Seeking Omega – An Unauthorized Strategy for Yahoo

If Seeking Alpha is the search for active return on an investment above a prescribed benchmark then Seeking Omega “Ω” is the quest to create an investment return on a social or business objective. In other words, if Alpha is the beginning then Omega is the end. For our purposes, Seeking Omega is a modern solution to solving issues like India’s innovation problem without waiting for the necessary innovation ecosystem as I described in a previous article. I will also illustrate how it can be used to create investment opportunities for investment participants or help businesses create highly effective and efficient Keiretsus. It is a new virtual innovation ecosystem that leverages the social graph, predictive markets, sentiment engines, and highly networked power brokers.

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If you ask an economist how to drive financial growth in an up or down market, it is by producing innovative solutions to critical functions. However, the world is not conveniently organized with the best topic experts, inventors, venture capitalists, and executive managers sitting around a room discussing methods of solving complex societal or business issues. Instead, the very best are usually isolated by geography, language or some other constraint that makes it extremely difficult to assemble the right people to solve a particular objective. There are of course clusters of people in certain parts of the world that are geographically close that form innovative businesses (e.g. technology - Silicon Valley), but due to the geographic constraint they can’t necessarily enlist the top experts to solve a particular problem or objective.

This situation alone presents many inherent road blocks to innovation, but it also limits the grouping of our most preeminent experts to solve our most pressing business or societal issues. There is not an easy or timely way to assemble the top experts and reward them for participating in solving our most pressing issues. For example, India has a mammoth clean water issue which needs to be solved in the next 10 years or a major crisis will emerge, affecting India’s ability to grow.

Today there is no easy way for businesses to network with other businesses, experts or investors like most of us do personally with LinkedIn, Facebook and Orkut. Businesses go to Dun & Bradstreet, Hoovers, the Yellow Pages or Google (GOOG) to search for information they need to solve a business objective. The information found is limiting and may not be relevant or current and is certainly not filtered through a social network. Why isn’t there a single solution provider that addresses this enormous business to business (B2B) need?

The Seeking Omega Solution

As I’ve referenced in my previous article on business and social networking being one of the primary initiatives all companies should be doing today, Seeking Omega is the next step in business and social networking evolution. Imagine social capital being leveraged by businesses and individuals internally and externally as opposed to the existing situation of social silos and lack of transparency. Moreover, the system would allow the ability to quickly organize a virtual board of advisors or assemble a group of experts to provide solutions.

In fact, if Carol Bartz and Yahoo (YHOO) were to create a solution around this concept they could recapture their former glory and reinvent business as we know it. Sure, they would need to reconfigure their business strategy to concentrate on large and small businesses, but clearly their existing strategy is not effective. I am going to use Yahoo as my Seeking Omega solution provider because they have a need to change and can reposition to capitalize on this concept.

In its simplest form, a Seeking Omega solution will use a variety of networking and predictive tools to create a wisdom of crowds effect to solve complex problems or bring more transparency to a business’s value chain. It will also be an ongoing business and consumer sentiment “search and collection” engine that is constantly monitoring discussions on the web and categorizing the sentiment by company, individual, and industry (see Figure 2). Google trends was the early entrant in this space by monitoring what people are searching (remember the predictive intelligence of the presidential election). However, Yahoo can take it to the next level by categorizing sentiment across social networking sites, online reviews, Twitter and other sites where there is candid discussion. Of course, it can be gamed, but your trusted social network will help filter some of the noise.

For example, one of the issues I see executives face is the need for better and more transparent information about their suppliers and business partners. Suppose you are trying to source components for a widget you want to manufacture in China. Currently, even the best companies need to work with local agents or employees in China to properly research and find widget component suppliers. Then, reference checks are made, financials are vetted, factory capacity is checked, and the process needs to be closely monitored over time for changes. This process is time consuming, expensive and unnecessary with a Seeking Omega solution.

A Seeking Omega solution for this issue would work as follows. First, the request for a set of suppliers or solution providers would be made to the network. Since the Seeking Omega network has been constantly tracking the suppliers, it instantly returns a set of network ranked and predictive information about suppliers in China. The Seeking Omega system would then allow the executive to sort the information by a series of filters and metrics. Since the executive’s network is trusted and ranked by their predictions in the past, the best people in your network will carry greater weight when evaluating the set of suppliers. Add to that a monetary incentive for power networkers to participate in the Seeking Omega system and you have a win-win Keiretsu solution for everyone involved.

Another issue and current to today’s lack of credit and fund raising environment, is the need to match those with business and social capital needs with investors. For example, if the business that sold widgets needed a capital infusion to expand their business, a Seeking Omega solution will provide both the investor and business with a holistic view of the other. Predictive markets, internet buzz and expert filters can tell the investor about the business and business’s network can pinpoint the best investors given their capital needs. Again we have an issue of trust that is solved using the wisdom of crowds and predictive markets.

A third benefit of the system is to virtually assemble experts to solve a complex business issue. Imagine bringing together the best minds to streamline business research and development efforts or to help solve an engineering challenge. A whole new class of independent contractors will emerge making money through sharing their expertise through the Seeking Omega ecosystem. There are fragments of these systems in place today but nothing that encapsulates them into a single profile so that they can be leveraged across an expert’s social graph.

How Yahoo can Monetize a Seeking Omega Solution

There are six major cornerstones for this solution each can be monetized differently.

1. Subscriptions
2. Lead Generation
3. Predictive Decision markets
4. Experts
5. Targeted advertising
6. Seeking Omega Platform

#1 Subscriptions

The business intelligence created in this system is invaluable. Companies wishing to get real time information can subscribe to categories of information about their products, competitors or industry.

#2 Lead Generation

This is a complex issue and one that could potentially destroy a system that is too intrusive. Therefore, careful thought needs to be taken in order to best extract leads for interested companies. Most people will not tolerate a system that is actively monitoring there web discussions and sending leads directly to an interested business. However, if a group of people from a company are looking for information on a new Enterprise Resource Planning (ERP) system, most would not mind if the group lead was given to an ERP provider.

#3 Predictive Decision Markets

The predictive decision market is speculative and created for the purpose of making predictions within the Seeking Omega system and will reward those that correctly predict events or decisions. Predictive markets like Intrade, Iowa Electronic Markets, The Industry Standard are already accurately predicting political and economic events. Seeking Omega users will have the ability to place bets on business decisions, the viability of a business, industry trends, business objectives, social causes and more. These bets can be placed in a closed market (like your business network) or opened up to a much broader audience.

Since it works like the stock market, there will be winners and losers. Reputational points are earned or lost based on correct or incorrect calls. The concept is being used today. In fact the Wall Street Journal reported that General Electric (GE) uses prediction market software from Consensus Point to generate new business ideas. Yahoo can capitalize on this trend by opening it up to their large base of users and charging businesses for the intelligence.

#4 Experts

In order to organize an ecosystem with the best topic experts, inventors, venture capitalists, executive managers to solve social and business problems, Yahoo will have to pay them for participation. Whether it’s the internet equivalent of the X Prize (pay the group for a successful solution) or if a revenue share model (pay the experts a portion of the revenue from models #1 and #2) each will encourage the best to participate in solving a business problem. Yahoo profits by bringing more experts to the table which encourages businesses to submit business concerns.

#5 Targeted Advertising

Deploy algorithms that let advertisers know how receptive a particular audience would be to their message. These algorithms would also take into account not just the interests of an individual, but the interests of their entire peer network. Ads would then be displayed based on those preferences.

#6 Seeking Omega Platform

Give vendors the ability to build niche applications on top of the platform that not only offer strong products but an ability to also provide services, support, and niche analytics. Yahoo would in return deliver the future strategy, vendor services, community management, community analytics and support to the vendor base. Monetization occurs via #1 – #5 above because of the increased user base.

In Summary, there is a large black hole in B2B networking on the web. Businesses are challenged to find the best solutions, suppliers and sources of capital because there are no organized business networks in place. Sure social networks exist and are becoming more useful for social objectives, but businesses are left without a system that is focused on solving business objectives.

Yahoo should completely reinvent itself to claim the B2B networking space. It has the infrastructure and user base to launch the effort and the need is enormous. The new Yahoo will connect millions of businesses worldwide and provide an invaluable innovative and problem solving ecosystem. The integration of predictive markets, social networking, sentiment analysis into an innovation economy would be a seminal and unprecedented achievement. Yahoo’s new business model would not only increase shareholder value but bring all of us together in a really powerful way.

Comments

[Brain Damage:]

i'm very intrigued by this idea, Mark -- particularly because i've encountered far too many clients who don't want to spend the time/money on "formal" research -- while i don't necessarily advocate foregoing traditional research methods, gathering/using customer intelligence as you've laid out would seem to enable companies to tap the gold mine of information they already have.

Mar 25 01:35 PM

[PJ Louis:]

I like the whole notion of predictive decision markets. If you take that one step further, you can actually leverage experts within a company and outside of the company to improve management’s tactical and strategic plans.

There are consulting firms that have been using this approach for since mid-2008. For one I have been using the tools mysel. I believe the use of predictive decision tools is effective for restructuring a company.

The keys to successfully using predictive decision tools are: management needs to be willing to look deep within the company and management needs to hire external consultants to serve as referees.

In regard to Yahoo, I hope they listen to your advice because they certainly need it. Mark - your other suggestions are sound as well - good article.

Jun 24 09:15 AM