Wednesday, 14 August 2013

Crowdsourcing; open for business



The lure of the crowd

Facebook, eBay, AirBnB all use the crowd almost totally in their core business.  Some of the more conventional companies Amazon, Huffington Post and Gilt Groupe use it too. 

Should you?

Crowdsourcing is an emerging tool for firms using the internet for businesses, extremely powerful when used correctly.

If Henry Ford’s moving assembly lines created the modern factory in the industrial age, crowdsourcing is the equivalent in the information age, creating new-era factories using data as raw material, manufacturing informational and quasi-informational products and adding value to physical ones.  Instead of factory workers, it is us, the consumers who willingly and unwittingly become the factory hands.  Ford’s assembly lines upped productivity eight times and as others adopted and improved on it, it raised global productivity significantly, one of the great unheralded innovations. 

Crowdsourcing will do more. 

Wikipedia with only a few full time employees is ten times bigger than Encyclopedia Britainica and is roughly the same in accuracy from a study by Nature.  The other factories of today, Google, Alibaba, Sohu are generating profits through crowdsourcing..

This post in three parts explores the role crowdsourcing plays as businesses begin to use the digital channel to increase sales.

What is crowdsourcing?

Factories gave rise to modern consumerism.  We consume.  Now it is the turn of the consumers!  We produce. 

Crowdsourcing is a method that engages mainly the public to contribute resources, mostly effort, voluntarily in the production process.  It is done through the internet.

It can be for a design (GPS system for BMW), software (open source), information (Wikipedia), expertise (Quora), funding (Kickstarter) and other uses yet to be pioneered. Data makes up a huge part.  Crowdsourcing is being used indirectly by social enterprises (Google +, Twitter) to curate data which is then monetised.  For these modern innovators, it is business via the crowds. 

In short, with crowdsourcing you use the crowd to do something for you.

A website using it in effect sources manpower from the crowd to populate it, thus crowdsourcing.  It can be a conscious effort or unconscious, for profit or non-profit.  The crowd can be the public or groups of common interest.  They can also be companies.  It is usually symbiotic.

The term website is used but unlike web 1 era when they were mostly front covers of annual reports, websites today is about business.

I also define a crowdsourced site as one that depends on resources outside the organisation.  This is in contrast to conventional firms that rely mostly on internal resources for the production of goods or services.

A bit of history cements understanding of this important modern business tool

While a recent term, crowdsourcing was used in the genesis of the internet.  A defining event was when the concept for an RFC was created.  Traditionally tech design is carried out by a single team within an organisation but with the internet a different approach was taken.  The community around Arpanet (the predecessor of the internet), the group of participating researchers from universities, government and private entities conceived the RFC concept.  An initial design is written up and circulated among the community for comments, therefore Request For Comments (RFC). This resulted in an iterated ‘extragroup’ design.  In effect it facilitated a team effort of diverse groups and individuals totalling hundreds within and without.  Anyone can participate, even a new recruit, not just the few key engineers.  Working with unforced participants outside the core team became an operating culture of the early internet.  This developed further. When an engineer or two conceive an idea, he specifies the design into an RFC which is openly published, seeding it, effectively inviting anyone anywhere ie. globally to contribute to the development of that idea.  This was how all the design specifications of the internet were done then, even today, unconventional as it is.  This entered the working culture of the internet industry today.

While this is not quite a public crowdsource-design but that of a special interest group, you can say the same today of Wikipedians.  And of eBay.  And the seeding effort to draw in the crowd is how Facebook became a global phenomenon.  The foundation is laid.  Contrast this to the traditional committee-based decision making process where meritocracy is trusted only within, not without.  But that’s before the internet that made reaching the 0.001% (see next post) of the crowd of experts or the like-minded easily and cheaply.  In fact the RFC model influenced more than crowdsourcing, it laid down the roots for the internet industry’s culture of openness and furthering the democratic, bottoms-up and collaborative nature.  Initiatives on the internet today tend to reflect these norms. 

But I think while this early manner reflected human behaviour by nature independent while community-oriented, the modus operandi of organisations then (and now) was very much encapsulated in the 1956 best seller, “The Organisation Man” by William H. Whyte.  A central tenet of the book is that average Americans subscribed to a collectivist ethic rather than to the prevailing notion of rugged individualism” according to Wikipedia.  The collectivism is within the organisation he belongs to, hence organisation man.  I interpret this book as influenced by the machinery of the industrial age.  Factories and management needed this ethos to get their products produced efficiently.  The RFC process perhaps (I’m no social scientist!) reflects a change in society back towards individualism, breaking down the traditional collectivist ethic that innately trust internal resources and thus confidence in individuals within and without.  This may have something to do with the shift from the industrial to the information age we are now in since the latter empowers the individual.

As the internet took hold, user generation first became evident with newsgroups (circa 1979) intensifying with blogs (1994), both of content.  In 1999 there were 23 blogs and by the middle of 2006, there were 50 million blogs.  It accelerated with the introduction of the web (1993).  Free email services added to it but they had no value then.  Ditto gopher, the early ‘search’.  This wave began the commoditisation of information and monetisation a bit later.  Open source (a topic of a future post) while known mostly as a software movement but is actually a generic production model took crowd production beyond content.  From internet software, it has been used in books and video (film) and in time to come, become generic in application.

So much for how crowdsourcing came about, in the next post, why crowdsourcing works in the context of modern society and progressive business will be examined.



©Chen Thet Ngian, internetbusinessmodelasia.blogspot.com (2013).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chen Thet Ngian and internetbusinessmodelasia.blogspot.com with appropriate and specific direction to the original content.