Mob wisdom means business

So-called 'crowdsourcing' lets companies create massive focus groups, garner fresh ideas, and even predict the future

As Lloyd Tabb, CTO of LiveOps, says, “It’s all about the value of the solution versus the cost of revealing the problem. So you have to evaluate on an individual basis: ‘Is it worth revealing this problem so that I can get a solution?’ "

Spearheading arguably one of the largest distributed call centers, with more than 16,000 active service agents, Tabb has deep roots in crowdsourcing. One of the founders of Mozilla.org, Tabb also previously worked as the information architect of Netscape Communicator, where he was a key player in establishing Open Directory -- a project that set the stage for products such as Wikipedia.

Kicked off in June 1998, with 5,000 people working from home to create and edit a Web-based content directory, Open Directory was one of the first crowdsourcing initiatives. Supplying its content freely to the public, Open Directory eventually became the indexing backbone for many of today’s popular search engines.

"If a problem is that hard to solve," Tabb says, "then no one else is solving it either. If your competitors have figured it out, then you can copy them. But if no one has figured it out, then [the problem is] worth revealing.”

Netflix, for example, wanted to improve its capability of predicting whether customers would like a particular movie recommendation based on past preferences and the selections of similar individuals. To improve its chances, the company launched the Netflix Prize Web site, offering $1 million for the best solution. The project, which has yet to award a grand prize, opened the industry leader's customer data sets to the public -- a significant competitive risk that Netflix believes will reap substantial rewards.

“It’s about taking a Net-based economy, letting people operate freely within that economy, and getting information from that," Tabb explains, speaking of crowdsourcing's value proposition. "The underlying premise is that the market of the whole will predict better than any of the individuals in the market.”

Proof of the crowdsourcing concept
For many organizations, crowdsourcing has become synonymous with predictive markets, which create and tap a community of people to help predict the outcomes of certain scenarios, such as a presidential election. Such markets have the potential to provide invaluable data that goes well beyond what can be gleaned from focus groups, especially when linked with granular demographic information about the participants.

Predictive markets are but one form of crowdsourcing. Another popular mode is "human computing," in which companies create online games for people to play; the outcome of the game is information. Google, for example, sought to index billions of photos. Rather than have folks on staff devote years to tagging and categorizing images, the company launched Google Image Labeler in September 2006.