Combining Outsourcing with the Wisdom of the Crowd: Crowdsourcing

Combining Outsourcing with the Wisdom of the Crowd: Crowdsourcing

🔥NEW In the HBR of April 2013, K.J.Boudreau and K.R. Lakhani are writing about the concept of Crowdsourcing (C). According to them C is a recent development in which organizations use the crowd for problem solving, innovation, research and consultancy; it has already resulted in a lot of success stories. But still there exist only few organizations that use crowd-sourcing, mainly because managers’ are not able to distinguish which problems crowds can better deal with than the internal organization. In this article, the four types of C and kind of issues that crowds can handle better than the internal organization and vice versa are outlined. Furthermore, guidance is given on picking the best type of crowd-sourcing in particular situations.

1. A Crowd Contest means that a sponsor runs a contest to find the best solution for an already identified problem by the sponsor. The sponsor offers a reward so that people will be invited to submit the best solution. This type of C is useful if it’s not obvious what skills and technologies are needed for the best solution, usually the case in high-complexity and novel problems. It also works well if problems need creativity and subjectivity, such as design problems.
Nevertheless, contests go together with some manager challenges. The identification of the problem is difficult since it must be important enough to experiment on. Then, it is a challenge to generalize the problem so that it will be rapidly understandable to outsiders. Also, since companies cannot make public their specific problems, the problems must be broken down into various sub-problems and sub-contests. Finally, managers must be able to establish a good structure in the contest.

2. In Crowd Collaborative Communities, various contributions and proposed solutions by the crowd are compiled into a value-creating whole. These communities must first decide what must be included in the final whole after which they can achieve their goal through a process and technology combination. It works best if contributors are able to freely share information and to recombine and accumulate ideas. But crowds lack coherence and are therefore hard to control. , Also intellectual property can barely be protected, therefore organizations must maintain strict separation between proprietary and community assets.

3. Complementors: this type of C creates complementary innovations on an already existing product or technology. Complementors not just find solutions for one specific problem but rather for many existing problems; besides generating revenue it can also result in expanded demands for the product itself (which in turn can increase supply of those complementary innovations). So if utilized in the right context, large competitive advantages can occur with contributors. Nevertheless, also with this type of C challenges appear. The main challenge is about exposing the core products’ functions and information to the crowd and simultaneously protecting these protecting these products. This is challenging especially when the core products are relatively complex.

4. Crowd Labor Markets are highly flexible platforms that match purchasers and sellers of services and matches skills to discrete tasks. This type of crowdsourcing works best if categories of work are clearly established and if the type of solution is already known by organizations. The biggest challenge is the identification of the tasks to farm out and of the people that should handle those tasks.

Since C is a relatively new concept, a full understanding of the possibilities of crowds is not yet possible. Although a lot of challenges still exist, crowds can serve as a useful problem solving tool if using all the energy and intelligence we have for organizing work outside company walls. In that way C can be a concept with great opportunities that will have important implications for finding solutions of the most complex problems that otherwise would never have been found.