The invisible hand of creativity: adding value to crowdsourcing
Last week I had a bit of a go at various forms of supposedly collaborative idea generation and creativity. Much of the piece was focused on the various awful aspects of crowdsourcing, how dumb but obvious ideas often win over smart but unexpected ones, how people often vote with their worst self because they can hide behind the group, and how mass participation dilutes expertise.
Then I received a very interesting email from Carlos Cruz, the complete text of which is reproduced below, which invited me to revisit this topic with a new, unexpected perspective; the problem of consequences. Or, to put it more clearly, the problem of having no skin in the game.
Before moving on to discussing this in a little more depth, a political disclaimer: Capitalism, the power of markets, the idea of Libertarianism, are often emotionally charged topics. But creativity as a challenge to the human species does not allow us to ignore potentially useful discussions simply because they make us feel uncomfortable.
I don’t think I would be oversimplifying Carlos’s general point if I stated it here as follows:
People behave differently when they have to risk something to take part so markets are better than purely democratic systems.People behave differently when they have to risk something to take part Click To Tweet
You can go ahead and read Carlos’s words below to make sure I’m not entirely missing his point. But assuming that he’s right this idea demands that we consider how a business might improve collaborative creativity with the application of market forces. Here’s my first stab at it.
To make it more interesting let’s posit a hypothetical business that has decided to go all in on the Invisible Hand of Creativity and implement a market system for creative discourse.
The company is a medium sized marketing and communications agency called Buzzkill. They’ve adopted an internal currency named Buzzbeans and everyone has been allotted 1000 Buzzbeans that they can use to take part in creative collaborations of various sorts.
Buzzbeans are a currency with real world value. At the end of the financial year Buzzkill employees can choose to trade in their accumulated Buzzbeans for real money. During the year they can spend their Buzzbeans on various things, and invest Buzzbeans in ideas or activities they like. If their investments pay off they get extra Buzzbeans.
Crowdfunding over Crowdsourcing
Last week we looked at how crowdsourcing ideas can lead to either funny ideas (Boaty McBoatface) or popular but boring ideas (Change the email system to be first name, surname instead of surname, first name). But at Buzzkill things might be a little different.
Every quarter Buzzkill runs a company-wide poll to choose an internal awareness campaign to improve their culture. Instead of voting in a simple one-person-one-vote system, Buzzers (what Buzzkill employees call themselves) invest their Buzzbeans in the ideas that they think are most important and would be most effective.
If your chosen idea wins, the Buzzbeans you pledge are collected.
Quarterly awareness campaigns have to achieve targets for effectiveness. If they do, any Buzzer who “invested” in the winning idea gets his or her Buzzbeans back plus a bonus. This means that Buzzers remain engaged in ideas longer as they have a vested interest in the success of the campaign.
Another upside of the Buzzbeans system is that people tend to stay away from voting on things they don’t understand. Now that expressing an opinion comes at a cost people tend to only express one when they have taken the time to make it an informed opinion.
Comment isn’t Free
The once free-for-all suggestion box now costs you Buzzbeans to use. That means you no longer find small, unexciting ideas posted time and time again. And Buzzers are encouraged to read the Frequent Suggestions lists to avoid wasting
Buzzbeans duplicating a suggestion that has already been made.
Buzzers can also vote on other people’s ideas. Suggesting an idea costs 10 Buzzbeans, but voting only costs one. This encourages Buzzers to add to and support other ideas instead of flooding the suggestions box with minor variations on existing suggestions.
Buzzers get rewarded with extra Buzzbeans if they suggest something that is taken up by management.
Cash for Consensus
Another challenge that gets in the way of creativity is the desire to have too many people get involved. So Buzzkill uses a system whereby any group that wants to invite peripheral people to meetings or have extra groups outside of the core sign off on an idea they have to pay in Buzzbeans.
This way, only people who genuinely have something to contribute, people who will increase the chances of success of a project, get involved.
Balance of Payments?
Of course, all of this leaves some open questions. For instance, is the assertion that people are more rational where money is involved really safe? While most of us are loathed to part with our money foolishly, it’s also true that we do spend money on things we don’t need, and over or undervalue things based on unconnected data. I’m reminded of the anchoring effect wherein simply having someone think of a larger or smaller number before asking them how much they would pay for something would increase or decrease the proposed spending. Further, when pride is involved we often gamble irrationally or succumb to the sunk cost fallacy.
Another open question is that of avoiding a power imbalance due to the high spending power of some people. Should the Buzzbeans system be left to its own devices we might expect that, eventually, a small number of employees would hold far more Buzzbeans than everyone else, just as how wealth in the global economy is unevenly spread. In such a system we may find that great ideas are ignored because they come from people with few wealthy friends while mediocre ideas succeed due to the backing of one or two well-off sponsors.
The idea that wealthy people are wealthy purely by virtue is easily debunked. Luck is a large part of life. Might the Invisible Hand of Creativity lead to a world run by the lucky who believe they hold power by right within a purely meritocratic system?
With all of that being said, I believe that Carlos makes a very strong point. It’s striking that businesses which exist within markets, which take advantage of market forces when using external suppliers or when selling to customers, seem deeply suspicious of market forces internally and instead depend on a command and control approach that would be more recognisable in a planned political economy than a modern market system. Instead of allowing employees to budget their own spending, they require endless checks and approvals; instead of encouraging competition between different groups, they carve out internal monopolies and managers fight to increase their budgets instead of cutting costs.
Markets should play a larger part in businesses and in creativity but they can be brutal and short-sighted. Many of the greatest achievements of humanity have been driven by state spending, by philanthropy, and by people willing to put great achievements ahead of doing what people might happily pay them to do. Wealthy men of ages past would pursue science and philosophy, not needing to make a living and thus bypassing market forces. Artists relied on patronage instead of commerce.
But, of course, this is all speculation. What would be truly wonderful would be to try some of these ideas out within a real, live working environment. So consider this a call to action for anyone out there who wants to see if the Invisible Hand can tickle your company’s creative curiosity. It would be my pleasure to and my privilege to help you try it out. But, of course, in keeping with the theory, I’d expect to get paid.Anyone want to see if the Invisible Hand can tickle your company's creative curiosity?Click To Tweet
I enjoyed your article about the stupidity of the crowds. However, you didn’t mention anything about crowds of people spending their money!
Donors to the Libertarian Party (LP) were recently given the option to use their money to signal the value of potential convention themes. Here are the top results…
$6,222 — I’m That Libertarian!
$5,200 — Building Bridges, Not Walls
$1,620 — Pro-Choice on Everything
$1,377 — Empowering the Individual
$395 — The Power of Principle
The order (relative importance) of the themes was determined by the Invisible Hand (IH).
There’s a BIG difference between voting and spending. Voting has absolutely no cost but with spending… the size of the cost depends on how much you’re willing to spend.
It didn’t cost anything to vote for “Boaty McBoatface”. If voting had been replaced with spending… would this name still have been chosen by the crowd? We know that it was the most POPULAR option… but I sincerely doubt that it would have been the most VALUABLE option.
When something doesn’t have a cost then we really don’t bother thinking long or hard about it. But the more costly something is… the longer and harder we think about whether it’s truly worth it. This is why spending makes people more rational than voting. This is why the market is better than democracy.
Unfortunately, most organizations really don’t understand how powerful a tool the market really is. So they don’t allow their employees and customers to use their money to help make important decisions. Yet, the market has the final say on the correctness of all the decisions that an organization makes. Well… unless the organization is in the public sector of course!
My friend teaches 4th grade and at the beginning of the school year she gave her students the opportunity to use their pennies to help communicate the intensity of their specific preferences. They used spending rather than voting to make decisions…
The students created 9 departments and used spending to decide who should be in charge of them. The students can choose which depts they give their pennies to. You can see their current budget (in pennies) on their blog…
When the students give their money to the Book Dept, they can use their money to signal the value of their favorite books…
The order (relative importance) of the books is determined by the Invisible Hand (IH).
These are all tools that all organizations could and should use to effectively utilize their crowd’s brainpower and information.
The world would be a far better place if everybody made far more informed decisions. So I’d love it if more organizations used markets to make decisions.
Please let me know if you have any questions!