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Innovating with the in-crowd
Crowdsourcing is part of an honorable tradition
Lateral thinking
In the early eighteenth century, an English carpenter and clock maker, John Harrison, was
awarded a phenomenal sum of money – £15,000 – when he made a great scientific and
technological breakthrough.
Harrison invented the marine chronometer which determined ships’ longitude at sea. The
Longitude Prize was established after the likes of Edmond Halley and Isaac Newton had
failed to come up with a solution. Recalling the story in the Harvard Business Review, Kevin
J. Boudreau and Karim R. Lakhari make the point that this is really an early example of what
we now call crowdsourcing – getting ideas or creating new products and services by
enlisting the help of a large body of people.
Wearing different guises, crowdsourcing has been with us for hundreds of years. ‘‘Entire
industries’’, as Boudreau and Lakhari observe, have been kick-started this way and
examples include aviation and personal computing. There might never be anything
genuinely new under the sun but technology has undoubtedly transformed the possibilities
for crowdsourcing. In its online incarnation, huge numbers of people can be brought into the
fold to bring their expertise to bear.
The writers identify four distinct forms of crowdsourcing. All have specific merits, which
mean that they are more suited to specific challenges than others. The four are: contest,
collaborative community, complementor and labor market.
Making a name
The first is perhaps the most straightforward, the one which paved the way for John Harrison
to carve a permanent name for himself in the history of technological advancement. A
sponsor identifies the problem and gives some form of prize, probably cash, to the winner.
The Longitude Prize is just one of many ways in which this approach has been used.
Contests work well with really cold starts to the question. In other words, when no one has
much idea of the skills and approaches that will be needed, and experimentation and
multiple solutions might help. Those asking the questions might not even know what the
solution will look like, such as when pharmaceutical firm Merck wanted to streamline its drug
discovery service. Following a contest which brought more than 2,500 proposals, computer
scientists rather than life sciences professionals came up with the solution.
Crowd collaborative communities are really an extension of internal brainstorming. It is less
cohesive, but more diverse. It also has plenty of history: Bessemer steel and Cornish
pumping engines are just two of the developments aided by collaborative communities.
DOI 10.1108/SD-06-2013-0032 VOL. 29 NO. 8 2013, pp. 9-12, Q Emerald Group Publishing Limited, ISSN 0258-0543 j STRATEGIC DIRECTION j PAGE 9
Modern companies which have used the community approach include Facebook, for
translation services, and Danish toy firm, Lego, which has brought in fans of the product to
come up with new designs and ideas. Information is shared freely but the downside, of
course, is that it is virtually impossible to protect intellectual property.
Apple’s sure touch
Crowd complementors provide an approach through which a new market can be built on to
an existing core product or technology. It is suitable, therefore, for complementary
innovations; iTunes, which developed via Apple’s core mobile products is one example.
Apple has revealed a sure touch through use of crowd complementors, stealing a march on
the likes of Bang & Olufsen and Bose along the way.
The final crowd-sourcing approach matches buyers and sellers of products. Companies use
third-party intermediaries rather than building platform themselves. Effectively, it is an
extension of hiring and outsourcing practises that have long been in existence. While similar
in principle to outsourcing, these tactics offer greater scope for matching talents with the
work than was previously possible. As is so often the case, innovatory practises build on old
practises, rather than supplanting them.
Not many previous generations would have been happy with the term ‘‘crowdsourcing’’.
Mark Wexler views the concept through sociological eyes, arguing that early theories of the
crowd played up its negative side. Crowds could be seen as irrational threats to social order.
Another view acknowledges that crowds can be rational agents of change, and therefore a
problem for anyone wishing to preserve the status quo.
Via more enlightened and lateral (though not necessarily modern, some of these ideas can
be dated back to the nineteenth century) ways of thinking, crowds can be seen as problem
solvers. This turns the ‘‘unthinking mob’’ notion on its head by arguing that crowds can be a
form of collective intelligence. Those responding to the call for help can be motivated by
benefits to volunteer their input to come up with ideas.
Simple but effective
Wexler cites the case of beauty and cosmetics company L’Oreal. Following an appeal for
ideas to viewers of a television station which relied on user-generated content, L’Oreal put
out a simple but highly effective advertisement. The cost was $1,000, as opposed to the
$160,000 or so that might have been used if the company had gone in-house or via a
creative studio.
It’s tempting at this point to do a variation on George Orwell’s Animal Farm: ‘‘New crowd
good, old crown bad’’. However, Wexler asks whether it is really as simple as that. ‘‘Is the
compliant crowd at the start of crowdsourcing likely to remain so or does it learn to increase
its demands as it realizes its value to the crowdsourcer?’’
Advocates for the new crowd frame the crowdsourcer as a champion of change. They do not
recognize the crowdsourcer as either an elite group or those doing the elite’s business.
However, it could be argued that crowdsourcing does create a new elite which ‘‘maintains a
position of powering in which it presents itself virtuously’’. There’s always a cost, someone
winning and someone losing. In the case of L’Oreal, for example, those who might
traditionally have been expected to benefit from that $160,000 advertising project miss out.
’’Apple has revealed a sure touch through use of crowdcomplementors, stealing amarch on the likes of Bang &Olufsenand Bose along the way. ’’
PAGE 10 jSTRATEGIC DIRECTIONj VOL. 29 NO. 8 2013
Under the ‘‘new elite’’ of crowdsourcing the enthusiasm and skill of the person on the street
trumps experts and high-cost professionals. It’s easy to see an eventual backlash to such
ideas. It’s also tempting to go back to Orwell and say that some in the new elite will be more
equal than others.
Ripe for exploitation
The term crowdsourcing was actually coined by Jeff Howe as recently as 2006 in the
computer magazine Wired. Garrigos-Simon et al. include this historical detail in their article,
whose main focus is on the relevance of crowdsourcing, together with the importance of
community managers, in exploiting social networks and Web 3.0.
The new technologies of the Web 3.0 provide a wonderful opportunity for companies to
harvest information. Before, during and after contact with customers they can use
techniques such as data warehousing, data mining and customer relationship management.
Together with the information that comes to them via social networks and the net in general,
this can pave the way for adapting and personalizing products, brands and services by and
for different users or firms.
This is all based on the creation and management of networks. The new technology’s
importance might be indisputable, but it would be nothing without the participation of people
who live, interact, learn and create via the Web. Those personal relationships are the ultimate
source of competitive advantage, not least for the way that Web 3.0 can transform the
customer from a passive individual into an active one who wants to participate in the all the
production processes.
Sophisticated information systems have allowed Spanish-based retailer Zara to achieve
great success with their fast-fashion retail network. This enables the company to gather
information every day on the products bought by customers. Zara can adapt to rapidly
changing markets. The company is able design, produce and deliver new products, and put
them on display in its stores worldwide within 15 days, according to store data and the latest
customer preference trends. Some airlines have used these information systems to help with
their revenue management, allowing them to set prices according to demand and
production factors.
Stakeholders united
The real lesson of recent innovations such as these nevertheless has to be that the new
marketing and management systems promoted by the evolution of Web 3.0 are based on
enhancing participation and collaboration in the development of organizations. Employees,
customers and other stakeholders must all play their part, thereby intensifying the innovative
culture that allows for the creation of new business models and upgrading of those
established in different organizations.
The right strategies are needed, and community managers and crowdsourcing are key parts
of that process. Community managers have overall control of the virtual communities and
liaise between companies and the online communities. They’re the ones with responsibility
for ensuring a good relationship between the two. It’s a role that also involves management
skills and the ability to promote participation and collaborations of stakeholders to improve
some crowdsourcing processes at different points of the value chain. These include
marketing, design and development of products and processes, R&D and solutions for all
kinds of technical problems.
’’The new technologies of the Web 3.0 provide a wonderfulopportunity for companies to harvest information. ’’
VOL. 29 NO. 8 2013 jSTRATEGIC DIRECTIONj PAGE 11
Meanwhile, the precise impact of community managers on organizations and the
appropriate skills for developing their tasks could be the subject of further research. The
fundamental idea behind crowdsourcing is not a new one; but its potential, thanks to the
unprecedented growth of communication technologies, has never been greater.
Comment
This review is based on ‘‘Using the crowd as an innovation partner,’’ by Kevin J. Boudreau
and Karim R. Lakhani (2013); ‘‘Reconfiguring the sociology of the crowd: exploring
crowdsourcing,’’ by Mark N. Wexler (2011); and ‘‘Social networks and Web 3.0: their impact
on the management and marketing of organizations,’’ by Fernando J. Garrigos-Simon,
Rafael Lapiedra Alcami and Teresa Barbera Ribera (2012).
Two of these articles make convincing arguments for the role of crowdsourcing: Boudreau,
through an examination of the differing approaches it permits to innovation; Garrigos-Simon
through the way technology has expanded horizons. Wexler takes an almost maverick
stance with his sociology-based paper, occasionally verging on the recondite but adding an
interesting critical element to the debate.
Keywords:
Collectivism,
Creativity,
Crowdsourcing,
Ideas generation,
Innovation,
Social networks
References
Boudreau, K.J. and Lakhani, K.R. (2013), ‘‘Using the crowd as an innovation partner’’, Harvard Business
Review, Vol. 91 No. 4, pp. 61-69, ISSN 0017-8012.
Wexler, M.N. (2011), ‘‘Reconfiguring the sociology of the crowd: exploring crowdsourcing’’, International
Journal of Sociology and Social Policy, Vol. 31 No. 2, pp. 6-18, ISSN 0144-333X.
Garrigos-Simon, F.J., Laprieda Alcami, R. and Barbera Ribera, T. (2012), ‘‘Social networks and Web 3.0:
their impact on the management and marketing of organizations’’, Management Decision, Vol. 50 No. 10,
pp. 1880-1889, ISSN 0025-1747.
PAGE 12 jSTRATEGIC DIRECTIONj VOL. 29 NO. 8 2013
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