You are not your brain scans!

December 14th, 2009 by Kai

of.homer

Nielsen provide analysis and insight on a whole range of mediums, from government polls, tv shows, to eCommerce and when it comes to marketing [insert product here] you pay these guys the big bucks and they tell you what your customers want, where you can reach them, how to pitch the idea, how to track the before and after your multi-million dollar marketing campaign and so and so forth.  And, who’s to know their data is right or wrong or whether the insights they provide clearly reflects market conditions?   Well, up until recently nobody really knew, but changes to their @Plan service have people asking that very question.  Here’s the link.

Even with these occasional data anomalies, which in fairness can be expected, insights gleamed from companies like Nielsen are big business, and something I’ll be blogging more about later.

Here’s something new and a little different in the field of market and industry analysis.  It’s called Neuromarketing and here’s a company, Neurofocus, that specialises in it.  Plug from their site:

Neuroscience provides a deep, clear view into the real-world, real-time reactions of consumers at the most elemental level: their brainwaves.

Never heard of Neuromarketing?  This is from wikipedia:

Neuromarketing is a new field of marketing that studies consumers’ sensorimotorcognitive, and affective response to marketing stimuli. Researchers use technologies such as functional magnetic resonance imaging(fMRI) to measure changes in activity in parts of the brain, electroencephalography (EEG) to measure activity in specific regional spectra of the brain response, and/or sensors to measure changes in one’s physiological state (heart rate, respiratory rate, galvanic skin response) to learn why consumers make the decisions they do, and what part of the brain is telling them to do it.

Marketing analysts will use neuromarketing to better measure a consumer’s preference, as the verbal response given to the question, “Do you like this product?” may not always be the true answer due to cognitive bias. This knowledge will help marketers create products and services designed more effectively and marketing campaigns focused more on the brain’s response. This makes neuromarketing and its applied results potentially subliminal.

Neuromarketing will tell the marketer what the consumer reacts to, whether it was the color of the packaging, the sound the box makes when shaken, or the idea that they will have something their co-consumers do not.

If you’re wondering whether this could possibly be the future of consumer/market analysis, then take into consideration that Nielsen made a “strategic investment” in Neurofocus last year.

But there are always two sides to the story, and to provide a balanced view on the subject of Neuromarketing, watch this video.  It’s Natasha Mitchell from ABC’s All in the Mind.  She’s one of my fav podcast presenters and in this video she provides a very informative and entertaining view point on MRI’s titled:  You are not your brain scan!

Video:  You are not your brain scan!

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Mind Games

December 10th, 2009 by Kai

Mindflex uses brain waves to play.  One of the biggest selling games in the U.S.  Very cool.

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Shift Happens

December 10th, 2009 by Kai

fear1This is from John Hagel, at Deloitte, writing about a new conceptual framework – A Big Shift – for understanding what’s happened in an industry, what is happening and potentially what will happen, and how to deal with it:

…we were looking at economic indices and struck by the fact that most of the well-known indices focus on very short-term cyclical events – unemployment, inflation, purchasing activity, consumer confidence levels, etc. Of course, these are extremely valuable in helping executives to assess the current context for their operations.

On the other hand, everyone acknowledges that we are in the midst of a fundamental shift playing out on the business landscape on a global scale over many decades. We may not all agree on the exact dimensions of the big shift, but the reality is so widely recognized that it is often unstated. When we looked for indices that gave us some insight into the nature and pace of this big shift, we pretty much came up drive.  There were isolated measures and one-off analyses, but there was nothing resembling a comprehensive index of key metrics updated on a regular basis.

So we decided to develop one.  We had a team work for about six months developing the conceptual framework for describing the dimensions of the big shift and how these dimensions related to each other. We then spent the next six months working to define the specific metrics for a Shift Index and collect and analyze the data related to these metrics.

In case you miss them, the reports are here.

It’s definately an interesting read, but having read the Technology Industry report I felt it missed the need for an important shift. That is, we need to do away with unsustainable, unfair and an extremely greedy view of busness and do things better, smarter, more eco-friendly; focus less on making loads of money but more on cultivating a great company that does well.  Isn’t this the type of advice we should be passing on to executives?

From Umair Hauque of HBS:

Here are the four pillars of smart growth – for economies, communities, and corporations:

1. Outcomes, not income. Dumb growth is about incomes – are we richer today than we were yesterday? Smart growth is about people, and how much better or worse off they are – not merely how much junk an economy can churn out. Smart growth measures people’s outcomes – not just their incomes. Are people healthier, fitter, smarter, happier? Economics that measure financial numbers, we’ve learned the hard way, often fail to be meaningful, except to the quants among us. It is tangible human outcomes that are the arbiters of authentic value creation.

2. Connections, not transactions. Dumb growth looks at what’s flowing through the pipes of the global economy: the volume of trade. Smart growth looks at how pipes are formed, and why some pipes matter more than others: the quality of connections. It doesn’t just look at transactions at the global, regional, or national level — how much world trade has grown, for example — but looks at how local and global relationships power invention and innovation. Without Silicon Valley’s relationships powering the development of personal computing and the internet, for example, the volume of trade between Taiwan, Japan, and China, would be a fraction of what it is. Smart growth seeks to amplify connection and community — because the goal isn’t just to trade, but to co-create and collaborate.

3. People, not product. The next time you hear an old dude talking about “product”, let him know the 20th century ended a decade ago. Smart growth isn’t driven by pushing product, but by the skill, dedication, and creativity of people. What’s the difference? Everything. Globalization driven by McJobs deskilling the world, versus globalization driven by entrepreneurship, venture economies, and radical innovation. People not product means a renewed focus on labour mobility, human capital investment, labour market standards, and labour market efficiency. Smart growth isn’t powered by capital dully seeking the lowest-cost labour — but by giving labour the power to seek the capital with they can create, invent, and innovate the most.

4. Creativity, not productivity. Uh-oh: Creativity is an economic four-letter word. Why? Because it’s hard to measure, manage, and model. So economists focus on productivity instead — and the result is dumb growth. Smart growth focuses on economic creativity – because creativity is what let us know that competition is creating new value, instead of just shifting old value around. What is economic creativity? How many new industries, markets, categories, and segments an economy can consistently create. Think China’s gonna save the world? Think again: it’s economically productive, but it’s far from economically creative. Smart growth is creative — not merely productive.

Here’s a final point — and a question.

Smart economies are driven by smart growth. The four pillars of smart growth are design principles for next-generation economies. 20th century economies are limited to unsustainable, unfair, brittle, dumb growth. Smart growth is more sustainable, equitable, and resilient.

Can you build a business powered by smart growth? The four pillars of smart growth aren’t just design principles for next-generation economies: they’re also design principles for next-generation businesses. Already, tomorrow’s radical innovators don’t accept yesterday’s toxic, tired consensus…

Maybe as part of all this we need to think about what really makes us all happy and can it measured in a country’s GDP?

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Open Innovation

December 6th, 2009 by Kai

A recent post in Slashdot, talks about Google becoming a “Black Hole of Brilliance”.  Google VP Bradley Horowitz is quoted as saying:

I recently had a discussion with an engineer at Google and I pointed out a handful of people that I thought were fruitful in the industry and I proposed that we should hire these people.  But [the engineer] stopped me and said: “These people are actually important to have outside of Google. They’re very Google people that have the right philosophies around these things, and it’s important that we not hire these guys. It’s better for the ecosystem to have an honest industry, as opposed to aggregating all this talent at Google”.

I do wonder however whether Horowitz’s comments reflect a growing sentiment amongst companies at the forefront of innovation, which is, you can’t keep buying the best engineers in the world with the hope of delivering the best products and services in the world.  It’s simply not a sustainable model, and one that is very costly, even for Google.  But perhaps there’s more to it then this, perhaps Google’s cottoned on to the fact that to retain their competitive edge they have to start fishing for ideas outside their internal pools of talent, even if it means opening the doors of innovation to the rest of the community and potentially their competitors.

Open Innovation is a term popularised by Dr. Henry Chesbourgh who is the author of several award winning books on the subject.  It represents a shift from the traditional “closed” business model where 100% of a company’s innovation originates from within, to a more open innovation model where both internal and external ideas are combined to create an innovation, whether it be a cool shirt that can earn you some bucks or a solution to another party’s problem. Although Chesbrough coined the term “open innovation” in 2003, it’s not something new as those of us familiar with Open Source will agree with.

What is different however, is that Open Innovation has become a core management discipline.

The breadth of external knowledge and the speed at which it can be transferred cannot be ignored.   And, if Chesbourgh’s recent award is anything to go by, its that greater importance is being placed on open collaborative business models.   But before we start sharing our ideas with the rest of the world  there are of course certain challenges that need to be addressed when considering Open Innovation as a business model.  Perhaps the biggest challenge involves a paradox, why would firms spend money on R&D efforts if the results of these efforts are available to rival firms? Another challenge has to do with starting an innovation from scratch; would it be possible to launch an Open Source software project without a base or foundation to build, develop, debug upon?

Take Apple and Google for example.  Apple have designed and delivered a fully comprehensive platform and integrated framework for developers called iTunes and iPhone, which in its right is every bit a closed innovation; nobody but the Apple resources, architects, developers and business suits were responsible for designing, building and delivering the solution.  And, here’s the best part; the rest of iPhone and iTunes, namely its “App Store” is Open Innovation, which means Apple has opened the doors for smart cookies from all walks of life to come up with cool and interesting applications.

Google is no different.  Just about every Google innovation, not all, but some, are open to others wishing to collaborate and innovate with the worlds most innovative company.   The catch is, Google provides the platform and foundation, everyone else builds on top of this.  Google, like Apple, enjoy greater market penetration, a richer feature list -- thanks to everyone contributing, and the contributors get the kudos.  Some, in the case of Apple, get paid for it.  So what’s the theme here?  How are these companies avoiding rivals from benefiting from their openness whilst still fostering a collaborative environment for innovation?

Well as we’ve seen from Open Source projects, Apple and Google, there are few things in common:

  • They have a base or a foundation that is typically closed.  In the case of Open Source, closed means -- updates and bug fixes only.
  • They provide an open framework for innovation that builds on top of this foundation.
  • You get rewarded either through kudos or cash for your contributions.

So the trick is to keep the core business closed and only open up those parts that benefit the community, the clients and the industry as a whole.   Perhaps I’m stating the obvious here, but as I explore this paradigm further its real practicality will become clearer.

Apart from business and technology, Open Innovation also has the potential for far reaching societal and environmental benefits.   Here’s a list of some great ideas for Open Innovation.

This is really just the tip of the iceberg, and no doubt I will be writing about Open Innovation again.  For now here’s Dr. Henry Chesbourgh on Open Innovation and how its being applied to academia.

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The Wisdom of Crowds

November 23rd, 2009 by Kai

Wisdom of Crowds

Heard of Communispace?  They have taken the concept of Social Networking, think Facebook, created hundreds of private communities for their clients including over seventy companies from skin care to breakfast cereal, banking to technology services and then sold the wisdom of these communities for about $180K for the first six months, and then $20K a month thereafter.

It works like this:  I have a new Organic Skin Care product I want to sell to women from the age of 18 to 90.  I hire Communispace who then recruits anywhere from three hundred to five hundred people, all women, aged 18 to 90, to form a community that includes profiles, discussion forums, online chat, and uploaded photos.  Sounds familiar yeah, but the difference here is that this Social Network is a Research Network.  No body else in Internet-land can see it except for the members, the Communispace moderators and the client.

Oh there one more thing, the members get rewards, typically gift cards, from places like Amazon.com.

These focus groups have been around for sometime, and the concept isn’t new.  It’s just that the technology has matured such that, it becomes effortless and a little bit cooler.

James Surowiecki wrote a book on the subject:

The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations published in 2004, ISBN 978-0385503860.

He goes on say:

It’s about the aggregation of information in groups, resulting in decisions that, he argues, are often better than could have been made by any single member of the group. The book presents numerous case studies and anecdotes to illustrate its argument, and touches on several fields, primarily economics and psychology.

Some of these anecdotes are quite interesting.

A contestent at a country fair:  guess the weight of an ox after it had been slaughtered and dressed.  It was predictive and needed to account for the butcher’s skill.  800 guessers, including expert butchers and farmers and also merchants and family members.  After the contest, taking the average you got 1197 lbs – and the actual weight was 1198 lbs.  It wasn’t a coincidence, nor limited to ox-weight-guessing.

At racetracks, the odds on horses predict almost perfectly how likely a horse is to win.  Odds are determined collectively by correlating all bets and establishing statistical judgements.

Eli Lilly‘s think-tank has an internal stock market for predicting which drug candidates will make it to Phase 3 clinical trials:  vital to narrowing down which pharma product to invest in.  They open the market to 100 “semi-experts” who have some info but aren’t on the inside, and collectively they identify which candidates will win.

But then given all this what can be said about mob or herd mentality, like, for example, during demonstrations that turn violent or when the stock market crashes?   How do we ensure the wisdom of the crowd?  Is it something that can be moderated and controlled or is it something organic and fluid?

Social psychologists studying group behaviour tend to prefer terms like “herd behaviour” or “crowd hysteria”.  And, one of the key catalysts to a misinformed and irresponsible crowd is an “information cascade” a concept that was introduced in an article by Sushil Bikhchandani, David Hirshleifer, and Ivo Welch back in 1992.   Based on observational learning theory, information cascades occurs when people observe the actions of others and then make the same choice that they made.  Because it appears safer and more sensible to do what others are doing.

This is definitely true for the Japanese who will cue in line for ages for a [insert store/cafe here] because why?  Well everyone else is so it must be good!

But Surowiecki does acknowledge the dangers of pack mentality and so in a session entitled Independent Individuals and Wise Crowds, or Is it Possible to Be Too Connected? he asked “how do you ensure wisdom of the crowds without information cascades?”

The recommendations:

1.  Keep your ties loose.

2.  Keep yourself exposed to as many diverse sources of information as possible.

3.  Make groups that range across hierarchies.

So coming back to Communispace, the rules of engagement would have to be slightly different then social networks, because as we’ve just seen, having people that are tightly coupled, say friends and relatives may sway your views.  The wrong information, especially from more vocal persons may also need to be tempered by other views, making the role of the Communispace moderator all that more important, and lastly, selecting people from diverse demographics, but yet ensuring they are your target audience is also important.

Last but not least, you need to have a really good senior analyst on hand to organise the data, retrieve the information and present the right level of insight for companies.  Otherwise you could end up with another iSnack2.0 disaster.

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Word up!

November 23rd, 2009 by Kai

What's it all about then?

I’ve been exploring a number of technologies recently, and came across “Wordle“.  It reminded me a little of the Ogilvy & Mather site, and reconfirmed in my mind how something so simple and visual is yet so powerful.

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SEO

September 16th, 2009 by Kai

The PageRank of a webpage as used by Google is defined by a Markov chain. It is the probability to be at page i in the stationary distribution on the following Markov chain on all (known) webpages. If N is the number of known webpages, and a page i has ki links then it has transition probability \frac{\alpha}{k_i} + \frac{1-\alpha}{N} for all pages that are linked to and \frac{1-\alpha}{N} for all pages that are not linked to. The parameter α is taken to be about 0.85.

Markov models have also been used to analyze web navigation behavior of users. A user’s web link transition on a particular website can be modeled using first- or second-order Markov models and can be used to make predictions regarding future navigation and to personalize the web page for an individual user.

Hmm…  more on this later.

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