If you have any interest at all in social networking and crowd intelligence I highly recommend reading The Wisdom of the Crowds by James Surowiecki. It’s a great book, and I think it will eventually be regarded as a seminal work in realm of social network intelligence.
Recently, I came across a TED talk that James gave in 2005 following the famous tsunami that hit near Sri Lanka:
What follows is an outline of the thoughts and questions this talk provoked in my mind.
The upside of the social web
- Blogs and social networks are filling an important role in telling the real story following a disasters.
- Can social networks be used to assess risk and forecast disaster?
- Blogs and social networks are accessing a previously untapped form of collective intelligence.
- Social networks are driven by the power of voluntary cooperation.
- A striking economic irrationality exists with blogging. Most do it for free. How can the internet do such a good job of distributing information resources without the aid of a conventional currency? Is this a new economic model?
- What is the value of reputational capital? Can it be priced? Traded? Borrowed against?
- Groups of people consistently make better guesses than individuals. How can groups be used in forecasting?
- How useful are blog comments as a crowd intelligence tool?
- What effect do networks have on the behavior of investors, policyholders, financial institutions?
- Can the stock market guide us in analyzing social network activity?
The downside to the social web
- The more tightly linked we become, the harder it is to maintain independence.
- The meme problem: Networks begin to shape your views by driving attention to things the network values. Memes can drive your personal decisions. Memes create dependence. Groups are only smart when members are highly independent.
- Don’t be like ants, who sometimes get stuck in a “follow the one in front of me” mode. Don’t march in a circle. Don’t stop diversifying out of your existing network.
Feel free to share your own thoughts and questions in the comments.
Beginning today, Risk + 2.0 becomes more succinctly Risk 2.0.
“Social currency,” you ask? Here’s a little bit from the press release:
Social Gold has grown by leaps and bounds since it went live in 2008. In the first half of 2010, we’ve processed more than double the entire payment volume we processed in all of 2009. And we’ve welcomed hundreds of developers to our platform. The fact that our highest revenue day was in the last week attests to the continued growth of online gaming.
Our vision is to build world-class products that help developers manage and monetize their virtual economies across the globe. When the opportunity arose to join forces with Google to execute against this vision, we couldn’t pass it up. We are thrilled to bring the Social Gold platform to Google’s global users. And we invite you – our customers, partners, and friends – to continue on the journey with us.
The fact that Google acquired Jambool could be a telling indicator. It likely means that Google—one of the biggest tech powerhouses on the planet and arguably the controler of the largest information hub in the world—believes that social currencies have promise.
As online gaming, virtual worlds, and other virtual experiences become increasingly popular, it makes sense that companies like Jambool would step in to help create mediums of exchange in these new worlds.
It’s impossible to say where all this is headed, but just imagine for a moment that large-scale virtual economies emerge, and virtual goods and services are traded in high-volume, complex markets.
Who will analyze the risks in these new economies?
The skill set of actuaries and other risk professionals should extend well in these new virtual spaces.
Some would argue that our own, “real” currency is already virtual. And in many ways it is. So don’t be too quick to write off these “realities.” Instead, think about how you can play a role.
Please share your thoughts on virtual economies in the comments.
[Photo by Search Engine People Blog via Flicker]
I remember conversations I had with other insurance professionals back when I was first discovering social media. I knew that social media would eventually gain traction in the world of insurance, but the possibilities were so great in number that it was hard to really focus on one area.
When I would discuss social media with others in my field, I would usually get the question “but how can social media be used for life insurance?”
Leveraging social media for other forms of insurance like auto and health was more intuitive I suppose. Social media involves a conversation between people. Listen, respond, and repeat.
Not all insurance encounters are the same. Some can be one night stands; others can lead to ongoing relationships. To form a relationship, people must converse on a regular basis. Some forms of insurance just clearly lend themselves to a regular relationship more than others.
- J. Eddie Smith, IV