In his book "The Wisdom of Crowds", James Surowiecki makes the compelling case that all else being equal, many independently selected people have more accurate predictive powers than a few experts. These insights have spawned a whole new Internet mediated industry around crowdsourcing that seeks to engage large numbers of people to solve problems and create productive value, such as Wikipedia, Innocentive, and Jigsaw. In fact, all social media and social networking initiatives belonging to the broader Web 2.0 banner are about crowdsourcing. Take Facebook, for example. The masses provide the content (the productive value) and Facebook provides advertisers with access to the honey pot.

The popularization of collaboration by Don Tapscott and Anthony Williams in their book "Wikinomics" and wiki software developers see the potential for traditional organizations to engage more productive resources both inside and outside their traditional corporate boundaries and for new non-traditional ones to emerge without them.

However, despite the sea change in the way people now interact socially and to some extent professionally via Facebook and Twitter, organizational structures and practices remain rooted in traditional paradigms. Even innovation incubators appear to have difficulty thinking outside tried and true 20th century business models.

This week, I attended a number of events and met with several people that have made me even more aware of this cultural divide. I witnessed: an innovation centre promoting one-to-many (school and seminars) and one-to-one programs (advisory) for entrepreneurs, rather than establishing peer-to-peer collaborative communities of entrepreneurs that empower them to help each other; a hot new golden boy entrepreneur that VCs are salivating over with a mobile gift card application that replaces plastic with bits rather than some initiative to tap into the collective wisdom of smart phone users to create new value; and an entrepreneur who is launching a new Internet based business that provides a pay-per-use service that critiques business-related documents of entrepreneurs and solo practitioners, rather than employing a freemium business model. It boggles the mind that even today's "creative class", to use Richard Florida's term, lacks creativity.

I therefore fully expect our established institutions to remain in the dark ages until some catastrophic event renders them extinct - like the dinosaurs. As painful as this will be, I'd rather swallow that pill now than allow the status quo to suppress the productive and prosperity potential of an emerging creative class.

What do you think? Is there hope for progressive change?

I think that there is still hope for progressive change out there. For example, there is Sprouter http://sprouter.com/, which is a platform for enabling "collaboration and networking between entrepreneurs globally". That sounds pretty close to what you were looking for.
My guess is that the change is going to happen bottom-up with new start-ups leading the charge, and it may still be too early for the VC crowd to start throwing money at the idea, but I would be surprised if the new model arrives so quickly as to catch the current institutions cataclysmically off-guard.

Interesting question! And coincidentally, one I was just thinking about, while working with a group of Canadian business leaders looking to stimulate innovation...

FWIW, when I hear "crowd source," I usually think of the exchange-type games like the Iowa Electronic Markets (www.biz.uiowa.edu/iem/index.cfm ) and the Hollywood Exchange (www.hsx.com/). If you spend some time Googling the guy who's done much of the compelling research in this area, David Pennock(probably an unfortunate turn of phrase, since he appears to be working for Yahoo now), you'll find a list of publications that includes many different references to these sorts of exchange-based simulations: dpennock.com/publications.html

As theoretically sound as Pennock's research appears to be (I have to stick to "appears," since much of the math is beyond me), the basic problem I've found with the whole collective wisdom idea is that prediction games don't really attract masses of participants. Sure, you can get groups of experts to debate an issue on a specialized site - you see prediction-type threads on the Red Sox fan site Sons of Sam Horn pretty often - but that isn't really what the "wisdom of the crowds" is supposed to represent. And, you can get crowds excited about things like a goofy YouTube video, but that's more about shared experience than wisdom...

One more nit, before I get down from this soapbox - it's hard to find widely-used, well-tested, low cost tools that can be used to build "wisdom of the crowds" apps. In one of Pennock's papers, he mentions NewsFutures (www.newsfutures.com/www/home.html), but it wasn't obvious to me what their pricing/packaging model is (and my confidence in software always takes a hit when the vendor's site is buggy!). If you know of any good options along these lines, though, please let me know - I'm a believer in wisdom whatever the source, and I'd like to get a chance to try to apply the Crowds theory!

I would not equate "crowdsourcing" with "prediction markets". Instead, I see the latter as a subset of the former. Wikipedia depicts them as distinct concepts (see en.wikipedia.org/wiki/Crowdsourcing and en.wikipedia.org/wiki/Prediction_markets)

To me, crowdsourcing is the generic concept of sourcing solutions from many people, instead of a few experts. Decision markets or prediction markets, are a type of crowdsourcing for gaining insights into uncertainties associated with an possible outcome.

My original posting addressed the broader concept of crowdsourcing. A good example is www.cambrianhouse.com/. They started as a crowdsourcing service for information technology startup ideas that allowed member to vote and provide feedback on new business venture ideas. The process was intended to allow the ideas with the most support to rise to the surface and thereby gain exposure with investors. Now they sell this technology to enterprises under the brand name Chaordix.

Prediction markets rely on a critical mass (statistically sufficient number) of independently minded (this is critical) individuals to predict the likelihood of a future outcome by betting on them (usually with fictitious money). The wisdom of the crowds is supposed to result in a more accurate prediction than asking a finite number of experts. In addition to the tool you mentioned (www.newsfutures.com), just yesterday, Deloitte's CFO Insights featured the article "Social analytics: Tapping prediction markets for foresight" (see www.deloitte.com/view/en_US/us/Insights/...00aRCRD.htm?id=email) that discusses the www.intrade.com/ service as another example.

I believe the biggest challenge for both models is getting sufficiently broad participation. This requires appropriate incentive systems. For prediction markets that added challenge is getting independent-mindedness, while solution markets require a greater intensity and duration of engagement. So the biggest challenge may well be the incentives that promote required types of engagement.

Coincidentally, I just joined Sprouter (see sprouter.com/alextodd) earlier this week. There is no doubt that Sprouter allows people to aggregate around common areas of interest. My primary concern is that the platform is limited to Twitter-like 140 character communications, which are not conducive to exploring new concepts and ideas (something Noam Chomsky is very critical of with mass media, which forces everyone to speak in sound bites). Perhaps this is just phase I.

You will notice my (brief) suggestions on Sprouter calling for a broader set of services to support the commercialization of innovations. These go far beyond functionality than is currently offered by Sprouter, and perhaps even its mandate.