Driving Innovation: From “Crowdsourcing” to “Smartsourcing”

Crowdsourcing is becoming increasingly entrenched as a component of many businesses’ innovative strategies. This has led to the appearance of smaller firms on the Market Research radar, which probably weren´t involved in the industry before, or at least weren’t aware of it.

How did the word “Crowdsourcing” come about? Crowdsourcing is a compound word derived from ‘crowd’ and ‘outsourcing’ and quite simply means ‘outsourcing via the crowd’.  A common form of crowdsourcing would be that a firm wanting to accomplish a particular task, sends out an open call to the general public requesting for submissions of idea proposals.  After an unknown member of an Internet Forum used it in the context of the Web 2.0 phenomenon, Jeff Howe popularized it in an article in the magazine, Wired in 2006, called ‘The Rise of Crowdsourcing’.

The concept existed way before poster and photo competitions, and the web revealed how firms could profit from a crowd propelled effort. However, the amazing extent of crowdsourcing remains quite new. The internet developmental milestones provide a new facet to this fact, allowing for a free and much better connection between companies and their crowd.

Currently, there are intermediaries who have crowdsourcing platforms that cater to specific needs, and there are intermediaries who offer companies to create these crowdsourcing platforms. These platforms have been used in generating creative product ideas, as a tool to create new products as well as to enhance existing products.  It has even been taken up by governments as a means to reach the general population.

Owing to the fact that crowdsourcing is still on the rise, its parameters have not been clearly defined, with the result that it can easily be confused with concepts like Open Innovation.  Open Innovation, however, dwells on the aspect of innovation while crowdsourcing goes beyond this.

The benefits are undeniable because of its cost-effectiveness.  However, the cost may vary considerably, depending on the type of crowdsourcing involved.  One may spend anywhere from tens of thousands of dollars down to several hundred.

It is efficient in terms of time, too, since collecting information, processing it, and implementing it has become much more accessible through the internet. Depending on the type of crowdsourcing needed, originality and uniqueness are achievable in creative tasks and solutions, due to the diversity of the crowd.

However, when it comes to the creation of breakthrough ideas and their implementation, crowdsourcing has seen a number of setbacks that have curtailed its success.  When Dell came up with IdeaStorm, anyone was allowed to create an idea related to computers.  And the response has been great: 16,623 ideas have been produced on this website!  Unfortunately, since its inception in 2007, only 476 ideas have actually been implemented.  This accounts for only 2.9% of the entire initiative (as of January 2012).

When Starbucks started its ‘My Starbucks Idea’, participants needed to register on the website to post their innovation ideas and the best ones were voted on.  As of the beginning of 2012 there were nearly 125,000 ideas submitted, but only 185 ideas launched, amounting to a mere 0.2% of the total.

What does this say about crowdsourcing?  It means that people are more than willing to share their ideas; but – what percentage of these generated ideas is actually useful to a business?  Crowdsourcing clearly has its shortcomings. With the numerous ideas a company gathers, there are glaring setbacks including lack of knowledge and the technical know-how of its pool of contributors.

In a dynamic, connected world and with the rapidly changing pace of technology, breakthrough innovations are essential for companies to stay competitive and survive in the long-run. Nevertheless, many companies still rely on focus groups and other more traditional techniques. With the emergence of Web 2.0 the innovation process can be accelerated.  Although the Dell and Starbucks initiatives seemed to head in the right direction, how can the crowd really help?

This is where ‘selective crowdsourcing’ or ‘Smartsourcing’ and ‘Expertsourcing’ comes in.  Linking Asia 21 and BDRC Asia are collaborating on new methods of product innovation using ‘Smartsourcing’.

Piers Lee, Senior Consultant and MD of BDRC Asia comments “product innovation research through consumers is often quite disappointing.  Either the consumers do not have enough knowledge of the category, or their imagination runs wild leaving few practical ideas for manufacturers to use. What is effective is bringing together people within the industry and academia.  These people can range from marketing people in the category, distributors, trade journalists, industry association heads, and research institutions.”

Linking Asia 21 with clu, a social idea management platform, offers a place where experts can exchange ideas and collaborate. As the platform is web-based, these experts can be drawn locally, regionally or from anywhere in the world.  Claudia Siregar, Founder of Linking Asia 21 comments “we are tapping into the Market Research industry, as we believe to select the best ideas to innovate and deliver the best business insights, we need to work with companies who share these goals. To be ready for the future, collaboration is what companies should look at, either in offering better products or services to their clients. Together with BDRC Asia, we are not only able to identify the golden nuggets, but to ask the right questions and to discover where a market will be in 5 years time.”

Now one might ask, though, how relevant is this for my company or for my clients?  In fact, there is power in the crowd, and the next logical step would be to harness the experts within this crowd. ‘Smartsourcing’ would mean to integrate the smartest in the crowd to drive breakthrough ideas, invent and innovate.

In the words of Braden Kelly, an innovation expert and founder of Business Strategy Innovation, “Crowdsourcing will serve as an input into the innovation process that must be filtered by internal resources and built upon as necessary. The most forward-thinking organizations will invite the wisest of the crowd to participate in this idea refinement side by side with internal resources”.