Crowdsourcing your next big idea…Or not

Anybody who has ever searched anything on the Internet knows about Wikipedia. What’s so great about it?  Well, other than being the world’s largest online encyclopedia with over 14 million articles on any topic imagineable, all that information is not only used by a huge crowd of people, but has also been created by the crowd themselves.

In a nutshell, you have just understood the meaning of the term “crowdsourcing”. Wikipedia is a project based on the crowdsourcing model, in which tasks traditionally performed by employees are turned to the internet crowd.

But does that mean you can do away with your employees altogether? Surely not. Here, we look at some of the pros and cons of crowdsourcing, and provide case studies of businesses who have either excelled at it, or went down the drain.

Pros:

1) Cut costs & generate ideas

Crowdsourcing represents a significant opportunity for small businesses. Who wouldn’t jump at the chance to get work done cheaper, faster and with more innovation! That is the promise of crowdsourcing. Depending on the job context, the risk is low and the rewards are tremendous.

2) Diversity of intellectual background

Seeking help from outside the company’s employee talent pool engages different intellectual minds to solve tasks, which increases the odds of success. Dell created Ideastorm, an online community where customers can submit ideas related to Dell’s products, services and business.

3) Crowdfunding

Basically, crowdfunding is about funding your business with no strings attached. Thus, it is especially effective for first-time entrepreneurs. Kickstarter.com is a site where average joes can each invest a little bit in companies listed on the site.

Case Study: Threadless

Threadless is a t-shirt company founded in 2000 that is based in Chicago, Illinois. It uses a simple concept of crowdsourced design ideas. Anyone can submit a design idea. The Threadless community rates and comments on the idea. If the idea is selected for print, the designer would receive cash and gift certificates. According to Forbes, the 50-person company brought in close to $30 million in revenue in 2009. It is also adept at using social media to engage its community, to promote its designs and designers, with over 1.5 million followers on Twitter and 100,000 fans on Facebook.

Cons:

1) Turns power over to the community.

The flip side is, crowdsourcing is not for every business. It turns power over to the community, and not every company is ready for that. It depends on the context of the business as well. Unless your toilet detergent is really attractive to your customers, don’t crowdsource them to name the new product you’re about to roll out.

2) Issue of quality of work

There is little guarantee that the end product will be quality. Depending on the quality of the work expected, a business may not want to crowdsource to any average joe what is expected of from professionals. A focus on the quality of participation is more important than the number of participants involved.

3) Make sure to set clear boundaries for participation

Without focus, strong boundaries and leadership, it would be a mess trying to control the conversation. The Pril campaign could have been better designed if it wanted to be taken seriously.

Case Study: Kraft Foods Australia

Kraft Foods Australia came up with a crowdsourcing campaign in 2009 for their launch of a new cream cheese and Vegemite spread. It encouraged customers to submit suggestions for a name for the product, resulting in a complete disaster that made fun of the very idea of the contest. The spread was eventually named iSnack 2.0, which totally did not fit the product at all. So much for allowing creativity to reign.

The opportunities for crowdsourcing are almost limitless, using it for collective intelligence, creation, voting and funding. But then again, too much of everything might not be a good thing. Understanding the limitations of crowdsourcing and whether it fits in the context of your business are important as well.

The key is attracting the right community of active contributors and structuring the rewards in such a way that makes it easy to participate. Sites that now assist people with the crowdsourcing process are growing (CrowdSPRING, 99designs, logo tournament, Innocentive, mturk, etc.)

Finally, take time to look at Youtube’s crowdsourcing venture in “Life in a day”. It was a global experiment which asked users to upload videos capturing a glimpse of their lives on a single day, something which would not have been possible without crowdsourcing.