Category Archives: Princeton

The noosphere of margins

If you don’t work in advertising or communications you’ve likely missed the enthusiasm among middle-aged men who wear jeans and black T-shirts about crowdsourcing — the idea that masses of people can be sorted to build better solutions at lower costs. It’s a play off the “wisdom of crowds,” where groups of people, each of whom has partial information and can make an informed best guess, often when averaged together can find a near-perfect answer. The world is filled with examples, from children trying to guess the number of marbles in a jar (the aggregate answer is almost always spot on) to markets of investors trying to gauge the future value of a stock (speculative bubbles aside, the way prices of pieces of companies adjust nearly instantly to new information is almost miraculous). Crowdsourcing expands this concept by making it an economic model: You set a prize, encourage thousands to contribute an answer, and after judging the collective input, opt for the top one. That is, instead of selecting the middling average of the response curve, you cherry-pick the best outlying result on the fringe.

Want a new cell phone design? Instead of paying teams of internal engineers, throw a contest, and some brilliant young design student from the crowd will raise her hand to knock your socks off.

All of this has excited the ad industry because it provides a fundamental restructuring of human creativity (the most positive reason) while also greatly reduces costs (useful if you’re managing agency human resources). Futurists also dig it because it pulls deliverables out of the noosphere — the “global consciousness” concept by Vladimir Vernadsky that we are moving into a third phase of the Earth’s development, after physical formation and biological evolution, to a higher form of collective intelligence. This feels trippy, perhaps, until you look out the window of a plane landing in JFK and see how tiny swarms of humans are acting collectively to terraform our planet, and then, holding that perspective, realize our species may be acting like bees with a hive mind. No less an organization than Princeton has set up 65 devices around the world that randomly generate numbers — and is monitoring them to see if some form of global consciousness is making those numbers less random. Really.

Crowdsourcing employee firings: A thought experiment
The trouble with group consciousness is sometimes it moves in ways that hurt individual participants. Here’s a thought experiment we’ve posed with Edward Boches, the Mullen agency creative chief who is a strong proponent of crowdsourcing: Imagine you run a business with 50 employees, each of whom you pay $52,000 a year or $1,000 per week. One day you decide to fire all your employees and instead hold a weekly global competition for each of their jobs, with a prize for each winner of $100. Thanks to nearly perfect information systems, thousands of people apply for each job post, and you have no trouble filling each slot. (There are lots of smart people starving in the world; now you find them and they find you.) Training would be required of course, but as part of your competition each winner must agree to conduct three weeks of home study, so all the fresh employees hit the ground running. Then, every future week, you fire everyone again, hold another competition, and hire a new crew of winners — ensuring a constant flow of improved ideas and talent, at a 90% payroll savings!

If information systems were perfect enough, this model could become real. But is it fair?

The economic challenge that few raise about crowdsourcing, or Chris Anderson’s broader theory that all services want to be free, is that there is some value in inefficiency — a value extracted from imperfect exchanges that is passed onward to support society. Your business exists because it charges a profit margin, and that profit exists only because you build and defend fiercely some form of inefficiency between supply and demand. If customers could get food teleported to their kitchen table from the farm fields in California, all the inefficiencies of transportation and packaging and storage would be gone — and all the margins of those businesses in the middle also. If your own customers could get what you produce without touching your operations, your source of income disappears. Do we want to live in a world where there is perfectly seamless transfer of goods, services and information? Or the real question is, can we?

Image: Pensiero