We are smarter than me: book on wisdom of crowds in business
December 19th, 2007

Wharton School press has published a book by Barry Libert and Jon Spector about how businesses are using “the wisdom of crowds.” The authors eat their own dogfood, enlisting over 4000 people to contribute to their book:

Back in the Aussie summer of 2002, Liam Mulhall was ready to abandon the high-stress, high-tech business. He had put in his time at the local office of Red Hat, the big U.S.-based provider of open sourcing solutions, and now he and his two buddies had a new Plan A. They wanted to buy a pub in Sydney. The problem was, the price was more than the lads could afford. So they fell back on Plan B, which, in this case, was Plan Brew. With a nothing-to-lose attitude — “It was our money and not a lot of it,” Mulhall allows — they would make beer, but with a twist; they were going to tap the power of community.

Mulhall had stumbled onto the story of PK-35, a Finnish soccer club. The team’s coach invited fans to determine its recruiting, training, and even game tactics by allowing them to vote using their cell phones. The idea put the fizz in Mulhall’s lager. As he would later write, he had found “the best way to run a business — give the customers the reins.”

Luckily, Mulhall and his two friends didn’t know that the 2002 soccer season would be so disastrous that PK-35 would fire its coach and scrap its fan-driven ways. So they went ahead with their scheme, setting up a Web site, Brewtopia.com.au, and inviting 140 of their friends to describe their ideal beer. Within weeks, the community had built up a head of more than 10,000 people in 20 countries, and their votes determined everything from the beer’s style (lager), color (pale amber), and alcohol content (4.5 percent) to the shape of the bottle and the colors printed on the label.

The founders, however, were — and are — solely responsible for the beer’s name. For reasons comprehensible only to an Australian (let’s just say it has to do with sheep), they called it Blowfly.

Chief executive and “spokesmodel” Mulhall and pals, Greg Bunt and Larry Hedges, contracted with a brewery to make and bottle their concoction. But how to sell it? As the Brewtopia site explains, “In Australia there is a ‘brewing duopoly,’ two major brewers who have contracts with most outlets and bars that restrict the smaller boutique beers. If you don’t have the bucks to throw at retailers, you just don’t get exposure.” The solution: Blowfly would be sold in direct shipments through the Web site, beginning with the people who helped design the beer, and, thus, would have what Mulhall calls “viral equity” (a.k.a. shares in the company) and a predilection to try the brew. And in line with the company’s crowdsourcing origins, the site would enable members of the Blowfly community to customize the label on the bottle, choosing a template from among a dozen offered, typing in their own text, and uploading their own photos or artwork.

Four years later, in 2007, with, as Mulhall would have it, “no brewing experience, no industry experience, no marketing experience, no money, and no idea what [they] were doing,” Brewtopia had 50,000 customers in 46 nations.

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