Would you credit it?
Jinfo Blog

11th June 2008

By Tim Buckley Owen

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Against all the odds, the credit rating agencies seem to be emerging from the subprime debacle with their reputations at least patched up, if not undamaged. Lambasted for handing out over-generous ratings to dubious mortgage-backed securities, and looked at askance for taking money from the very clients whose products they rated, the Economist now reports http://digbig.com/4xawj that the big three may be on the verge of striking a deal with the New York State attorney general, one of a number of authorities that have been investigating them. It’s ironic that these players – Fitch, Moody’s and Standard & Poors – whose core business consists of quantifying the reputations of others, should find their own under such severe scrutiny. But, in these days of instant global publishing by anyone, reputation has become a particularly fragile commodity. It’s certainly interesting enough to have encouraged academics at the Penn State College of Information Sciences & Technology to embark on a demonstration project http://digbig.com/4xawm showing how postings on the social networking site Twitter can be classified according to whether they enhance or harm an organisation’s reputation. Working with conversational search specialist Summize (http://summize.com/), they hope to be able to help organisations achieve near real-time brand management by identifying individual customers who might not contact them directly with a complaint, but are nevertheless badmouthing them in public. Focusing on the Business Week 100 top brands, plus companies and businesses that have been newsworthy in recent weeks, their method is to examine the comment’s context and give it a rating from ‘great’ to ‘wretched’ based on analysis of up to 200,000 terms. It’s a neat idea that corporate information professionals may want to keep an eye on in their customer relationship management, horizon scanning or compliance roles. But, as a new report from Outsell suggests, the implications of harnessing the wisdom of crowds in this way may be even more profound – and not just for organisations with a care for their own reputation. User generated content and communities’ collective knowledge inevitably challenge the information industry establishment as well, says Outsell’s report, Social Communities & Expert Networks in B2B (http://digbig.com/4xawn – $895). Classic examples of the specialist networks it has in mind are organisations that offer expert witnesses or provide input for investors. And it has particularly bleak news for market research firms – where, Outsell believes, the wisdom of crowds can generate its own ‘good-enough’ answer exchange. But if expert networks – particularly those that support high-risk decision-making – threaten market research, then the future could be just as bleak for the credit rating agencies. It would be ironic if, having survived the scrutiny of regulators, they fall victim to the newly harnessed collective expertise of their own clients.

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