The Rise of Expert Reputation Systems

Our recent report prepared for GigaOm Pro on the rapidly changing world of on-demand expertise. While search and social have made it easier than ever to find experts, reputation systems are enabling an ever increasing number of on-demand transactions. More on GigaOm Pro.

The State of Crowd Power for Startups, Innovation, Capital, Media + Governments

A little over one year ago, Mary Meeker reviewed a number of industry scale disruptions in areas from publishing to mobility. Since then, the trends have been reinforced across startups and large firms alike. has entered the TV and Movie production business with Amazon Studios, crowdsourcing everything from ideas to pilot feedback. Havas acquired the first crowdsourcing advertising agency, V&S and brands like Doritos continue to see crowdsourcing success on world biggest TV ad contents, the Superbowl. Google’s more than $1b acquisition of Waze showed the importance of simple crowd actions in helping to solve some our most complex challenges.

At the the 3rd Conferencia Crowdsourcing on July 23/24 we have brought together some of the worlds best, who are everyday are finding new ways to leverage the power of crowds in areas ranging from startups and innovation to government and marketing. The pace of change has not slowed, but it is clearer than ever where we can depend on crowds to support our organizations. Here are some of themes we will explore.

Crowds + Capital – the core value continues to grow, via pre-tailing, the ability to sell ideas long before they are even in production. As a result we’re seeing a surge in media production like games and films, but also in hardware from baby feeding spoons to medical devices. At the same time firms like LendingClub are have made almost $2b in loans in the United States, sourcing capital from the crowd. And now is accelerating funding for startups, by making use crowd-organizing principals from reputation systems to efficient deal filtering.

Crowds + Innovation – Amazon Studios is just the latest in a trend to restructure and open up innovation processes to outside talent. Crowdstorming is enabling organizations to source ideas in areas ranging from data science and fashion. We’ve moved from experiments to more permanent adoption as part of the innovation process. Perhaps as important, the focus group is giving way to multiple crowd interactions to understand products long before they are put into production. Pre-tailing is just one model, but organizing fast, efficient surveys or large groups of stakeholders is also become a core process to reduce risk and quick gather feedback.

Crowds + Government – Waze and Google hint at very different futures to solve complex problems like traffic congestion. When the crowd is involved, we have alternatives to large, expensive infrastructure investments. But thats just the start. Sharing systems for cars and bikes are adding completely new layers to the idea of public infrastructure. And sensing problems from security risks to potholes is being accelerated by empowering citizens to help. And government also is beginning to benefit from crowds and capital, letting citizens fund prototypes and small scale projects like Plus Pool and Underline. At the same time, initiatives like Code for America are showing how governments can tap large outside talent to solve some of their toughest problems too. [let know if we can say something about citizen organizing – from us to egypt, now turkey and brazil]

Crowds + Startups – most startups require funding, but all startups benefit from crowds. Increasingly we’re understanding the startups can successfully recruit crowds to help with everything from specialized skills to sales. Startups now have access to talent they could never afford to hire. And they are more efficiently finding customers, reducing their need for capital.

Over two days we will hear about these themes, but as important, we will help people to organize around each of these areas to meet and learn from one another. We hope you will join us to understand how crowds can help your organization.

Lots and Lots of Crowdstorm Updates

Crowdfunding is much more than a new source of funding.

We led the Life Edited crowdstorm phase to find the best low footprint apartment ideas. This is the end result – an ultra low footprint apartment in NYC.

We don’t lack ideas.  They inundate our inboxes and flood our feeds. But we do lack an effective, efficient way to filter out the noise and focus on the best.  We can gather simple signals to better identify identify the best and avoid the tyranny of the rest.

The approach is inspired by sites like,,,,, to name just a few. They are all harvesting small signals in the form of like, shares, comments, views, etc to understand what ideas are most interesting (and worthy of further investigation and investment). We explore a possible hack that organizations can use to put this idea to work on the McKinsey and Harvard Business Review Innovating Innovation Challenge.


Obama Campaign: From Social Media to Social Production

Haven’t blogged much of late, as all writing cycles seem to be sucked up by my first book, Crowdstorm. But I wanted to share some thoughts in response to a specific initiative from the Obama/Biden campaign, ahead of the US elections in November. I think the initiative shows an important shift to Social Production.

For the months following President Obama’s 2008 election win, the social media portions of the campaign were picked over, emulated and celebrated. The 2008 campaign successfully used emerging social tools and many of the tactics were ahead of their time – from rapid, responsive, content production to crowdfunding campaign contributions.

For this campaign I have been on the lookout for notable changes – in particular, I noted in June 2011, that the Obama campaign brought on the CTO of Threadless – a move which, I hoped, signalled the intent to leverage crowdsourcing alongside the already masterful use of social media. After all Threadless remains one the most successful crowdsourcing firms of our time.

We’ve been following the campaign and see many signs that crowdourcing is likely to play a critical role as we head into the home stretch. Amoung the key issues for President Obama –

1. Getting people to the polls – across a number of critical states, there have been attempt to limit turnout (usually by republicans). This has taken a variety of forms, from increasing requirements for voter identification, to limitations on how much time voters will have to vote (ahead of election day). Much of this is being battled out in court now, but it’s clear that both campaign teams view this as a critical factor come November.

2. Some votes matter more than others – yes, they aren’t supposed to, but Nate Silver at the 538 does a tremendous job explaining (assigning probabilities to) the role of specific states in the range of possible outcomes in November 2012. It is clear that a number of states have high probabilities of going either Republican or Democrat, but then there are those like North Carolina (yes, this is where the Democratic Convention will be next week), Ohio, Iowa and Florida (and a few others). The polls suggest close races in these states and different outcomes in the Red or Blue column can shape the end result.

So pundits will tell you that the “ground game” is an essential component to help with very specific actions – like helping people to register or getting them to the polls. And of course it helps to focus on where these efforts can help the most, in specific districts of specific states, highlighted in Nate Silver’s analysis.

And now this – The Dashboard – from the Obama/Biden campaign. It’s my first time seeing this, but its clear this already home to active supporters, team members and organizers. The Dashboard is a very slick tool to help volunteers organize and to help the Obama campaign team to encourage specific volunteer actions, in very specific neighborhoods. For example, when I logged in, 13 people were already working nearby  – that is within a few blocks.

It is easy to create events (much like with people near your location. Just looking around the Miami area, I found parties to watch next week’s convention, scheduled phone banks, canvassing events…basically an extension of what the campaign is already doing, but organized by volunteers, connected using the Dashboard, to one another and the campaign team.

But this is just the start – the Dashboard is set up to work at the neighborhood level. Field organizers manage groups of Neighborhood teams. The Dashboard immediately enables me to connect with my Neighborhood team. And my team is already organizing – all I need to do is reach out to the Team Leader and ask how I can help. Within a few clicks, I am being directed to carry out very very specific actions, at a hyperlocal level.

Independent of joining the local organization, there are very clear actions to help with the big issue highlighted above – getting people to vote. From my own computer, I can begin calling undecided voters, right now. If I am willing, I can also take to the street and reach out to specific people nearby. Most impressive perhaps – lots of help in the forums – from how to handle people who confront you about going door to door, to questions related to party positions as they relate to religious beliefs.

By contrast, a look through the available options for Romney campaign reveals some similarities on the surface – yes, you can organize to fundraise. And yes, you can buy gear. And there appears to be a way to volunteer as well. But this is ultimately limited to calling – no events, no connecting with other people in your area. No canvassing. No doubt the Romney campaign has plans to organize locally, but they aren’t even close in terms of enabling volunteers.

The Dashboard is one of the most impressive tools I have seen to enable participants to easily join in and play a productive roll. The result is an internet scale organization, something the Romney campaign does not have access to. It is simple to quickly take very specific (and well thought out) actions on behalf of the campaign.  There is a hint of the analytics being used to orchestrate this – from tracking the level of organization of the neighborhood team (simple indicators show this), to measuring event, call and fundraising activity (stats are no doubt visible to organizers). This looks like the future of Social Production – very very large teams being organized effectively down to very very specific actions in support of very big goals.

I am not sure if Nate Silver’s model can account for The Dashboard, yet. It is unprecedented in what it enables. If the right neighborhoods are being targeted in this way, I’m betting the Dashboard will play an important role in winning President Obama a second term.

what is being contributed

Cut Through Crowdsourcing Clutter

Crowdsourcing is being asked to do a lot of work today – specifically its being asked to describe a very wide range of activities. As we discuss the concept, we’re finding it helpful to focus on what people are contributing.

Here is a first pass


Crowdsourcing Beyond Experimentation – 30 examples of crowdsourcing’s increasing impact on most business functions and industrial sectors.

Crowdsourcing Business Models – a framework and 7 cases to explain how Crowdsourcing enables organizations to Re-Image their business models.

Havas buy leading crowdsourcing ad agency

Excited for the great lineup at Collective Intelligence – MIT 04/18/12.

GAP + Threadless = Many Many People Experiencing The Results Crowdsourcing

The Changing Nature of the Firm

From Wikipedia

The Nature of the Firm’ (1937), is an influential article by Ronald Coase. It offered an economic explanation of why individuals choose to form partnerships, companies and other business entities rather than trading bilaterally through contracts on a market.


Given that “production could be carried on without any organization that is, firms at all”, Coase asks, why and under what conditions should we expect firms to emerge? Since modern firms can only emerge when an entrepreneur of some sort begins to hire people, Coase’s analysis proceeds by considering the conditions under which it makes sense for an entrepreneur to seek hired help instead of contracting out for some particular task.

Mutopo Perspective – There is now additional choice as many entrepreneurs are finding. Non-financial exchanges that produce economic value for the firm. Example include: reviews on, comments on the, shares on, help on the HP support forums, wikipedia content contributions (such as this one), norms enforcement on Craigslist, Bandwidth Donation on Skype, Software testing for Mozilla Firefox, R&D help on Giffgaff, etc. etc

Coase noted, however, that there are a number of transaction costs to using the market; the cost of obtaining a good or service via the market is actually more than just the price of the good. Other costs, including search and information costs, bargaining costs, keeping trade secrets, and policing and enforcement costs, can all potentially add to the cost of procuring something via the market. This suggests that firms will arise when they can arrange to produce what they need internally and somehow avoid these costs.The traditional economic theory of the time suggested that, because the market is “efficient” (that is, those who are best at providing each good or service most cheaply are already doing so), it should always be cheaper to contract out than to hire.

There is a natural limit to what can be produced internally, however. Coase notices “decreasing returns to the entrepreneur function”, including increasing overhead costs and increasing propensity for an overwhelmed manager to make mistakes in resource allocation. This is a countervailing cost to the use of the firm.

Coase argues that the size of a firm (as measured by how many contractual relations are “internal” to the firm and how many “external”) is a result of finding an optimal balance between the competing tendencies of the costs outlined above. In general, making the firm larger will initially be advantageous, but the decreasing returns indicated above will eventually kick in, preventing the firm from growing indefinitely.

Other things being equal, a firm will tend to be larger:

  • the less the costs of organizing and the slower these costs rise with an increase in the transactions organized.
  • the less likely the entrepreneur is to make mistakes and the smaller the increase in mistakes with an increase in the transactions organized.
  • the greater the lowering (or the less the rise) in the supply price of factors of production to firms of larger size.

The first two costs will increase with the spatial distribution of the transactions organized and the dissimilarity of the transactions. This explains why firms tend to either be in different geographic locations or to perform different functions. Additionally, technology changes that mitigate the cost of organizing transactions across space will cause firms to be larger—the advent of the telephone and cheap air travel, for example, would be expected to increase the size of firms. On a related note the use of the internet and related modern information and communication technologies seem to lead to the existence of so called virtual organizations.

Coase does not consider non-contractual relationships , as between friends or family.

Mutopo Perspective – cost structures are shifting radically when enabled by social technologies and behaviors. Operational Costs [exploitation] – for these types of costs, there is simply a much reduced shift in the cost of managing these transactions outside the firm – software testing, translation, search engine optimization, administrative assistance, data quality, customer support, IT support, etc. These are exactly the areas in which we find flourishing crowdsourcing as one can see on this landscape map from
New Opportunities for Innovation [exploration] –  these costs don’t allow for easy direct comparison – i.e. the question is less inside or outside but more the possibility that the innovation might yield a new market opportunity or signficant efficiency gains. Examples include: P&G connect and develop as an ongoing focused approach to seeking innovation from outside. Or myStarbucksIdea. Or role of developers in App store ecosystems. Or challenge formats like GE ecomagination innocentive, jovoto, etc.
Taken together. These changes suggest that new forms of the firm will continue to evolve as the decisions about what takes place inside versus outside the firm undergo review after 75 years of relative stability. 
[edit]See also

[edit]External links


Coverage of our Crowdsourcing talk at ProXXima event in Mexico City

New Work

Mutopo Re:Working Conference will explore how social technologies are changing work on February 24 2012 in New York City. Following are some thoughts on the main themes, highlighting the work of many organizations who will discuss their experiences at the conference.

New Work

At the table next to me, three people huddle excitedly around an unseen iPad screen. A little further away, a gentleman nods vigorously to the invisible person on the other end of his call. And here I sit, trying to organize my thoughts as I gaze at those working around me.

The scene describes many of our workspaces, but I am sitting outside on a beautiful day, at Cafe Octavio, a coffee shop in Sao Paulo. Now this could be a Brazilian thing, but I’ve had this experience in other cities like Berlin, New York and Cape Town.

New Work Spaces

Coffee shops may be the easiest way to notice shifting work spaces. Since Daniel Pink’s Free Agent Nation, free agents have moved between their garages, home offices and coffee shops and now into a growing list of co-working spaces. Many of the spaces provide much more than a desk and antidote to working alone, filling our rolls that used to be the domain of employers, from training resources to new business – just look at Grind Spaces or General Assembly. And its no longer just free agents who are working in new spaces, when offices are designed to keep employees working at home.

Some of the other important workspaces are harder to see – one has to sit alongside the people at home, in coffee shops and co-working spaces to peer into the world displayed on their laptop and ipad screens. You’ll see the familiar places we go online like Facebook and Twitter alongside our e-mail as conversations alongside a variety of tools from inside the enterprise. You’ll also see new general collaboration spaces like Google Docs, Microsoft Sharepoint and 37Signals Basecamp. And you will also find more specialized spaces for specific activities like R&D (Innocentive or Brightidea) or Marketing (Victors and Spoils or Shout).  Like the co-working spaces, many of these places are about much more than connecting with people you know, but finding new people to collaborate with. Or in some cases to hire new people for projects that might last hours or months (oDesk or workmarket).

Employee, Partner, Customer or All of the Above?

But aren’t most of these changes happening for self employed or part time workers? Perhaps. But a look at global workforce numbers from the Economist suggest that only 40% of us workers are full time employees, with 31% now self employed and 22% employed part time (whether or not they want full time jobs, is a different question).

But these employment numbers are only part of the picture. Over the last 10 years strategies that have looked beyond full time employees have yielded big results, even for core value-creating activities like research and development. Organizations like P&G have looked beyond the edge of their organizations to people and organizations outside. Today their open innovation process yields at least 50% of their innovation and at least one new billion dollar brand. Similarly LEGO Group’s turnaround in the last decade has led the company management to another group beyond employees. LEGO now considers the LEGO community of fans as a core asset alongside the plastic bricks.

And this is not just happening across the boundaries of traditional organizations. Inside larger organizations, people are finding that job descriptions are great for what you do most of the time, but miss opportunities for you to contribute in other ways. Cemex, for example is able to tap into more than 50 thousand employees to tackle some of the organizations most important problems. It is no wonder that LinkedIn wants to get beyond traditional resume representation of what we can do to add tags to represent our other skills.

The successes at these large global organizations have tracked a rise of a range of models to enable organizations to access talent on demand. In the most traditional cases, where outsourcing used to happen via large firms, now organizations can hire individuals or small teams directly via oDesk, Sortfolio or workmarket. Less conventional models enable tasks to be efficiently assigned and completed by “crowds” where those assigning the tasks might never know who performed them – from general tasks on Amazon Mechanical Turk to specialized science challenges on Innocentive.

Beyond the concept of crowds, is a more connected intimate idea of collective or community, sometimes supporting one another and sometimes competing in functional areas like marketing or innovation or in industry verticals from consumer products (Quirky) to automotive (LocalMotors). Beyond the focus on specific types of work, is a focus on providing support once only available to full time employees like insurance or assuring payment – just take a look at Freelancers Union. These new organizational forms are relatively young, but finding new ways to achieve what used to be the sole domain and part of the reason to join (often very large) organizations with full time employees.

The Other C-Level Leadership

These new relationships, shifting roles and changes in scale of connections are demanding new leadership skills. Many of the early changes began with software companies who used new technologies to work closely with stakeholders to define, build and test products from open source servers to iPhones. At the core is a constant struggle to set directions, gather feedback and align interests across groups of people with different incentives and different levels of participation.

Organizations are learning to work with people whose relationships may blur the lines between traditional customers and employees as they contribute in areas from R&D to customer support and marketing. And then there is also the question of scale – it is one thing to manage an organization of 10,000 people but then how do you manage another 10,000 stakeholders who are increasingly involved across a range of organizational activities (never mind the millions of fans). Here is a good example – a new type of mobile operator with fewer than 30 employees that relies heavily on working with customers to deliver their service – aptly named Giffgaff which means “mutual giving” in Scottish.

At the messy intersection of traditional organizations and communities is the emerging role of community management. For some, this is similar to account management – understanding and reconciling the needs of those inside and outside the organization. For others its more akin to customer service, managing lots of lightweight interactions from basic support to more elaborate client needs. These different interpretations, fit a range of responsibilities from helping groups achieve specialized tasks (like responding to a creative brief or engineering challenge) to seeking insights and feedback on Facebook. Whatever it is – it is hard and valuable, but you’d be hard pressed to find classes about it in management schools – no wonder there is now a Community Manager Appreciation Day.

From Connecting to Collaborating and Evaluating

“I think the last 5 years have been about connecting all these people. The next 5 years are going to be about all the crazy things you can do now that all those people are connected,” Zuckerberg commented earlier this year. More than any single organization, Facebook has helped to usher in a new era in connectedness, yet they are already looking at what these connections might enable.

Fortunately, we can go back two decades to get a glimpse of what might be ahead.

Linus Torvold’s transformation of the software development process was enabled in large part by low cost, loose ties to his users. He began using one of the Internet’s first collaboration platforms, email. Only a decade back you could see how organizations like LEGO and P&G have worked with partners and customers. Or you could see how Skype, Craigslist and Zipcar have enlisted customers to help with everything from sharing bandwidth resources, editing posts and bringing down the cost of getting access to a car.

The “crazy things” we can do are multiplying. It’s not just how we are working together, but going further to understand how different people are contributing. Today, Klout Scores are enabling us to study interactions to understand how effectively people (and brands) influence one another. Mozilla is studying contributions in the collaboration process to understand when members of their community might be losing interesting in building their open source wares. Jovoto observes online interactions to uncover leading creative talent for marketing and product development, while Trada evaluates search marketing prowess to match their marketing clients with the best performing marketers. CrowdTwist analyzes individual actions online to understand, far beyond purchases, who are the most valuable customers by understanding what these people do for brands. Our contributions as workers, freelancers, customers and friends can be constantly evaluated as we go about our usual business enabling ranking (and ultimately pricing).

The focus used to be on what was given up by moving people out of the same room or workspace. But as we see the benefits from online collaboration and evaluation, the same might soon be asked about what is given up when work takes place offline.

Results So Far?

The impact of New Work is felt across functional areas and industries. Some measure their ability to get new ideas (and eventually new businesses) from non-employees. Others look to communities as a core asset for research, support, promotion or infrastructure for a telecommunications company. Contributions might be measured in earned media or savings resulting from human-resources-on-demand. Or success might be seen by the self employed who can earn similar income and benefits without the organizations that offer full time employment (through organizations like Freelancers Union).

Overall there is a sense that through new connections, we are getting more, even if the metrics are not always clear. As Andrew McAfee puts it (of MIT Center for Digital Business), “I have never spoken to an executive or a manager who says, ‘I just long for the days when we collaborated in the old style, and e-mail was all we had, and nobody had a voice. Man, that was so fantastic. Let’s please go back there.’”

On February 24 2012 in NYC we will explore these New Work themes with many of the organizations reference here. Learn more at


From Social Media to Social Production in 2012 Elections

Picture: Gaming Revolution design by Sean Mort on Threadless (vote to bring it back).  

In his 2008 election campaign, President Obama showed what can be achieved with Social Media. As if commanded by Joe Jaffe, he joined the conversation from initiating to responding, from simple status updates to slick videos. The influence on Social Media Marketing has been so profound that the Obama Campaign might be a leading cause of Wind Tunnel Marketing in Social Media Marketing – – strikingly similar tactics used across to boost conversation and “fan count”, the new metric to stand alongside the “website hits” of yesterweb.

Looking a little closer at 2008, there were signs this wasn’t only about Social Media, but Social Production. In particular, within the race for the Democratic nomination in Texas, Obama hinted at what happens when you get beyond conversation and build a new type of “Outside Organization”.

Yes, Obama was using Facebook, Twitter and e-mail to build awareness and recruit volunteers, but he was using tools like his MyBO website to co-ordinate volunteers and enable them to co-operate.  As Technology Review described “In Texas, MyBO also gave the Obama team the instant capacity to wage fully networked campaign warfare.” As the head of the Clinton campaign conceded when they understood what was being organized on MyBO:

“I remember saying, ‘Game, match–it’s over.”

Social Production lessons for the 2012 Election
On June 1 2011, Techcrunch reported that the CTO of Threadless would be joining the 2012 Obama campaign. We believe this represents a shift to Social Production – building the tools and organization necessary to enable large groups of people to work with and on behalf of the Obama campaign, in the same way that Threadless has learned to work with their community to create, market and sell happiness-making t-shirts.

Threadless is no Social Media slouch with over 1.6 million Twitter followers or 300,000 Facebook fans. However much of the value creation is being done by a only a few thousand people (based on our estimates from the 6% of “addicts” according to Quantcast) using a custom platform, not Facebook or Twitter.

How do you build an organization that can depend on people that are not fulltime employees to generate a big chunk of the value that your organization creates? Threadless knows and they are joined by a small number of organizations who have figured this out.

From getting fans to creating value with fans
In a recent report, the Economist Intelligence Unit (EIU) described the shifting focus from conversation to generating value across the organization – Re-envisioning customer value – Opening the floodgates of new potential. They highlight a number of successes across different functional business areas:

+ New Products: Today P&G get 50% of innovation from outside the organization

+ Product Development: Intuit works with 25,000 to get ongoing feedback

+ Service and Support: British mobile phone company, GiffGaff has its customers responding to 50% 99% of the support questions – more on that below.

At Mutopo we’ve been calling this the “lumpy donut” – the changing roles of people outside the organization through the product lifecycle. Paid employees remain at the core, but increasingly people outside the organization expend effort to create value and change the economics of value creation.

Building new organizations using Social Production
GiffGaff provides an important example of what happens as organizations shift focus from Social Media to Social Production. The Giffgaff tag line:

“the mobile network run by you”.
Building on the EIU report, the The Realtime Report says:
“The company’s customer support community has over 200,000 100,000 users and delivers three million 5.5 million page views per month as of June 2011. At least 50 99% of queries are answered by other customers and 95% are answered in less than one hour.  The average response time on the companies Help boards is less than a minute and a half. “
Good luck getting that type of support from any company, let alone most mobile operators. But Giffgaff doesn’t stop there. Like P&G, Intuit and Threadless they are getting ideas from their “outside organization”. And they are revisiting the affiliate model enabling people to be paid when the resell Giffgaff services, so they are changing the economics of distribution and sales, too.
In short Giffgaff is changing how value is created and therefore the economics of mobile services. 

How might Obama use Social Production in 2012?
Creating  conversation is one thing – designing organizations is something else altogether, but as the EIU examples show, Obama has many options to change how campaigns are organized and operated. From collecting better intelligence to focusing volunteers on critical geographies, we expect to see his campaign build on the experience in Texas in 2008.

In a likely close election campaign where votes in specific geographies really matter, changing the economics of these essential efforts will shift the game, enabling Obama to use resources more efficiently, with more agility than his opponents. While we cant predict the outcome of the election, we expect this to cause some WTFness among traditional campaign organizers.

Unfortunately we will have to wait a while to see how the Obama campaign will use Social Production. At a minimum the t-shirts will be awesome and in the meanwhile we can look forward to some masterful Social Media as Obama begins tweeting again from @barackobama.


How Crowdsourcing Can Change The World

On May 23, 2011, we were fortunate to share the Mutopo perspective on Crowdsourcing and Social Production at ESPM, Brazil’s leading marketing and advertising school.

ESPM Social Production & Crowdsourcing Session

Long Term Agile: 5 Lessons from the Nissan GTR


At the heart of innovation is a critical contradiction.

As MIT Medialab’s incoming director, Joichi Ito puts it: How can you balance the need for long term perspective with the need for short term agility?

My favorite models for innovation are start-ups. I have been fortunate to work with some great ones – the best ones begin with a hypothesis and embark on a frantic search for a new way to do something. Conversely, larger organizations usually become brittle – they optimize around a business model, processes etc and in the process, they lose their agility.

The tricky business of innovation requires the combination of the agile mode of a start-up, with the longer term perspective of more mature organizations. The key is tapping into the Outside Organization – the people outside your organization that can offer new questions, perspective, ideas and skills.

While I like to ponder ideas in a variety of settings, piloting a Nissan GTR for a few fast laps around the Las Vegas Speedway clarified the issues quite nicely.

Prospective Customers > Existing Customers (For Long Term Agile)

“Ha, you are driving the cheater car?”, Dave mocked.

Dave was my instructor for my race track adventure behind the wheel of a Ferrari Scuderia. The Ferrari is frighteningly fast (somehow even when it’s parked). Dave’s mocking laughter was directed at the Nissan GTR, the other car I planned to drive later in the day. The GTR looks less seriously fast race machine and more stylized homage to Japanese battle robots.

Dave is a pro. For him oads of sensors and software helping to bend the laws of physics to your will, is well cheating. On the other hand, I believe I may be Nissan’s perfect customer – I want all the help I can get to go fast – if it comes in the form of a robot car, so much the better.

Long Term Agile Lesson 1: spend some time ignoring your customers and talking to your prospective customers.

Try Some Harder Metrics

Below is the simple match-up. You have to hand it to the Scuderia on the traditional power/weight ratio and wind cheating form. However, “Physics Manipulation” is not entirely clear since it’s not well measured until “real world” track driving.
GTR Scuderia
Price $85,000 (all options) $286,000 (starting)
Weight 3,800 lbs 3,000 lbs
HP 523hp 508hp
Power/Weight .14 hp/lb .17 hp/lb
Physics Manipulation Total* Partial

*see below for qualitative explanation.

Long Term Agile Lesson 2: People usually measure what is easy or accumulated over some consensus over the years. This will deceive you. Measure some of the hard stuff, even if it requires real world testing.

Find Your Inspiration Outside
It seems pretty clear these cars should be in a different class, from the power/weight ratio alone. In a wind tunnel I cannot see how this might be much of a contest, either.

However, as was proved on Top Gear Power laps, their performance is almost inseparable ( Ferrari relies on a trusted strategy of power-to-weight ratio – keep innovating on materials to make things lighter and keep the machine balanced via mid-engined approach.

The GTR is not so much a car but rather robot minion – the “Playstation Car”, as it is known to the instructors, felt like it was helping me to go fast, because it was. The car is designed to use all four wheels to get your round corners despite some dodgy balance and power-to-weight numbers. Its a marvel of sensors, actuators and feedback loops.

While Ferrari looks to the pureness of F1 for inspiration, Nissan went outside to gamers and robots to draw its inspiration.

Long Term Agile Lesson 3: Get thee farther away for inspiration. Even if you are smart, inspired and creative, you need to make sure your ideas have sex with different ideas if you are hoping for a very different outcome.

There is Always More Deep Skill Outside
Ferrari adheres to a core set of design ideals and skills from within. It gets the job done, beautifully and will win awards, even when performance is not perfect (for design, for example). But it’s horribly inefficient – from the original price tag to the ongoing maintenance to ensure the best performance (for some this will be a successful outcome in the form of “exclusivity”).

But when it is matched by something less than one third the cost, well it seems silly and misguided.

The GTR is a triumph of a different philosophy. Yes supercars should be mid engined and expensive. And yes, they need to shed pounds to compete. Or do they? Maybe some clever sensors, actuators and algorithms can cheat physics? This seems to work in well in other areas ranging from aerospace to house cleaning robots. Why not work with these people – they help us build the industrial robots that build cars anyway.

Long Term Agile Lesson 4: selective ingnorance can help to shed assumptions but you will still need to find deep expertise from other fields if you are to bring a new approach to market.

Deliberately Fund and Support Long Term Agility
Nissan did not put it’s business at risk to learn and find new approaches, but they did allocate budget to a program that made them smarter and ultimately yielded an awesome outcome – the GTR.

Searching for incremental weight advantage is a costly, competitive business involving F-1 and aerospace research, but turning their attention to less well researched areas to like all wheel drive vehicle dynamics and different assembly approaches let Nissan develop new leadership capabilities.

Long Term Agile Lesson 5: someone has to approve a research budget – not enough to bet the company, but enough to put together unique teams to make something and see what it can do.

In the GTR, Nissan found an approach to reconcile Agile with the Long Term. They invested in a search for new approaches, within the constraints of a long term company viability. I think they demonstrate that large organizations need not ossify, but need to ensure that they allocate some resources to finding and working with their Outside Organizations.

Oh yeah, if you were wondering what it’s like to drive a Nissan GTR in ways that would be illegal on public roads, this was my experience – literally left me unable to speak.


Collaboration with the Competition


It’s tempting to think of the world as a zero-sum game.  The typical RFP process doesn’t lead you to believe otherwise: battle your competition over a client until there’s one man standing.  Any projects your opponents get is one less piece of the pie for you.

This is total fiction.

In Enchantment, Guy Kawasaki talks about eaters and bakers.  Eaters see a pie and want to get as big a piece as possible, but bakers help make more, bigger, increasingly delicious pies.  And the best way to start thinking like a baker is to re-examine your relationships with your competitors.

Making the Lists

Think about what kind of projects you really don’t want to do.  Projects that are too big, or too small, or have too many lawyers.  Clients that have good concepts and secure funding but are in an industry you don’t like to work in. Figure out what kind of work you’re passionate about and want to be doing.

Come up with this list and stick to it.   Having a clear idea of your core competencies and niche is a much more compelling story than being mercenaries who work on any project with a big enough budget.

Doing unto others

So what happens to leftover projects? Say a great lead comes across your desk, but it’s in an industry you don’t really like and you’re super busy with four other clients right now.  Think of this as a re-gifting opportunity.  Call up one of your competitors and give them the referral.

This may sound crazy.  It is a little crazy.  People will question your motivations.  Maybe your sanity.  But there are two good reasons to pass work along to your competition.

1.  Clients talk.

If a client has a good experience with, say, a collaboration consulting company, they’ll talk about it.  They may talk about the specific partner they used, but a good experience with anyone in the industry is good for everyone else in the industry.  And the reverse is true, of course: one project gone sour will taint that client’s view of the industry as a whole.  As clients share more and more positive anecdotes, more projects will start to crop up.

And by passing along leads for projects you couldn’t (or didn’t want to) do the project in the first place to someone better geared to take the work on, you’re creating better experiences for the client and giving them more positive stories to tell.  The company logos may be different, but you and your competition are really working towards the same goal: delivering client value.

2.  You get what you give.

I’m not advocating helping others solely to get help in return: that’s disingenuous, and ultimately transparent.  Think of it more as a by-product, whether or not you use Guy Kawasaki’s ‘I’m sure you’d do the same for me’ line.  When you send work you can’t do well to others, you’ll start to find yourself pulled into their projects as well.So get out there and make some pies.

Nobody vs. Somebody

In his new book Enchantment, Guy Kawasaki makes the assertion that Nobody is the new Somebody. Not too long ago the internet was a playground ruled by somebodies, some argue that it still is. The internet’s power structure has shifted against the Sombodies of the web – influence peddlers like the New York Times, Forbes, CNN. In its place, the collective Nobody has risen to assume a greater voice online. These paramount content providers allow less contingency for nobodies to spread information and promote outside interests. The somebodies deem information ‘news worthy’ then utilize  their social status to spread the information quickly.
The nobodies have created a community of user generated content. People who want to tweet about where the KimChi food truck is, post memes about cats, blog about street art and things of that manner.
What we’re really talking about here is influence. These nobodies are gaining klout. Influence is sometimes misunderstood by marketers as a person or brand who has a high number of followers on Twitter, RSS feed subscribers and Facebook page likes, but influence comes from brand experience and trust.  Having one hundred strangers re-tweet a brand name or an article they’ll never read doesn’t create the same kind of influence or produce tangible outcomes. 

The nobodies have community leaders who have a greater chance of creating an impact on individuals because the content is relevant. Take the example of a new mom, she might be more likely to trust content on a ‘mommy blog’ rather than the Pampers website because she knows she can trust information created by someone who is like her. Marketers can gain a lot more than influence by courting the small groups where trust is implicit.

Essentially the nobodies are acting like the old somebodies but on a smaller scale. If mainstream media finds a way to compete with user-generated content that creates tangibility could they could transform the power of the nobodies?

We know that the nobodies can create buzz, communities and promote, but we also know that nobodies are unpredictable.