Crowd Model Lecture- MIST 9/26 PDF

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Crowd Model Lecture- MIST 9/26...

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Crowd Model Lecture Chapter 10 ●

The Crowd: DOminant organizations, institutions, groups, and processes of the preinternet era ● The Crowd: New participants and practices enabled by the net and its attendant technologies ● “Groups do not have to be dominated by exceptionally intelligent people in order to be smart” -Surowiecki A Sometimes Unruly Mob ● Crowd is nonhierarchical- and messy! ● Two difficult problems: ○ It can be hard to find what you’re looking for in an ocean of uncontrolled information (the core can curate information, there’s just too much in the crowd) ○ Some of its members behave in hurtful ways (the core can evict bad actors, but that’s hard to do on the web) ● Effective solutions will probably leverage machine learning AI technologies (Module #1) The Magic of Markets ● Hayek: The data from which the economic calculus starts are not given to a single mind ○ We can’t tell all of what we know (what we have, what we want, and what we value) to a centralized control ● Markets let people freely transact with each other without centralized control ● Illustration: Prediction Markets ○ “Events with final share prices of about $0.70 tend to actually happen about 70% of the time, making these prices pretty accurate probability estimates.” How Can you Organize a Crowd ● Openness: Linus made his initial request for contributions as broad a possible ● Non Credentialism: Diplomas, job titles, recommendation letters, experience, grades, etc do not matter (if your work is good!) ● Verifiable and Reversible Contributions: Contributors can’t irreversibly break or worsen the software ● Clear Outcomes: The people who worked on Linux knew what the end result of their work would be (directly and indirectly) ● Self-Organization: People decide for themselves which aspects of Linux to work on ● Geeky Leadership: Linus was engaged and informed about the work

Chapter 11 ● When things get really complex, don’t look to the experts. Instead, call the outsiders Beginners beat benchmarks in biology ● Best tasks: Complex, multidisciplinary tasks with objective evaluations as to the potential solutions ● Are the experts truly bad? ○ New knowledge is being created in other fields and it is slow to enter the core ○ Many problems, opportunities, and projects benefit from different perspectives, people and teams

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The crowd is so valuable, in large part, because it’s massively marginal: it contains huge numbers of people who are some combination of smart, well-trained, experienced, tenacious and motivated (pg 259) The Core Wakes Up to the Crowd ● Get work done (Wikipedia, mturk, Topcoder) ● FInding the right resource (Upwork, TaskRabbit) ● Conducing Market Research (GE, Veronica Mars) ● Acquiring New Customers (Lending Club, YouTube) ● Acquiring Innovation (Facebook: WhatsApp, Insta) ● Trading (Quantitative finance) ● AVOID: products for which safety and quality is paramount (medical devices)

Chapter 12 “The dream of decentralizing all the things” Stop Behaving Like Information ● It is essential that BTC NOT follow the free, instant and perfect economics of information goods (from Ch. 6) ○ Blockchain acts like a distributed/decentralized ledger system that log transactions ○ Blocks on the chain have to be “mined” by performing increasing challenging computational problems (miners are rewarded with bitcoins) ● Although BTC is one use for blockchain, it is interesting to think about other uses for the technology

Chapter 13 Are Companies passe? (hint: no) Two Illustrations: 1) The DAO (Decentralized Autonomous Organization) a) Fund that would invest in projects to gain returns b) Problems in decentralized voting process c) Anonymous hacker stole ⅓ of the total fund 2) Bitcoin/Blockchain a) Governance problems: System controlled by a handful of people b) Difference in opinions about how to handle growth c) Consolidation of power in China Economics of the Firm ● If markets are so great, why does so much happen inside companies? WHy don’t we all work as freelancers and trade our labor in the open market? ● Organization or market? Make or buy? ● Markets have higher cost in certain areas: ○ Costs of searching and discovering the correct prices ○ Costs of negotiating and making decisions ○ Costs of concluding a separate contract ○ Costs of monitoring and enforcing each contract ● Transaction Cost Economics (TCE) ○ Markets have lower production costs (the costs of making goods and services)

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Hierarchies have lower coordination costs (the costs of setting up production and keeping it running) ○ As coordination costs go down, markets become more and more attractive ○ What if we could write better (more complete) contracts? The Role of Management ● Managers provide “social skills” of coordination, negotiation, persuasion and social perceptiveness ● 3 reasons why this is more relevant today: ○ The world is more complex and fast-changing; coordination is more important today than ever before ○ Most of us don’t find algorithms persuasive; we need a good story or anecdote ○ Humans are social creatures and want to work together ● How to lead in this age: ○ Egalitarianism- especially of ideas ○ Transparency of information

“The TripleRevolution” Three lenses to understand how technology is changing modern businesses (p. 26): •New combinations of minds and machines are changing the way businesses execute their most important processes •Pioneering companies are bringing together products and platforms to transform their offerings •The core and the crowd are altering what organizations themselves look like, and how they work....