Crowdsourcing......say it with me…..Crowd-sore-sing.
This buzzword, part jargon part grammatical compound, echo’s with increasing frequency through the halls of Silicon Valley incubators and business schools alike.
So what is crowdsourcing?
Crowdsourcing is a distributed problem solving process that uses a large group of people (crowd) to take responsibility for part of a firm’s activities. While this process may differ from one business to another it often involves sourcing innovation activities like new product ideation, design and selection to the crowd. (see CBS News overview of Crowdsourcing)
Threadless, one of the best known crowdsourcing companies uses it’s community of ~2 million artists and consumers to design and score t-shirts and other 2-D art designs. The top scoring designs are then produced and sold through the company’s online store and through retail partners.
Threadless’ success has spawned a veritable gold rush of interest in crowdsourcing. Lookk(fashion), Lego Cuusoo (toys), Quirky (Invention), Innocentive (Corporate R&D), GeniusRocket(Creative Agency) and CrowdJewel (Jewelry), are just a few examples of the companies rushing to bring crowdsourcing to new product categories and industries.
With the proliferation of new crowdsourcing businesses it’s helpful to understand some of the key factors that influence their success. While there are many aspects to building a successful crowdsourcing business, below are three factors that I believe have particularly importance:
1) Motivations
Crowdsourcing requires the active participation of a community. To earn and maintain this engagement, crowdsourcing businesses must motivate participation. There has been extensive research and discussion around the intrinsic, extrinsic and prosocial motives used in crowdsourcing (see motivations for crowdsourcing article). While the types of motivations required will vary from one business to another, all companies must work hard to understand the factors that drive their community members and build structures that support them.
One way that Threadless promotes voter participation is by tracking individual voting history. Each community member has a homepage that shows the number of times they’ve voted on designs and how many of these designs were printed. Showing members the impact they’ve had helping designs get printed (prosocial motivation) encourages ongoing participation.
2) Specialization & Creating Boundaries
Crowdsourcing companies also benefit from creating boundaries for their projects and business activities. CrowdJewel focuses solely on women’s jewelry, and is building a community that loves to create, purchase and discuss jewelry design and products. This specialization ensures that when CrowdJewel posts designs, they already have an audience that’s eager to engage. If instead they posted designs for necklaces one day and power tools the next, they would have to constantly recruit new types of community members whose interests may be in conflict. This would reduce the ever-important engagement and participation already discussed.
3) Operational Excellence
It’s one thing to build a successful crowdsourcing community, but it’s another to build a profitable business. Operations and manufacturing are how crowdsourcing businesses make their money. Specialization not only helps build strong communities, but also allows businesses to focus on products with very similar manufacturing requirements. In Lego Cuusoo’s case all products literally rely on the same building blocks – Legos. While this example is a bit extreme, the idea is critical. Specialization allows the community to innovate creatively while streamlining operations. Focusing on operational excellence enables companies to profitably produce any product that is created within the bounds of the community. Without these boundaries companies would be forced to introduce new materials, suppliers and processes for every new product. This would create tremendous complexity and dramatically increase costs and manufacturing time.
These are just a few of the many factors that impact crowdsourcing businesses. What factors do you think make or break the crowdsourcing model, and what new verticals are ripe for disruption? Thoughts and comments welcome!
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