This is the first of a series of ten articles describing technology-driven business trends reshaping business strategy across all industries.
The first article in the series is about crowdsourcing, a term coined by Jeff Howe in a June 2006 article of Wired magazine. The official definition of crowdsourcing from Jeff Howe, is “the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.”
Web 2.0 technologies provide the infrastructure for crowdsourcing. Their interactivity creates contacts at a lower cost and encourages participation on all levels of an organization. Web 2.0 technologies also bring greater scope and scale to organizations, strengthening bonds with customers and improving communications with suppliers and outside partners. This model of labor has been more and more embraced by all kinds of organizations. 70 percent of the executives recently surveyed by McKinsey said that their companies regularly created value through Web communities.
Wikipedia is one of the best known examples of crowdsourcing at work. Thousands of Wikipedia users have created an encyclopedia that studies have shown is as accurate as traditional volumes like Encyclopedia Britannica. Google is another example, as it organizes websites based on how they link to each other. Google sees links as votes for the relevance of a page. Basically Google is tapping the wisdom of crowds to determine which websites are the most relevant.
Intuit is among somewhat more traditional companies that use crowdsourcing to extend their reach and lower the cost of serving customers. For example, it hosts customer support communities for its financial and tax return products, where more experienced customers give advice and support to those who need help. The most significant contributors become visible to the community by showing the number of questions they have answered and the number of “thanks” they have received from other users. By McKinsey estimates, when customer communities handle an issue, the per-contact cost can be as low as 10 percent of the cost to resolve the issue through traditional call centers. Other companies are extending their reach by using the crowdsourcing for word-of-mouth marketing. P&G’s Vocalpoint network of influential mothers is an example. Mothers share their experiences using P&G’s new products with members of their social circle, typically 20 to 25 moms. In markets where Vocalpoint influencers are active, product revenues have reached twice those without a Vocalpoint network.
Click here for a list of other companies relying on crowdsourcing.
To assure crowdsourcing success follow these rules:
- Upfront research is necessary. Don’t neglect the up-front research needed to identify potential participants who have the right skill sets and will be motivated to participate over the longer term.
- Crowds should operate within constraints. To harness the collective intelligence of crowds, there need to be rules in place to maintain order. Not everything can be democratic. Sometimes a decision needs to be made, and having a core team (or single person) make the ultimate decision can provide the guidance necessary to get things done and prevent crazy ideas and groupthink from wreaking havoc on your product.
- Crowds must retain their individuality. Encourage your group to disagree, and try not to let any members of the group disproportionately influence the rest.
- Crowds are better at vetting content than creating it. It is important to note that in most cases, the group merely votes on the final product; they do not actually create it.
- Provide feedback and the right incentives. Give feedback to stimulate continuing participation and commitment. Getting incentives right is important as well: participants value reputation more than money.
- Gain a high level of trust within a Web community to earn the engagement of top participants.
Recommended reading:
- Josh Bernoff and Charlene Li, Groundswell: Winning in a World Transformed by Social Technologies
- Don Tapscott and Anthony Williams, Wikinomics
- Joel A. Farrell, Wikis, blogs and other community tools in the enterprise
- More reading here
When LinkedIn asked thousands of its translator members to complete a survey last month asking whether they would consider volunteering to translate the site, many said no and gathered together in a group called “