Nilofer Merchant is a corporate director of one public and two private firms, and the founder and former CEO of Rubicon. She's the author of 11 Rules for Creat­ing Va/ue in the Social Era (Harvard Business Review Press, 2012). Twitter: @nilofer.

by Nilofer fv1erchant

HBR.ORG

ARTWORK Jacob Hashimoto, Forests Collapsed Upon Forests, 2009, acrylic, paper, thread, bamboo, wood, Martha Otero Gallery, Los Angeles

WhenTED Lost Control oflts Crowd

"WOW. SUCH F---ING BULLSH-T." No, this is not a snippet from the latest Quentin

Tarantino film. It's Stanford professor Jay Wacker

responding, on the Q&A site Quora, to the now­

infamous TEDx talk "Vortex-Based Mathematics!'

A member had posed the question "Is Randy Pow­

ell saying anything in bis 2010 TEDxCharlotte talk, or

is it just total nonsense ?" Wacker, a partid e physicist,

was unambiguous: "I am a theoretical physicist who

uses (and tea ches) the technical meaning of many

of the jargon terms that he's throwing out. And he

is simply doing a random word association with the

terms. Basically, he's either (1) insane, (2) a huckster

going for fame or money, or (3) doing a Sokal's hoax

on TED. I'd bet equal parts 1 & 2!'

April 2013 Harvard Business Review 79

SPOTLIGHT ON MANAGING THE CROWD

Powell's talk had been given in September 2010,

at what was one of numerous local TEDx gatherings

spun off by TED, a nonprofit that puts on highly re­

spected global conferences about ideas. But the talk

went relatively unnoticed until the spring of 2012,

when a few influential science bloggers discovered

it-and excoriated it. One dared his readers to see

how much of the talk they could get through befare

they had to be "loaded into an ambulance with an

aneurysm!' Another simply described it as "sweet

merciful crap!' By August the uproar had gone main­

stream, as other questionable TEDx content was un­

covered. The New Republic wrote, "TED is no longer

a responsible curator of ideas 'worth spreading: In­

stead it has become something ludicrous!' As others

piled on, TED staffers called Powell and asked him to

send the research backing up his daims. He never di d.

The TEDxCharlotte talk, which had received

tremendous applause when delivered, was one of

thousands produced annually by an extended com­

munity of people who neither get paid by nor offi­

cially work for TED but who are nonetheless capable

of damaging its brand.

When it was founded, in 1984, TED (which stands

for "Technology, Entertainment, and Design")

TED's army of volunteers has extended its reach to more than 130 countries. But TED no longer completely controls its brand.

NUMBER OF TEDx EVENTS BY YEAR

So Harvard Business Review April 2013

brought together a few hundred people in a single

annual conference in California. Today, TED is not

just an organizer of private conferences; it's a global

phenomenon with $45 million in revenues. In 2006

the nonprofit decided to make all its talks available

free on the internet. (They are now also translated­

by volunteers-into more than 90 languages.) Three

years later it decided to further democratize the

idea-spreading process by letting licensees use its

technology and brand platform. This would allow

anyone, anywhere, to manage and stage local, inde­

pendent TEDx events. Licenses are free, but event

organizers must apply for them and submit to light

vetting. Since 2009 sorne s,ooo events have been

held around the world. (Disclosure: I spoke at the

main TED event in February this year.)

The brand extension and new content TED

gained by setting up a decentralized community

would have cost millions of dollars to produce

through traditional business means. Such a com­

munity can crea te value in many ways. Loo k at the

benefits Apple reaped by opening app development

to the crowd. By designing a tool kit that lowered

the cost of development from $1 million to $10,000,

the company harnessed the creativity of thousands

of developers. Ask yourself what Apple's business

model would be without its diverse app store. When

the security-software maker McAfee allowed volun­

teers known as "McAfee Maniacs" to offer custom­

ers answers to technical support questions, it cut

overhead expenses by S%. At Intuit, users of Mint,

QuickBooks, and TurboTax serve as "live commu­

nities," providing peer-to-peer advice for every­

thing from special tax circumstances to competitive

pay issues. To date they ha ve answered more than

25 million questions-about 74% of all questions that

have come in. "In one product line, this approach

has slashed support costs by 35%;' says Per-Kristian

(Kris) Halvorsen, the chief innovation officer ofln­

tuit. And then there's the upside of having a commu-

As organizations become more porous-with

more outsourcing, more freelancers, more

crowdsourcing-risks rise along with potential

rewards. When your crowd gets offtrack , how do

yo u get it working with you again? That's exactly the

conundrum TED faced when so me of its TEDx licens­

ees began hosting pseudoscientific events under its

brand. To recover, TED took three approaches that

any business can benefit from:

nity of superusers built around and invested in the

Intuit platform, creating a competitive moat.

The benefits of open innovation are clear. Yet

many companies still worry about an approach that

involves collaborating and sharing power with many.

Openness is indeed risky, as the TED example dearly

shows. TED's army of volunteers has extended its

reach to more than 130 countries. But beca use TED

allows nearly anyone to con tribute, it no longer com­

pletely controls its content or its brand.

Leaders might wonder whether the rewards of

openness are outweighed by its risks-especially

when they have a public company to run and pre­

dictable results to deliver. To gauge the trade-offs,

you first need to understand that "open" does not

mean "easy" or "free." Second you need to know

how to get a crowd working with yo u and not against

you. That will mean adopting new practices: listen­

ing harder, aligning through shared purpose, and

opening your organization in the ways that matter.

Learning by "Listening Loudly" Crowds will organize themselves far faster than you

could manage, which is great when they're holding

events for you around the world-like TEDxKibera

and TEDxAntarcticPeninsula-but not so great when

they're setting up ones that feature "experts" in

pseudoscience tapies like "plasmatics:' crystal heal­

ing, and Egyptian psychoaromatherapy, al! of which

were presented at TEDxValenciaWomen in Decem­

ber 2012. That conference was described by one dis­

appointed viewer as "a mockery ... that hurt, in this

arder, TED, Valencia, women, science, and common

sense!' Within 24 hours commentators on Reddit

had picked up the charge; by the next da y more than

s,ooo people had weighed in on Reddit, Twitter, or

other social charunels.

Two months earlier, in October 2012, TED had re­

moved Randy Powell's "Vortex-Based Mathematics"

1. Learn by "listening loudly" Before you can try to fix the problem, you first need to let yo u r crowd tell yo u what's going on. Don't confuse this with public relations-the primary purpose is not to cal m the angry mob but to figure out what went wrong.

HOWOPEN IS OPEN? TED has different approaches for different contributors and audiences.

OPEN • Access to TED.com

content

• TEDx attendance

• Opportunities to present at TEDx

TEDx licensees choose the presenters. Videos

of presentations are

posted on TEDx's

YouTube channel. TEDx

attendees may be

charged a small (less

than $100) fe e to help

cover conference costs.

SEMI·OPEN • TED conference

attendance

• TEDx licenses

TED conference attend­

ees undergo an appli­

cation process and pay

a fee. TEDx licensees

are vetted by TED.

CLOSED • TED.com

contributions

• Opportunities to speak at TED conferences

All content is selected

by TED staff (but

translated by volun­

teers whose work is

peer-reviewed).

WHEN TED LOST CONTROL OF ITS CROWD HBR.ORG

2. Realign the crowd You can't manage a crowd through traditional eco­nomic incentives. You need something stronger and cheaper: shared purpose.

3· Be open in the ways that matter Allowing crowdsourcing in one part of your business doesn't mean you open the kimono entirely. Be strategic about what you'll let go of and what yo u need to control more tightly.

video and had begun to respond to public concerns

about that particular talk on a few influential web­

sites like Quora. But those small steps did not ad­

dress the fundamental problem: The TED name had

become associated with bad content, as the chortle­

inducing lineup of TEDxValencia Women made clear.

People who didn't even know the specifics of those

situations but had grown to dislike what TED repre­

sented used the occasion to trash the brand-both

for its perceived elitism and, somewhat paradoxi­

cally, for dumbing down ideas. An angry mob was

forming. The dialogue was mean. And, organization­

ally, it was life threatening because the very premise

of TED was being questioned.

TED's leaders needed to look beyond the com­

plaints about the Charlotte and Valencia events and

hear the bigger message. They had to start "listening

loudly" -engaging in a dialogue through a variety of

public forums to understand what had gane wrong

and to learn how to fix it.

As soon as Emily McManus, the editor of TED.

com, waded into the blogosphere, the tension

started to subside. Through posted exchanges on

the NPR, CNN, and LA Times websites, and the

Huffington Post, S late, Quora, BuzzFeed, and other

online venues, she reached out to 100 different

communities. By communicating publicly and

person-to-person, TED achieved two things. One

was to signa! that it was paying attention to peo­

ple's concerns. But more strategically, TED learned

about a systemic problem that demanded a broad

solution.

Don't confuse listening "in public" with "public

relations!' First, it's not just about sharing your per­

spective (PR) but about being open to change that is

prompted by the interaction (community building).

With the former, you just want the crowd to feel bet­

ter about your brand; with the latter, you want the

crowd to work with you to salve problems.

April2013 Harvard Business Review 81

SPOTLIGHT ON MANAGING THE CROWD

So although Lara Stein, the TEDx program head,

first joined the Valencia Women Reddit discussion

with a flat explanation of policy ("While we do vet

licensees carefully, we do not review or approve ev­

ery speaker lineup .... From time to time, a licensee

gets it wrong ... .If we feel there has be en a blatant

disregard for the TEDx rules, we will not renew the

license"), she and her colleagues eventually started

engaging with critics, asking them questions and

teasing out more-constructive feedback. For ex­

ample, one such dialogue led a crowd member to

point TED staffers to a Forbes article titled "lO Ques­

tions to Distinguish Real Science from Fake Science;'

which they ultimately built on to create new content

guidelines for the TEDx community. According to

Stein, "TEDx policies ha ve gone from a set of 10 sim­

pie guidelines to pages and pages of specific rules

including things like branding, messaging, sponsor­

ship, speaker selection and so on, based on the input

we've gotten:'

Realigning the Crowd It wasn't enough to respond rapidly to and learn

from online critics by writing new policies. TED also

needed to redirect the crowd.

Changing an organization's focus is hard enough

when the people in it work for you. Consider the

challenge Howard Schultz faced when he famously

returned to the helm of Starbucks, determined to

steer the company back to its core mission of pro­

viding a "third place" for customers and away from

its policy of rapid expansion. But a shift in direction

is even more difficult when it involves people who

don't work for you. You can't "manage" a crowd-or

a community-through transactional exchanges or

economic incentives. You need something stronger:

shared purpose. Of course, cash-strapped nonprofits

and similar organizations ha ve used the power of

higher causes to align and motiva te people for years.

Businesses have begun to do so only recently. But

shared purpose is now integral to how people ere­

ate value, especially through the crowd. And TED's

experience again offers sorne useful lessons.

To get its crowd recommitted to the objective of

"ideas worth spreading;' the TED team sent a lengthy

letter to the TEDx community (made public the next

day via the TEDx blog) reminding members that the

organization's mission was theirs to uphold. While

elements of the note are clearly transactional ("Pre­

senting bad science on the TEDx stage is grounds

for revoking your license"), the bulk of it is instruc-

82 Harvard Business Review April2013

"Just see how far you can get through this TEDx talk befo re you get loaded into an ambulance with an aneurysm."

-Science blogger Carl Zimmer, in "1 Point to TED Talks and 1 Point to Kim Kardashian. That ls All."

"The TEDxValenciaWomen event was an utter disgrace ...

"Most of the event (including the parallel events) was a pathetic mix of pseudoscience and wishy-washy superficial pseudo-feminist spirituality, with lots of mentions of 'The Mother' and an abundance of unsubstantiated claims on the healing powers of LOVE, sacred geometry, goddesses, and in general easy sentimentalism, shaky psychology, and shakier neuroscience ... a mockery, loosely put together out of wish fulfillment and half-baked ideas that hurt, in this order, TED, Valencia, women, science, and common sense."

-La Cancamusa, "An Angry Letter After TEDxValenciaWomen"

"TED is no longer a responsible curator of ideas 'worth spreading.' lnstead it has become something ludicrous."

-Evgeny Morozov, in "The Naked and the TED," The New Republic

"The fact that people applauded wildly for this trash does not say much for Charlotte .... TEDx talks must be scientifically vetted. Between the talks on the dangers of GMOs and magical energy production here, TEDx tarnishes the sterling TED brand.

"1 seriously think this guy must have done an experiment: Can 1 talk about absolutely nothing for ten minutes, make up associations that implausible, make claims that are scientifically untenable, and do it on a TED-associated stage ... then get applause? Vep! At least in Charlotte NC you can!"

-Blog post by Kevin M. Folta, a Florida scientist

tional: a definition of pseudoscience, a list of com­

mon red flags, and examples of topics best left un­

touched. The letter (which ran pages long) explained

in much greater depth than ever befare what type of

content TED considered appropriate, a judgment

previously left entirely to each event planner. The

TED team asked members of the "TEDx movement"

for more feedback and for help monitoring the qual­

ity of events. The team also offered help with vetting

speakers. The message was clear: Spreading impor­

tant ideas was the shared purpose, improving qual­

ity was a shared problem, and it would take a shared

effort to fix it.

Remember that TED's initial response to the

TEDxCharlotte fiasco was to call the presenter and

ask him to defend his assertions. But as the Decem­

ber conflagration made clear, this prívate approach­

which would have worked well for an interna! em­

ployee-did little or nothing to get the crowd back on

course befare TEDxValenciaWomen. Instead, TED

had to openly clarify to the TEDx crowd what TED

isn't in arder to help sharpen what it is.

Stein describes it as a collective teaching oppor­

tunity. "This was not a case ofTED saying no, no, no;'

she explains. "It was letting the people in the TEDx

community say to one another that the trust had

been breached, we had strayed from our shared pur­

pose, and we had to get back in alignment." TED's

role was that of adviser and shepherd, not director

or dictator.

Being Open in the Ways That Matter Because the events described here happened in a

public court, not in prívate, you might infer that an

organization applying the ethos of openness must be

fully open. But that's not at all true. For the strategy

to work, what needs to be open should be open, but

other parts of your organization can remain closed.

Indeed, open as TED is, pieces of its ecosystem

are highly managed. For example, while 25,000

TEDx talks ha ve be en produced so far, as of the time

of this writing only 228, or approximately 1%-the

best of the best-had made it to TED.com for broad­

based distribution and endorsement. People who

complain that TED is not curating its content are ig­

noring how selective it is when posting TEDx canten t.

Apple manages its mobile platform in a similar

way. The platform is closed in its hardware design

but open to app store contributions, so it allows in

a wide range of ideas and solutions from develop­

ers. Apple then benefits as "1,000 flowers bloom" on

WHEN TED LOST CONTROL OF ITS CROWD HBR.ORG

its platform. The app store accounts for only 4% of

the firm's sales, but by making smart outsiders feel

welcome and rewarded in its fold, Apple ensures

that they're not aiding-or becoming-competitors.

(Whether the even more open and rapidly expanding

Android system will turn out to be a serious threat to

Apple's semi-open system remains to be seen.)

Apple, McAfee, Intuit, and TED have all found

ways to engage the crowd by drawing a clear line be­

tween their own offerings and what they're willing

to let the public con tribute.

Everyone's a Crowd Manager Today talent is increasingly untethered. Well over

30% ofU.S. workers are now self-employed. This

isn't just a U.S. trend; on the popular websites

Freelancer.com and oDesk, most freelancers hail

from India and the Philippines, respectively. These

are not workers who couldn't find other jobs; they

are talented people. Another popular freelancing

site, Elance, reports that 71% of its users have either

a bachelor's or a master's degree. Val u e is being cre­

ated by al! categories of people-workers and volun­

teers, paid and unpaid, contributors and consumers.

Organizations that still believe they can and should

keep the crowd out may find themselves in an unde­

sirable position -alone and apart.

Anyone leading an organization toda y is airead y

managing a crowd-whether it's composed of con­

sumers, the media, or citizens of the towns in which

the enterprise opera tes. What TED faced is the new

reality for al! of us. "Nothing is predictable;' Stein

concludes. "This flies in the face of leaders' being

asked to plan and predict and know more than oth­

ers. Today we have to create scale for our mission

by being open. The TEDx construct is an example of

how being in a community lets us learn, adapt, and

grow together!'

Even though management experts have long ar­

gued for looser organizational models and against

command-and-control leadership, most executives

are still ill equipped to manage crowds. As humans,

we want to be perfect and in control. We like knowing

more than we enjoy leaming. We want to get it right

the first time rather than iterate. But crowds-and

the community constructs we're talking about-are

not about flawless execution; they are about allow­

ing anyone (quite possibly everyone) to contribute

and gathering a large volume of potentially power­

ful ideas from which to pick the best. \?

HBR Reprint R1304E

April 2013 Harvard Business Review 83