Perspectives on Innovation

Bruce Hannon is known to many for his weekly email digest highlighting interesting articles, published in various well regarded complexity sources, that span the gamut from all areas of research and inquiry, from the life sciences to the social sciences.   What all the articles have in common is that they celebrate interesting findings, provocative theories, and the complexity of the world.  Bruce has graciously agreed to allow InnoCentive to repost his “Complexity” Digest from time to time.  Thank you Bruce!

Below, you will find Bruce’s “Complexity” Digest #2, we hope you enjoy.   Please let us know your feedback and feel free to respond to the blog posts and share your thoughts and reactions with others.

The Hidden Fragility of Complex Systems: Consequences of Change, Changing Consequences, SFI Working Papers

Abstract: Short-term survival and an exuberant plunge into building our future are generating a new kind of unintended consequence – “hidden fragility. This is a direct effect of the sophistication and structural complexity of the socio-technical systems humans create. It is inevitable. And so the challenge is, How much can we understand and predict about these systems and about the social dynamics that lead to their construction?

• Source: The Hidden Fragility of Complex Systems: Consequences of Change, Changing Consequences, James Crutchfield, DOI: SFI-WP 09-12-045, SFI Working Papers

Systemic Risks in Society and Economics, SFI Working Papers

Abstract: This contribution presents a summary of sources and drivers of systemic risks in socio-economic systems and related governance issues. The analysis is based on the theory of complex systems and illustrated by numerous examples, including financial market instability. Typical misunderstandings regarding the behavior and functioning of socio-economic systems will be addressed, and some current threats for the stability of social and economic systems are pointed out.

• Source: Systemic Risks in Society and Economics, Dirk Helbing, DOI: SFI-WP 09-12-044, SFI Working Papers

Why We Conform, PLoS Biol

Excerpt:

In his book Why We Cooperate, Michael Tomasello explores the socio-cognitive mindset that forms the basis of human sociality, including the creation of cultural artifacts and social institutions. The key message is that humans are fundamentally helpful and cooperative, as evidenced by infants’ willingness to provide information, help, and share worldly goods. Later in life, experience may corrupt this benevolent attitude, but the core point for Tomasello is that children exhibit other-regarding preferences, and it is precisely this feature that sets them apart from our closest living relatives, the great apes.

• Source: Why We Conform, Julia Fischer, DOI: 10.1371/journal.pbio.1000277, PLoS Biol 8(2): e1000277, 2010/02/02

Absolute Humidity and the Seasonal Onset of Influenza in the Continental United States, PLoS Biol

Summary: Here, the authors demonstrate that variations of absolute humidity explain both the onset of wintertime influenza transmission and the overarching seasonality of this pathogen in temperate regions.

• Source: Absolute Humidity and the Seasonal Onset of Influenza in the Continental United States, Jeffrey Shaman, Virginia E. Pitzer, Cécile Viboud, Bryan T. Grenfell, Marc Lipsitch, DOI: 10.1371/journal.pbio.1000316, PLoS Biol 8(2): e1000316, 2010/02/23

El Farol Revisited, SFI Working Papers

Abstract: Some years ago Brian (Arthur 1994) published a seminal article on the problem of resolving the crowding conditions at his favorite local bar El Farol, in Santa Fe. The informal setting and its seating problems provided a striking metaphor for a basic coordination problem that occurs in many contexts. Arthur provided an imaginative and deep solution to an every day minor problem. A simple version is as follows: Say 100 people like to go to listen to the music, but all dislike overcrowding. They all have the same taste that indicates that they enjoy attending if there are 60 or fewer individuals, but would prefer to stay away if there is a higher number than 60 in attendance. Each individual has a large set of rules of thumb that he or she utilizes. The rules are of the variety such as do not go the bar if last time there were over 60 present; or go if the you think the trend 81, 71, 62 will continue. As long as an individual’s rule of thumb works he stays with it, when it fails another rule is tried. Arthur’s simulations showed that the mean attendance was around 60 although the numbers were in constant fluctuation.

• Source: El Farol Revisited, Martin Shubek, DOI: SFI-WP 09-12-043, SFI Working Papers

Identifying Prototypical Components in Behaviour Using Clustering Algorithms, PLoS ONE

Excerpt: Quantitative analysis of animal behaviour is a requirement to understand the task solving strategies of animals and the underlying control mechanisms. The identification of repeatedly occurring behavioural components is thereby a key element of a structured quantitative description. However, the complexity of most behaviours makes the identification of such behavioural components a challenging problem. We propose an automatic and objective approach for determining and evaluating prototypical behavioural components.

• Source: Identifying Prototypical Components in Behaviour Using Clustering Algorithms, Braun E, Geurten B, Egelhaaf M, DOI: 10.1371/journal.pone.0009361, PLoS ONE 5(2): e9361, February 2010

Numbers Rule Your World: The Hidden Influence of Probability on Everything You Do, McGraw-Hill

Summary:

This fascinating book from renowned statistician and blogger Kaiser Fung takes you inside the hidden world of facts and figures that affect you every day, in every way. These are the statistics that rule your life, your job, your commute, your vacation, your food, your health, your money, and your success. This is how engineers calculate your quality of living, how corporations determine your needs, and how politicians estimate your opinions. These are the numbers you never think about-even though they play a crucial role in every single aspect of your life.

• Source: Numbers Rule Your World: The Hidden Influence of Probability on Everything You Do, Kaiser Fung, McGraw-Hill, 2010/02/01

This article originally appeared on Steve Shapiro’s 24/7 Innovation blog.

A magazine asked me to write a book review of Innovation Tournaments by Christian Terwiesch and Karl Ulrich. The book arrived in the mail yesterday and I immediately turned to the index to see if InnoCentive was listed. Sure enough, we are mentioned in several places in the book.

This got me thinking: Is InnoCentive a tournament?

The word tournament is derived from the French word for “medieval sport” and is now used to describe a wide variety of competitions.

Most competitions/tournaments are quite entertaining.  And by their very nature, there is always a winner.  One could argue that tournaments are “spectacles designed to find a champion.”

Given this widely held point-of-view, using the word tournament as a descriptor of InnoCentive seems to be inaccurate.

The NCAA basketball championships are a tournament.  The “World Series of Poker” is a tournament.  American Idol is a tournament.  With each of these, there is always a winner.  The purpose of the tournament is to find that winner while (usually) providing entertainment value.

InnoCentive is not interested in finding a winner for the sake of naming the champion.  The objective is to find workable solutions to real business problems.  Their approach is one I call a “contingency-based, value-driven pricing model.” Admittedly, that does not sound as sexy as calling it an innovation tournament.

Here’s how it works.  A company has a problem they want solved. They decide the “value” of finding a workable solution and they offer a “bounty” to anyone who can provide one. The bounty is only paid when they get what they need. This “pay for solution” model outsources the risk associated with complex problem solving.

Here are other examples that illustrate the key difference between the bounty-based approach with the tournament-based approach.

The NetFlix Prize was not a tournament. They only paid the team that improved the recommendation engine by 10%.  This makes it a bounty-based approach. You only pay the bounty when you get a successful solution.

In contrast, The Cisco iPrize, can be thought of as a tournament. According to their website, they will “select up to 32 semifinalist teams that will work with Cisco experts to build a business plan and presentation… Up to eight finalist teams will present their business ideas to a judging panel to compete for the grand prize: a $250,000 award shared equally by members of the winning team.” The LG Electronics competition (read my article on it here) was also a tournament-based approach.

The key difference is the way the challenge is articulated. With the bounty-based approach, the success criteria is clearly defined and you know if someone provided a successful solution: Did you improve the recommendation engine by 10%?  Did you find a chemical compound that has specific properties? Did you develop a mathematical model that optimizes solves a specific problem? The “winner” of the bounty is determined by this success criteria. If the criteria is not met, the bounty is not paid.

With the tournament-based approach, the success criteria is not defined. The winner is the “best” of the submissions. Although these types of competitions can yield excellent solutions, I know from inside-information that the results are often less than stellar. One company that uses this type of tournament described the results as a “PR success yet a commercial failure.”

Both approaches can provide value to any organization. It’s just important to recognize that they are useful in different ways. Tournaments can be great to get a broad set of ideas for an undefined space. Bounties are great for when you are hunting down usable solutions.

Last week, Michael Arndt from the Next Innovation Tools & Trends blog on BusinessWeek.com, posted an article asking “Is Open Innovation Over?” The crux of the post is an interview with James Todhunter, CTO of Invention Machine, who says “Open Innovation” is “becoming yesterday’s idea”. Todhunter’s argument was that companies’ internal knowledge-base would dwindle if they relied too much on external ideas and expertise, and run the risk of losing control of their IP rights and thus their competitive edge.

I mention this post because it elicited a bee’s-hive of comments criticizing Todhunter’s views, especially as they (the commenter’s) felt he hadn’t produced any viable examples to demonstrate his opinion. The commenter’s were rather passionate in their views and didn’t hesitate in listing why they felt Open Innovation, as one noted, “will become a natural component of companies’ innovation strategies.” Of note, and personal pride I might add, is an InnoCentive Solver, Chris DeArmitt, who chimes in his defense of Open Innovation in the comments, opening his statement with “As an innovator and two-time Innocentive challenge winner….”

Read the Next Innovation Tools & Trends blog post, http://bit.ly/5i0y22, and let both Michael Arndt and us know your opinion.

Here’s a crowdsourcing project to interest the burgeoning writer in you – in October 2009 BBC America Audiobooks gave people the chance to write a story with famed urban fantasy writer Neil Gaiman via the most contemporary of social media art forms, Twitter.  Gaiman provided the first line of the story (”Sam was brushing her hair when the girl in the mirror put down the hairbrush, smiled & said, ‘We don’t love you anymore.’”) and has invited dozens of twitterphiles to continue the story in 140 character increments. The story-thon went on for 8 days and is now complete and published on BBCAA’s blog (http://bit.ly/GmN5L). The audiobook, to be read by Gaiman, will be titled and published shortly.

The process was as follows: anyone could Tweet the next sentence, but a BBCAA editor was charged with sifting and selecting sentences to make a cohesive storyline, and came up with the finished product. Surprisingly, even though Neil Gaiman had very little to do with the actual arc of the storyline, the character development or the ending, the final selection is very Gaimanesque in tone. Must be due to the number of Gaiman fans that contributed!

What do you think? Collaboration is not a new concept in the writing world – the shared universe of Dragonlance is one such example. However, with collaboration being the highway of the internet, there are a bunch of pretty cool online creative collaborations taking place such as such as Altered Books (http://bit.ly/w9jxb) and ArsPoetics (http://bit.ly/3b9nOd).

Read the story here (http://bit.ly/GmN5L) & let us know your thoughts on crowdsourcing the creative arts.

A guest blog post by Jennifer Moebius, uTest

Having grilled some of the top minds in the software business, this installment of Testing the Limits will deviate slightly from the norm. With us this month is John Winsor – author, entrepreneur and crowdsourcing expert.

After a successful career as a journalist and magazine publisher, John founded Radar Communications in 1998, where he implemented a variety of academic-based market intelligence tools to help some of the country’s most progressive companies learn from key voices in their communities. Today, he offers that same advice as the VP/Executive Director of Strategy and Product Innovation at Crispin, Porter + Bogusky.

John has written extensively on the subject of crowdsourcing, having published the popular 2005 book Spark: Be more Innovative through Co-Creation. With his latest book Baked In: Creating Products and Businesses That Market Themselves now hitting the shelves, John was kind enough to sit down with us to discuss the future of crowdsourcing, the premise of his new book, and the best (or worst) rock-climbing movies of all-time.

uTest: The hottest debate in crowdsourcing right now is the “fall” of traditional advertising or design firms and the “rise” of crowdsourced services. In your opinion, what does the future of crowdsourcing look like? Is the world ready for what you call the “digital tsunami?”

JW: Well the future of crowdsourcing is definitely bright, but there are still a lot of unanswered questions in people’s minds. Those who are skeptical of crowdsourcing question its ability to truly connect people. With crowdsourcing, you no longer have all of these professionals working together in the same building – that alone is often too much for some people to come to terms with. The idea of a crowd aggregating to solve business problems in a virtual environment is entirely new to most people, even though the underlying trend has been developing for years. The difference now is that it simply can’t be ignored.

uTest: So you see crowdsourcing as eventually obtaining mainstream acceptance?

JW: Absolutely. People are starting to see the full potential of this model, especially on the client side of the equation. There was a time when most people viewed crowdsourcing as chaos – like the inmates running the asylum, and that’s no longer the case for a growing number of people. So I think we’re just getting started.

Let me give you an example. When I started blogging, people would say to me, “Oh that desktop publishing thing is never going to work out. It’s just not going happen. Amateurs will never rise to rank and status of newsprint.”

That was in 2003! So crowdsourcing, like blogging, is an evolving market. I suspect that we’ll look back in a few years and have a laugh over the naysayers the same way we laugh at those who thought blogging was a “fad.” I’d categorize many of today’s crowdsourcing companies as “Crowdsourcing 1.0.” In other words, there’s still a long way to go – and too many great ideas for this trend to fail or even fall short.

uTest: Your new book Baked In just hit the shelves and it’s getting some great reviews. What’s it about and where did the idea for this book come from?

JW: I wrote the book with Alex Bogusky. It is largely based on our personal observations. Over the last few years we’ve seen many clients enter a market with almost identical products, so it was almost impossible for them to differentiate themselves from their competitors. We started to see how this situation was reducing marketing as little more than a way to lie about their products or services. In other words, if there’s no difference between your product or service from that of your competitors, then what other options do marketers have? This obviously led to some very poor marketing strategies.

Social media is changing all that – and that’s what a big part of this book is all about. Social media lends itself to transparency. You’ve got to live up to what you’re saying, because if you don’t, someone else will. The simplest way to summarize the book would be to say that marketing shouldn’t be separate from your product or service – they have to be one and the same. Hence the title.

The basic premise of the book is that the future lies with those who embrace creativity. I’m convinced that crowdsourcing will play a major part in this evolution….

Read the rest of this John Winsor crowdsourcing interview at the uTest blog