'Crowdsourcing is a new label for some very old activities'

Where and how does a business begin to crowdsource? What is the process to go about this?
There are many different crowdsourcing models in use today. Two of the most common involve one-time activities and on-going communities. Contests are a popular example of a one-time activity (for example, create a new advertisement, design a new logo, propose a new packaging concept). Ongoing communities typically involve groups of customers or passionate individuals for a particular brand. Companies interested in crowdsourcing might get their feet wet by first engaging in some one-time activities. This is made easier today since there are many intermediaries that can facilitate contests. Ongoing communities probably involve the most planning since they are a long term proposition. In any case, serious companies are carefully thinking about ways to integrate crowdsourcing into their marketing efforts.

What are the merits and drawbacks of crowdsourcing?
Theoretically, crowdsourcing promises several benefits. It is a way to directly interact with customers. Usually input can be obtained faster and cheaper than traditional market research. And, importantly, fresh ideas from a large and diverse group outside the company can be obtained. Issues include protecting intellectual property (who owns the ideas), everything is public (competitors can see what a rival is up to), appropriately motivating participation (love, money, glory), and the potential for a community to become an echo chamber (where everyone essentially has the same perspective and there is no diversity). A big practical issue for companies using crowdsourcing is how to efficiently evaluate all the input that it typically generates (much of which is noise).

Which recent efforts qualify as good examples of strategic crowdsourcing according to you?
Dell’s IdeaStorm is one of the longest running on-going communities for new product ideas. Lego Cuusoo has received a lot of popular press attention for how it has been able to co-create new products with its customers. IBM is very pleased with its IdeaJam (crowdstorming), and Cisco with its iPrize. Threadless (tee-shirts) is well-known for its successful crowdsourcing business model. Finally, Innocentive has probably received the most attention in the form of many articles, case studies, and academic research.

Will crowdsourcing mainly be about communication inputs or will it assume more serious roles such as product innovation?
Crowdsourcing marketing communications such as advertising has received a lot of popular press attention for some brands. Right now I know of many more applications involving product innovation. Has the presence of social networking made crowdsourcing more of a fad or a quick-fix way for marketers to claim they have used social media well.
This is probably true. In my opinion, some companies made a splash by allowing the public to create new advertisements for their brands. However, most of these campaigns were short lived, and in many cases, the company has not repeated these contests. Like the history of most business buzz words, companies want to be perceived that they are on the leading edge. I believe that crowdsourcing has potential in some circumstances, but companies need to think how it can be integrated into their usual activities. The real power of these new tools comes from rethinking normal business processes.

Is cost-saving still the largest driver for brands and businesses to go looking for the crowds out there?
Lower costs are often the reason many companies first become interested in crowdsourcing. Having a voluntary workforce is certainly appealing. However, speed of getting input and the potential for fresh ideas (that might be more original and creative than those from inside the company) are also important drivers. Some new entrepreneurial businesses are based entirely on crowdsourcing. The US government, for example, has made available several important databases that clever entrepreneurs are using to develop new mobile phone apps.

Is crowdsourcing as used in marketing and product development just a passing fad or does it have a larger import to last longer?
Crowdsourcing is a new label for some very old activities. For example, the Statue of Liberty in New York was funded by small donations from the American and French people (early crowdfunding). The British government offered the Longitude Prize in 1714 for anyone inventing a method of determining longitude on the high seas. Today, crowdsourcing as we know it is possible because of the internet and the connections between individuals. Crowdsourcing tasks (like reCAPTCHA) is well embedded in some of our everyday activities, and the Xprize Foundation has achieved a lot of success by offering prizes for major scientific accomplishments. Right now, I think that marketing’s use of crowdsourcing is still in the exploratory stages.

How is it different from , one, the consumer contests of yesteryears and two, focus groups in consumer research that companies tap before and after product launches?
As I noted above, crowdsourcing is not really new. Public contests have a long history. With respect to focus groups, crowdsourcing is usually faster and cheaper. More important, crowdsourcing allows for freer communication and better input than focus groups. Finally, crowdsourcing can tap into a more diverse population of interested individuals. Of course, in neither case are the resulting samples necessarily representative of a company’s customer base.

Barry L Bayus is a thought leader in crowdsourcing.

Barry L Bayus
Roy O Rodwell Distinguished Professor of Marketing
Kenan-Flagler Business School,
University of North Carolina at Chapel Hill, USA