What is Crowdsourcing?

With modern corporate operating conditions toughening by day, businesses are obliged to step up their game on various levels to keep up with the pace. Hiring the best marketers, equipping the workforce with contemporary skills and improving public relations can work the magic, but sometimes that’s far from all staying up there with the best calls for. Ancient techniques, in basic terms, cannot be solely depended on in developing sound ideas let alone executing them.

Talking about coming up with ideas (and implementing them), a new trend that is barely a decade old in the mainstream is playing emblem to just how fast the modern world can adopt a promising pet project.

Companies – the very best included – are not entirely reliant on employee services and ideas anymore but on what its customers, critics, and third party experts have to suggest as well. It goes by a name pretty proverbial: Crowdsourcing. Unless you’re living under a rock, you at least have a clue of what this is. Perhaps you have heard about crowdfunding then? Well, that’s a form of crowdsourcing.

We are going to assume you are green as can be about this topic and begin with the basics. Then we will break down the subject further and touch into as many elements as possible.

For startups, and entrepreneurs in general, there is a lot to learn here.

So, what is Crowdsourcing?

Crowdsourcing is the practice of obtaining ideas, funds, time, expertise etc. from a group of people or a ‘crowd’ in a bid to accomplish a premeditated goal. The goal can be in the form of efficiency, problem-solving or innovation, and can pertain one of a range of industries and levels of production.

The term crowdsourcing was born back in 2005 from a combination of the overtly related terms “crowd” and “outsourcing”. The guys behind it Mark Robinson and Jeff Howe believed the whole thing could be translated as “outsourcing the crowd”, a supposition they made clear in Howe’s article of June 2006, “The Rise of Crowdsourcing” in Wired.

Echoing the founder himself, we can define crowdsourcing as:

That said, you will be forgiven for thinking that crowdsourcing was actually ‘founded’ in 2005. Well, only the term was. The practice has been in existence for centuries now, but implicitly, thanks to unreliable antiquated communication systems of back in the day.

The power of faster and more cost-effective internet must have popularised the phenomenon to the level that a name was indubitably needed and, as a result, brought it into being. Daren C. Brabham became the first person to integrate the new term into a scholarly writing in 2008.

The Olden Crowdsourcing of Yore

First, you should understand that there is a difference between how the old guys used to crowdsource ideas and resources and how we go about it in the modern world.

Right now, the internet is littered with crowdsourcing websites that have formed a major link between the organizations and individuals willing to lend a hand, unlike in the past where one had to print on papers (that were barely accessible to some) or go looking for potential benefactors in person, which plausibly must have been a little tiring and tedious.

Lack of sufficient information regarding various phenomena in the 18th and 19th centuries was a rife hitch in conducting researches and developing theories, and this inevitably prompted scholars to seek for assistance from members of the public.

For instance, in the making of the Oxford English Dictionary back in the 1800’s, understandably a few people could not come up with the whole vocabulary so the public as per request submitted their suggestions to the working group. The same thing applied when astronomer Denison Olmsted wanted to chronicle the meteor shower and its patterns in the early 19th century.

1. Modern Crowdsourcing

Just like everything else, crowdsourcing became popular and widespread with the start of the century thanks to the intensifying competition, advancement and affordability of information technology and later the invention of the smartphone.
Currently, crowdsourcing is carried out through the internet, not only massively reducing the cost and increasing the number of potential recipients of the information but also ensuring that only interested individuals are reached – as crowdsourcing sites could only be logged onto by users who are interested in crowdsourcing.

Crowdsourcing can be broken down into two broad categories:

• Implicit; and
• Explicit crowdsourcing.

Explicit crowdsourcing involves working together to work out a way to solve a problem while implicit crowdsourcing is aimed at bringing together individuals to come up with a solution for a side effect of an earlier action (that they may not have been part of).
The following forms taken by crowdsourcing in the corporate world can fall into the aforesaid categories.

2. Crowdfunding

Crowdfunding is the most popular form of crowdsourcing. It involves funding projects by obtaining monetary contributions from third parties, usually for a favor in return once the project is a success.

Most of the times rewards-based crowdfunding is conducted as product pre-purchasing. Drone, wearable and physical computer accessory startups with game-changing plans have particularly taken this form with a promise to make its funders the very first people to receive the product once it’s complete.

It can be fairly termed as a risky investment by the funders, as a refund is not warranted in case the whole project turns out to be a dud, but there hasn’t really been a history of failing campaigns to make it empirically cringe-worthy.

The problem, apparently, is that the very first products are usually super-buggy and that’s sadly what the people behind the project’s success, namely the backers get.
Kickstarter and Indiegogo are the two most popular platforms for crowdfunding for business. Both were founded little under ten years ago with Indiegogo – created in 2007 by Danae Ringelmann, Slava Rubin and Eric Schell – commanding a larger website user base.

Pebble Time Watch Technology

A good example of a very successful campaign was Pebble Technology’s in 2013 to raise funds for their smartwatch-cum-fitness-tracker Pebble Time which attracted more than 78,000 backers and raised more than $1 million within 49 minutes of its launch, $48 million in two days and $20.3 million at the end of the campaign, all three milestones denoting unprecedented feats on any crowdfunding website.
Perhaps the fact that Pebble Technology wasn’t a startup played in its favour as techies were already conscious of the company’s abilities but that has not always been the case with most funded proposals.

Coolest Cooler

Coolest Cooler™ launched a campaign of their own late in 2014 and showcased a prototype of the all-encompassing cooler (going by the brand name) they were developing, securing the backing of 36,000 people on Kickstarter. Yes, it may have turned out to be a sell in the end with directors citing miscalculated pricing in the campaign but it was proof that strategic campaigns can actually work without history and establishment backup.

Tilt and Quirky

Tilt™ and Quirky are the other known rewards-based crowdfunding platforms.
Crowdrise and the very famous GoFundMe make for the few platforms exclusively designed to facilitate funding towards charitable and personal causes. They are incentive-based and tied down to donations to, say, funeral and medical bills rather than profit-oriented campaigns.

Counterintuitively, Kickstarter is the most popular one in the West having played stage to some of the most successful across-the-board campaigns.

3. Crowdvoting

Crowdvoting has nothing to do with soliciting for monetary (or anything physical, for that matter) funding and everything to do with ideas, judgements, and opinions regarding a given topic.

Unlike crowdfunding, anyone – and not just businesses – is qualified for crowd voting but of course ‘backers’ are more interested in businesses as the end result could be something with a discernible impact.

Solicitors typically don’t use exclusive websites as is the case with crowdfunding, but instead do it on social media or on their own websites as an independent campaign targeting their ‘followers’ and loyal customers.

We have seen behemoths such as Coca-Cola and Domino’s Pizza follow this route while looking for bottle design and pizza ideas respectively, and it worked; Coca-Cola adopted the most upvoted design while Domino’s Pizza introduced a new pizza as suggested by a fan.

The method has grown famous among multinational organisations in various industries but this should never be confused with a lack of ideas on the designated personnel’s part or anything similar.

Mostly it’s a stunt to engage their customers and make them feel part of projects and thus remain loyal. In the long run, it counts as a popularity or sales gimmick. And, yes, it works, at least according to a research by Crowd-wisdom Intelligence Strategy who wanted to evaluate the impact of crowdvoting to the movie industry. They found out that the trailer of a movie and its feedback from viewers is an overture of the performance of the movie itself when it comes out.

4. Mobile Crowdsourcing

Mobile crowdsourcing involves the review of activities that take place on smartphones, tablets, and other mobile devices and using the data to make inferences on trends and preferences.

GPS technology together with other personal data on social media and other internet-based platforms provide the basis of mobile crowdsourcing. It is the same system Facebook and Google uses to know your location, gender, age and orientation to channel advertisements towards targeted persons.

It is one of the most successful forms of crowdsourcing yet only that many people are hypercritical of its algorithms which pry into individual private data.

5. Macrowork

This is where users with special skills are asked to contribute to large projects in phases where their skills can apply.

6. Microwork

Microwork is similar to macrowork only that these typically do not involve large projects, longer periods of time and specialized skills. This form of crowdsourcing is characterised by one-off jobs and are paid for by the crowdsourcers, with the rates varying with task difficulty, size etc. Amazon’s Mechanical Turk is a perfect example of a microwork crowdsourcing platform.

7. Inducement Prize Contests

Inducement prize contests are open platform competitions where crowdsourcers get to answer or solve a question or problem provided by the campaigner with a prize for the best answer (which will subsequently be adopted).

A good example of such a contest is the 2009 Netflix Prize which had a $1 million grand prize. The competition required participants to come up with a better and more accurate algorithm than Netflix’s own.

Winners of the contest, BellKor’s Pragmatic Chaos, submitted an algorithm blueprint that was allegedly 10% better than what Netflix was using in its then state. Unfortunately, the multinational never adopted the algorithm citing unnecessarily crazy costs that would come with the implementation.

Other forms of crowdsourcing include health care crowdsourcing – where governmental and non-governmental organizations solicit medical research for more reliable and efficient health care practices – and agricultural crowdsourcing, both of which fall under implicit crowdsourcing.

Why Crowdsourcing is Not a Waste of Time

The one thing that makes crowdsourcing one of the most powerful tools in the modern corporate world has everything to do with why people are setting up businesses in the first place: obtaining productive resources at a bargain.

With the cloud, social media and just the internet in general, it’s so easy to come across skilled and willing people to perform simple tasks on your website such as captioning hundreds of photos for a cost that would in no way add up to surpass or even equal what a full-time employee would cost.

Sometimes you may have enough employees to even think about crowdsourcing ideas, but we all know that time when a task catches you on the hop and you have to jump to Google to try and find a solution.

That’s when third party assistance comes in handy, and, well, we even have specific places on the internet these days where we can find the brains: sites such as freelance.com, studio.envato.com and Fiverr.com.

Whether whatever you’re paying for is for profit or just informational use, crowdsourcing is spilling cheap and effective labour at your disposal.

It has worked for a number of organisations (both profit and nonprofit, and even the government in a few occasions) to collect, parse and evaluate data in situations where depending on internal workforce would either be too costly or will just not work out due to scale or complexity of the assignment.

The US government through its relief agency the USAID launched in 2012 a crowdsourcing initiative to analyse and classify USAID Development Credit Authority (DCA) loan data and make it available to the public in a condensed and comprehensible form.
Assigning the task to the public not only eased the agency off the burden but also increased its transparency, as an offshoot.

The UK government, also, through the ministry of Digital Economy back in 2015 called on the public to give their opinions on the digital revolution in the country and how they would want the digitalisation of the education system, the NHS, transport, and communication carried out. The ministry provided an email address open for suggestions until January 2016.

Crowdsourcing For Business

As regards to crowdsourcing for business, the biggest beneficiaries have been startups but established companies and institutions haven’t let pass the opportunity either.

Apple in 2014 introduced a tool known as Apple Maps Connect through which business owners could directly update their location information on Apple Maps.

This was in a bid to reduce inaccuracy, wonky 3D images and misleading driving directions that were making the app virtually unusable. The tool would also allow the business to add information such as the official Twitter handle, Facebook page, Yelp page and a link to the official website in addition to a phone number, location, and address.

Another tech powerhouse that couldn’t possibly be as good without crowdsourcing is Google. While most of its functionalities are not directly the products of crowdsourcing, their improvements over time have a lot to do with the practice.
You may have noticed that below the search box on Google Translate, for instance, there is a link asking you to “improve the translation” if you think you can provide a better rendition of what has been offered.

By submitting a ‘better’ version, you are slowly improving the whole app and so is everyone else doing the same. In a month or even a week, the number of changes will theoretically sure have made a significant constructive effect on the app.
What apparently counts against the system is the logic that one wouldn’t be trying to look for a translation of something they can themselves translate. Basically, the number of individuals who use the “improve this translation button” to actually improve the translation is too small to make any substantial improvements in short periods.

Google Map Maker is another tool that needs your help to make Maps look as good as they do right now. Since the company cannot track each and every error spotted on Maps, from misplaced landmarks to missing roads and the presence of defunct malls, they have provided you with the tool which lets you make and submit your alterations.

So, if you think your neighbourhood is not correctly pictured on the map, all you need is to do is log in and update the system for the rest of the world.

Does Crowdsourcing for Business Affect Product Quality?

Through microwork, for instance, you’re not familiar with your employee and their grasp of the topic in question. It’s a gamble you are taking, and since you may not be sure yourself of what exactly the content should contain, you may end up unwittingly approving substandard work, posting it on your website and misleading a whole bunch of users.

If you don’t realise the mistake in time, you could end up doing yourself irreversible harm on a lot of fronts. For one, you may lose a few users and, of course, the money you used to pay for the content.
What’s more, crowdsourcers will most likely care more about the pay than the quality as the pay-per-item rule applies. An informed full-time employee would almost certainly deliver better quality.
Another crowdsourcing-related cause of presumed decline in product quality is the lack of the workplace environment for the crowdsourcer, which is typically awash with sufficient reference materials and of course the much-needed power of teamwork. As most projects are carried out by a single person, the prospect of implicit but consequential mistakes is relatively high.

Crowdfunding for Business

Whether you have a great on-paper business idea but no capital to execute it or vice versa (capital and no business idea) crowdsourcing platforms have been created to complement your half-done plans.
You can solicit lucrative ideas that chime in well with the amount of your capital through crowdvoting or launch a crowdfunding campaign to fund your business idea. The latter may be tougher thanks to the uncountable number of running campaigns on Kickstarter and Indiegogo, but with a smarter proposal, it’s easy to cajole willing investors into giving your project a thought.

As a general suggestion, create a convincing project but also ensure you remain as realistic as possible.
There are multiple websites out there including littlemight.com that have provided a systematic guide on how to go about a successful Kickstarter campaign.
For Indiegogo, which boasts a more superior international platform than Kickstarter, visit indiegogo.com for a compendious guide as given by the crowdsourcing site itself.

Conclusion

Crowdsourcing – like we have seen – is not short of drawbacks, especially when product quality is the matter in question.
You are not in control of “employees” and that reduces competence which will impact on the returns.

For the case of crowdfunding, you have no power over how much funds your campaign is going to score, for one, and, of course, you have the burden of fulfilling your promises to backers.
If you fail, you fail the backers as well, and that’s something you probably can’t stomach.

That, however, is not to say that applying for crowdfunding is not worth it. With a well-laid business proposal and an in-depth scrutiny and understanding of the market you’re just about to venture in, there is enough reason to push on with the plan.