Donal Reddington on mass customization, crowdsourcing and digital manufacturing

Economist crowdsources ideas

The Economist, a weekly UK magazine that is one of the most influential business publications in the World, recently undertook a project which it described as crowdsourcing but is probably closer in nature to open innovation. The magazine asked its readership what new directions it should take in leveraging its intellectual capital and resources. They called it Project Red Stripe.

Project Red Stripe was established in September 2006, and consisted of a six-member core group comprised of The Economist Group’s employees that had been brought together with the task of creating an innovative and web-based product, service or business model by July 2007. The core team consisted of Ludwig Siegele, German correspondent for The Economist, Joanna Slykerman, formerly Marketing Manager across all EMEA territories of the Economist Intelligence Unit, Steven Chiu of the Economist Intelligence Unit, and Mike Seery, CIO of The Economist Group.

In addition to the research which the core group conducted in-house, they solicited ideas from the outside world in an effort to attract submissions from a diverse group of people.

Following the initial launch of the project, the Red Stripe team held webcasts to further explain how individuals could participate, and took questions online during the webcasts. These questions and answers formed the basis for the projects FAQ.

One of the core team said at the time: “Being able to tap into (and maybe even pay for) outside knowledge and experience to help with the development of our idea will be especially useful if we can make it a collaborative experience.”

The outside participants chosen to take part in the project were selected during December 2006/January 2007. At the end of January, the new team members were introduced and some broad principles were scoped to guide the project.

With the team established, the task was divided into four basic items: setting up a framework for developing new ideas; brainstorming and choosing the best ideas; developing the ideas; and then writing the business plan and presenting the finished product.

At this stage the question of whether the project would conflict with the overall objectives of the Economist Group. However, it was noted that, while other publications were suffering from ads and readers moving online, the Economist’s advertising revenues were increasing and the group has never been more profitable. This gave the Economist Group the confidence to be more experimental about what it does on the Internet.

Around the same time that Project Red Stripe was gathering momentum, the concept of companies gathering ideas from the outside world was becoming more commonplace. In the space of a week, Yahoo! and Dell launched idea-gathering sites. A this point the core team had to consider the tricky issue of intellectual property – who would own the ideas that were to be submitted to Project Red Stripe? As one of the team noted on the Project Red Stripe blog, “If we don’t deal with this issue from the start, it could come back to haunt us later – particularly if we dream up a money maker.”

In the end, the terms of Project Red Stripe stated that The Economist Group would own whatever ideas were submitted. This was seen as the only practical way of dealing with the matter. However, it was less restrictive that the terms on Dell’s Ideastorm which prevented users from otherwise marketing their idea.

One practical incentive on offer was that the core team would further involve those making significant contributions in Project Red Stripe.

Many of the submissions received related to user-generated content such as wikis, blogs, and social networks.

Wikis were the most popular suggestion topic. The consensus from Project Red Stripe submitters was that the conventional wiki needs to be improved with some form of moderation. While many alternatives suggestions were mentioned in the Project Red Stripe Blog, my personal view was that perhaps the most obvious solution was missed – create a conventional wiki but limit editing to current subscribers to The Economist. While this would not solve all issues, it would certainly cut down on vandalism of content, as few potential vandals would be willing to spend on a subscription to The Economist before doing their worst on a wiki page.

There were also suggestions relating to prediction, information or decision markets.

From the Project Red Stripe Blog:

Prediction markets are are speculative markets set up to make predictions on the outcome of a particular event, for example the US presidential election. People can bet on one candidate by buying a “contract”, essentially a promise of the seller to pay, say, a dollar if the candidate wins and nothing if he or she loses. Those certain of the candidate’s victory should be willing to pay up to a dollar for this contract (they’ll pocket one dollar minus the price they paid). Those confident of a loss should want to sell such a contract, expecting to be able to keep the money they got for it (and not having to pay the one dollar to the buyer). Given enough buyers and sellers, this market should establish a price for the contract – which represents the probability of the candidate’s victory.

Most contributors in this area wished The Economist to launch an online service allowing subscribers to participate and even create such prediction markets. Some added a special twist to the concept, for example a system for “truth claim markets”, which amounts to using markets not to predict future outcomes, but to evaluate current truths. Another proposal was for an index for worldwide memes, ideas, and trends that rates their popularity and value much like a stock index.

Some even suggested that The Economist should create its own private currency, which subscribers could use to make bets on prediction or other markets. One suggestion was that every Economist subscriber receive one thousand Economist dollars per year to trade. This triggered another thought within the Red Stripe Team: Why not let subscribers earn some money (by contributing to a wiki, for instance) and spend it (by donating it to a charity of their choice)? i.e. turning The Economist into a real economy.

Other ideas related to The Economist Group’s own publications and products, such as an expansion of the scope of its Big Mac index (which uses the price of a McDonald’s Big Mac in different countries to calculate the relative buying power of individuals in each country).

Many parcipants stated that The Economist provided for them an aggregation of the most important issues of that week plus analysis and opinion. May contributors suggested expanding The Economist’s service of “trusted advisor and overseer” and applying it to information available online.There was strong support among idea contributors for The Economist to become the “gateway” or “sorter” of a wider body of information beyond that purely generated by itself. While this may be an attractive idea from the reader’s viewpoint, the workload that it would bring would be immense if undertaken by staff. However, an alternative would be for the work to be undertaken by readers, a sort of highbrow Digg, where items are rated, or a type of tagging service such as The team also considered using implicit pesonalization, by somehow collecting data on subscribers’ surfing behaviour to compile lists, such as “The Economist’s reader’s favorite websites” and “what other readers of this article have read”, in a simliar style to the likes of StumbleUpon and

Another possibility was to combine Economist data and analysis with Google Earth, allowing the reader to scan the globe and zero in on a location of interest to access the relevant country and regional data. It was also suggested that The Economist partner with Google Earth to provide Economist analysis within the Google Earth environment, and that this economic and political analysis would work well with traditional travel guides about countries and cities.

These various suggestions led the team to consider if

“the traditional role of publisher could move from their managing their own-produced content to managing a ‘standard’… a respected source like The Economist could present for its readers the dominant viewpoints, showcase the various views for debate and even link to wider related event coverage, including multi-lingual reporting.”

Other ideas focused on using the Economist for educational needs, (even providing a version of The Economist for kids). Junior versions of other ‘high brow’ publications of this type exist in various countries. The challenge would be in creating something that young people would want to read rather than something that they would have to read as part of their coursework or that is aimed at their teachers.

One approach to this would be to use a community of teachers to create a curriculum plus teaching materials.

It was noted that the Economist website has been slow to take up the principles of Web 2.0, such as comments, mash-ups and tagging. One contributor felt that “many people discuss Economist articles on other web sites and in other discussion forums and that by not allowing our readers to comment on articles we are losing our community and potential ad dollars.” (The publication, is in fact, involved in blogs called Democracy in America and Free Exchange where it engages readers in discussion.)

Many other suggestions were received dealing with various aspects of how The Economist interacts with its readers and the World at large. Some contributors zoned in specifically on the data held by the Economist Intelligence Unit (EIU). Most of these related to making the data more accessible, in both the the financial and technical sense (for example through an Application Programming Interface (API)).

However, the EIU currently charges for its data, so making it free would damage the Group’s revenue. One possibility would be to liberate some of the data or, more radically, by turning a business with a few subscribers into one with many more monetised customers.In the end, after much deliberation, the one idea which was chosen to be implemented was perhaps the least expected – The Economist would start a social enterprise.

At the end of June 2007, it was decided to start a web service that harnesses the collective intelligence of The Economist Group’s community, enabling them to contribute their skills and knowledge to international and local development organisations. These business minds will help find solutions to the world’s most important development problems.

It would be a global platform that helps to offset the brain drain, by making expertise flow back into the developing world. They called it “Lughenjo”, an Tuvetan word meaning gift.

Non-governmental organisations (NGOs), charities and other organisations – as well as entrepreneurs active in developing countries – would be able to post tasks on Lughenjo asking for help in solving problems. Qualified individuals could then provide such help by donating their knowledge and skills. By connecting these two groups Lughenjo would “create a marketplace for good and a new channel for skills and knowledge transfer”.

It was decided that Lughenjo would be a social business enterprise – a business that does good, and returns a profit. It would be financed by online advertising.

Almost immediately, Lughenjo ran into difficulties. There was much internal debate among the team as to whether it was correct to make money from a website on which people would donate their time to solve development problems. Initially, the Project Red Stripe team wanted Lughenjo to be not-for-profit, with revenues to finance the programme coming from The Economist Group as well as long-term sponsors and grants.However, a business model mainly based on the financial support of others would have limited Lughenjo’s growth and sustainability. Also, not-for-profits do not always raise enough funds, and thus cannot fully achieve their mission. From a purely financial viewpoint, by making its brand and readers available to the site, The Economist Group would be taking a considerable risk, which should be compensated. This would give the Group a strong interest in making Lughenjo a success – which, in turn, would help achieve the site’s mission.

Many variations of the social enterprise model already exist. Perhaps the most famous is the Grameen Bank. However, Lughenjo would push this idea further, by not reinvesting the profit. It was hoped that Lughenjo would reflect a larger trend that would spawn many hybrid organisations that will both do good and make money at the same time.

The Project Red Stripe Team believed that a site to exchange skills and knowledge to solve development problems could make a significant difference. They noted that, while international and local development organisations need money, skills and knowledge are often the true bottleneck. Even if both are available locally, the networks to spread them are often missing. While Lughenjo would not only be a partial substitute for such networks, but would also help build them.

The team was reasonably confident of gaining enough volunteers to give Lughenjo a critical mass. However, it was noted that research on volunteering showed that “the biggest obstacle in online volunteering is the lack of an organisation’s capacity to involve any volunteers effectively.”

So, the real challenge was to find ways of stimulating demand for the service, for example by making it as easy as possible to post “help” requests. Another method used to create demand for the Lughenjo project was to work with major international and local NGOs to get them to serve as a kind of aggregator of such requests. However, the most important aspect of making Lughenjo a success would be to identify a “killer application” for it to gather momentum. In the end, these goals were not achieved.

After a month, it was decided to move on from Lughenjo. While the feedback was very favourable towards the idea, there were, however, two problems. Firstly, it was not obviously something that The Economist Group should do. Secondly, and more importantly, it became clear that there was not an immediate demand for a knowledge network from NGOs and social entrepreneurs.

A posting on the Project Red Stripe blog explained:

“The upshot was that we would have had to force the creation of the network from a demand point of view as well as marketing it to potential donors. This would have put a barrier in the way of us being able to grow the community quickly and therefore monetising it. And the one thing that pretty much all the people in the NGO community that we spoke to said, was that they expected us to run Lughenjo as a profitable business, because that would be our motivation to stick with it.”

Lughenjo had already gone through several iterations before being made public, each time being refined into a simpler proposition. It had its roots in us wanting to make a ‘major difference’ and originally deciding to help achieve one of the UN’s millennium development goals – that of universal primary education by 2015. The original idea was to create a platform for digital donations with a novel map interface. It then became a skills exchange to help achieve universal primary education, before ultimately seeing the light of day as Lughenjo, aimed at helping anyone working on projects involving international development.

It was noted that, with Lughenjo, The Project Red Stripe team had always thought that after philanthropy they would be able to roll out other “verticals” that would be of value to The Economist Group’s high-end audience. However, they hadn’t focused on that wider goal. The feedback received made them re-focus on the need to put the wider goal of a knowledge network at the front of their idea. So they came full circle to a type of social network, a type of Facebook for the Economist Group’s audience (provisionally called HiSpace). It’s focus would most likely be on knowledge generation and sharing rather than contact generation and maintenance – members of HiSpace would not just consume information but they would also be the principal generators of such information. It is expected that HiSpace will surface in some form around November 2007.

One of the principal issues that the Project Red Stripe team has identified as a result of the Lughenjo process is the question as to what extent innovators need to experience a problem before coming up with a solution. The Economist Group was in an unusual situation, in that it is reliant on revenues from a print product which are increasing, whereas the overall print media market is declining. The issue for the team was therefore how to get a high-end audience in the tens of millions to interact online.

Perhaps Lughenjo did not succeed because it was thought of as a solution first and a problem had to be found to fit it. However, the one advantage to this type of ‘wildcat innovation’ is that it is easier to move on to the next idea, because lack of success does not leave an unsolved problem behind.

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2 Responses to “Economist crowdsources ideas”

  1. Paul Browne - Technology and People Says:

    Good to see someone else reads the Economist :-) My rule of thumb is that when the Economist mentions something (that was Techie), then it’s just about to go mainstream.

  2. Donal Reddington Says:

    I find that I read maybe 15-20 issues in the year – wouldn’t have the time to read it every week. I always keep the Technology Quarterly pages when they’re published – it’s often a good indicator of what’s going to be the next big thing.

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