My American Express card has chronic trouble with its magnetic stripe, especially at Walgreens stores. The other day, while making a purchase at a busy Walgreens, my card was having the same trouble. I expected the cashier to ask if I had a different card, or cash, or to manually enter the number on the card. Instead, she took a plastic bag, wrapped it around the card, and slid it through the machine. The card ran right through. I told the clerk it was a pretty cool trick, and she replied that a customer taught it to them.

The plastic bag around the credit card is a great trick, but Walgreens didn’t think of it. It’s not in their employee handbook, and it likely won’t come up at a staff meeting. Nobody at the Walgreens I went to is going to tell it to people at other stores, and Walgreens corporate isn’t going to submit a flier about it. It’s likely that nobody at a manager meeting is going to bring it up, and nobody will tell it to a district manager to spread to other stores. It’s just a trick that the clerks in this store know. Except that the clerks didn’t think of it themselves - they found it from a customer. And customers are the people who will spread it, because despite all the hype around knowledge-management and information sharing, in industries with separated business units with high customer touch points (i.e. retail, hospitality), your customers are still your best communication tool.

Whenever my American Express card won’t scan again, I’m not going to reach for another card. I’m going to ask for a plastic bag, and I’m going to teach a new store the same trick. Customers share information for you all the time. Store managers get suggestions about what another store is doing well, or something they’ve tried somewhere. Customers create a network outside your organization that you have no control over, that you never see, and that you interact with at random times. But by proactively communicating with your customers, you don’t just engage them, you create a human network that continuously improves your business.

Categories: Business and Economics, Customer Engagement, Social Software, Users as Partners
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Prizes stimulate innovation better than grants:

BACK in the 1700s, prizes were a fairly common way to reward innovation. Most famously, the British Parliament offered the £20,000 longitude prize to anyone who figured out how to pinpoint location on the open sea. Dava Sobel’s best-selling 1995 book “Longitude” told the story of the competition that ensued, and Mr. Hastings mentioned the longitude prize as a model at that meeting back in March.

Eventually, though, prizes began to be replaced by grants that awarded money upfront. Some of this was for good reason. As science became more advanced, scientists often needed to buy expensive equipment and hire a staff before having any chance of making a discovery.

The internet is changing the economics of innovation and discovery.  Science is no longer expensive like it once was, it is within the realm of dedicated and educated hobbyists.  Robin Hanson, who the article discusses, is everywhere you find interesting information economics problems.

Categories: Business and Economics, Incentive Centered Design, Information Asymmetries, Information Economics, Information Markets, Matching Mechanisms, Science, Social Software, Strategy, Technology, Users as Partners
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According to Slate, an attempt to get a nobody elected to the NHL All Star Game has exposed gross incompetence on the part of the site administrators and league officials:

How did the Rory Vote-O-Matic work? According to Touesnard, online security at NHL.com was pathetic. The league tried to counter automated scripts by making voters decipher words embedded in distorted images—a system known as CAPTCHA. But the NHL used only 51 different picture files and each one had a predictable name, like “1.gif.” All the Rory hackers had to do was create a table that linked up each file name with the appropriate pass phrase. Touesnard coded up the Vote-O-Matic in just a few hours.

Incentive centered design problem for online voting, anyone?

My favorite tidbit:

Some have even gone so far as to suggest the whole thing was orchestrated by the league’s viral marketers, who have been pushing a fan-centered brand under the slogan “My NHL.” But it’s hard to imagine how anything positive could come from such a parade of scandalous incompetence.

Having viral marketers is stupid enough on its own.  Then giving them positive credit for something they didn’t start and subsequently blatantly mismanaged?

Categories: Business and Economics, Community, Governance, Incentive Centered Design, Information Economics, Information Markets, Marketing, Social Software, Users as Partners
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In the Ann Arbor Business Review, Detroit Renaissance President Doug Rothwell:

I think that it clearly shows the importance of our universities in helping us make economic transformation a reality. Google is in Ann Arbor because of the relationship with the University of Michigan. And I think that too often in the past this state has not embraced its public universities, particularly its flagship universities - Michigan, Michigan State, Wayne State, the research universities - as really being absolutely vital to the future economic health of the state.

From AnnArborIsOverRated

Categories: Business and Economics, Community, Education, The Academy, Users as Partners
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Kevin Bacon has leveraged his high network centrality into a charitable initiative, sixdegrees.org, which connects individuals to celebrities who advocate for a charity, or allows you to become a celebrity for a charity of your choice.  Somehow, it then networks people together, though I don’t really get how, and my guess is that the site cost more to put together than it’s raised so far.

Via Philantrhopy 2173.

Categories: Community, Information Markets, Matching Mechanisms, Philanthropy, Social Software, Technology, Users as Partners
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As Campfire perfected that mode of storytelling on “Beta-7,” the team realized something else: The virus they discovered on Blair catches on only if it forges a community where none existed. The infection has to start small and feed on fascination. “You can’t start by thinking about what’s going to appeal to the mainstream,” says Monello. “You have to ask, ‘What’s this narrow target market going to embrace and absolutely make its own?’”

That’s from an fascinating story in this month’s FastCompany on the viral marketing efforts of the team behind The Blair Witch Project. They create immersive story lines that suck in hardcore users, casual observers, those who have bought in completely, and those who just wants to see what happens next. Around the whole product, out of nowhere, they create a community of interest, and from it, the word of mouth spreads. It’s entertainment as advertising, with the products integrated into a sort of interactive theater on a massive scale. And the best part is, unlike traditional marketing efforts, it generates tons of positive buzz, provides for two way interaction with customers, and more importantly, if done right, doesn’t piss people off.

Categories: Community, Marketing, Social Software, Users as Partners
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WN: What do you make of opinions that Gracenote privatized two public goods: the original open-sourced software that CDDB was based on, and song information input by unpaid volunteers?

Scherf: This is a popular opinion in certain circles. At first, there wasn’t a negative reaction to the sale, and I took this to mean that people weren’t fundamentally opposed to CDDB finding a commercial home. People only started complaining around the time certain folks at the company started mishandling developer relations. (None of the people directly responsible for this behavior remain at Gracenote, and thankfully there’s a much better understanding of how to treat customers now).

CDDB depended on partnering with it’s user community for success, but in this Wired News article, Gracenote Co-Founder and Chief Architect Steve Scherf talks about the challenges of managing that relationship. Those interested in these issues may also be interested in my Futurtech Panel on Users as Partners.

Categories: Futurtech, Information Economics, Social Software, Users as Partners
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I’m organizing a panel at the Business School’s Futurtech conference on users as partners in the product development process. Here’s a draft of my proposal:

The internet has transformed the way user communities organize themselves. Firms can directly interact with their customers, gauging interest, getting feedback on early betas, and seeking direct input for product features. For better or worse, customers and users are now much more integrated partners in the product development process, and how a firm interacts with their user communities has a direct impact on their success or failure.

Some industries have been dealing with these issues for a long time. Software platform vendors, like Sun, Microsoft, and Apple, have a long history partnering with their developer communities to ensure a rich application eco-system and benefit from network effects. Others, like video game publishers, are realizing the importance of monitoring user activity as their products become more social and their users more organized. Many studios, like Bungie, Nintendo, and Blizzard have seen major product shifts based on community feedback, and have dedicated community managers who interact with, excite, empower, and pacify users regularly. Finally, there are those who are new to this level of customer involvement in the creative process. Movie studios have recently started to produce films based on on-line petitions (serenity), change scripts based on internet buzz (Snakes on a Plane), and even solicit input for upcoming films (Transformers).

All of this brings up a number of questions. What is the roll of the user in the creative process? How can firms keep hardcore users happy without alienating the vast majority of customers? Who owns community-generated product contributions? What can companies do to empower their user community? How can they control them when they run amok? What is the best way to track what’s on the community’s mind?

Any comments, suggestions, or criticisms are welcome. Feel free to drop me an e-mail or leave it in the comments.

Categories: Futurtech, Incentive Centered Design, Information Economics, Social Software, Users as Partners
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