The October 12, 2009, issue of Fortune Magazine had an article about how the Netflix Prize is a case study in user-generated innovation.
We’re all familiar with user-generated content: anyone who posts a YouTube video or adds to their Facebook wall creates that. User-generated innovation, of course, is where users of a product or service drive that product’s or service’s (or company’s) innovation. This could be from utilizing Wisdom of the Crowds techniques, like forums in which users suggest features they’d like, or observing closely how users use (or try to use) your product or service, to having users actually design and implement the innovative feature, new product, or service. Netflix did the latter by offering a $1 million dollar prize to anyone or any group that could develop software that improved customer movie recommendations by at least 10%.
Netflix CEO, Reed Hastings, said that most business problems can’t be solved by outsourced committees, but if you try to do that, “the trick is finding problems in your business that you can package cleanly, where you can provide a sample data set and a very clear evaluation metric.” This is really part of good project management—who does what by when, where the who is whoever steps up, the what is the clearly defined problem definition and expected results, and the when is whenever the problem is solved or the end limit is reached, whichever comes first.