Today's innovation problems are tough to solve. The traditional methods that have served your enterprise well for decades no longer seem to work, and your current crop of young, talented millennials don't want to stick around to help. Exponentially advancing technology, a rapidly growing online worker population and improved access to education all add up to a confusing medley of options.
You know that the best solution is out there somewhere but in an increasingly volatile, uncertain, complex and ambiguous world, it's not always obvious what combination of people, skills and technology you need.
Thankfully, this dynamic environment is an enabler and not an inhibitor of an emerging, solution-finding method called crowdsourcing – the umbrella term for a variety of approaches that harness the time, expertise and resources of large crowds of online people. Crowdsourcing offers a way for enterprises to find new solutions and to offer otherwise frustrated and nomadic employees a greater diversity of work. It's also creating new opportunities for individuals to change the way they work, learn new skills and earn rewards wherever they are, even in remote corners of the planet.
Once seen as the preserve of obscure state-sponsored competitions or corporate innovation projects, crowdsourcing is now considered mainstream, increasingly embedded in the core business activities of small and large enterprises alike. In 2014, Gartner predicted that 75 per cent of high-performing enterprises will use crowdsourcing in some form by 2018. Today, the online crowd is helping enterprises tackle a wide range of challenges, from menial tasks to more complex needs requiring specialised skills. It's having spectacular results, too, in certain situations creating better and more scalable solutions at lower cost than even the best in-house teams.
Should you be thinking about crowdsourcing? Is it only for start-ups and small businesses or can it be used at enterprise scale? Can crowdsourcing be useful for more than just a technology solution? What are the 'killer apps' and how do they work? How do you manage the crowd to create value? And what are the cultural and commercial challenges you will face? In the following pages, we take a close look at crowdsourcing and tackle these questions.
In our view, crowdsourcing is part of an ecosystem of rapidly maturing technologies and methods that look set to play a fundamental role in the future of commerce and society. This paper – the latest in our series of reports under the title of 'Disrupt: Deliver' – aims to help business and public sector leaders understand the new and emerging opportunities for organisations in all sectors to create and deliver compelling services for their customers using the power of disruptive innovation. We hope that you find this paper useful and we look forward to your feedback.
Introduction
"To answer the most vexing innovation and research questions, crowds are becoming the partner of choice."
Kevin Boudreau, Karim Lakhani 1
Throughout history, crowds have been invited to tackle tough literary, scientific and technological challenges that have stumped even the most brilliant minds.
In 1567, King Philip II of Spain offered a reward to anyone who could devise a simple and practical method for precisely determining a ship's longitude at sea.2 The reward was never claimed. Almost 150 years later, in 1714, the British government established the 'Longitude rewards' through an Act of Parliament, after scientists, including Giovanni Domenico Cassini, Christiaan Huygens, Edmond Halley, and Isaac Newton, had all tried and failed to come up with an answer.3 The top prize of £20,000, worth over £2.5 million today, provided a significant incentive to prospective entrants.
Ultimately, the Board of Longitude awarded a number of prizes for the development of various instruments, atlases and star charts. However, it was John Harrison, a clockmaker from Lincolnshire, who received the largest amount of prize money overall – over £23,000.4 What is, perhaps, most astonishing about Harrison's 300-year-old sea clock design is that a test of a working version in 2015 demonstrated that it is "the most accurate mechanical clock with a pendulum swinging in free air", keeping to within a second of real time over a 100-day test, according to Guinness World Records.5
The crowd was not just useful for technological breakthroughs. In 1879, when Sir James Murray was responsible for editing the first edition of the Oxford English Dictionary (OED), he put out a call for volunteers to identify all of the words in the English language together with quotations illustrating their use.6 During the next 70 years, the OED received over six million submissions from tens of thousands of contributors. Murray's initiative has been compared to the modern-day Wikipedia in terms of the scale of its ambition to gather and curate knowledge.7 Wikipedia, itself, has grown from 15,000 articles at the end of its first year, in 2001, to over five million English articles today, which have been edited over 800 million times by a crowd of nearly 28 million registered users.8 Businesses also have a rich history of trying to tap into crowds, using consumer surveys, focus groups, and experiential marketing to provoke customer engagement. Product R&D, in particular, has seen significant activity, with open innovation campaigns launched by many large companies, including 3M, BMW, General Mills, and Stanley Black & Decker.9
After conversations about how today's businesses were beginning to use the internet to outsource work to individuals, Jeff Howe and Mark Robinson, editors at Wired Magazine, were first to coin the term "crowdsourcing" in 2005.10 In conceptualising the term the following year, Howe suggested that "crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call. This can take the form of peerproduction (when the job is performed collaboratively), but is also often undertaken by sole individuals."11 The term 'crowdsourcing' is often used interchangeably with 'open innovation'.
Right now, crowdsourcing competitions like the $30 million Google Lunar XPRIZE, the $25 million Michelson Prize or the £10 million 2014 Longitude Prize are challenging – and incentivising – professional scientists, engineers, entrepreneurs and innovators from all over the planet, amateur and professional alike, to develop novel solutions to the world's 'wicked' problems.12, 13, 14 In more straightforward applications of crowdsourcing, platform providers like Lionbridge and Samasource are helping enterprises with language translation, data validation, image tagging and other routine tasks that require flexible access to large numbers of people with basic computer skills.15, 16 Wikistrat, OnFrontiers and 10EQS tap into the specialist expertise of hundreds of thousands of people worldwide to provide flexible, non-routine services such as consultancy, market intelligence, strategy development and research.17, 18, 19
Despite a growing number of success stories, though, relatively few businesses draw on the crowd in a systematic way. Pushing problems out to a vast group of strangers seems at odds with conventional corporate wisdom. Managers, who have traditionally looked inward for solutions, are understandably wary. How, for example, can you protect intellectual property if it is exposed so publically? How can you manage the crowd to ensure it delivers? How can you integrate a crowdsourced solution into existing corporate processes and systems? What about the costs? And how can you be sure you'll even get a good solution?
Today's workers are also frustrated with the directions their careers are taking. They want to work on a greater diversity of projects, and concentrate their time on those activities that drive both reward and social worth. Yet traditional career paths in business prize ever-deeper industry knowledge, experience or management prowess – and workers trudge along these for years, and sometimes decades. Millennials, who represent one of the largest segments of the labour force, are not afraid to switch jobs frequently, and now expect to work an average of 12 to 15 jobs during their lifetime.20 Many of the millennials that Deloitte has surveyed do not believe that their current employers are taking full advantage of their skills, and as many as one in four would quit their jobs given the chance.21
Employers, as a consequence, are in a never-ending 'war for talent' – cosseting specialists and experienced professionals, and grappling with ever-tighter immigration rules, which limit human capital flows across country boundaries. And employees are looking for alternative approaches to work and reward. In such a fluid employment environment, how can you motivate and incentivise employees to stay? How do you help them to develop new skills? How do you inspire them to help tackle your own challenging problems or even give something back to society?
According to eYeka, a global market leader in creative crowdsourcing for marketers and creatives, 85 per cent of the top global brands have used crowdsourcing in the last ten years.22 Gartner, Inc. anticipates that by 2018, 75 per cent of the world's high performing enterprises will be using crowdsourcing.23 That's leading crowdsourcing companies, such as eYeka, InnoCentive, Kaggle and TopCoder, to 'industrialise' approaches to finding optimum solutions, and they now manage many aspects of the innovation process to help businesses tackle problemsolving with a minimum of effort.24, 25, 26, 27
And if it's not the aggregate 'wisdom of the crowd' being sought but simply the best person to fulfil a specific task, then companies like Gigwalk, Upwork, 99Designs, Streetbees, DesignCrowd and Writology help businesses connect with and manage talented experts right across the world.28, 29, 30, 31, 32, 33
For individual workers, the crowd creates opportunities for a different kind of employment, greater freedom of choice and sometimes bigger rewards, too. The idea of open source talent via crowdsourcing is itself growing in scale, sophistication and importance as an alternative staffing model.34 According to influential innovation academics Kevin Boudreau and Karim Lakhani, "Crowds are energised by intrinsic motivations, such as the desire to learn or to burnish one's reputation in a community of peers."35 Reputation aside, the earnings of the most successful crowdsourcing challenge participants can now also easily exceed $500,000 per annum.36
This paper is intended to help businesses understand crowdsourcing and its benefits. On the following pages, we examine what makes crowds tick and how businesses can use the collective insight offered by crowdsourcing to deliver greater diversity and breadth of ideas and knowledge. We tackle many popular misconceptions associated with crowdsourcing, such as it can only be used at small scale by start-ups and small businesses. We also cover potential challenges to process, risk, people and culture. And, in light of our research, we explore how businesses can take simple but effective steps to find innovative solutions that work for their business and for their employees.
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Footnotes
1. "Using the Crowd as an Innovation Partner", Kevin J. Boudreau and Karim R. Lakhani, Harvard Business Review, April 2013. See also: https://hbr.org/2013/04/using-the-crowd-as-an-innovation-partner/
2. "Weighing the World: The Quest to Measure the Earth", Edwin Danson, Oxford University Press, 2006.
3. Ibid
4. "Longitude found: John Harrison", Royal Museums Greenwich. See: http://www.rmg.co.uk/discover/explore/longitude-found-johnharrison
5. "John Harrison's 'longitude' clock sets new record – 300 years on", Steve Connor, The Independent, 18 April 2015. See also: http:// www.independent.co.uk/news/science/john-harrisons-longitude-clock-sets-new-record-300-years-on-10187304.html
6. "How the Oxford English Dictionary started out like Wikipedia", Nate Lanxon, Wired.co.uk, 13 January 2011. See also: http://www.wired.co.uk/news/archive/2011-01/13/the-oxford-english-wiktionary
7. Ibid.
8. Wikipedia statistics from: https://en.wikipedia.org/wiki/Special:Statistics , accessed 24 March 2016.
9. "Corporate crowdsourcing", IdeaConnection. See also: http://www.ideaconnection.com/crowdsourcing/
10. "On Language", William Safire, New York Times Magazine, 5 February 2009.
11. "Crowdsourcing: A Definition", Jeff Howe, Crowdsourcing Blog, 2 June 2006. See also: http://crowdsourcing.typepad.com/cs/2006/06/crowdsourcing_a.html
12. See: http://lunar.xprize.org/
13. See: http://www.michelsonprizeandgrants.org/michelson-prize
14. See: https://longitudeprize.org/
15. See: http://www.lionbridge.com/
16. See: http://www.samasource.org/
17. See http://www.wikistrat.com/
18. See: https://www.onfrontiers.com/
19. See http://www.10eqs.com/
20. For example, see: https://www.experience.com/alumnus/article?channel_id=career_management&source_page=additional_articles&article_id=article_1247505066959
21. "Deloitte Millennial Survey 2016", DTTL, February 2016. See also: http://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-millenial-survey-2016-exec-summary.pdf
22. "The State of Crowdsourcing in 2015: How the world's biggest brands and companies are opening up to consumer creativity", eYeka, 9 April 2015. See also: https://en.eyeka.com/resources/analyst-reports#CSreport2015?utm_campaign=csr&utm_content=1&utm_medium=act&utm_source=prc&utm_term=en
23. "Predicts 2015: Sourcing Strategies Shift From 'Built to Last' to 'Built to Adapt'", Gartner, Inc., 26 November 2014. See also: https://www.gartner.com/doc/2925517/predicts--sourcing-strategies-shift
24. See: https://en.eyeka.com/
25. See: https://www.innocentive.com/
26. See: https://www.kaggle.com/
27. See: https://www.topcoder.com/
28. See: http://www.gigwalk.com/
29. See: https://www.upwork.com/
30. See: https://99designs.co.uk/
31. See: http://www.streetbees.com/
32. See: http://www.designcrowd.co.uk/
33. See: http://writology.com/
34. "The new meaning of 'open source talent'", CIO Journal by Wall Street Journal, 24 September 2013. See also: http://deloitte.wsj.com/cio/2013/09/24/the-new-meaning-of-open-source-talent
35. "Using the Crowd as an Innovation Partner", Kevin J. Boudreau and Karim R. Lakhani, Harvard Business Review, April 2013. See also: https://hbr.org/2013/04/using-the-crowd-as-an-innovation-partner/
36. See: https://www.topcoder.com/tc?module=ComponentRecordbook&c=overall_money
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