Predicting Customer Need, Trends, Challenges Via Prediction Markets

28 09 2007

Would you bet your paycheck on the popularity of your latest new product or service?

Maybe if you knew the odds would be in your favor. How would you do it?

One way might be through crowdfunding – where you let your customers participate in choosing not just the idea or the initial design for a product or service but also help fund its start up. You can read earlier posts here on crowdfunding. You might also enjoy this old post on using customer-driven product design using “idea war” competitions like this one from Cambrian House.

Another way to predict product or service success is through the creation of a “prediction market” which has been taking many companies by storm in recent times. One amazing example is the Hollywood Stock Exchange, a virtual market game in which players buy and sell “pretend shares” in movies, actors, directors, etc. The market correctly predicted 32 of 2006’s 39 big-category Oscar nominees and 7 out of 8 top category winners.

How Prediction Markets Work

Prediction markets let stakeholders buy “imaginary stocks” in particular “events” that pay out a fixed price if the event transpires before a certain date, or nothing at all if it does not. Essentially, you are betting that an event will or will not occur. The price of an “event’s stock” represents the odds that the event will occur at a given moment in time.

Here is a scary one…. For example, you could ask your members:

“Will you achieve enough personal value from your membership to renew your membership by December 31, 2007?”

Presently there are online prediction markets for all sorts of things from politics to the weather. Google uses a prediction market internally to predict launch dates and other strategic events.

The theory holds that large groups of individuals are better able to make more accurate predictions and another example of crowdsourcing or peer production.

PPX is a market for science and technology events for Popular Science magazine. Below shows how readers are betting over time on the popularity of the iPhone as a predictor of Apple personal computer market share.

Applications for Associations

Prediction markets can offer:

  • A great way to stay engaged with your members and customers in “real time”
  • Create an ongoing collection of useful data to better inform product or service development
  • Separate volunteer “pet projects” from rank and file “needs”
  • Frame critical questions regarding emerging trends, market opportunities, product or service design issues, etc.

For more information of prediction markets click here.


Inbox Disease – Productivity Lives Beyond Email

25 09 2007

Yet another thread on a Management Listserv discussing what collaborative tool options should be considered for folks still living in a listserv world. Sadly, the feedback continues to devolve into upgrading listserv software or standalone discussion boards.

Collaboration Requires A Proper Infrastructure

Is anyone looking for proof that life exists outside your member’s email inbox?

In an era where increased productivity and team collaboration is key across business units, special interest groups and often global in nature, we don’t examine the empirical data that clearly demonstrates that Web 2.0 tools are critical to faster, better and more cost effective product and service design and delivery or to build a body of knowledge. Look for the McKinsey study posted earlier on adoption of Web 2.0 tools.

Roles and Process Delivers Results
If you hold a meeting you would never forget an agenda, a review of outcomes since the last meeting, and an assignment of tasks as a result of the meeting. You would also require people to physically attend meetings whether face-to-face or via teleconference.

And yet, we consider it perfectly ok to let members and staff stay inside their inboxes during the most crucial time of collaboration…the time between meetings when the rubber meets the road. They lean back from their email inbox.

We don’t require them to attend to their assigned tasks in an electronic medium that requires them to engage in an environment where you can use the power of the web through databases and Web 2.0 technology to improve productivity and reduce email overload.

IBM’s Use of Wiki’s

In the WSJ (9/17/2007 on B4), we find the following excerpts:

IBM: “Programmers keep tabs on what is going on through the wikis, to which they post progress reports and comments. They get automatic alerts when important pieces of their project change. And they keep in touch with faraway colleagues through instant-messaging and phone software, which display photos and personal details of co-workers.

PT: Notice the importance of creating project spaces to ensure proper context of information resources. Can you imagine them doing this with listservs or simple discussion boards? IBM offers the following advice for collaboration via wikis. Note it is all about creating systems and processes that are separate from technology which makes the technology work.

  • Have a common understanding of the task.
  • Clarify roles and responsibilities.
  • Set firm ground rules.
  • Get to know other team members.
  • Communicate often.

IBM: “One key to smooth teamwork is dividing projects into small pieces. Mr. Nicholson says the team of 50, charged with making IBM’s WebSphere software work with code written in other programming languages, breaks projects into two-week chunks. Each chunk is further split into tasks designed to take one programmer a day or two to complete. That means mistakes or miscommunications are caught quickly, and there is little waiting for others to finish work.”

Programmers keep their task list on a wiki that can be seen and edited by everyone on the team, which includes about 20 people in Hursley, 20 in Bangalore, India, and 10 in Ottawa. Each morning, Mr. Nicholson typically takes an unassigned task from the top of the list and puts his name on it. When he is done — generally by the end of the day — he notes on the wiki that he has completed the task and puts additional documentation in a shared database. “With this method, you’re always progressing — checking your sanity constantly,” Mr. Nicholson says.

When the software fails a test, which could stall work around the globe, all stop what they are doing to diagnose the problem, says Noel O’Dowd, the Hursley-based leader of the 50-person group that Mr. Nicholson is in. At the Hursley office, team members rigged to the testing machine a light that turns red when there is a serious problem. Other teams are thinking of following suit.”

PT: Imagine the amount of emails this would have taken and the added time spent locating past discussions in older emails versus the beauty of the system IBM put in place.

So in an era when organizations are seeking ways to enhance collaboration and performance, why are we still living in our inboxes? It’s time to take a look at tools and systems that can break the email bottle-neck that is strangling productivity.

Open Business Model Player InnoCentive Radically Expands Its Markets

21 09 2007

Months ago we showcased several posts on InnoCentive – a leading example of open innovation driven by an “open business model” was revolutionizing the world of chemistry. For those of you new to InnoCentive, it’s an online community of 120,000+ global researchers working with major companies like P&G to compete to produce research to advance product development and even find cures for diseases.

From yesterday’s Boston Globe:

InnoCentive Inc., a Web-based community that seeks to match a global network of problem solvers with research-and-development challenges, announced today a “major expansion beyond their traditional domains.”

The Andover company sees its traditional domains as life sciences and chemistry; now it says it wants to broaden its scope to include business and entrepreneurship, engineering and design, physical sciences, and mathematics and computer sciences.

InnoCentive’s business model is to help corporate and nonprofit clients solve R&D problems by posting descriptions of them on a website visited by thousands of researchers, scientists, engineers, and mathematicians from around the world; those who solve a problem can qualify for a financial reward.

Now InnoCentive’s intermediary market model is expanding dramatically into new markets and association executives better take note. Because you may be seeing a market play in your space that could crowd you out from your own members. Remember, we live in a hyper-participation economy where people can join communities and devote their time, expertise and money elsewhere more easily than ever.

Here’s what’s possibly at stake.

Say your members are engineers. Chances are you have the peer-review publishing part of your members’ professional value chain locked up long ago. But what about the part of the value chain prior to publishing papers? Do you offer any services where an engineer can actually practice their profession?

That’s what makes InnoCentive’s intermediary market model so fascinating and potentially scary. Given the recent discussion about for-profit and non-profit business models among association executives, instead of changing the whole association business model why not create a separate for-profit service business? Using an “open business model” you could create entirely new ways for your members to pursue their profession but within your own branded experience rather than a new player like an InnoCentive.

But for now, engineering, designers, computer and physical science folks are now fair game.

For more on InnoCentive and open business models:

Your Future Is in the Hands of Others

19 09 2007

It’s The Network, It’s Your Infrastructure

An interesting discussion is taking place on the ASAE and Center Executive Management listserv about the wisdom of for-profit versus non-profit business models. Good discussion focusing on how to design and deliver what your stakeholders need faster, better and more cost effectively.

But a critical component is missing from the discussion.

Will a change in business model by itself deliver the desired faster, better, cheaper results? If the expectation is to become more streamline and aligned to design and deliver what your members need then it sounds more like an infrastructure or execution problem.

So what if you had a non-profit with a new infrastructure designed to leverage “networks” of people and knowledge in your market that made you more nimble, more accurate at designing product and service that met customer requirements, and delivered them as customers desired?

If you had such an association would it matter what business model you chose?

Wealth Creation Driven from Networks of Open Participation

Readers of os.a know this blog urges associations to consider open innovation , customer experience management, and customer intimacy to re-energize existing practices. Competencies like new product development, customer experience mapping, intangible asset management, and social network analysis will be tools needed in the coming years and adapted to the association world.

A leading thinker in the power and wealth of networks is Yochai Benkler who is perhaps the father of “networked information resource” thinking. Benkler is Professor of Entrepreneurial Legal Studies, Harvard Law School and faculty co-director, Berkman Center for Internet and Society.

The future is all about how to create open models and practices for creating product and services. Companies like Nike, Gannett, BBC and others featured in previous posts get the importance of this and have created “real-time” customer communities around their products and services. NikePlus is but one example. Gannett another.

If you desire to be able to design and deliver faster, better and more effective product and service experiences, then understanding open innovation and the role of networks in them is super critical.

Listen to Professor Benkler in a 2005 presentation he gave at PopTech and appreciate the importance of the power of networks. Click on the image above to list to the podcast.

Don’t let your competitors create better, faster of more compelling products for your audience by letting them create better customer communities than you.

Remember, it’s all about the network. Your network.

Gallup: Cultures That Promote Strengths & Engagement = Better Products & Services

18 09 2007

Yet another study on what makes innovation work this time from the folks at Gallup to confirm that management must develop strategies to enhance one’s intangible assets – our people (staff and volunteer leaders).

In the past we posted about how intangible assets can make or break your organizational strategy (See customer intimacy post here) as well as its impact on building winners, turning around a loser to a winner, or sliding into a long term losing streak (See Confidence post here).

You Need to Walk the Talk

The Gallup Management Journal (GMJ) surveyed U.S. employees to determine the effect on individual creativity and workplace engagement when employers emphasize developing employee talents and strengths.

Here are some highlights on what they found:

  • Organizations that emphasized strengths development were more likely to demonstrate innovation and creativity than those who did not. So training to one’s strengths can be a powerful factor in creating and sustaining a workplace culture that allows innovation to grow and employee engagement can intensify this effect.
  • In contrast, organizations that were not committed to building the strengths of their people demonstrated significantly less creative ideas.
  • Managers play a significant role (plus or minus) in strengths development and people engagement by making sure that job roles leveraged these strengths properly or not at all.
  • Management receptivity to new ideas were significantly higher (65%) among organizations with a culture supported by programs that built strengths and people engagement versus those that didn’t (2%).
  • This was also true in the degree to which managers fed off their teams creative ideas. Stronger cultures had more confident managers who promoted creative exchanges.
  • This in turn led to a higher degree of employee friendships and a very high degree of job satisfaction within teams due to the more positive and engaging culture in which they worked. In contrast, organizations that didnt support this culture exhibited far fewer on the job friendships and far less job satisfaction. For instance, Eight out of ten engaged employees (83%) who strongly agreed that their organization is committed to building the strengths of each associate also strongly agreed that they have a friend at work whom they share new ideas with. This number drops to 5% among workers who are actively disengaged.

What Kind of People Do You Have?

If I had a dollar (or maybe a Euro since they are worth more these days) for every manager I have known who didn’t feel the need to worry about this “culture” thing I could have retired long ago. But the good old days of making easy money are gone for most of us. That means we need to cultivate the kind of organizations we hope to become or remain.

So as you look at your overall strategy:

  • What kind of leadership development program exists within your association for staff and volunteers? Is it competency based? Do they map to the core competencies you need to create compelling product and service experiences? Tell me you have one…please.
  • Does your staff or volunteer leadership performance evaluation process reward for idea creation, collaboration, staff development, teamwork, or taking risks?
  • Do you have systems and practices to promote knowledge sharing and best practices?
  • How aware are your people of the strategic goals and core strategies of your organization? How well aligned is the work of your boards and committees to your core strategy?

Which Builds Trust & Innovation Better: Networks or Hierarchies?

13 09 2007

One of these is better than the other for building trust and promoting innovation whether internally (staff or staff and volunteer leaders) or externally (staff, volunteer leaders, rank and file members, other stakeholders). It is more effective at developing and sharing tacit knowledge, is more flexible and better promotes a back and forth diversity of thought.

One of these is better at building exclusive, authoritative knowledge that is developed and delivered one way and is more rigid and traditional in practice and thought.

One is stronger overtime while the other is stronger at key moments in time.

One shows you the rules for how things should get done while the other (if you can locate it) would tell you how it actually gets done.

One represents a hierarchy of knowledge and the other a network of knowledge.

Deep Diving on Your Own Networks

Now, think about your own office and ask yourself:

  • With whom do I exchange information as part of my daily work routine?
  • With whom do I “check in,” inside and outside my office, to find out what is going on?
  • With whom do I collaborate or kick around new ideas?
  • To whom do I turn for expertise or advice?
  • With whom do I seek for advice about the future?
  • With whom do I work to improve existing processes or methods?

Each question seeks to know what your personal network is for transactions that are related to: work operations, social exchange, innovation, expertise, future trends, and outcome-based learning. The currency used in such transactions is trust. The more trust we develop and place in someone the more we tend to work through them for our needs.

If you are like me, chances are your answers may not follow the “chain of command” or the “official liaisons” of various business units, volunteer leadership bodies or special interest groups in the organizations you serve. You have established “invisible” networks for specific purposes and they exist only among and between those included in them.

Social Network Analysis in Organizations

According to Dr. Karen Stephenson a leader in the emerging field of social network analysis (SNA), these networks make up the culture (healthy or otherwise) of your organization. SNA examines human interaction within an organization particularly those outside formal structures. Presently, Stephenson is focusing her studies on how the two systems (Hierarchies and Networks) can be more fully integrated and optimized into “networked institutions” she calls Heterarchies.

The main problem Stephenson points out is that organizations through hierarchies tend to promote “homogeneity” of thought driving “diversity” of thought to less formal social networking structures thereby inhibiting the ability to develop new perspectives from emerging issues and trends or testing traditional beliefs, systems and practices to ensure continued relevance. This tends to mask a “fundamental fear of difference” (you don’t walk or talk like me, publish in the same place as me, know the secret handshake… so you cant be worth knowing). In a world of increasing globalization this is a significant obstacle to extending one’s influence or the adoption of one’s products, services or practices.

According to Stephenson, management (in our case…staff and volunteers) ought to put the right people in the right places to foster new opportunities for collaboration that can better support hierarchies of knowledge with its network counterpart. We need to better leverage the effectiveness and power of an individual’s networks which depends not just on his or her position in a hierarchy, but on the person’s place in a variety of intertwined networks.

“A typical social network analysis uncovers and tracks the number of links among individuals in any of these networks, the frequency with which people communicate, the relative significance of their communication, and the number of people through which a message passes. Looking at these maps of informal networks, you start to see how the network itself has an intelligence, more than the sum of its parts and beyond the cognition of any one individual.”

Mapping Networks – Hubs, Gatekeepers, Pulsetakers

According to Stephenson, in any organization people play different parts in networks.

There are some who play the part of Hubs (like Diane above) who draw information all around them. Hubs know the most people and others seek them out because of their charismatic charm and ability to multitask. Dr. Stephenson warns that Hubs are consummate jugglers: “Keeping all the balls in the air is not the same thing as directing the flow of information.” So if you want to keep a secret, she says, don’t tell Hubs; they connect naively, not strategically.

Gatekeepers (like Heather) are expert at managing information flow. They know what to tell when and to whom in order to achieve their goals. They connect to a few people, the most important ones. A department manager who insists on being the only contact point for all of his or her subordinates is a classic Gatekeeper. A well-placed Gatekeeper can facilitate highly efficient communication, and a counterproductive Gatekeeper can hijack momentum.

A less visible, but equally important, archetype is the Pulsetaker. Pulsetakers (Fernando and Garth) are keen observers of the people and trends around them and often make excellent mentors and coaches. One of the first steps in any serious change initiative should be to bring some Pulsetakers on board. As Dr. Stephenson puts it, “Hubs know the most people; Gatekeepers know the right people; and Pulsetakers know the most people who know the right people.”

As we study how “social networks” can play a business role in our associations we ought to remember that these informal networks are “under the radar” of most of us and is certainly not congruent with our hierarchies. We should also understand that (especially in light of the popularity of “social networks” in the news and among our peers on listservs and such) a network for social needs may not be the same we would use for expert knowledge or learning.

For more on Social Network Analysis, you might be interested in a new certificate program developed by Dr Stephenson and run by the Organization Development Network an international professional association of organization development practitioners.

A Wealth of Networks – Value Creation for the 21st Century

11 09 2007

Given all the hype lately about Facebook, MySpace and the lot, it’s a good thing to expand on networks…beyond “social networks” and get into networks that can really deliver the intended outcomes your stakeholders want.

So let’s start with a quote from someone who wrote the book on “The Wealth of Networks.” 

Information, knowledge, and culture are central to human freedom and human development. How they are produced and exchanged in our society critically affects the way we see the state of the world as it is and might be; who decides these questions; and how we, as societies and polities,come to understand what can and ought to be done.

For more than 150 years, modern complex democracies have depended in large measure on an industrial information economy for these basic functions. In the past decade and a half, we have begun to see a radical change in the organization of information production. Enabled by technological change, we are beginning to see a series of economic, social, and cultural adaptations that make possible a radical transformation of how we make the information environment we occupy as autonomous individuals, citizens, and members of cultural and social groups.

It seems passé today to speak of “the Internet revolution.” In some academic circles, it is positively naive. But it should not be. The change brought about by the networked information environment is deep. It is structural. It goes to the very foundations of how liberal markets and liberal democracies have co evolved for almost two centuries.”

From Yochai Benkler’s “The Wealth of Networks”

Back in 2005, while serving with an international computing society we completed a business plan for our digital library that would guide us in its continued transformation as a vital product for our stakeholders. One of the chief outcomes from that effort was the recognition of what the next evolution of this library ought to be – a networked information resource.

This library was a jewel in the crown. Becoming one of the first digital libraries that generated revenue from its archived publishing operations, the library went through a number of innovations in its history from paper to digital via CD-ROM and then again from static digital storage to a dynamic online digital experience.

But we saw the need to innovate again only this time we felt that the digital library experience was going to fundamentally change. Instead of “search and find” we felt a digital library was going to “put people in touch with knowledge and how to apply it.” That “solutions-oriented” experience was likely to combine a static archive of digital peer-review content with the rich contextual value of real people with real experience and expertise. If we could combine the two, it would add dramatic product differentiation by turning a traditional library experience on its head. The value our library would ultimately serve would be helping people “find and apply” solutions to their personal needs and possibly create an experience even Google might have trouble replicating through the leverage of our members’ technical expertise and passion.

Visionaries like Yochai Benkler, Professor of Entrepreneurial Legal Studies at Harvard, and faculty co-director of the Berkman Center for Internet and Society and author of “The Wealth of Networks,” was a revelation to me during this time. His notion of “peer production” as a new means of content production (be it a product or service) was straight out of the successes of the open source software movement as my early posts this past Spring outline.

A good example of a networked information resource we studied is a digital library hybrid called Merlot that combines a digital library of peer-reviewed content with online community features that provides a superior contextual experience that changes every time you visit. Merlot exists to improve the effectiveness of teaching and learning by increasing the quantity and quality of peer reviewed online learning materials that can be easily incorporated into faculty designed courses.

Why Networks Are Important and What Makes Them Different?

In the next series of posts we shall explore “the wealth of networks” but not from Benkler’s book (but please read it here). Instead we shall focus on the importance of “networks” as a strategic value creator. Combine that with the examples of “open business models” and “content co-creation” practices outlined in earlier posts and you will begin to grasp the tremendous potential of open innovation.