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Business - Written by on Monday, June 7, 2010 11:24 - 0 Comments

Denis Hancock
Some quirky thoughts on ‘you are not a gadget’ and social production

I’m currently reading Jaron Lanier’s manifesto called “you are not a gadget”. While I find myself nodding along with some parts, and occasionally shaking my head at others, my most common reaction to each chapter is that I’ll need several months of quiet reflection to even form a coherent opinion (which, based on what I think I’ve read, is part of the point of his book). It is unquestionably the most thought provoking body of text that I have read this year – and I hope to respond to various parts of it, if and when thoughts hit me, over the coming months.

The part I’ve been thinking about most today is “The transition” section, within the “what will money be?” chapter (page 106). The general idea is to allow people to earn from their “bits” of contributions, such as photos, music, or articles. It’s posed in response to his (very valid) concerned that society is losing its way as the value of “bits” people contribute trends towards zero in the marketplace, and all the rewards (if any) go to the people that aggregate them. If this continues, there will be fewer and fewer bits to aggregate, of worse and worse quality, in a continuous downward spiral that could have disastrous long-term consequences. He explains the consequences, and proposes a few ideas on how to avoid them – but you can read about those in the book.

Why I find this, (and Jaron’s book in general) so interesting is that it’s challenging the new orthodoxy of “the wisdom of mobs”, working in conjunction with powerful algorithms, is superior to the judgment and intelligence of individuals. At first glance, one my primary research areas – prosumer-driven innovation, or customer co-creation – we seem to be right in his line of fire. But as I’ve studied it over the years, my thinking on the subject lines up directly with Jaron more often than not (I think).

This research area was born out of the book Wikinomics by Don Tapscott and Anthony Williams. As the sub-title of the book is “how mass collaboration changes everything”, the idea is often viewed as synonymous with the “wisdom of crowds”. But I’ve went to great lengths over the years to explain how this common interpretation of this is often misguided. It’s often not about a “crowd” collaborating in any meaningful way; instead, it’s about finding the few uniquely qualified minds within the crowd that are both willing and able to make an important contribution. While not a prosumerism example per se, the first story in the book – GoldCorp – is a great example of this. Rob McEwen didn’t enable mass collaboration. He opened up the data about his property in hopes of finding those few people in the world that might know the best way to find the gold. That’s a very big difference.

Such contest models have their own problems built into them, as Lanier references regularly in his book. But at least they point towards some sort of financial compensation for the people that have the best “bits” to contribute, and have very little to do with the problem associated with the “wisdom of mobs.” This indicates a very different set of opportunities, and potential problems. The key challenge, then, is to adapt the model to instances where it’s not a “winner takes all” contest – one where a larger number of people can be rewarded for contributing “bits” to the creation of a new product or service.

I’ve been hypothesizing about this, and waiting for signs that it’s happening, for many years. While much of my research focus has recently been on marketing (which also puts me on the bad side of much of what Lanier talks about), my academic background is in economics – and I have a strong belief that financial compensation for contributors and creators is absolutely vital to the long-term success any prosumer-driven models. But examples of it actually working have been few and far between. That is why I’ve taken a relatively keen interest in Quirky – which I just recently discovered.

Quirky is a platform for social production
, founded by Ben Kaufman. The core idea is fairly simple. If you have an idea for a new product, you can submit it to the site (for $99 – which presumably provides a decent “filter” for idea submissions). Each week, a winner is selected (through some combination of community votes and design team input). It then moves into the “influence” phase, where the community can weigh in on everything from specific product design to the logo representing it. Once this phase is completed, it’s handed over to Quirky’s industrial designers and mechanical engineers to create a 3D render. Next up is the pre-sell phase, where a minimum number of purchase commitments must be made before the company invests in moving it into production. If that threshold is met, it then moves into production – hopefully allowing many of the people to cash in.

Why I say “many” is that Quirky currently allocates 30% of revenue from direct sales, and 10% from indirect sales, to the community. What exactly the allocation will be is hard to say (and the company is likely still figuring out the best way to do it), but some “ingredients” include submitting the winning idea (or name, logo, etc.), making insightful comments, voting, rating, and committing to pre-sales. All of this activity is rolled up into an “influence percentage”, which is used to distribute the money. The rest goes to the company itself, which as I referenced above does a lot of the heavy lifting in actually turning an idea into a market-ready product.

Now whether Quirky itself will succeed, I (nor anyone, in my opinion) can really say. I think the biggest challenge comes in terms of scale. As one might expect, the examples provided on the site (to show how much money can be made) typically involve two key assumptions – lots of products are sold, and your individual influencer percentage is high. The end result is lots of money for your effort. Obviously not everyone’s influencer percentage can be high. As (hopefully, for the company) more and more people engage, each individual’s potential influencer percentage might decline further still (in relation to effort applied). If the percentages are small, the potential rewards are low – and thus much of the incentive to engage evaporates.

But at minimum, it’s an interesting idea, and I believe such experiments are critically important to the evolution of web enabled, and prosumer driven, business models. Someday, someone is going to figure it out. And what I find most intriguing is that, at its core, Quirky appears to be trying to find a way to reward individuals for their “bits” of contribution – which I think is absolutely key to making this web-enabled world work, and appears to be something that Lanier might approve of. But the process by which they are figuring out how to do it, which will likely involve layering some sort of algorithm on top of what looks like a “winner takes all” competition platform, seems to be tie directly to approaches he typically disproves of (or not – I’m sure there’s many nuances in the book I’ll have to re-read to capture).

So I’ll personally wait and see – and perhaps even engage in the community to get a real feel for how it works, and whether my own mind is uniquely qualified enough to add value anywhere. But in the end, I’m hoping both Lanier and Kaufman are right – there are ways to reward people for the bits they contribute, and this can be done within the context of a social production model.

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