If you have read James Surowiecki's book titled The Wisdom of Crowds, there is a famous example of the power of the crowd demonstrated by Sir Francis Galton. The story goes In 1906, he was visiting a livestock fair in England, where he stumbled upon an intriguing contest. An ox was put on display, and the villagers were invited to guess the animal's weight after it was slaughtered and dressed, paying 6 pence to participate. Nearly 800 people participated, but not one person hit the exact mark: 1,198 pounds. Galton collected the answers and applied the statistical mean of these guesses from independent people in the crowd: Astonishingly the mean of those 800 guesses was 1,197 pounds, accurate to fraction of a percent. This marks the first of the series of experiments conducted by scientists to prove the collective intelligence of the crowd.
What this proves to us is when you apply a set of smart people to solve a problem, any problem, chances of a solution are very more possible than a single person trying to do the same. Today the same type of contests are held by companies such as Kaggle, 99Designs, Innocentive, CrowdAnalytix and many others, where statisticians and analytic experts compete to solve such problems.
What is the use of these contests and these business models? well there are several benefits
- The problem can be solved better by a crowd where it can be solved faster
- The open innovation platform provides you access to more experts than any consulting expertise can provide
- Costs can be better managed in an open contest where the solution has a fixed price and timeline
The topic is deep and wide, next week at TDWI Las Vegas, there is a night school session on this subject that I'm hosting, feel free to attend.
Posted February 7, 2012 6:15 PM
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