Traditional research has dedicated in house teams. In Netflix’s case – the rules have been changed forever: (NYT)

A contest set up by Netflix, which offered a $1 million prize to anyone who could significantly improve its movie recommendation system, ended on Sunday with two teams in a virtual dead heat, and no winner to be declared until September.

The biggest lesson learned, according to members of the two top teams, was the power of collaboration. It was not a single insight, algorithm or concept that allowed both teams to surpass the goal Netflix, the movie rental company, set nearly three years ago: to improve the movie recommendations made by its internal software by at least 10 percent, as measured by predicted versus actual one-through-five-star ratings by customers.

Instead, they say, the formula for success was to bring together people with complementary skills and combine different methods of problem-solving. This became increasingly apparent as the contest evolved. Mr. Volinsky’s team, BellKor’s Pragmatic Chaos, was the longtime front-runner and the first to surpass the 10 percent hurdle. It is actually a seven-person collection of other teams, and its members are statisticians, machine learning experts and computer engineers from the United States, Austria, Canada and Israel.

When BellKor’s announced last month that it had passed the 10 percent threshold, it set off a 30-day race, under contest rules, for other teams to try to best it. That led to another round of team-merging by BellKor’s leading rivals, who assembled a global consortium of about 30 members, appropriately called the Ensemble.

This approach formalizes the proto rules of the Wisdom of Crowds: (Surowiecki)

Diversity of opinion

Each person should have private information even if it’s just an eccentric interpretation of the known facts.

Independence

People’s opinions aren’t determined by the opinions of those around them.

Decentralization

People are able to specialize and draw on local knowledge.

Aggregation

Some mechanism exists for turning private judgments into a collective decision.

And the underlying key to this process? A culture of collaboration AND a great set of collaboration tools.