Jimmy Wales, the founder of Wikipedia, got flack recently because he took special interest in a page about somone he was dating. The Wikipedia community will get over it, but the kerfuffle calls into question reputation, quality, and the very veracity of the site itself. This would be a salacious detail only of interest to The National Enquirer if it were not for the fact that Wikipedia is one of the top sites on Google, and is rapidly becoming the most cited reference source on the planet - in all languages. It is not news that the world of user generated content is exploding - blogs, wikis, and the wisdom of crowds are all the rage. Yet, there are only some things for which the crowd is wise. One need only look at the current mortgage crisis to see that crowds can be very wrong in their judgment, and the great thing about the capital markets is that they keep score. Those who are truly wise make more money and get a bigger voice in the opinion market and in the capital market. Warren Buffet gets more votes because he is better at it than I am. The problem with Wikipedia, and blogs, and user generated content is that many of them don't have a strong reputation management process. Put another way, any idiot can have an opinion. The most important thing is does the person who is giving an opinion have a good reputation? Is that reputation attached to his or her opinion? Does the person own the downside risk of the adverse effects of their opinion? On eBay, people who are lousy merchants bear the reputation risk. On Amazon, those who generate bad reviews are rated poorly and have less influence. Best yet, on stockpicker sites such as Motley Fool's CAPS, individuals are rated by the number and quality of their picks over time. So, robust reputations evolve as a consequence of the recommendations of the individuals.
You need three elements to create a robust reputation management system:
- a persistent identity, so that you are always you when you participate in an end user generated forum;
- a rating mechanism to vet "high quality" and "low quality" opinions or predictions; and
- a robust quality process to evaluate and adjudicate conflicts of aberrations.
This three-pronged approach is the essence of scientific inquiry. Experts review experts to see if there is new knowledge created. It is the reputation management mechanism that creates the quality. Almost all businesses are embracing - one way or another - user generated content, but few of them are doing a good job of implementing a reputation management system. Are you willing to live at the mercy of the mob, or do you want to take action to make sure that only true experts have influence when rating your product or service?