Crowdsourcing is a process helping in distributing problem-solving and production.(15) Also, it involves outsourcing tasks to people around the world occurring both online and offline.Crowdsourcing is similar with Outsourcing but the difference is the "Crowd". That is, the problem is outsourced to an undefined public. The public is also known as the crowd who submits solutions to the problem. Solutions are then owned by the crowdsourcers who broadcast the problem in the first place.
The contributor of the solution is, in some cases, compensated either monetarily, with prizes, or with recognition. Someone may just want the intellectual satisfaction. And crowdsourcers are motivated by the benefits of crowdsourcing, they can gather large numbers of solutions or information and that it is relative inexpensive to obtain this work.
Background of Crowdsourcing
The Oxford English Dictionary (OED) can be one of the earliest examples of crowdsourcing. They made an open call to the community for contributions by having volunteers to index all words in the English language and example quotations for each and everyone of their usages. Within 70 years, they had received over 6 million submissions.
Today, crowdsourcing has transferred mainly to the web. Since individuals tend to be more open in web-based projects where they can be more comfortable to share ideas, the development of Crowdsourcing can be facilitated. In an online atmosphere, more attention is given to the project or questions rather than communication with other individuals.
Examples:
Threadless.com-- crowdsources its t-shirt designs by having users provide designs and then vote for the ones they like, which are then printed and available for purchase. The company itself has less than 20 employees, yet there are thousands of members who provide designs on them that it can make the products truly created and selected by the crowd, rather than the company.
Minted.com--crowdsources designs for paper goods, like cards, stationary, and calendars in order to sell the most popular ones.
The 2011 documentary Life In a Day --used crowdsourcing to collect video footage from worldwide. Contributors from 192 countries submitted 4,500 hours of video, primarily through YouTube uploads, which the filmmakers edited to 97 minutes in order to create a cohesive documentary.
Past practice: Do the Design in-house or outsource the design
If a company wanted to innovate and market a new product under its brand, there were two options for them in the past two decades. The first option would be having its own in-house R&D team and production capacity. The second option would be outsourcing the design or manufacturing to vendors. Most of the companies do the product design and development in-house traditionally. However, the product life cycle becomes shorter due to the technological advancement. Globalization also creates fierce competition that marginal products no longer can survive in the market. R&D becomes risky activities. The risk is more obvious when company’s core competency is manufacturing capability, distribution network, marketing expertise or customer services rather than idea generation and product innovation. Besides, design equipment and specialized design skills like styling, simulation, and prototyping is costly for small manufacturers and companies. As a result, more and more companies outsource the product design and development process.
Changes in creativity management
Apart from that, new thought in creativity management also favors the emergence of crowdsourcing. Nowadays, to motivate workers to be more creative, giving them intrinsic motivation is better than monetary reward. It is because creative people love challenge. An information Week survey of tens of thousands of IT workers ranks on the job challenge above salary and other financial incentive. (Richard Florida and Jim Goodnight, 2005)Also, they would like their creativity to be appreciated by others. Therefore, crowdsourcing is an excellent way to motivate creative people.
By outsourcing the product development process, company can enjoy lower development costs due to economies of scale, management and expertise of an experienced Product Development Company (PDC). PDC would design the usability, functionality, performance, safety and compliance of the products according to the quality standards and specifications outlined by the company. It helps company to concentrate on its internal core functions and capabilities. Companies tend to favor outsourcing product design and development if the design is for a low-end product or commodity product. These products do not require in-house designer to create distinctive features and extraordinary product design. Another reason for the emergence of Product Development Company is the information it has. PDC serving in a particular geographical market/region have law knowledge such as product safety and environmental requirement than foreign company does. PDC provides assurance for products to meet legal, demographic and geographic requirement. It could improve the success rate of the product.
However, there are drawbacks in outsourcing the product design and development process. PDC may provide distinctive features and extraordinary product design that does not fit with brand perception, impressions and feelings occupied in customers’ mind. It would dilute its market positioning. Also, PDC are the technical specialists in design industry but not the expert in understanding and serving customers’ needs. Products are less customer-centric. Companies are switching to a new practice called crowdsourcing. It could overcome the pitfalls of outsourcing. It makes product design and development process inexpensive and improve customer acceptance before commercialization.
Global force and international contexts influencing the new practice
There are some global forces and international context affecting the changes. They include technology advance, workforce diversification, new form of creativity management, customer orientation.
Technology advance
Technology advance causes the changes in design industry. In design industry, talent employees are the most valuable asset as the companies rely on them to produce creative design. Therefore, seeking talent employees to work for their own company is important. However, due to geographical constraint, the company can reach a limited number of qualified employees as the low mobility of workers. In addition, without advanced technology, the company used traditional methods to hire employees such as posting job advertisement on newspapers, magazines etc.
Fortunately, thanks to the advanced technology, companies are able to do recruitment online. Online recruitment brings lots of advantages. For example, it allows the companies to reach an unlimited number of candidates from all over the world. It shortens the time of receiving responses from applicants. Online application is convenient as candidates could send resume and cover letter via email. Crowd sourcing is similar to online recruitment but it is more cost effective as the companies do not have to spend money on having employee selection and hiring large number of designers. A company can announce their upcoming design projects online and any interested person can do the design and send the design to the company. Without technology, it is difficult for the companies to use crowdsourcing as it is difficult for them to reach those interested person.
Understanding the importance of having workforce diversification
Another force causing crowdsourcing is the trend of workforce diversification. Nowadays, many companies understand a more diversifed workforce will increase organization effectiveness.(David A. Thomas and Robin J. Ely, 1996) Having a diversified workforce is beneficial to their business as different kinds of people have their own strengths and weaknesses. Working with different people could make use of different people’s strengths and overcome others’ weaknesses. Also, with different culture background and personality, they think in different ways. Having various thinking is important especially in design industry which requires creativity. Therefore, let the company becomes more diversified brings more advantages than disadvantages once company understand how to manage diversified workforce. After realizing the benefits of having diversified workforce, many companies try to hire different countries people to be their employees. However, recruiting various kinds of employees is very costly as the companies have to spend lots of time on attracting them and it is impossible for the company to hire large amount of employees with limited resources and capital.
Then, crowdsourcing is an easier and more economic way to get diversified workforce. Since crowdsourcing allows the company to seek help from anyone online, it is possible to have different nationalities, personalities and characteristics people. By gathering designs from various people, the company can find the best design. And the companies could save a lot of cost because it only has to pay for the winning products. That is why crowdsourcing become popular nowadays.
Changes in creativity management
Apart from that, new thought in creativity management also favors the emergence of crowdsourcing. Nowadays, to motivate workers to be more creative, giving them intrinsic motivation is better than monetary reward. It is because creative people love challenge. An information Week survey of tens of thousands of IT workers ranks on the job challenge above salary and other financial incentive. (Richard Florida and Jim Goodnight, 2005)Also, they would like their creativity to be appreciated by others. Therefore, crowdsourcing is an excellent way to motivate creative people.
Even though solely the one who wins the project could earn some monetary reward, it could attract a lot of creative people to participate in it because they could have an opportunity to involve in a challenging design project. The challenging project motivates them to perform better as they love challenge. Also, the recognition of being the champion is another intrinsic motivation. As a result, with crowdsourcing, the companies could reduce cost because they spend less money on selecting and recruiting creative employees while successfully attract creative people from all over the world to offer the companies creative design products. Further, it solves the problem that the limited amount of inhouse designers may always encounter bottleneck when designing for difficult project.
Customer orientation
Customer orientation is another force attributing to crowdsourcing. As the global living standard increases, people require better life. When customers go shopping, they want to choose the best. A research shows that rigid design system and excessive specialization are no longer responsive enough to meet rapidly changing customer demand.(Chun Hsien Chen, 2006) That is why companies nowadays spend more capital to understand customers need in order to tailor made products and be more flexible.
It also influences design industry. In the past, designers designed what they think are the best. Now, they have to design what the customers think are the best. However, it is difficult for companies to understand customers’ need entirely even though they spend huge amount of money to hire specialist like market research firms to do the research, it is impossible to thoroughly understand the customers from all over the world.
Crowdsourcing is helpful to produce designs which are customer orientated and it is flexible. It is because a lot of participants of crowdsourcing themselves are the customers. Besides those who are interested in design, customers are engaged in participation either as they have the opportunity to reflect their opinions toward the company via their designs. Giving opinion verbally is not persuasive. Nevertheless, they could design the products by themselves and show the company that their opinions are useful and valuable. As a result, crowdsourcing could help the company to understand customers need and tailor made design for customers as customers are the one who do the design.
New Business Practices--CrowdsourcingBecause of the international contexts change, nowadays there is a steadily growth of MNCs adopt crowdsourcing, which relies on user-generated content(10), as their new business practice in the design prospective. MNCs normally adopt the new practices in two basic models: corporate crowdsourcing and crowdsourcing venders.(7) In the following, we will use several successful examples for illustration.
Corporate crowdsourcing
Corporate crowdsourcing happens when crowdsourcing is started by a company. Lego is totally a representative among toy industry. Lego first introduced a pilot scheme, which is an crowdsourcing collaboration with LEGO® CUUSOO, in Japan in 2008.(2) The system allows Lego fans to share their ideas or create a project of a good Lego design. Then the design will be voted by other users. Once an idea is supported by 10,000 supporters, it will be reviewed by Lego and evaluated by professional Lego-ers for a chance to become a Lego official product. If their “wish” comes true, the idea will turn into production and the designer will be given a whopping of 1% of total net sales of the product. (1)
Corporate crowdsourcing happens when crowdsourcing is started by a company. Lego is totally a representative among toy industry. Lego first introduced a pilot scheme, which is an crowdsourcing collaboration with LEGO® CUUSOO, in Japan in 2008.(2) The system allows Lego fans to share their ideas or create a project of a good Lego design. Then the design will be voted by other users. Once an idea is supported by 10,000 supporters, it will be reviewed by Lego and evaluated by professional Lego-ers for a chance to become a Lego official product. If their “wish” comes true, the idea will turn into production and the designer will be given a whopping of 1% of total net sales of the product. (1)
Lego’s crowdsourcing not only generate creative community and talents from the internet for the product innovation, but also let the crowd to assess whether those ideas are popular or implementable or not. At the same time, Lego have set up some project guidelines and house rules for better talent management. LEGO® CUUSOO is so successful that they are now producing the third LEGO® CUUSOO product!
Among household enterprises, the Japanese lifestyle brand Muji, just like the Asian Version of IKEA, is also following the new trend of practice – crowdsourcing. Muji operates 440 stores across the US, Europe and Asia.(6) It launched the crowdsourcing practice through community website - Muji.net so as to gather innovative product ideas. After submitting the product designs by the crowd, Muji test the popularity of designs by allowing customers to pre-order products and pre-evaluate by their members. If they receive over 300 pre-orders, it will go into manufacturing and will be available to sell online and global retail stores eventually.(4) Muji changes product innovation direction from product-oriented to customer-oriented. A new type of relationship between customer and advertiser can be created through crowdsourcing.
P&G, which provides diversified branded consumer products and services, is also a successful example.(8) It relied on their own talents and capabilities for generating, developing and delivering new ideas in the past. However, the CEO A.G. Lafley started introducing Connect + Develop in 2000. Everybody around the world can submit your innovation through Connect + Develop website if your ideas meet one of P&G’s criteria. In fact, P&G has about 1.5 million professionals who can be leveraged. It has already successfully resulted in more than 1000 active agreement under the Connect + Develop strategy. Compared with 15% in 2000, 35% of products have elements that originate from outside.(7) Thus, crowdsourcing strategy creates breakthrough for P&G in doing business.
Crowdsourcing venders
Apart corporate crowdsourcing, there is also crowdsourcing vendors which business model is built on crowdsourcing entirely.
In the fashion industry, Hipster clothing company Threadless.com (3), which prints and sells t-shirts designed by people on its Web site, is a famous crowdsourcing example. Threadless launched Artist Programs which allows people to submit their T-shirt designs online and netizen may evaluate them by giving score. Each week, company receives hundreds of design, the top 4-6 highest-rated designs will be produced once they have got enough pre-order from customers and the winners can obtain attractive cash.(5) The more attractive thing is they will put designer's name on the label of each shirt, the social value or reputation is an important reward for participating in open-source projects(11) and it is the main reason that makes Threadless.com success.
Besides, the Mechanical Turk, which was launched by Amazon, acts as an intermediary to give a platform for those companies which require doing simple crowdsourcing. At the same time, people can be a Mechanical Turk Workers and work on human intelligence tasks (HITs) from the website so as to earn money.(9) This is an example of intermediaries of microtasks crowdsourcing.
Conclusion
As Crowdsourcing can bring more benefits to the business so that it is being more popular in different industries especially in the design industry and online commercial. It is not only creates more opportunities for everyone around the world who want to participate into the business event, but also helps the designers to have more ideas about their products. Thus, Crowdsourcing plays an important role to our work as it can gather much more information from the public.
References
(1) What is LEGO CUUSOO. (2012). LEGO Group. Retrieved March 26, 2012 from http://lego.cuusoo.com/#
(2) Lego Crowdsourcing. (2011). Innovators. Retrieved March 26, 2012 from http://www.innovatrs.com/blog/lego-crowdsourcing/
(3) Alec Perkins. (2007). Crowdsourcing, Evolutionary Design, Their Combination and Implication.
(4) Harry Gayner. (N.A.). Crowdsourcing. Contagious.
(5) Pual Boution. (2006) Crowdsourcing: Consumer as Creators. Bloomberg. Retrieved March 27, 2012 from http://www.businessweek.com/innovate/content/jul2006/id20060713_755844.htm
(6) James. (2010). The Beauty if Crowdsourcing. Blur Group. Retrieved March 26, 2012 from http://www.blurgroup.com/blog/the-beauty-of-crowdsourcing-muji
(7) Crowdsourcing. (2011). Universita Bocconi. Retrieved March 27, 2012 from http://www.slideshare.net/TheBlogTV/introduction-to-crowdsourcing
(8) What is Connect + Develop?. (2012) Proctor & Gamble. Retrieved March 27, 2012 from https://secure3.verticali.net/pg-connection-portal/ctx/noauth/0_0_1_4_83_4_3.do
(9) Amazon Mechanical Turk. (2012). Amazon.com. Retrieved March 27, 2012 from https://www.mturk.com/mturk/welcome
(10) Crowdsourcing. (N.A.). Retrieved March 26, 2012 from http://en.wikipedia.org/wiki/Crowdsourcing
(11) M.L. Markus, B. Manville & C.E. Agres. What Makes a Virtual Organization Work? (2000). Sloan Management Review Association.
(12) Richard Florida and Jim Goodnight. (July-August 2005) . Managing for Creativity. Harvard Business Review. 124-131
(13) David A. Thomas and Robin J. Ely (Sept-Oct 1996) . Making Differences matter: A new Paradigm for managing diversity. Harvard Business Review. 79
(14) Chun Hsien Chen. 2006. Trends and Research Issues in Customer Oriented Product Conceptualization. Retrieved from http://ir.lib.cyut.edu.tw:8080/bitstream/310901800/9225/1/6.87-106.pdf
(15) http://en.wikipedia.org/wiki/Crowdsourcing
(15) http://en.wikipedia.org/wiki/Crowdsourcing
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