Since the advent of the internet and the emerging of user-generated media, for example, You Tube and Wikipedia, the process of sharing information has become an easy task, because of the great interaction tools that are provided by the internet. Currently, through the internet organizations and individuals can outsource most of their research work, market surveys, and even seek external assistance in solving critical organizational problems using processes such as crowdsourcing.
Crowdsourcing was first used to determine the degree of influence of the collective mind on a single business. It is believed that crowdsourcing is the process of doing work by a variety of contractors without any contracts, in most cases, online. Unlike freelance, the use of human resources is suitable for solving more labor-intensive tasks that require a considerable number of performers and time. Thus, the most precise definition of crowdsourcing is information technology, which combines interested people and makes it possible to propose ideas on a given topic, comment and discuss, refine and choose the best.
Meaning and Definition of Crowdsourcing
The term ‘crowd-sourcing’ was coined by Howe (2006) to designate the act of outsourcing a job traditionally done by a specific employee or specific group of employees to an unknown large group of people by making an open call. Crowdsourcing primarily entails outsourcing tasks to an online community who are supposed to offer correct solutions to such activities and offer a feedback to the outsourcer. Once such feedbacks have been received, they are reviewed and the right and best solution selected, the provider of such a solution is rewarded if the task had a price tag. As compared with most traditional outsourcing it is not only cheaper, but also an efficient and affordable way of getting viable business ideas and solutions to problems. Considering this process involves the use of the “crowd” that may make it to have some disadvantages such as lack of originality and quality problems, crowdsourcing is one of the most important processes not only in research work, but also in business, because of its numerous applications.
Crowdsourcing is a unique tool for both business and government. For example, the owner of a company that produces consumer goods is about to release a new product. How do business people know if it will be in demand? It is essential to understand that the standard way of marketing research is time-consuming, expensive, and is not always effective. An alternative is crowdsourcing, because within a couple of days, the consumer demand for the product will be known, and the report will be received from the target consumer. It should be mentioned that the Starbucks coffee shop company created the My Starbucks Idea website. The team collected the plans for improving coffee houses from visitors, and also tested new products.
In business, crowdsourcing can be used to achieve a wide variety of goals from solving a specific problem, creating content, generating new ideas to conducting an expert assessment. At the same time, the competence of the people participating in the project does not matter much. For example, directors can invite users of the site to participate in the best idea competition with a guarantee of an excellent reward to the winner. Another example involves questioning on improving the service in return for a small discount or free expert content.
Applications of Crowdsourcing
Crowdsourcing has been shown to help organisations do the following activities: knowledge discovery and management, human intelligence tasking, broadcast searching and peer-vetted creative production. An organisation could use crowdsourcing to achieve one or many of the applications. An organisation could use crowdsourcing to gather opinions on a new product and/or service that it would wish to introduce to the market. The opinions received from the large group of people would go a long way in helping the firm to take final products and services that would meet the needs of customers. This is an economical way of conducting product research because it does not involve taking goods to customers for testing and approval.
The goal of crowdfunding is to achieve financial targets by requesting the online community to participate in contributions that would culminate in completion of the proposed project. Business organisations could use crowdfunding to get funds to develop unique products and services for customers. In fact, the funding approach is a sure way of determining the level of customer numbers that would purchase the finished product. If only few people participate in contributing for completion of a product, then it could be an indication that the proposed product would have few customers once it is taken to the market. On the other hand, massive contributions by the online community would imply that the proposed product would attract many customers once taken to the market.
A business organisation could use creative crowdsourcing to solicit for creative ideas on complex projects, for example, apparel and graphic designs. The intention of this type of crowdsourcing would be to find out the designs that would attract customers once a product is completed. It does not involve paying professionals for their work on projects, but interested individuals are invited to submit their design ideas and interpretations. An organisation could adopt a final project based on the complication of the projects that are reviewed.
Advantages of Crowdsourcing
The advantage of crowdsourcing is in reducing the cost of the company to perform many tasks. For instance, it is more profitable for a company to attract various specialists to solve a non-core task once than to hire a separate employee for this assignment. Implementation of projects does not require a lot of money, because often the website or social network is enough. Besides, in many cases, participants do not need a monetary reward because the best incentive is to participate in the work of a well-known company or to see their idea embodied.
One primary advantage of crowd sourcing is that, the process can help an organization to reduce labor and research costs. When crowd sourcing an organization is only supposed to post its problem to the online community who are supposed to compete for a single price. Hence, an organization is saved from incurring any costs associated with recruiting, training, and paying employees who are supposed to complete such a task. Another advantage that is closely related to this is that, this method offers organizations opportunities of gathering numerous creative ideas that are beneficial to the well-being of an organization. As compared to other outsourcing methods that may force one to waste a lot of time searching for individuals with the required expertise to perform specific tasks, crowdsourcing is faster, because the big pool of online individuals with required expertise. This process can also help an organization to get employees with certain talents that an organization is searching for, when used as a platform of recruiting employees. Finally, this process is an important marketing and product development tool, because of the enormous number of individuals who have access to the internet.
Disadvantages of crowdsourcing
It is important to note that the disadvantages of crowdsourcing include the difficulty in predicting the quality of project participants’ work. The business can get thousands of brilliant ideas, but there is a risk of not getting a single sensible thought. Crowdsourcing has excellent potential for use in business, which is increasingly aware of the effectiveness of attracting outside forces to solve specific problems. The capabilities and applications of crowdsourcing will expand significantly with the advent of technologies to achieve synergies, combining the intellectual efforts of participants.
Although a good methodology of getting tasks accomplished using minimum costs a within set limits and deadlines, this method is susceptible to leaking of information; hence, reducing the originality and confidentiality of most ideas got through crowd sourcing. In addition, although it is a good marketing strategy, if some outs outsourced tasks results in poor quality outcomes, an organization may lose the confidence and loyalty of its customers.
Further, because of the low motivational levels associated with this process, likelihoods of some respondents providing misleading, illegal or worthless information is high, more so in marketing surveys. On the other hand, this method has numerous hidden costs, which if not well considered may make it an expensive venture. For example, sometimes the cost of employing say two professionals to handle certain tasks can be cheaper, as compared to employing professionals to review numerous submissions from the online community.
Examples of Companies Tend to Use Crowdsourcing
Threadless is a T-shirts company that uses crowdsourcing as part of its business plan. It gives members of its social network, who are more than two million, the creative control over the products that the company offers to the market, especially the T-shirt designs. Members submit and vote for the best designs, where the winners get compensation when their designs are printed and sold by the company as part of the business. The Threadless example shows that companies are encouraged by the ability to meet high innovation and creative designs at a minimal cost as the generic tools for crowdsourcing ideas are already available freely or at affordable rates.
The FoundersClub is a company whose business is the provision of an angel investment platform. The business allows investors who have a few resources to make angel investments in the company, which they would otherwise not be able to do. The FoundersClub requires members to commit small amounts annually for funding activities. It then pools all the funds and invests in different companies. Thus, the FoundersClub can get money for investment without having to work with a particular financial partner, such as a bank, as its primary supplier. At the same time, the company allows its investment members to offer skills to the companies they invest in when the companies require the skills urgently, but they are unable to find employees.
Nokia is one of the most established global companies that rely on crowdsourcing for innovation. It manages a consumer driven collaboration platform that unites contributors from 210 countries and generates consumer experiences from the participating innovators. Participants of the “Ideasproject” by Nokia end up getting a share of the company’s revenue, which comes from its crowdsourced ideas. The participants can become agents of product-design at particular levels within the “Ideasproject”. As a result, Nokia can respond to the trends and demands for product design and functionality innovations.
TopCoder is another example. It has the TopCoder Direct platform to link the crowd with its clients, where the arrangement allows clients to receive assistance remotely from the crowd, rather than from the company. Members of TopCoder Direct can be regular or advanced. The advanced members run projects where they serve as co-pilots. Outsourcing at TopCoder allows the company to maintain a small number of in-house technical staff and automate the customer solutions part of the business using the crowdsourcing platform