Harnessing the Creativity and Wisdom of Crowds

By / February 01, 2013

The speed of business in the twenty-first century is astounding. The Internet has fundamentally altered the tempo of business; competitors with disruptive ideas emerge seemingly overnight from each corner of the world. While customers often control the dialogue, they expect an unprecedented level of engagement from companies. Meanwhile, as budgets shrink, the costs of traditional research and development climb ever-upwards.

The good news is that the Internet is also enabling new ways to identify and develop innovative ideas. One such method is crowdsourcing – a way of distributed problem solving and production that outsources business-related tasks to a network of online participants. At Bridgeable, we view crowdsourcing as a way for organizations to transform the threats of upstart competitors, demanding customers, and escalating R&D costs, into opportunities for innovative new products and strategies, and transcendent brand awareness.

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Crowdsourcing begins by defining one or more challenge questions and presenting them to an online community. Engaged respondents then work towards solving the challenge and submit their contributions online. Contributions can vary in their sophistication; crowd members might submit a detailed solution, a loose idea, discuss an idea presented by someone else, provide feedback on existing ideas, rank ideas, or share an idea with a network of contacts. Meanwhile, the sponsoring organization manages the technology platform, facilitates submissions, and rewards best responses. The sponsoring organization is also responsible for acting on the crowds ideas to implement them in the marketplace

 

Defining Crowdsourcing

The term crowdsourcing was coined by Jeff Howe in a 2006 issue of Wired magazine, by aggregating the terms ‘outsourcing’ and ‘crowd.’ Deployed strategically, companies can engage with a much wider set of stakeholders, in a more open exchange, at a faster pace, and at a lower cost. As such, the value proposition for crowdsourcing has the potential to far exceed traditional methods for consulting with stakeholders.

With social media and individuals increased desire to interact and contribute to the web, businesses can use crowdsourcing to solve problems much more quickly and cost-effectively than they could in the past while engaging with a diverse, global audience.

Crowdsourcing does still require significant investment to host an online platform, brand it, craft challenge questions, moderate forums, and identify winning ideas. You must curate, engage, motivate, and incetivize your crowd of contributors. Yet measured as cost per idea, or cost per person working on the problem, crowdsourcing comes out a winner.

For example, the Netflix Challenge, launched in October 2005, tasked computer programmers to develop a new algorithm for recommending DVDs to users of the Netflix online rental service. The first algorithm to improve on the existing results by more than ten percent would be awarded $1-million. In the first year alone, more than 20,000 teams registered, submitting over 13,000 different algorithms. Obviously, the monetary cost to Netflix far exceeded the prize amount, but the company generated many more ideas far more cheaply than they ever could have by working internally. The crowdsourcing campaign also attracted top minds in the field teams came from industry leaders such as IBM and AT&T Labs, and leading global research universities. Meanwhile, Netflix didnt have to pay for that talent until it produced a result.

To successfully deploy crowdsourcing and mitigate risk on highly demanding challenges, companies must build their organizational capabilities. Some of those capabilities are rooted in technology, but most center around so-called softer skills: the ability to manage risk without diminishing the scope and scale of initiatives; the capacity to engage the crowd effectively and channel their contributions productively; the organizational wherewithal to deploy crowdsourcing initiatives quickly and efficiently in response to suddenly emerging opportunities.

 

Crowdsourcing Maturity Model

At Bridgeable, we have helped several companies use crowdsourcing to turbo charge their stakeholder engagement. Core to our approach is a proprietary maturity model and framework for thinking about the capabilities required to make crowdsourcing engagements a success. When we use it with our clients, it helps us determine the appropriate approach for a crowdsourcing project. If an organization is at an Elementary level of maturity, we will tend to focus on using crowdsourcing for narrowly-defined problems, while also helping the organization build new capabilities so that crowdsourcing can be applied more widely in the future. On the other hand, if crowdsourcing is Established or even Exemplary, we can go in strong and tackle complex problems that might transform fundamental business models.

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We’ve transformed our Crowdsourcing Maturity Model into an interactive tool that will allow you to assess your organization’s crowdsourcing capabilities.  Give it a try, and give us your feedback.