The Bankwatch

Tracking the consumer evolution of financial services

Posts Tagged ‘wisdom of crowds

Thoughts on the real-time web, and the fallacy of the wisdom of crowds

The big meme at the moment is the real-time web. I have a couple of points to make here, that might help understand the current state of internet. If like me you are fed up of hearing CNN reporters say "and over here on Twitter mightymouse says ….. " then read on, and hopefully this helps define your own perspective.

The broad notion of real time is that the internet is series of information snippets that can be pulled together from disparate sources across the web. By immersing yourself in this pool of information through tools such as twitter, Facebook, Posterous, Tumblr etc, you will elevate yourself to new levels of awareness and no doubt approach a zen like status! For more read the experts; Chris Messina, ReadWriteWeb | the definitive primer

This is all wrong. One thing the ‘leaders’ from silicon valley miss is that the next big thing does not replace all things that went before. How often did we read that social networks will replace blogging. To suggest that the real-time web will replace all else that went before is to suggest that conversations in coffee shops will replace universities. Perhaps my metaphor is not ideal, but you get the idea. Society requires all kinds of people and many types of approaches and interactions to move ahead.. And all those approiaches do not impact each person – each has their own approach. The proponents of real time suggest that 140 characters will replace document search online. The web will somehow gravitate from a web of documents and pages to a web of snippets.

This conversation cannot move forward without referring to the Semantic Web where the internet is a series of data that can searched, aggregated, disseminated as each person sees fit. When we think about the Semantic Web then the real time concept makes more sense as part of the larger whole.

So thats my take on real time – yes it is coming, but its not an end in and of itself, and it does not replace what went before. Actually it might replace what went before for those with attention deficit but I won’t go there 🙂

A related point is how the masses are smarter than the individual. The fallacy of the Wisdom of Crowds is pointed out here in new research addressed by Sarah Perez at ReadWriteWeb. Where is the Wisdom of crowds

This is something we all know intuitively. She refers to Wikipedia, Amazon, IMdb, Digg and BookCrossing. The conclusion is simple and frankly intuitive. The majority of people are lurkers and browsers. The contributors are a very small group, 1% in the case of Wikipedia. Jimmy Wales refers to them as the Wikipedia community. This is not necessarily a bad thing. The notion of authors and readers is as old as books. This is what makes the world work.

Back to real time web. The reason it is a misnomer, is that the real time web has two components. One is simple immediacy. Information is transmitted to all users immediately, versus the 20 minute +/- index delay with Google search or few minutes delay with RSS. The second component of real time is the simultaneous sharing. Everyone can see the same update at the same time because everyone is in twitter all the time :-/

Scoble himself creates a list of reasons that Twitter is now part of eveyones life, and he actually argues against his own point here:

8. If you don’t read tweets for eight hours, don’t worry, all the big stuff you missed will be on TechMeme. When I was the first to talk about Yelp’s augmented reality feature on Twitter and on FriendFeed it was quickly blogged by EVERYONE and was on TechMeme within a few minutes and stayed there for about a day. The same is true of ALL news. I have not found an example yet where something important is discussed on Twitter about a tech company or tech news and doesn’t show up on TechMeme within a few hours. What doesn’t show up? Small stuff like birthdays or launches of obscure technology that only a very small audience will use.

Something to think about at a personal level – do you feel smarter because of your twitter feed? Do you every wonder what you are missing? Can we be just as smart by following a simple aggregation tool, and save ourselves a bunch of time in the meantime?

Then from a bank strategy and marketing strategy perspective, if we think through the above, the inputs to Twitter that are read by the lurkers will be represented by two components.

  1. the 1%
  2. marketers

Relevance to Bankwatch:
Banks should definitely not ignore the trends, and should participate in these platforms – the above does not mean anything here will disappear, merely that further evolution is inevitable, and it is essential to be part of that evolution. We are a long way from end of job in terms of defining how markets and marketing will play out here. The 1% thing is worrisome though, and is something that brings into question the validity of the social platforms for marketing purposes; the lack of widespread input will lead to consumer disaffection and lack of trust very quickly if people can see platforms being gamed by marketers.

Written by Colin Henderson

September 18, 2009 at 09:36

Collaboration (1) vs Beaurocracy (0) | Wikipedia & CIA Factbook example

Here is a striking example of the power of collaborative ‘wisdom of crowds’ approach to information preparation, versus traditional top down beaurocratic approach.

I was reading the Obama speech in Ghana, and his references to the current and previous governments, including Jerry Rawlings which rang a history bell for me, so thought I would read up.  First off I checked what used to be my old favourite the CIA factbook, and it has not been updated since sometime before Dec 2008 [note highlight].

On the other hand a quick visit to Wikipedia had more than enough detail being up to date, including information about Obamas trip dd 10th July in the footnotes.  I copied one section from the history area below, and highlighted the notes about the recent election in 2009, something the CIA has not figured out yet apparently.

The efficiency and effectivness of the Wikipedia approach compared to the old style management and approval processes is stark.  [Incidentally, surely the CIA beaurocracy would at least update their site for the countries that their boss is visting?]

In fairness to the CIA it is probably impossible to maintain an up to date encyclopedia type site such as the FactBook within the constraints and context of their mandate.  To open the CIA up to a Wikipedia approach would not make any sense.  I only use this example to display that collaborative and engagement of the broader network wins every time for information dissemination.

CIA Factbook – Ghana

Formed from the merger of the British colony of the Gold Coast and the Togoland trust territory, Ghana in 1957 became the first sub-Saharan country in colonial Africa to gain its independence. Ghana endured a long series of coups before Lt. Jerry RAWLINGS took power in 1981 and banned political parties. After approving a new constitution and restoring multiparty politics in 1992, RAWLINGS won presidential elections in 1992 and 1996, but was constitutionally prevented from running for a third term in 2000. John KUFUOR succeeded him and was reelected in 2004. Kufuor is constitutionally barred from running for a third term in upcoming Presidential elections, which are scheduled for December 2008.

Wikipedia – Ghana

Rawlings soon negotiated a structural adjustment plan with the International Monetary Fund and changed many old radical economic policies; the economy began to recover. A new constitution restoring multi-party politics was promulgated in 1992, and Rawlings was elected as president then and again in 1996 to serve a second term. The Constitution of 1992 prohibited him from running for a third term, so his party, the National Democratic Congress, chose his Vice President, John Atta Mills, to run against the opposition parties. Winning the 2000 elections, John Kufuor of the New Patriotic Party was sworn into office as President in January 2001, and beat Mills again in 2004; thus, also serving two terms as President. In 2009, John Atta Mills took office as president with a difference of about 40,000 votes (0.46%) [23] between his party, the National Democratic Congress, and the New Patriotic Party, marking the second time that power had been transferred from one legitimately elected leader to another, and securing Ghana’s status as a stable democracy.[24]

Written by Colin Henderson

July 11, 2009 at 16:28

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