Prediction Markets at Google

Prediction markets are mainly used to gain new perspectives on problems from many different people to assist in predicting the future of a particular market. Within a company, they promote communication and collaboration as well as the ability to estimate, for example, sales of a new product. Thus, it is no surprise that Google decided to implement prediction markets into its product mix, as it seems to have the vital elements for success, a large diverse user base and the ability to provide financial incentives.

Although predictions proved accurate, providing decisive predictions about future events, attitudes varied widely among Googlers and the team wondered how it could encourage more traders and trading within the Google Company, bringing more liquidity to enhance markets. Google currently rewards its traders by converting each participant’s final balance into lottery tickets, drawing six tickets and giving $1000 to each select holder. The company felt that by providing this type of incentive, participants would trade based on true beliefs, helping them build a portfolio that did not rely on the occurrence of a single unlikely event.

It seems that overall, prediction market participants value reputation compared to monetary forms of incentives due to complexity, uncertainty, and low payoffs. Therefore, one way to bring more traders and trading within the company is to build in more social features and personalization, such as, creating individual profile pages or blogs to discuss markets. This would additionally allow others, not as familiar with a particular market, to learn and potentially make a prediction. Another way to increase participation is by rewarding several different categories of winners, allowing more individuals to win, producing a high level of involvement and retention. Google could also implement a type of crowdsourcing model in which company executives aim to change corporate strategies or product mixes based on learned opportunities from the prediction market. This allows the trader to desire accurate predictions to win this type of competition and also aids in building or maintaining a participant’s reputation, since a company will implement plans based on the accuracy of a prediction in the marketplace.

To further increase trading within Google, leader boards can be created and displayed predominantly in the office or company website, listing top contenders in each department, thereby fostering camaraderie among teams and increasing liquidity. Additionally, since it seems as though many of the participants came from engineering, sales, or operations groups, Google could throw launch events, aiming to make trading more fun and therefore more attractive to other departments, increasing interest levels. Lastly, more prizes, such as, T-shirts and hats to promote bragging rights can be used to promote involvement in the prediction market.

Mitigating TopCoder Client's Concerns

BLOG ENTRY: Clients of TopCoder’s competition-based outsourcing model would mainly be concerned with the quality and availability of the platform’s community of programmers, as this is the main value of the company. TopCoder aims to overcome this issue by attracting developers with algorithm challenges, online advertising, and “member development days.” Additionally, community norms were instated to promote a high standard of integrity, transparency, and quality. To retain qualified programmers, TopCoder offered consistent work streams, prize money, select networking opportunities, occasions to learn and improve in a supportive community, flexible work hours, and ratings that established status and prestige. To ensure the ideal number of submissions and participants, TopCoder adjusted prize amounts, the duration and timing of the contest, and the number of contests running at once. Although the company had accrued a massive community base, the number of active members was a small percentage of the entire population due mainly to a small chance of winning to obtain high ratings and prize money. Thus, TopCoder must both effectively target quality programmers from developing nations and increase the amount of overall winners to ensure participation. Furthermore, the company might implement classes to give novice developers the opportunity to learn and expound upon their abilities, supplying superior members for an increased number of competitions.

Another major area of concern for TopCoder’s clients is effectively determining their type of problem and providing the appropriate amount of detail for the TopCoder community to ensure active programmer participation and quality solutions. Clients found that contest participation decreased if the issue was unclear, too complex, or too vast in scope. Additionally, clients realized that members lost interest if a contest lasted over two weeks. TopCoder allows members to comment on client’s initial problems and ideas to determine its value to a company. Furthermore, a community-based peer system was implemented to grade and comment on contest submissions, ultimately selecting a winner. TopCoder must provide large incentives to ensure that expert and experienced members not only compete in contests, but also efficiently provide quality reviews and winner selections for clients. In addition, clients worried about intellectual property and security. To address this, TopCoder produced a white paper detailing confidentiality policies, intellectual property assignment rules. The company also allowed clients to keep their company names anonymous during competitions and permitted clients to require competitors to sign a standard Competition Confidentiality Agreement. The peer review process and option to run testing competitors also ensured code security and quality.

Lastly, TopCoder clients will likely be nervous about the effect utilizing the platform will have on internal employees, as job security will be threatened. Furthermore, even if TopCoder assisted a client with internal development, the company still had to have adequate staff to integrate the solution into its existing system, review codes for security issues, and make adjustments over time as necessary. TopCoder implemented its internal platform managers to work alongside the client inducing community participation, gathering feedback, and providing support, service, and project status updates. TopCoder could offer additional service tools by providing an online blog or forum in which clients could, at any time, voice a concern or obtain a progress update. The company could select and reward experienced community members to offer assistance during and after a solution has been implemented. Moreover, to ensure professional interactions between clients and community members, TopCoder could rate and reward developers to be posted on community profiles.

The Product Development Process: Community-driven vs. Traditional

Besides the obvious difference of developing a product online verse in a corporate office or retail environment, the major distinction between a community-driven product development process, such as Threadless, and a traditional product development process is the presence of diverse community member’s active participation in product creation. This enables a company to quickly and efficiently listen and gain insights from thousands of customers, with a broad array of information, knowledge, and experience, about potential opportunities to enhance and create new products and services fast. In Threadless’s case, the company discovered that members were using Threadless blogs as a tool to receive design feedback. This newfound realization led to the creation of a “design critique portal,” a service that satisfies both the designer and the potential t-shirt buyer by allowing the community to comment on an artist’s designs before submission. Furthermore, by designing and selling products hand selected by a community of potential buyers, the product’s ability to maximize revenues is substantiated. Threadless exemplifies this by typically selling out of all printed designs as well as by consistently increasing revenues, over a 5-year period, to an estimated $23 million.

Additionally, by allowing a community to develop a product, a firm saves money, since large salaries are not required to hire an elite group of internal designers, a process vital for the traditional product development process. Moreover, both R&D and marketing costs are lower if utilizing a community- driven product development process. Although this is true, in order to ensure success, a community-driven product development process requires a company to maintain both a functional and up-to-date website as well as the correct Internet bandwidth.

On the other hand, similarities between a community-driven product development process and a traditional product development process within a firm include the logistical capabilities to support printing, warehousing, and shipping and handling of returns. Most importantly, whether a community or traditional product development process is implemented, a company must ensure there is adequate supply and demand for the product in the desired market. Both product development processes must focus on a group of targeted consumers as well as a specific product to fulfill an unaddressed consumer need. Additionally, no matter which process is used, a firm must outline a marketing plan to attract, maintain, and retain profitable customers. This includes defining promotional methods as well as discounting and reward techniques, and selecting domestic and international markets to offer products. Threadless, for instance, created “The Street Team,” a point-based system, which allowed community members to receive credit earned towards future Threadless purchases. It is clear that there are numerous differences between implementing a community-driven and a traditional product development process within a firm, but at the end of the day, if a company does not have the necessary skills to effectively create and market a product to an outlined group of customers, then a company will never succeed no matter how a product was developed.

Why Wikipedia Works

While the creation of Wikipedia generated rapid growth due to the limitless opportunity for anyone to start a new article or edit an existing one at no cost, it also led to the creation of inaccurate and unreliable articles that did not meet established standards. Primarily, the website works well due to the obvious reason that enormous amounts of information may be easily found online for free. Thus, there is little cost to the consumer to find data about a particular topic of interest. Additionally, this platform quickly attracts a large consumer base forming a community- like atmosphere able to produce high traffic levels due to both word of mouth and to a high level of consumer involvement; offering millions of articles, photographs, and links to other websites in over 250 languages.

The website actually generates good content, as depicted by a study comparing the accuracy of science entries in Wikipedia and the online version of Encyclopedia Britannica, due mainly to its organized communication ability and perhaps most importantly its dedicated “Wikipedians” desire for empowerment and equality through the use of the “articles-for-deletion” process. Wikipedia enhanced its data collection by implementing changes when needed. When a biography remained uncorrected for over 4 months, the site made it possible for anonymous or newly registered users to create new pages and made it easier to track pages devoted to living persons. Additionally, Wikipedia created a set of specialized roles for registered users to maintain a sense of organization. Administrators, Bureaucrats, and Stewards obtained unique levels of privileges and were seen as having respect and familiarity with the Wikipedia policy as well as were known and trusted members of the community. These titles allowed these consumers to protect or deleted pages and promote or demote other users.

The supplied discussion page is used by Wikipedians to debate and eventually agree upon the appropriate content and structure of each article. Groups formed with similar beliefs, such as, “Inclusionists” and “Deletionists” and resulted in highly interactive discussions centered on the perfect combination between a specific page’s quality, quantity, and comprehension. As exemplified by the deletion debate over the Enterprise 2.0 article, numerous controversies and challenges arose, perhaps leading to an increased opportunity for a highly productive and highly collaborative environment by both utilizing the practices of knowledge and the visibility of outputs. Ultimately, the Wikipedia community sustains the interest and content for the website and without it there would be no Wikipedia!

United Breaks Guitars Breaks United

In a world where consumers have the opportunity to use social media as an emotional outlet to express and share experiences and feelings, companies must maintain awareness and respond quickly, especially to comments of disgruntled customers. As the United case notes, people who have negative customer experiences are more likely to tell almost five times as many people then if they have a positive experience.

The use of social media by a dissatisfied customer, as depicted in the United case, has the ability to reach and influence millions of consumers. Platforms such as YouTube and Twitter have some of the largest social networks, a main attraction to advertisers, and thus, anything displayed affects a brand’s image. Therefore, it is in a company’s best interest to properly train employees, specifically customer service representatives, to quickly and respectfully address and rectify a disgruntled customer. This may be implemented in many ways, such as, offering free or discounted merchandise. Additionally, the company may wish to respond to all consumers through a media outlet, email, or its own webpage, addressing the situation and apologizing for what had occurred. United made the mistake of taking a long time to mend Dave Carroll’s loss, losing credibility and further angering consumers.

Companies, like United, should value the responses of customers on social media outlets, as it is not only a promotional tool, but also a way to increase the effectiveness of their product or service offering. Companies should have not one, but many individuals in charge of actively reviewing all consumer communications amongst all media outlets. Furthermore, customers should be addressed on the chosen media outlet to show readers that the company is being proactive in its efforts to resolve the situation. Companies will rapidly go out of business if consumers are largely unhappy. Therefore, firms must remember to appease customers, regaining and reaffirming their trust and loyalty, especially amidst an online platform where billions of eyes are watching.

Hope for Hulu

Online streaming has supplied consumers with a unique option to instantly watch selected shows for free with limited interruption. At a time when viewers expect immediate supply of information, this development is necessary for the television industry. Comcast and Time Warner’s “TV Everywhere” initiative is ultimately a genius idea to promote the success of cable providers to obtain market share in the premium content online business.                                

Although this idea may be successful, due to the control the television industry has over consumers, it is likely that viewers will continue to use sites such as YouTube and Hulu. These sites offer two distinct advantages compared to cable providers: no charge and short advertising spaces. If Hulu changed its revenue model to subscription based or pay-per-view, its consumer base would diminish drastically. This negatively impacts the website as its success relies on cross- sided network effects to influence its three main groups of customers, content owners, users, and advertisers (its major source of income).

A potential option for Hulu is to implement a freemium model. Since the company has already generated a large viewer base, the company could offer versions to consumers, for example, options of decreased advertising, enhanced picture quality, or increased offerings of content. This allows the company to capitalize on tailoring to the needs of its consumer groups at a low cost. Additionally, it further supports the company’s advertising strategy to not only complement television, but also to create a more targeted, interactive and effective advertising experience.

The future of the television industry resides in the option to instantly download and watch a program. Whatever the revenue structure may be, consumers are relying on Iphones, Ipads, and computers for quick and quality information. Thus, it is imperative that companies such as Time Warner and Hulu fully research and implement technological savvy downloading techniques to remain competitive in the television industry. 

Focus at Google

It is obvious that Google has overall been an extremely successful competitor in each of its developed services, offered largely through the Internet. The company acts as an “infomediary,” mainly supplying large amounts of information to a mass consumer base, consisting of a multi-sided platform of consumers and merchants. Its main mission and respective strength or value is the ability “to make all the world’s information accessible and useful.” Therefore, it is recommended that Google focus its efforts on developing superior search solutions and monetizing them through targeted advertising.

Google already has the necessary tools to develop superior search tools. The company is known for its innovative engineers, who continually enhance algorithms, creating accomplished services such as Personalized Search, Search History as well as local and vertical search. Furthermore, the company heavily invested in its ability to produce lightening-fast returns on search queries. Additionally, Google refused to compromise the integrity of its search results, helping to build its invaluable loyal consumer base, as its success relies on a network of people and companies.

Advertisers were initially drawn to Google because its network offered more search traffic and allowed lower minimum CPC bids, yielding high switching costs. The company also acquired DoubleClick to increase effectiveness in placing display advertisements. Although this was true, estimates of click fraud varied widely and advertisers began to question both charges and ad placements. Therefore, it is vital that Google effectively advertise in a trustworthy manner, ensuring that both consumers and merchants feel secure. The company could develop a tracking system to show merchants the vitality of Google advertising based on a weighted cost-per-click ratio. Additionally, the company should continue pursuing efforts to target local advertisers, showcasing their ads to specific consumers in a particular region and increasing brand awareness and user acquisition. Most importantly, Google should charge merchants based on a versioning model, tailoring to each unique customer need. This will allow Google to produce customer- specific information, locking-in merchants.

Furthermore, the outlined suggestions will provide Google with the most promising opportunities over the next 5-10 years. Due to the growth and development of the World Wide Web, search has broadened to include print, video, mobile and potentially much more in the near future. Google could implement targeted advertising techniques on YouTube to grow its consumer and merchant base, since it has access to billions of consumers. Thus, there are numerous possibilities to utilize these avenues to develop and supply a more diverse and effective search tool, allowing Google to increase its user base to monetize through target advertising and ultimately continue to dominate the Internet world.