Strategic Crowdsourcing

A means to improve organizational excellence: cost and speed efficiencies, more diverse and higher quality outcomes

by Andrei Villarroel, PhD

(originally published in the inaugural volume of the Innovation Lab Newsletter of Catolica-Lisbon SBE, May 2012)

At the start of the XXI century, few people could envision that a valuable project could be successfully developed by a crowd of thousands of individuals spread around the world without any contractual ties, without physical offices, and for free (or almost).

This far-fetched idea has fueled the creation of humanity’s largest multilingual knowledge bank (Wikipedia) and the world’s largest social networking platform (Facebook). The value created by the crowds behind these platforms is undeniable, as two Time Magazine Person of the Year awards attest, and Facebook’s pre-IPO valuation at over $100 billion.

The Research Says

A study of over 500 platforms shows how the crowdsourcing phenomenon is used in a diversity of industries, ranging from scientific problem solving to new product design, to project implementation, to start-up project financing. Crowdsourcing platforms enable the rapid assembly of distributed resources held by individuals, most often in the form of knowledge, services, and money, which would otherwise be impossible (or comparatively very hard) to obtain by other means. Consider these examples:

Problem-solving

InnoCentive enables organizations to solve key problems by connecting them to a “crowd” of over 200,000 highly educated innovators around the world. Problems solved by this crowd range from minimizing surface damage on a layer of chocolate coating to devising a means to separate frozen oil from water to clean up a sub-arctic oil spill. NASA, Procter & Gamble, and Roche all partner with InnoCentive, offering cash awards for successful solutions.

Design

Threadless produces t-shirts and other items printed with unique designs. What makes Threadless different from any other tee company is that all designs printed on Threadless are submitted by members of the public (“the crowd”). The designs are voted on by other crowd members, leading to a final score for each design. This is used as a gauge by Threadless to decide what to manufacture next. In this case, the winning designs have found consumer support before production even begins.

Financing

Kickstarter is the world’sd largest crowdfunding platform for creative projects. Every week, thousands of people pledge a combined amount of millions of dollars to finance the development of new projects in music, film, art, technology, design, food, publishing and other creative fields. Typically, project creators keep ownership and control over their work, while investors get the chance to receive products and experiences that are unique: free music, concert tickets, first-access privileges, etc.

Why You Should Care

As more crowdsourcing platforms become available, firms should be able to find alternative sources of expertise, labor, funding. This may extend or replace existing processes in a cost-effective manner. Some practical impacts include:

• First, crowdsourcing offers a means to speed-up the development of quality solutions to mission-critical problems that most firms often hold unsolved.

• Second, crowdsourcing offers an on-demand and cost-effective alternative for outsourcing work that most firms need done on a daily basis.

• Third, crowdsourcing offers access to a diversity of global market insights beyond that of a national territory– likely also beyond the grasp of even the most seasoned executives.

A growing number of firms are taking strategic advantage of crowdsourcing as an alternative means to improve on these fronts: cost, speed, quality. How is yours?

To Learn More

Howe, J. 2009. Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business. Book with Crown Business.

Malone T., Laubacher R., Johns T. 2011. The Big Idea: The Age of Hyperspecialization. Harvard Business Review, July 2011.

Villarroel J.A. 2013. Strategic Crowdsourcing: The emergence of online distributed innovation. In Huff A., Reichwald R., Moeslein K. (Eds.) 2013. Leading Open Innovation. Second Print. MIT Press.

… together we create more …