Oxford Study Concludes it’s “The Wisdom in the Management of the Crowds”

A soon-to-be-published Oxford Internet Institute study concludes that companies they analyzed are not tapping the wisdom of the crowds. Instead, “the wisdom of these networks seems to be located in the intelligence behind their management.”

Oxford, as one of the leading universities in the world, is built on serious research. As I noted in e-Preneur there is a minimal amount of research on crowdsourcing; the field is growing faster than the ability to analyze it.

I recently met with William Dutton, Director, Oxford Internet Institute, who shared that a report on the study he had led, entitled The Wisdom of Collaborative Network Organizations will be published this September. Dutton and his research team tackled issues related to the notion of the “wisdom of the crowds:” how do you manage networked individuals and capture the value of their activities?

Dutton’s team conducted a number of interesting case studies of what he calls “collaborative network organizations. One company is Sermo, a community-based knowledge ecosystem of 50,000 licensed physicians in the US. Physicians can ask and answer questions and surveys posed primarily by doctors and pharmaceutical firms. The Sermo community identifies interesting health trends, case and other novel health insights for the benefit of multiple stakeholders.

They also examined distributed news aggregators such as Digg which, of course, display stories based on user rankings. They looked at conditions under which the crowd is smart and analyzed the bias of several modes of information aggregation and assessed the risk of mob behaviour. Another news aggregator, not covered, is Vancouver-based NowPublic.

They also looked at A Swarm of Angels which supports open content film production. The project is based in Brighton, England but the company extended its open source model to movie making so that it could bring distributed collaborators into the film project.

Dutton then distinguished these collaborative network organizations based on three levels of progressive performance: sharing, contributing and collaborating.

In sharing, individuals contribute to the creation of the information product and the benefits are reputation enhancement, influence and, in some cases, fees. An example is Innocentive which matches researchers (problem-solvers) with problems (problem seekers). It is a means of finding problem solvers rather than collaborating on work.

In the contributing scenario, a company or organization will set up a platform for soliciting and processing contributions. The company’s costs involve the creation and management of the platform for generating and managing community input. The benefit to the company is the licensing or sales of the platform or network (i.e. advertising or third party access). Sermo is a good example of Web 2.0 trends as it offers user-generated content. Physicians can remain anonymous but their answers can be rated.

Finally, there is collaboration with the outcome being co-created products.This results in the creating and management of a co-created product (i.e. software, films). The benefits capture is the licensing or sale of information projects; non-monetary benefits are training, status, notoriety. An example is “A Swarm of Angels” where shared information is central to the co-production process.

Dutton’s team reached a couple of key conclusions based on this study. First, organizations may think they are tapping the wisdom of the crowds—but they aren’t. Dutton explains that, “the wisdom of these networks likes primarily in the intelligence behind their management” and the channeling of contributions. His case studies uncovered “a variety of network management levers that can yield more useful outcomes.” These levers include architecture design, degree of openness, the controls employed and how management organizes the tasks.

Second, who benefits? Individuals perceive benefits by reducing their costs through participation or something as intangible as reputation enhancement. The benefits for the organization include reduced overall costs and often facilitate a greater sense of group identity.

As I pointed out in my recent book, the analysis of crowdsourcing, the wisdom of the crowds and related concepts is in its infancy.Serious academic research is welcomed as further progress towards having companies understand the true potential of how to apply crowd power for positive entrepreneurial outcomes.