’s another graphic I like to use that seems to resonate well with people. It’s a riff on the Intel Logo most people are familiar with:

Now of course we are not suggesting that companies adopt this approach entirely – having only customers inside, and only talent outside, makes absolutely no sense. However, I find it useful for discussions because over the last decade or so many companies have become quite comfortable with the “Talent on the Outside” portion, via strategies like outsourcing, the use of ideagoras, etc. However, from my experience while lots of companies talk about things like “customer engagement”, they generally haven’t really thought through what “Customer on the Inside” really means for them. Is it simply about getting feedback? Word-of-mouth advertising? Integrating customers in the innovation process? What about testing (i.e. beta launches), or strategies built around customization and true co-creation?

There are a lot of different opportunities that companies can consider and pursue, depending on what there strategy is, when they start thinking about bringing the “Customer Inside”. And similar to how Intel did a brilliant job de-commoditizing themselves by having PC purchasers know that there is Intel inside, many companies may find they can similarly differentiate the experiences they offer by adopting some “Customer Inside” strategies.

Much of the research I am doing for nGenera’s Marketing & Sales 2.0 program is focused on what we call prosumerism. While I’m sure some eyes will roll in reference to yet another buzzword, I find it to be a useful one. It describes the process by which customers are becoming actively involved in the innovation and communication around the products and services they consume (i.e. producer + consumer  = prosumer). Once you really start digging in, it is an extremely rich and interesting topic – but it can often get a little confusing.

Because of this when I speak about prosumerism, I like to start by looking at some questions around a very special Dilbert cartoon. Dilbert cartoons, as most people know, poke fun at society and particularly workplace culture, usually highlighting some absurdity that people can relate to. But in this case what I’m saying is that, for perhaps the first time in history, we can argue that companies need to start acting more like Dilbert cartoons, rather than less.

The reason I can say this is because last year, Scott Adams made a major change to the Dilbert.com site – they turned it into a Dilbert Mash up platform. Every day when Scott publishes his new cartoon, an alternate version goes up. In this alternate version,  the images are present in each of the three boxes, but the text in only the first two. Anyone could then login and add their own punchline to the cartoon (it’s since evolved to include Group mash ups and other things I’ll talk about later).To tie it back to the opening lingo, the site is now a prosumer platform.

I was participating in this quite a bit last year, so effectively Scott Adams and I were co-creating cartoons, such as this one:

Please, hold the applause… and the laughter is becoming overwhelming .

Back to the story. So this looks like a cute, fun little example – what could the possible business implications be? Well, let’s start by looking at the perspective of Scott Adams and United Media – why would he/they do this? And would you do the same thing in their place? Would your company – and how would the decision get made?

Think about it for a second – pretend you are part of Dilbert Inc.,  a large company that owns Dilbert (perhaps having negotiated and deal with Scott, and having acquired the syndication rights from United Media). You pull all the senior executives into a room and you all start talking about things like your core value proposition. I would argue that in this situation a significant number of people might argue that the punch line is rather core to the value proposition for a cartoon. By extension, I think many of these people would argue that you absolutely, positively cannot open it up – a company built around making people laugh can’t give up control of the joke, can they?

But they did – anyone can now offer their own punchline, and use their comics in a variety of ways, so long as they don’t violate the terms of use (notably including prosumers can’t make any money off of them). So what are the possible implications (cost /benefit) of opening it up? And are the interests of this larger (fictional) company and the initial comic creator (Scott Adams) aligned? I can’t find it anymore for some reason, but a while back Scott Adams was interviewed about this and said something to the effect of “I expect my punch lines to be funnier 99% of the time. For that other 1%, I hope it’s different people every time. If it’s just one person, I hope they can’t draw.” While I personally doubt Scott Adams is actually concerned at all, the “quote” is indicative of the issues that consistently pop up when companies start adopting prosumer and collaborative strategies.

But now set that to the side, and as a next step just accept that the decision was made. What are the corporate equivalents of characters and images (i.e. the drawings) being core, and some of the conversation (i.e. the punch line) being open? At the risk of getting to cute, I think you can draw a direct parallel here to what many companies and marketers are facing in the world of social media and word-of-mouth promotion – while you can do most of the set-up, the eventual “punch line” that is communicated is not only increasingly out of your control, it varies from person to person (assuming different people are seeing different people’s mash ups).

Now again, the purpose here is not necessarily to answer these questions just yet (and of course if you want the real answers for why Scott Adams did what he did, you could ask him yourself), though you are welcome to add some thoughts to the comments if you’d like. Rather, it’s to use the Dilbert example as a thought starter about how, and why, other companies might want to consider adopting some of the prosumer strategies.

Next up in this series – questions around why might individuals engage with this, and what’s the role of the community?

Last year I was blessed with the birth of my daughter (now 9 months old), and I wanted to come up with a special gift that both she, and her immediate family could enjoy for years. Given that I was working on some wikinomics-related research, I sat down to think about how I could put some of the principles into play to create a unique and interesting gift. What I came up with was a story book about the first two months of her life – and I thought I’d post the process here for others that might want to do the same. Here’s what I did – it’s fairly easy, and can be done at quite a reasonable cost.

Like a lot of new parents, I had a huge number of digital photographs of my daughter over the first two months of her life. While I was originally thinking of a simple picture book, I’ve always liked the look of sketch drawings – but I’m not really a great sketch artist. However, I stumbled upon a very cool site called befunky.com, where any photo can be turned into a sketch using the cartoonizer. I did about 40 of them, saved them to my hard drive, and I think the results were pretty impressive. Here’s an example of the output from my daughter’s first few minutes of life:

For my next step, I copied each of the pictures into a Microsoft Word file, and added some captions under them (with a page break in between each one, text centered on the page right under the picture). For example, the caption for the above picture was And then I got to meet my Dad! If I dare say so myself, he seemed awfully proud of both me and mom. The entire story was written from my daughter’s perspective, and covers major events of her first few months, and importantly pictures with almost every family member who came to visit (and a couple of friends as well).

With this word file in hand, the next step was quite simple as well – I went to Lulu.com, created an account, and uploaded the file. I chose the hardcover version ( more specifically, 6″ x 9″, casewrap-hardcover binding, white interior paper (50# weight), black and white interior ink, white exterior paper (80# weight), full-color exterior ink). The file was uploaded in exactly perfect format, I chose a green cover (where I threw on the title My First Two Months of Life), playing with it all until I had it exactly write. I could have put an image here as well, but opted for the simpler version:

So now I had it – a very professional looking, hardcover storybook covering the few first few months of my daughters life. I then purchased 20 copies for my daughter, close friends and family for a total cost of $272 – $237 for the books (or $11.85 each), $22.39 for shipping and handling, and $12.98 in taxes. They arrived at my door a few weeks later, and I can tell you for certain that everyone loved it – with the fact that most of the people who received the book also had a picture in the book with my daughter as an extra benefit.

So just an idea I thought I’d toss out there for people that might want to come up with a special gift for a child, loved one, etc. As an extra bonus, quite a few people that didn’t know very much about the wikinomics-related research I’d been doing started to understand it a little bit better… and having my daughter be a published author at two-months of age isn’t half-bad .

(and note: if you’d like to do something similar and need some help, just drop me a line).