co>innovative

As Nicholas Carr recently pointed out and as I have mentioned before, there is no one type of “crowd”. He lays out 6 categories: social production, averaging, data mine, networking, transactional, and event.

Each of these “crowds” (and there are surely others) has its own unique characteristics and its own unique strengths and weaknesses. Some crowds, for instance, gain their usefulness from the individual talents of their members. Others (notably the “averaging” sort) gain their usefulness by essentially filtering out those individual talents.

I would also add what I would call a Resource Crowd, which is represented best by crowdfunding platforms such as Kickstarter, Kiva, and IndieGoGo. These platforms aggregate small amounts of money to accomplish a fundraising goal to complete a project. They allow for participation in the funding of projects that might be far out of reach for the average contributor while also providing the funding necessary for a producer that may not have been able to raise funds before such a platform. The power is in the aggregation of small contributions by a large crowd.

For anyone who has ever had an inkling of interest in what this site covers, you should go to the Open100 competition. There Openbusiness.cc is running a competition to find the top 100 best open innovators in the world, highlighting achievements in open innovation, crowdsourcing, co-creation, open source software, and open business. If you know of any companies that should be included, head over to nominate them before March 19th.

There are a ton of great examples of what is going on in this space, so I hope they leave the complete list of nominations up after the competition is completed on April 8th.

Thanks to a previous commenter, Daniel, for pointing me in the direction of IndieGoGo, a crowdfunding platform for filmmakers. I just nominated IndieGoGo along with Kickstarter (which was inexplicably missing from the Open100 list). Looking forward to the results.

It was inevitable the Chris Anderson Editor in Chief of Wired would eventually write a significant piece on “the long tail of things” as he puts it, and as usual it’s a great read. As head of DIY Drones, an drone supplier for hobbyists, he has seen first hand how the manufacturing world has evolved. He designs the circuit boards on a computer and uploads it to one of a multitude of possible manufacturers, many of which can be found on Alibaba, and can get extremely small runs made — down to 1 at a time. This allows him to experiment and hold very little inventory.

That is one piece of the story: the democratization of access to industrial grade manufacturing at scales available to amateurs and hobbyists (democratized innovation). Part two is extending the actual design of products to customers (mass customization and crowdsourcing). Somewhat along the lines of the Open Source Car project, which I wrote about previously, Local Motors sought to solicit ideas and designs from members (of which they have 5,000). They are producing a pretty wicked looking car designed by contributor Sangho Kim that will be built in distributed building centers. Similar to the ubiquitous Threadless, which inspired Local Motors to some extent, users submit designs and it is voted up until a car reaches a certain popularity after which it will be produced in limited runs. This fills in the market with specialized, small run cars and meet needs that would not be possible with the large auto firms.

Local Motor's first car

Okay, so you have the ability to order custom made parts from manufacturers in small quantities, companies are successfully building products based on user submitted designs and voting, and now, if these sources are still not enough to fulfill your desires, enter 3D fabs and 2D cutters (personal manufacturing). About which I have written plenty about. An image which seems to be appropriate is that filling a inverted pyramid: the top can be filled in with mass production and satisfies most people, the middle to lower regions can be filled by user submitted, smaller run manufacturing, and the very bottom, the highly specialized cracks are filled in by the fabbers and totally custom building.

“Thus the new industrial organizational model. It’s built around small pieces, loosely joined. Companies are small, virtual, and informal. Most participants are not employees. They form and re-form on the fly, driven by ability and need rather than affiliation and obligation. It doesn’t matter who the best people work for; if the project is interesting enough, the best people will find it.”

Each step of conceiving, designing, prototyping, manufacturing, and selling are within reach of just about anyone with a surprisingly small amount of capital. Couple that with bringing in the crowd at any point to help fund or vet ideas and the current situation becomes that much more interesting.

Generalized business advice or generally accepted wisdom is useless, just as blanket pronouncements about the “right” size of beak for a particular bird species is meaningless. Different environments produce different creatures. In the world of business different industries, countries, and stages of company evolution will produce wildly different best practices and “rules” by which to live. Throw into the mix a differing set of goals — from lifestyle businesses that are kept small by design to the fastest growing venture backed startup — and the rules will change even more.

Jason Fried recently pronounced that Joel Spolsky‘s assertion that growth is essential for his software as a service bug tracking software company to keep up with competitors. Jason’s 37 Signals has succeeded wonderfully with a small team, a focus on simplicity, and by saying “no” far more often than not. Joel however, may not wish to remain small, he may wish to be a large player in the market which might require greater investment and marketing spending. And it may be that bug tracking IS a network effect business in certain respects. Both are wrong. Both are right. Thus we arrive at the most unsatisfying of answers: It Depends.

For every hard, unwavering proclamation by a successful business person one can find an equal and opposite rule from an equally successful business person.

Just as species evolve to thrive in a particular environment so too do businesses survive and thrive in their own particular environment in pursuit of their own ends.

This helps resolve the seemingly contradictory paths one might take, for example, in the design of a product or service along the spectrum of open vs. closed development, of open source vs. Apple. Both are right, both are wrong. It depends on what your environment, goals, company position, and industry are.

Going against sensible practice I am making the prediction that Twitter as a company will ultimately fail to live up to its current expectations — or at the very least, survive as a shell of its former self. Twitter as a concept, however, will succeed. To explain.

Many have listed their reasoning for Twitter’s ultimate demise ranging from spam, to lack of monetization, to a steep dropoff of new users, but I believe the best argument has been articulated in various forms by Dave Winer and Marc Canter who have been saying for a while that the service Twitter offers should not be controlled by a single company and in fact cannot be controlled by a single company long term. A single owner creates a bottleneck, fail whales, and stifled innovation. A communication platform such as this will be subsumed into the web as a distributed service. There is no one Email Company, no RSS Company — these are distributed services that interact through standard interfaces.

What if every email in the world was forced to go through a single company? A single bottleneck? It would make no sense. Within a couple of years a standardized set of protocols will develop such that there will be thousands of Twitter clearinghouses through which messages travel — with robust new features and use cases that haven’t been imagined yet.

“Take a look at internet history: News Groups (NNTP), Email (SMTP/POP3), Web Pages (HTTP), Voice over IP, Video Conference, etc. All have standards and generally operate in a distributed fashion.”(Via Sumolabs)

Facebook has already moved in the direction of testing Twitter-like status updates in that one can open up their updates to everyone on an individual post basis. Add the ability to follow other people’s public status updates without requiring a reciprocal relationship, and most of Twitter’s utility disappears.

The original innovator is rarely on top when the market shakes out, so Twitter better sell out to a larger company soon or evolve to accept the future open standards.

A further opening of the system through open standards (extensively laid out by Marc Canter) will pave the way for the next incarnation of posts of status updates, photos, videos, links, etc — the concept of Twitter which will live on. This type of communication, asymmetric following, and sharing will not be going away. It will evolve and expand through thousands of decentralized services… one of which will be Twitter.

Every day hundreds of millions of people type their thoughts, needs, and desires into Google’s search box. Aggregate those and track them over time and you can begin to see patterns, in flu epidemics, the economy, products, candidates — just about anything really.

Once you know what a ripple looks like, and the content of that ripple, you can track it. And you start to see the others. And eventually, you start to identify the ripples that preceded a discrete event instead of the ones that followed. (Via OccasRazr)

Item 1: Google Search Trends and Insights allow you to enter any search term and see how it has relatively trended over the last 5 years. Beanie babies (why beanie babies? why NOT beanie babies!?) for example, had been on the steady decline [thankfully] until recently when they got a huge spike when Teenie Beanie Babies were brought back (whatever that means). The highest search volume coming from Reston, VA. Of mild interest unless you are a seller or manufacturer of beanie babies, then it becomes massively important. If I were looking to start a beanie baby store, Reston, VA would be at the top of my list for potential locations.

Large companies would pay handsomely for an up to the minute trending of their relevant keywords. Imagine being able to have a week or two of advance notice that a product is about to hit it big? I would guess the evidence in searches would predate the data on the ground by weeks or months.

And, what about as a measure of the success of a branding campaign? Companies could track exactly how much of an effect a campaign is having. Are people searching for the brand more? Has one campaign been more successful than others? Did one particular brand exposure have a disproportionate effect?

Item 2: Google Finance Domestic Trends Indexes These track search terms related to various industries. Combined with data on consumer price indexes and consumer confidence, one might be able to predict a rebound in a particular industry. After all, financial markets are built on the confidence and sentiment of the universe of investors and if you can wedge yourself in the time between the upswell of negative/positive feeling about an industry and the increase/decrease of an index, you can rule the world.

(Here’s a tip: the lowest volume of searches around airlines and travel have occurred at about December 15th each year over the last 5. I’m guessing if you want to reserve a room or a plane ticket, that is the time to do it. That also happens to be a good time to buy a car.)

Item 3: Google Flu Trends. Google has “found a close relationship between how many people search for flu-related topics and how many people actually have flu symptoms” and can predict flu outbreaks 1 to 2 weeks earlier than the CDC and is 97% to 98% accurate. (This becomes less useful when cases are in the hundreds as opposed to thousands, becoming far more valuable in an epi- or pandemic.)

As Hal Varian and Hyunyoung Choi (Google’s Chief economist and Decision Support Engineering Analyst) pointed out they are currently only focusing on predicting the present, but given the mounting data available, the diverse channels and types of data available, and the identification of significantly correlated variables in models they will be able to predict the future. (Here is a model that uses Google trend data to improve predictions of changes in credit levels.)

Search can be an early warning of people’s shifting interests and intentions, but it doesn’t tell the whole story. However, the accuracy and importance of these predictions will be ever increasing given:

• the increasing number of people online
• improvements in sentiment analysis and scoring
• increasing importance of real time search (i.e. Twitter search)
• their ability to bring in data from other services such as Gmail, blogs, and news sources

A year and a half ago I saw a need for a tool that would allow artists, filmmakers, writers, musicians, anyone with a project, to tap their network of fans, family, and friends to raise the money for their next project. In effect, allowing fans to pre-order the result of a project at various levels from a digital download of an album to a custom work of art.

I put the idea on the back-burner and, thankfully, Kickstarter read my mind and began working on what they launched a few months ago which is an almost perfect manifestation of what I had envisioned. (I also wrote a general overview of crowdfunding with a ton of examples back in June, 08. Here are more examples over at the crowdfunding wiki. If you don’t like the term crowdfunding, perhaps you would prefer “collective ex-ante fundraising”.) Creators have long had the option of posting a paypal link and begging for money, but this provides the infrastructure and eases the process along with much more powerful tracking tools available.

How it works:

1. Post a specific, potential project, listing available pre-order/pledge levels
2. Set an amount to be raised and a deadline
3. Promote to your fans and wealthy friends.
4. If you hit the amount raised before the deadline the project is a go, otherwise, you don’t get the money.

Check out what appears to be the largest fund-raising projects so far: a book called Designing Obama. Looking to raise $65K and so far have made it to $42K.

Now, there is a certain amount of trust necessary in this process. Kickstarter writes: “Project creators are wholly responsible for their promises. Kickstarter is a venue, like eBay or Etsy.” In the early stages, I would imagine this won’t be a much of a difficulty, but it will be something to look out for. But, in the end, most of the people pledging will either know or know of the person/group and will have some kind of existing relationship with them. That or the projects themselves will be so clever or worthwhile that people with no connection will pledge as well.

So, how is this an innovation?
Fans/customers:

Feel a part of the process, a deeper connection with the project creator.
Can help make a project possible.

Project creators:

Get access to capital and some way to survive while they work
Get real feedback on the desire of supporters for a particular project, measured in cold cash
Decrease the risk of a project: if you have essentially pre-sold the first run of your project, you’re much farther along

Just as microfinance provider Kiva allows for the direct, small, impactful loan between individual and entrepreneur, so does this allow for the same in the form of a pledge/preorder.

It’s just amazing when something of value catches on and people pile on to provide funds for a worthwhile project that would likely have never seen the light of day, but for crowdfunding. And the best part is, usually, you have something to show for it: a book, an album, an event to go to, or a good deed done.

An important connection has been made which brings to fruition what I foresaw happening about a year ago in my previous article Part 5: The evolution of mass customization and personal manufacturing Each part of the chain for truly distributed and democratized product design and personal manufacturing have essentially come together to form a coherent whole.

If you want to design a product and have it built you currently have three options — short of contracting with a manufacturer which is complex and expensive.

Slap a graphic design on a commodity product: You might be familiar with Zazzle and Cafepress which allow anyone to upload a design and sell physical products, but these services are limited in that you are stuck simply printing a graphic design on a preselected commodity product which is then shipped from a central location.
Design an object from flat materials that are laser cut. Ponoko is the best example of this. You can choose from a whole host of materials. Designers post designs, Ponoko handles the sale, cuts the material, and either sends it to the seller or directly to the buyer. (Can I interest you in some biohazard coasters, perhaps?)
Design an object in 3D and have it “printed”. Shapeways takes 3D models and creates physical objects from them. (Or would you prefer a small skeleton sculpture?)

Each of these services have been available in the past to people and companies with significant resources, but never before have they all been available and affordable for normal folk. And now, ShopBot and Ponoko have partnered to create 100KGarages. Ponoko is supplying it’s online “click to make” system and ShopBot, which makes CNC routers, brings the distributed digital fabricators who are in 54 countries around the world. Products designed anywhere, printed wherever you are, in runs as small as 1 unit.

This allows for designers and builders to essentially sell a product before it exists! Instead of design->prototype->test->manufacture->market->retail->Sale, the process can look like this: design->market->Sale->manufacture.

The great innovation here is not only the atomization of the process (you can design a product and put it out in the world to see if someone else wants to build it or you can just build other people’s designs) but at the same time the loose coupling of the process (if you want you can take it from start to finish using several services that are tied together). The basic infrastructure is there.

For now it will be relegated largely to hobbyists and, no, it can be expensive (3D printing in particular), but I would imagine within a few years we may see a successful product that comes about through this loosely coupled chain of services… a design student in India uses a free online design tool… a retail site such as Ponoko hosts the design… a buyer in the NY purchases… a 3D printer NY that has the correct materials prints the object and ships it to the buyer.

UPDATE: A few weeks after 100KGarages launched, a similar idea was introduced through CloudFab.com, “a central marketplace to connect buyers and sellers” of 3D printed parts and objects. So, for now, think of this as very similar to 100KGarages, with the main point of differentiation being that CloudFab is focused on 3D printing, and 100K Garages is focused on 2D materials. More info at MadeForOne