Crowd Sourcing

Introduction

Colgate-palmolive, a giant packaged goods company needed a way to inject fluoride powder into a toothpaste tube without it dispersing into the surrounding air. Melcarek (a registered user at InnoCentive.com) solved a problem that stumped the in-house researchers at Colgate-Palmolive.

Melcarek earned $25,000 for his efforts. Paying Colgate-Palmolive’s R&D staff to produce the same solution could have cost several times that amount– if they even solved it at all.

This was one of the examples which demonstrate power of Crowdsourcing, a term first coined by Jeff Howe in a June 2006 “Wired “magazine article "The Rise of Crowdsourcing”.

What is meant by Crowdsourcing?

Ø  Crowdsourcing means crowd-out sourcing. It can be described as “the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.” 

Ø  That means crowd sourcing is a procedure to use the power of crowd. So it is very powerful because always two heads are better than a single one and similarly the heads of a mass of people are better than a few. 

Ø  The difference between crowdsourcing and open source is that open source production is a cooperative activity initiated and voluntarily undertaken by members of the public. In crowdsourcing the activity is initiated by a client and the work may be undertaken on an individual, as well as a group.

Ø  Crowdsourcing taps into the global world of ideas, helping companies work through a rapid design process. You outsource to large crowds (hence the word: crowdsourcing) in an effort to make sure your products or services are right.

Ø  This phenomenon crowd sourcing is often used as a contest hosted by companies to award people who wins a challenge given by the company.

Types of crowdsourcing

Crowdsourcing may produce solutions from amateurs or volunteers working in their spare time, or from experts or small businesses which were unknown to the initiating organization.

Jeff Howe has differentiated four types of crowdsourcing strategies:

Ø  Crowdfunding - describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations.

Ø  Crowdcreation – This type of business model is used by businesses such as Current TV to create news segments and video ads.

Ø  Crowdvoting – In this model, people vote for their favourite T-shirt design at apparel maker ‘Threadless' Web site.

Ø  Crowd wisdom - The wisdom of the crowd refers to the process of taking into account the collective opinion of a group of individuals rather than a single expert to answer a question.

Advantages of crowdsourcing

ü  The cost will be cheaper- The task to be done is crowdsourced to a sea of heads.

ü  Ideas come in rather fast  - Thinking power of so many people often yields promising results

ü  Hassle free - No need to maintain those employees and no need to track the whole process in development.

ü  Great marketing tool- recently LG has outsourced to get next mobile phone model designed. LG drew more eyeballs via the news that went viral about LG crowd sourcing.

ü  Less expenditure on R & D - To get new products developed companies have to invest in R&D. And in case if the experiment fails you lose. Contrary to this in crowdsourcing the same thing can get done in a cheaper way.

ü  Talent comes searching for you- After outsourcing the task, Talent comes searching for you.

Disadvantages of crowdsourcing

v  Ideas are open -the ideas of a crowd sourced challenge is open so there is a high chance of it to get leaked out

v  Disputes- will be there so one cannot replace it with the existing business model

v  Wrong marketing- At times Crowdsourcing can result in wrong marketing by passing the bad word of mouth publicity. Take for examples an automobile company tries to Crowdsource its next model design. In case if the end product is proved not good from the comfort aspect and not good in aesthetics, then people will simply say that the company nowhere takes quality seriously and rather tries to Crowdsource to get the work done in pennies.

v  Crowdsourcing the wrong thing – The critical information can be leaked if it is crowdsourced.

v  Copyright issue – There can be a situation like Nokia can claim that the artwork that LG has used by crowdsourcing is a Nokia copyright.

v  Hidden costs - Culling through 50,000 submissions takes vastly more time than considering the top 5, 10 or 25 suggestions offered by a professional naming company

Examples of Crowdsourcing  

Ø  The best example is Wikipedia, one of the top 10 largest websites.

Ø  Dell Idea Storm where customers vote for what products they want Dell to do next – this is how Dell’s recent introduction of Linux laptops happened.

Ø  Get Satisfaction which is “people-powered customer service”.

Ø  Netflix, the online video rental service, uses crowdsourcing techniques to improve the software algorithms used to offer customer video recommendations

Way ahead

Ø  Crowdsourcing is a great tool for any business. So from well planed and well maintained crowdsourcing a company can gain a lot.

Ø  Organizations reinforce similar approaches and inside-the-box thinking. When you're looking for something truly different, the crowd can lead you down a less travelled path.