After reading “The Scary Economics of Crowdsourcing” posted by Phil Wainewright over at eBizQ, I’ve been thinking about why people are so concerned at the prospect of crowdsourcing. Do they think it is so powerful that crowdsourcing will be the only way of work in the future or is this just sensationalized journalism?

Here at Chaordix, we always talk about crowdsourcing in a positive way – enabling faster innovation, deeper brand engagement, community development – but we see what people worry about as well. We understand the fear, but disagree with some of the logic. Here are some arguments on crowdsourcing discussions gone awry:

1. Crowdsourcing will get all of your work done for free. There is no way to trick the time/money graph. Whether you are Netflix with a million dollars kicking around, or a small startup without the cash to hire someone to design a logo for you, the graph still applies. The rumor that you’ll get a massive crowd to complete all of your work for your business, for free is not true. For example, The Guardian was able to quickly get through massive amounts of data by asking its readers to go through documents, but without having some type of incentive, people were not willing to invest very much time into it. After the initial push, it stalled.
2. Crowdsourcing will destroy corporate structure. While crowdsourcing can help find new solutions in unexpected places, it won’t be the end of business as we know it. Crowdsourcing gives mangers and executives access to more data, people and options than before, but all companies still need people to bring it all together. What we learned from our original crowdsourcing community, IdeaWarz, is that you cannot crowdsource a founding team. Experienced leaders are still key to any successful endeavor. A successful leader will recognize that they might not have all of the answers, but the experience to find and implement them.
3. Crowdsourcing is threatening my job. Unlikely, if you are good at what you do. Crowdsourcing is the democratization of talent. Yes, the new kid fresh out of school can make a logo or write a few lines of code for way cheaper than you, but this frees you up to do more involved, more complex work. Think about the attending/resident relationship of doctors. There will never be a world where we don’t need people with experience to guide people just learning. Instead of thinking about crowdsourcing as some young, inexperienced punks taking your job, why not look at crowdsourcing as a way to promote your experience – either through being a mentor to fresh ideas without experience, or as the “expert” who helps guide the decision making process?

Implementing crowdsourcing isn’t a magical solution for everything – it requires a combination of easy to use technology and thorough planning. As with any other business initiative, it has to be a good fit for the end goal. While we believe it represents an exciting opportunity for new innovation and open conversations, we don’t believe all the hype – just the facts.

Photo by kiki99

Crowdsourcing isn’t an all or nothing undertaking

Opening up your organzation to let the crowd in likely isn’t as difficult as you imagine. Instead of thinking about crowdsourcing as an all-or-nothing proposition, consider the different stages of innovation where crowd input could help you better perform:

1. the crowd submits ideas – put a call out for ideas
2. the crowd refines ideas – get people to evolve ideas they’ve created or you have
3. the crowd comments/votes – assess preferences and gather input on crowd generated ideas or your own
4. the crowd shortlists ideas – filter down from a mass list to crowd-preferred frontrunners
5. the crowd picks winning idea – from shorlist the crowd creates or you do, get the crowd to rank the top favourite

There are lots of crowdsourcing instances where the crowd participates in all five ways to come up with a winning idea. You can get highly valuable data though, by inviting crowd contributions at just one or two points along the full crowdsourcing path.

Idea generation & favouriting - 1 & 3 Combo: What products and services do you want from us? What do we do best? If wondering how your customers see your brand, how satisfied they are with your service, or what they wish you would launch next to the market - just ask them. Suddenly you will have a vantage on demand, and your market rank that you never had before.

Make expert ideas market relevant - 2, 3, 4 Combo: If you still want to be at the helm of the idea-generation, you might get a crowd of experts to create new product ideas for example and then have the crowd refine and shortlist the ideas to things they want to buy, and maybe vote on what they’d pay for them.

Crowd winner pick - 5 only: Want to launch the product enhancement that most thrills your users? Why not share your top 5 enhancement ideas and let them pick what they want you to deliver. They could even vote with development dollars if they want to fund your technology build.

As soon as you let the crowd in, you’ll see the value of open innovation however small you start. Experimentation and high-value discovery and market prediction is what has led many organizations to make a whole-scale business shift to open innovation.

photo by: mistersnappy

Thanks to Edward Boches, I had the opportunity to lead a great interactive session on crowdsourcing with some of his team at Mullen.  Edward is a strong advocate of the benefits of social media for businesses and his agency is more open to the idea than most.

During the session, one topic that came up was “how does crowdsourcing differ from surveys and contests?”  The argument could be made that anytime you reach out to the crowd for input, you are crowdsourcing.  Fair enough.  But if you stop there, you’re missing out on the biggest benefits of true crowdsourcing.

Surveys, contests and polls capture feedback from the crowd.  This is a good first step and there’s no arguing it does provide value. However, you’re missing the value derived from getting the crowd involved in evolving and enhancing the ideas. The multi-step process of ranking/selecting/brainstorming/voting that only comes with a full crowdsourcing process provides a platform for two-way discussion. It is a direct way for companies to get input they wouldn’t otherwise have on hand, or even realize they needed to ask about.

Rarely do Ideas start off perfectly formed. Ideas become more powerful as they are honed by collective wisdom.   This process of refinement not only makes the idea stronger, but also starts a coalition of support – it’s no longer just an idea that one person thinks has merit.

In crowdsourcing, you can see this exact process happen but on an even greater scale.   People from different backgrounds and demographics, who don’t know each other, can collaborate on ideas to make them better. At the same time, the company behind the crowdsourcing site can start to get an indicator of market acceptance.

It’s the cross-pollination of ideas, thoughts and critiques among a diverse crowd that not only provides the most value from crowdsourcing, but also guards against biased results.

Is crowdsourcing better than simple surveys and contests? If you’re looking for a way to quickly pull information from a crowd, not necessarily. But if you really want the most value of collective wisdom or a continuous flow of input and ideas, have the discipline to follow a full crowdsourcing path.

Making a successful shift to open innovation requires some behavioural and attitude changes and new technology adoption, but when done right the rewards can be enormous.

We’ve worked on and studied dozens of crowdsourcing initiatives, and while we, and everyone involved with crowdsourcing, continue to learn on a daily basis, there are some emerging guiding principals that seem to lead to crowdsourcing success. On the surface, crowdsourcing seems easy – shout a question out to the crowd, get their ideas and allow them to vote on the best. But we’ve found that for true performance and profit driving results, you need to pay attention to these principals:

#1 - Right Purpose
Call to the crowd for insight you will act on

A little bit of time up front in planning out your Crowdsource campaign can dramatically increase the value you will derive from it. Just like in the early days of e-commerce, the companies that truly benefited from the online business shift were those that well conceived the potential of the technology applied to their business problems, market and organizational behaviors. For high ROI crowdsourcing you need to be clear on: What issues or opportunities facing your organization can a crowd answer for you? Where can you improve product development, R&D, policy development, your brand positioning or market research by adopting open innovation? And as important, who are the leaders in your organization that will champion and commit to acting on the input from the crowd. There is no law that says you have to implement what the crowd decides, but you need to be ready to acknowledge the crowd’s input and broadcast the action you are taking and why.
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We are routinely asked by universities and business executives what we see coming next in crowdsourcing. As we watch the evolution of crowd-powered business, there are three models we see bubbling to the surface: core crowdsourcing companies crowdsourcing hubs attached to major enterprises and crowds for hire where organizations can post calls to pre-existing communities.
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