Abstract
Crowdsourcing has become an established business concept among small and large businesses. While firms of all sizes have applied the concept and derived its values, crowdsourcing has been effective among small businesses and individual entrepreneurs. However, crowdsourcing is an emerging concept with the development in technologies. Businesses should plan adequately for risks and benefits associated with the concept.
Introduction
Many forms of businesses have adopted the concept of crowdsourcing as a form of marketing strategy. Such businesses collect data and ideas in order to gain competitive advantages in their business processes. As a result, the idea has proved to be effective form of marketing, but only few firms have realized its potential. Crowdsourcing has demonstrated its effective in promoting business growth, but some critics believe that the strategy can fail due to inherent challenges.
They claim that the crowd may not possess the necessary knowledge and good advice, which businesses can rely on to restructure their strategies. Although some organizations had used crowdsourcing before, the concept gained popularity with the growth in the Internet technologies when businesses noted that they could crowdsource different tasks, which they could not complete indoors through their own employees. In this essay, the focus is on pros and cons of crowdsourcing as a business model.
What is crowdsourcing?
People have defined crowdsourcing as the process of giving work to online communities in order to collect information and complete tasks, i.e., it depends on the power of the crowd. Facebook has relied on the concept of crowdsourcing. Facebook has provided a community of workers who can accomplish tasks through fan pages and other platforms.
People participate in contests where they generate ideas, some are brilliant, and others are not. Wikipedia has also used a similar approach to develop data bank of information by using various people. This shows how firms have exploited crowds to generate new marketing concepts.
Jeff Howe introduced the term, crowdsourcing in 2006 (Howe, 2009). However, some firms had previously relied on the idea to generate new ideas and create new products. In 1936, Toyota used the concept in order to develop its logo. The idea has gained momentum due to increased online activities among people, and companies have taken advantages to recruit such people to generate new ideas. In the recent period, Procter & Gamble has called people on several occasions to solve technical scientific challenges. Small businesses like
Threadless and iStockphoto have also used the concept to generate millions of dollars with few employees. These companies have demonstrated that they can rely on the peopleâs creativity and finish highly specialized projects. The crowd has various talents, creativity, and rates of production. In addition, crowdsourcing overrides issues like gender, race, age, experience, and qualification in order to achieve a quality performance. Thus, people who can perform the job take it.
On the other hand, crowdsourcing has changed work processes, research activities, talent management, generation of product concepts, and marketing activities. The crowd has upset the normal forms of labor and marketing practices. Significant changes shall take place within organizations in which some may be positive while others may be negative.
Application of crowdsourcing in business
Marketing
Businesses have used crowdsourcing in several areas. One such area is marketing. Organizations use crowdsourcing in product development and design. The aim is to obtain inputs and recommendations on product development from users and professionals. Professionals or experts may contribute to the process by solving technical challenges. Other organizations require the community to design new products.
Such firms may use those designs and share the revenue with the crowd. Still, other organizations use crowdsourcing communities for all services and products, which are usually in written forms or data. The company then provides such services, products, or information to its customers.
Another marketing area that crowdsourcing has been effective is in advertisement and promotion of products and services. One can identify two different forms of activities. First, organizations outsource laborious, tedious, and menial jobs to the crowd. Most firms may not have the workforce or time to complete such tasks. Second, firms also âcrowdsourceâ highly specialized tasks, particularly in the development of advertisement and promotional messages.
Some firms do their marketing research through crowdsourcing. Marketing managers have noted that they can gain valuable information from a large number of consumers from various parts of the world in a timely and cost-effective manner.
The aim is to get the crowd to answer questions provided at a small fee within a specified time (see Amazon mechanical turk). In the process of marketing research, short projects, which the community can complete in few minutes, have emerged. These tasks tend to differ with the extensive marketing research that organizations give to specialized marketing firms.
Other areas of application
Businesses have also used crowdsourcing in other areas other than marketing. The concept is applicable in the real estate sector. For instance, the site, Popularise is a crowdsourcing site for real estate development. The owners of the site (Ben and Dan Miller) use the crowdâs opinions to allocate tenants residency in their vacant premises. In addition, they also use crowdsourcing to determine the kind of building for construction in new locations.
In the UK, people can ânow crowdsource a homeâ (Collinson, 2012). Individuals can pull their resources together with aim of acquiring a home at no risks and charges. In some cases, sites aim at bringing the crowd and resources together for creating a change in the neighborhood (Bricskstarter). This is a business venture in which interested crowds normally conduct their research in order to understand its operations.
Crowdsourcing has also been effective way of sourcing for funds. People have raised startup capitals from the crowd (Steinberg, 2012). This is the main purpose of a Web site like Kickstarter, which has facilitated the idea of crowdfunding. This is a method of raising a modest sum of cash by providing certain service and goods in return for money or donations.
Others firms or individuals have used crowdsourcing as a way of accomplishing tasks that people can perform online. People can fill up questions, rate a Web site, review tasks, correct grammar, write new projects, and technical aspects of a job among others. Crowdsourcing has been effective for such tasks. A Web site like Fiverr provides online services at a minimum rate of five dollars.
There are also tasks that require human inputs and many people may not have adequate time for them. Small businesses or individuals can crowdsource such tasks to online communities. Small businesses or individuals pay for photo tagging, proofreading, translation, transcription, and interpreting some materials. Crowdsourcing offers a solution to such tasks through its widespread workforce. Organizations can get their tasks accomplished fast, securely, anonymously, and at low costs.
Pros and cons of crowdsourcing
Crowdsourcing has provided a cost-effective method of accomplishing tasks online through the community at cheap rates and on a timely manner. Crowds can perform any task of their interests at a small fee. This provides an opportunity for the business to place several orders on the same project and then later choose the best outcome. For instance, LG brought the idea of âDesign the Futureâ in which the crowd took part in generation of new ideas for the future phone, and the company offered rewards and gifts for top performers.
Crowds can generate the best ideas ever because of the vast community (Dawson and Bynghall, 2011). Businesses have generated millions of concepts for improving or designing new products. The crowd can provide ideas that the business needs in order to improve its products or services.
Large and small businesses have used crowdsourcing as a method of getting suitable talents for completing and outsourcing their projects. This could be the long-term benefit of the concept. In some cases, firms have turned their regular projects into contract with the crowd that handles most of their tasks. Some firms have recruited talented individuals through crowdsourcing.
It is a powerful marketing tool for small and large businesses (Sherman, 2011). Firms like LG and Procter & Gamble have been able to market their brands through crowdsourcing because any crowdsourced ideas usually go viral among crowdsourcing communities.
Others believe that crowdsourcing provides simple processes of completing a technical task. Some firms can now crowdsource their R&D projects and reduce the number of workforce.
On the other hand, crowdsourcing has a myriad of challenges. Some firms have complained about the quality of the final work. The crowd is good and affordable method of accomplishing tasks. However, issues concerning project quality, suitability, and accuracy may be low.
It is also difficult to find the right idea from thousands of ideas the community generates. Obviously, this is a difficult task, which may take several months to accomplish because the company may only be interested in an exceptional idea.
In some cases, a business may crowdsource the wrong task such as R&D projects. The crowd may share such ideas with other companies that may be seeking for similar ideas. Therefore, firms should ensure that any crowdsourced ideas do not result into a serious loss to them in case of a leakage.
Businesses may also crowdsource and get wrong marketing ideas and final products. This is usually a challenge during the product design and development in which the final product from the crowdsourced ideas may not impress the consumer. Consumers may blame the company for delivering poor products or services, and such bad publicity can ruin a brand.
Finally, disputes are also always in any form of human interactions. Dispute resolution model may be the major drawback to crowdsourcing. Members of a crowd may copy othersâ ideas, the client may get a poor quality job, and crowd may lose the income. The method has not established effective dispute resolution method because of virtual nature of participants. However, some virtual crowdsourcing companies have internal dispute resolution mechanisms.
Conclusion
Crowdsourcing is an evolving concept with technology. It has been an effective tool for businesses to get their tasks accomplished at low-costs and on a timely manner. However, in some cases, the task may fail to meet the desired standards. Therefore, businesses, which engage in crowdsourcing, must also know the inherent challenges.
References
Collinson, P. (2012). Property investment rebranded for ‘crowdsourcing’ generation. Web.
Dawson, R., and Bynghall, S. (2011). Getting Results From Crowds: The definitive guide to using crowdsourcing to grow your business. San Francisco, CA: Advanced Human Technologies.
Howe, J. (2009). Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business. New York: Crown Business.
Sherman, A. (2011). The Complete Idiot’s Guide to Crowdsourcing. New York: Penguin.
Steinberg, D. (2012). The Kickstarter Handbook: Real-Life Success Stories of Artists, Inventors, and Entrepreneurs. Philadelphia, PA: Quirk Books.