Made on the Web, designed by us

With a new survey showing that the majority of people on the Web are willing to co-create, crowdsourcing is looking like a repeatable, reliable way to outsource work and partner with online communities to create concrete results. Crowdsourcing has become increasingly attractive to small businesses as well as enterprises. Yet this category remains stubbornly in the experimentation phase even as some firms start racking up significant wins. Here are the pros and cons of this approach as well as how companies get started in what is shaping up to be one of the most significant new approaches to global business in this century.
Written by Dion Hinchcliffe, Contributor
With crowdsourcing, how we produce ideas and work in the 21st century will be very different indeed. The notion of the Internet as a medium for self-expression and creativity is certainly not a new one. The Web 2.0 era has repeatedly underscored the point that when an online service successfully taps into the wellspring of global innovation that is us, the outcomes can be historic. Now traditional businesses are finding ways to take advantage of the same power. It's no accident that the top five sites on the Web as of this writing are Google, Yahoo, Facebook, YouTube, and Wikipedia. The vast majority of all content on the latter three services is entirely user generated, while arguably the first, Google, is merely a reflection of our own content after passing through their patented algorithm. The implication is that what we collectively create has become the most significant and popular part of the Web.

In recent years a new and slightly different take on user generated content has emerged. The growing popularity and professionalism of crowdsourcing has led to a number of online services who specialize in meeting the specific needs of businesses by enlisting their communities to tackle anyone's challenges, usually in exchange for some form of compensation. The advantages are clear: Very low cost access to enthusiasts and experts in a given subject, broader input of new ideas, faster response to needs, and so on. The disadvantages are less so, but usually boil down to lack of control, occasionally in unsatisfactory results, and finally there are concerns about security and privacy.
Crowdsourcing Models for Social Business
But the biggest question has been whether sourcing to the Web is a repeatable and reliable way to run a business. Can you really count on a largely unknown group of people on the Web to predictably provide you with the results you need day-to-day? While the fast growing number of crowdsourcing services (I count several new ones a week now) speaks volumes, another interesting new data point surfaced this month that shows that the wellspring might indeed be as large as required for widespread adoption. A new Forrester report issued last week says that despite half of all firms yet to use social media to drive product design, creation, or strategy, approximately "sixty-one percent of all US online adults are willing co-creators" if they are so tapped.

A majority are willing to co-create

Source: North American Technographics Consumer Technology Online Benchmark Recontact Survey, Q2 2010.

This is a significant piece of data and if borne out shows that how we produce ideas and work in the 21st century will be very different indeed. For its part, The New York Times has been running a long series of pieces on crowdsourcing over the last year, most recently this small business guide, where a lot of the focus has been in terms of the growth and richness in co-created products and services for SMBs. This is an interesting departure from much of the use of Web 2.0 in business, which has often been dominated in recent years by the enterprise space. Large firms have often had the resources and spare capital to invest significantly in capabilities such as Enterprise 2.0 and Social CRM. Not that the Global 2000 has eschewed crowdsourcing either. Many notable examples exist here too, particularly with well-known enterprise crowdsourcing services such as Innocentive and Ideascale. Yet an informal survey of some of the newer crowdsourcing services such as Tongal and Whinot shows that small businesses are the major customer base, if not the actual target. Almost certainly it's because crowdsourcing offers by far the least expensive route to conduct the activities that small business are often too financially strapped to do any other way. This is part of the dramatic collapsing of traditional cost structures for many classical business activities that seems to be a hallmark of Social Business in general. For some, this will provide a major competitive advantage and associated gains, at least as long as the leaders in their sector are still using the old methods. For others, particularly late arrivals, it will no doubt become a required competency but perhaps not offer up the same disruptive potential. The real insight into the data above, however, is that there indeed seems to be a vast and ready reservoir of talent that can be tapped into inexpensively by most businesses. When people around the world are more than willing to tell you what they want, why wouldn't businesses listen? I've long pointed out the not-invented-here syndrome that afflicts companies when they get a certain size, and it's certainly one of the major reasons that about half of businesses ignore significantly improved ways of operating. Yet, much of it is accidental and due to the time it takes to absorb and activate on fundamentally new ideas. Unfortunately, the rest of the world hasn't been waiting and as I pointed out at the top of the post, many of the global winners online are largely built by their customers. For the rest of us, how might we best go about applying crowdsourcing to our lines of business with minimal disruption and the best benefit? Like, so many things, adoption is a matter of looking at the opportunity with an open perspective:

How to experiment with crowdsourcing

For those looking at exploring this new approach to sourcing work, here are some common sense steps:
  1. Look for areas where traditional methods aren't working in your business today. This might be in customer support, where the crowdsourcing aspect of Social CRM can offer significant help, or it could be in product design, testing, or another place entirely where not enough people with the right ideas or skills can be applied effectively. Good signs are when some important business function is either far too expensive, doesn't scale, or is producing poor quality results (typically due to too few usable inputs).
  2. Identify candidate crowdsourcing services. It often helps to identify more than one, so that they can be run off against each other in parallel to get the best results. I'll be creating a detailed round-up of crowdsourcing services shortly, in the meantime use Ross Dawson's useful Crowdsourcing Landscape as a good starting point for your list. There are new services emerging all the time, however, so it's worth taking a time to explore and find applicable candidates.
  3. Engage in pilots with your candidate services. One of the good things about crowdsourcing is that it's typically very inexpensive compared to alternatives like subcontractors or outsourcing. Consequently, you can usually try out all available services until you find one that works best for you. Keep an eye out for the ones that attract top performers (these services are often more expensive than the others, but again, sometimes not by much) and whose community is aligned well with your primary business if possible.
  4. Move successful pilots into operation while cultivating new contributors. Unlike traditional business relationships, which are usually far more stable and change less frequently, the world of open business models is much more dynamic. Be prepared to continue discovering and evaluating new communities to tap into and participate with. The crowdsourcing journey is one fraught with change, challenges, and opportunities and there is no final destination. Communities ebb and flow and change is the norm in this new discipline.
In the future, many of the products and services that we will use could be labeled "Made on the Web, designed by us". But for now, this nascent and emerging field is offering early adopters a powerful and easy-to-use new alternative for building scalable, fast-growing businesses for a fraction of the cost of the slow and inefficient methods of yesteryear. For those that can clearly see their future, anyway. As this field continues to grow and expand, I'll be exploring more of the stories of crowdsourcing and other open business models in coming months. Please share your experiences with sourcing to the Web below in Talkback.
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