Collective Wisdom: 'We Are Smarter Than Me'

Barry Libert and Jon Spector

Barry Libert (left) and Jon Spector are co-authors, along with "thousands of contributors," of We Are Smarter Than Me. Courtesy Mzinga and The Conference Board hide caption

itoggle caption Courtesy Mzinga and The Conference Board

More from the Interview

Jon Spector tells Steve Inkseep about the missed opportunities for companies that don't yield some control to customers and employees.

Read an Excerpt

Read how the power of crowds helped companies like Netflix, Bradbury Software and Intuit.

Contribute to the Next Book

Barry Libert and Jon Spector's next book will be about how community is changing the way companies do sales and marketing. You can contribute ideas here.

When Barry Libert and Jon Spector set out to write about how social networking might help businesses, they allowed just about anyone with an idea to help write the book. Thousands of people contributed to We Are Smarter Than Me, which is about the wisdom of the crowd.

Spector, president of The Conference Board research firm, says the book was initially modeled after Wikipedia, the popular online encyclopedia written and edited by Internet users.

"We've actually stumbled throughout the process on the differences between Wikipedia and writing a book: how do you synthesize the ideas, how do you get a single common voice across?" Spector says.

Spector and Libert, co-chief executive officer of a startup called Mzinga, tried to set guidelines for how people should write, but that proved too restrictive, Spector says.

"Finally we said ... you have to have no guidelines," he says. "And we talked to ourselves about relinquishing control, were we ready to do it? And eventually we said to ourselves, 'Look, if we believe in this concept, we have to implement it.' And we did. And that's really when the contributions from the community began to pick up."

The authors felt that social networking wasn't just about the popular sites like MySpace and Facebook.

"It was really about how businesses might think about crowds," Libert says. "Not just their employees as crowds, but also customers, partners, distributors [and] investors as crowds — and to use those crowds as a way to improve whatever activity they're working on ..."

In one success story that proved the power of the crowd, the gold mining company Goldcorp had essentially run out of places to look for gold. It decided to publish its geological data on the Web and allowed outsiders to contribute suggestions for new locations to mine.

"They found $3 billion of new gold out there," Spector says.

"There's just that knowledge out there and that's the essential premise of the book: We, some of whom are unknown, are smarter than a small group of experts inside a company."

Excerpt: 'We Are Smarter Than Me'

'We Are Smarter Than Me'

 

How May We Help We?

Hokie 15 of Tigard, Oregon, had a question: "I just got my new Smokette. It seems a bit small. Has anyone sent theirs back to upgrade?"

So did Vizguy of Hunt$Vega$, otherwise known as Huntsville, Alabama: "Can I use the Cookshack smoker in my garage without posing a problem?"

JPSmokin of Boise, Idaho, meanwhile, was having a blast: "Thanks to everyone for all the advice, recommendations, and recipes," he wrote. "Picked up my new 008 smoker oven Saturday, and it hasn't been setting idle. Shoot, I haven't had this much fun since the boss's wife lost her swimsuit top at the company picnic."

Hour by hour, day by day, hundreds of online Cookshack customers sign onto its various forums to ask and answer questions about barbecue sauce (another product line), smoker and barbecue ovens, and cooking techniques. All this Internet jabber seems to work fine for all parties, but it does seem a tad incongruous, given the down-home subject and the fact that we're talking about an old-fashioned, low-tech kind of business.

For more than 40 years, Cookshack has been cranking out ovens for home and commercial use in a 21,000-squarefoot factory in Ponca City, Oklahoma. It was founded by Gene Ellis, a businessman and inventor, and his wife, Judy. Gene got his inspiration watching neighbors try to turn old refrigerators into barbecue smokers. He built a cabinet and added a tray to hold smoldering wood chips, and Judy helped develop recipes for the company's sauces and meat rubs. After the Ellises' deaths in a 1985 boating accident, their son and daughter took over. The major claim they make for their company is that its machines make barbecue and smoked foods "without a lot of fuss." That's because the food is wood-cooked at a low temperature under static conditions with no through movement of air (which tends to dry meat) and no need for water pans (moisture stays in the oven).

Buyers of the ovens and smokers, which range from a model that holds 25 pounds of meat to one that can handle as much as 750 pounds, get a 30-day money-back guarantee and the promise of great after-purchase support. (The Cookshack Web site proclaims that "the customer is [almost] always right.") Cookshack has 25 employees and actively encourages its customers to contact the company (its toll-free number appears prominently on every page of its Web site). The forums are an adjunct to its live customer service and are meant to provide a body of knowledge that couldn't be transmitted in a phone call and to provide assistance 24 hours a day, seven days a week. And they are clearly popular. A recent visit to the cooking technique section revealed 1,196 topics and 10,126 posts. By creating a folksy, friendly site and designing forums and archives tailored to all tastes, the company has sold its customers on providing their own customer support.

All sorts of businesses are transferring much of the service function onto the shoulders of the customers themselves. Traditionally, of course, customers who had questions about a product—how to put it together, why it wasn't working properly, how to use it to the best advantage—would call the company's help line and talk with a customer service representative.

That's still possible, but it's not as easy as it used to be. Getting through to a service representative can take 30 minutes or more, and even then, customers are liable to get shifted from one level of expertise to another. Meanwhile, under pressure to reduce costs, many businesses have begun charging substantial fees for telephone support. After the warranty on Dell computers expires, for instance, the company collects $39 for each tech support call unless the customer has paid $189 for a one-year service contract. Apple iMac customers get to purchase a three-year version for $169.

The alternative these companies offer is a visit to their online version of customer service. Typically, there is a FAQ page and probably one or more forums where customers can pose a question and have it answered by others who volunteer their time and wisdom. Hokie 15, for example, was assured by Cookshack forum gurus that he could prepare all sorts of wonderful barbecue on his Smokette, and they even gave him some recipes to try. Vizguy was warned that he might be smoking himself along with his brisket if he cooked in the garage.

For companies that offer it, online support has been a double boon. They save money by freeing customer-service personnel for other work, while also building a cohesive, loyal community of repeat customers who can be tapped for other purposes—say, to test new products.

Why are advice-dispensing customers willing to devote their time, gratis, to improving Cookshack's bottom line—or that of any other business? One possible explanation is ego. As Bill Rose , founder and executive director of the Service "Most customers want to be seen as experts and recognized as gurus in their fields." We suspect that a number of people in customer-service communities simply enjoy interacting with other like-minded individuals and helping them solve their problems.

If you're a barbecue enthusiast, like the crowd that hangs out at the Cookshack site, what better way to pass the time than exchanging experiences and suggestions with fellow smokemeisters? (By the way, you don't need a cast of thousands to advise customers online. Just 1 or 2 percent of the customer base can handle the job, according to Ron Munz, chief executive officer of the Help Desk Institute, an information technology trade association.)

Shifting service to a customer community raises some interesting questions, though. For one—and this is a biggie—how can you be sure that customers will provide the right answers? Suppose that, instead of elaborating on the Smokette's virtues, someone tells Hokie 15 that his oven is too small and then recommends a competitor's product? Can you trust your community to send defective product cases or billing problems directly to your service representatives rather than trying to deal with the customers online? In fact, where should the line be drawn between the two kinds of customer service?

Those are among the questions addressed by the following examples.

Netflix

Along with its inviting online presentation and oh-so-efficient distribution system, this booming movie-rental company prides itself on its capability to offer subscribers a compact list of films they are likely to enjoy watching. "Imagine that our Web site was a brick-and-mortar store," Netflix vice president James Bennett told the Los Angeles Times. "When people walk through the door, they see the DVDs rearrange themselves. The movies that might interest them fly onto the shelves, and all the rest go to the back room."

In the real world, the movies don't do the rearranging; that's handled by the customers themselves, with an assist from a computer program called Cinematch . Customers are invited to rate each Netflix film they watch on a scale from 1 to 5. Cinematch digests these ratings, searches through the 80,000 titles in inventory, and comes up with a list of films tailored to the taste of each of the company's six million subscribers. By enticing them to rate films, Netflix achieves the latest in business magic tricks, getting customers to serve themselves. The use of so-called recommenders is hardly unique to Netflix. Other online retailers, such as Amazon, Apple, eBay, and Overstock, rely on their customers for a helping hand in predicting what products the customers will prefer, whether bedding, books, CDs, or DVDs. Customer ratings are used to rank corporate service providers as well.

For all these companies, the recommender system offers more than the chance to provide an extra service. It helps them establish a stronger connection with customers. Studies have shown that it can substantially increase online sales.

The extent of Netflix's commitment to personalized movie recommendations was made clear in November 2006 when the company offered a $1 million prize—in true wikinomics spirit—to anyone who can build a system that is at least 10 percent better at the job than Cinematch. The competition is to end in 2011. Meanwhile, Netflix has enticed many of the leading lights in the field of artificial intelligence to join in. Among the contestants' discoveries to date: For reasons unknown, most Netflix subscribers share the same attitude toward The Wizard of Oz and Silence of the Lambs.

The company has made yet another bow to crowdsourcing with a feature called Friends. It enables subscribers to see each other's list of films watched, to compare the ratings they have awarded the films, and to exchange suggestions for other films to watch. Once again, the crowd is invited to play a role in customer service.

Bradbury Software

In his office in Nashville, Tennessee, home of the Grand Ole Opry, Nick Bradbury was a one-man band. The company's only employee, he sort of liked the solitary life.

After graduating from the University of Tennessee, he tried to make a living as a cartoonist. His comic strip, about a koala bear named Basil, poked fun at everything from politicians to television commercials. Then Bradbury took up computer programming, another solitary occupation, eventually creating the HTML editor, Homesite , which he sold in 1996. Two years later, he founded Bradbury Software and all by himself developed FeedDemon , a news aggregator, and TopStyle , a Web design program.

Bradbury's products were selling well, but he had a problem. When it came to customer support, his company was off-key. There was no way he could keep up with customers' questions and occasional complaints, so he handed over the job to the customers themselves. On the Bradbury Web site, he set up a customer-to-customer forum, a so-called peer support group where more than 2,000 people provided the after-purchase service he couldn't handle himself.

In May 2005, Bradbury Software was acquired by NewsGator Technologies, based in Denver, and Nick Bradbury was hired and given the title "Architect, Client Products." In other words, he continues to spend hours alone, thinking about new ways to improve his two products. He also regularly visits the forums on the NewsGator Web site to check out product suggestions his customers offer.

Like many other technical sites, NewsGator offers three levels of service and support. It asks customers to start by searching its extensive knowledge base because that's where answers to most questions can be found. If that doesn't work, the customer is urged to move on to the NewsGator forums, where veteran customers provide answers. The third option is traditional: Customers can e-mail the company's support staff.

To make sure the Bradbury products' customer service is properly maintained, NewsGator decided to hire a new customer service manager. It started by looking close to home and found just the right person: Jack Brewster, a customer who had been a major contributor on the original Bradbury forums. You can take the boy out of the Bradbury, but you can't take the Bradbury out of the boy.

PMI Audio Group

Around the same time Nick Bradbury began his solitary life as a computer programmer in Tennessee, Alan Hyatt, one-time professional guitarist, was setting up PMI Audio Group, a California-based distributor of professional audio equipment. He called his company a group, but, like Bradbury, he was the only employee. Today PMI is still a distributor, handling recording, video, film, broadcast, and other products. But now it owns most of the businesses whose products it sells. That means PMI must concern itself with matters most distributors don't have to worry about: product design, manufacturing, marketing, and customer service.

To cope with customer service, the company relies, in part, on its online forums where old hands instruct newbies on the intricacies of such complex topics as multipattern diaphragm condensers, dualchannel mic, precompressor EQ, and ATB mixers. The discussions of technical issues turned out to be so detailed and to the point that the company archived them on its Web site, organized according to product, and directed customers with questions to check them out as a first step toward finding answers.

PMI reaps rewards beyond the customer service function. When numbers of people began talking about a product on the Web site, they became a cohesive and loyal community. When the company has a problem with, say, quality control, these folks are the first to be supportive. They also share their ideas for new or improved product lines—and alert the company when a new product fails to measure up. That happened with PMI's ATB mixer, which started out with four auxiliary send channels. The forum members protested that more were needed, and the company responded by redesigning the product to include six channels instead of four.

In 2006, a hacker wreaked havoc with PMI'S forums, and Alan Hyatt had to shut them down and start all over again, rebuilding from scratch. No fun. The strength of the Internet is its openness and lack of restraints, but those very strengths leave online communities prey to Internet predators. They are an infinitesimal minority of the online crowd, but as in so many areas of life, one rotten apple can do a lot of damage.

Intuit

When this financial software powerhouse set up shop in 1984, its first product was Quicken, which has now been purchased by more people than all other personal finance software items combined. Two decades later, Quicken's parent company, Intuit, decided to test the idea of customer support forums, but it wanted to avoid the hassles of building and managing them. So it turned to LiveWorld, a specialist in creating, operating, and moderating social networks and online communities.

The Quicken forums are organized according to products and computer type, PC or Mac. Other customers quickly answer Quicken queries, usually in helpful detail. In fact, the company says that volunteers answer 70 percent of all support questions, taking an enormous load off customer service employees. For example, when ten-year customer "Allan" complained that some of his mutual fund data wasn't showing in a Quicken capital gains report, several other customers began a dialogue. Some wrote lengthy explanations of the entire capital-gains process, and all offered the kind of caveats most employees would shun. Of course, LiveWorld and its competitors charge for their services. Whether a company wants to take that route to get customers to serve themselves depends on its culture, finances, and technical savvy. But it's an option that a number of major companies, including America Online, Campbell Soup, Dove, and MINI Cooper, have embraced.

© 2008 by Pearson Education Inc.

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How to Unleash the Power of Crowds in Your Business

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