Latest Wharton Research Demonstrates the Wisdom of Crowds Reply

4-Crowdfunding-Rocio-LaraA nicely-crafted piece of research from Wharton, written by Prof. Ethan Mollick and HBS Prof. Ramana Nanda shows that crowds can make “pretty good” decisions when seeding new projects.

Crowdfunding has opened the virtual gates to capital for start-ups, developers and researchers in nearly all corners of life. But when pitted against a panel of experts in a field, can the crowd show the wisdom needed to pick a winning project?”

There research results are quite encouraging.  In this study, crowds and experts had an agreement of 57% – 62%.

And there is a communication angle.

The researchers observed that “The biggest differences we found between projects that the crowd alone supported versus those supported by experts seemed to be in the style of presentation, rather than the quality of the actual project itself,” Mollick and Nanda write. “The more ‘crowdfunding friendly’ a quality proposal was — [such as those] taking advantage of the Internet by using videos and pictures, or including many rewards for backers — the more it seemed to appeal to the crowd.”

Of course, traditional corp comm folks should take note.  This isn’t your father’s business proposal that the researchers are describing.  This is a visual literacy that is much better suited for Internet-based digital communications and an audience with changing consumption patterns.

Great research, and very much worth your time.

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