The
word crowdsourcing was firstly proposed by Howe (2006) as a new network-based
business model that obtains creative solutions for an undefined group of people
in the form of an open call. Generally speaking, crowdsourcing means
outsourcing to the crowd. Also Howe (2006) also believed that crowdsourcing can
be sorted into four types: crowd creation; collective intelligence; crowd
voting and crowdfunding. Actually in this paper I will mainly talk about the collaborative
practice shift related to innovation crowdsourcing.
Traditionally,
innovation is only related to R&D department. The innovation capability of
a company depends on internal R&D. While recently, due to the development
of crowdsourcing, companies can easily find information, knowledge and
competency from outside the R&D department or even outside the company. The innovation process is becoming more and
more open. In simple terms, crowdsourcing can get ideas and innovation from a
large group of people instead of obtaining from a few experts. The people who
will give the ideas and innovation are not known in advance. How innovation is
carried out has been shifted.
Four types of crowdsourcing
1) Crowd
creation is described that as ‘crowdsourcing for the product configuration and
design’ (Kleemann
et al. 2008). One of the examples of this kind of crowdsourcing is the Speardshirt.net
initiative. Customers can upload their design of T-shirts online and decide the
price of each T-shirt they design in their own online shop. Speardshirt is only
responsible for producing and delivering T-shirts. Thus everyone can be a
designer.
2) The
essence of collective intelligence is that the crowd is more intelligent than
the smartest person in the crowd even they do not really work together. Howe
(2006) said collective intelligence is not only quantitative but also
qualitative contribution of information from different cultures. It is a creation
activity. Crowdsourcing is not only effective for sourcing new movies, music
and novels but also for solving scientific problems in real world.
3) Crowd
voting refers to using the judgment of the crowd to filter and organize the
content such as movies, music and novels. It is usually the most popular type
of crowdsourcing and has the highest level of participation. The internet
provides the mechanism of voting for the crowd -the ranking of the articles and
the click rates of the video. Howe said that American Idol is the most popular
and typical example of crowd voting.
4) Crowdfunding
is a special and new area of crowdsourcing. For crowdsourcing mainly focus on
preference and knowledge of customers, While crowdfunding is about to finance
for the project from the large crowd. Crowdfunding platforms act as the
interface between the funding projects and the public. Crowdfunding platforms facilitate
the transaction between funder and founders. A lot of new crowdfunding
platforms are created in different areas in recent year due to the development
of crowdfunding. The platform provides people mechanism for project funding and
promotion.
Not
all these four types of crowdsourcing are related with innovation. Crowd voting
may not imply innovation and crowdfunding may be not directly related to
innovation when funding offer the chance to develop new ideas. The collective intelligence
and the crowd creation support crowdsourcing innovation. Also there may be a
lot of risk in collective intelligence and crowd creation.
For
innovation, there is one historical issue that limits getting ideas from a
large group of people- the scale of interaction. It seems impossible to put
thousands of people in the same room and let them work together to create new
ideas. Also it is impossible to know others’ ideas and there is no way to use
the diversity of people. With the development of digital technology, it is
possible to form a broader innovation approach. Now technology not only enables
the company to wider the range of network in the search for innovation, but
also encourages collaborative behaviors that promote the evolution from original
idea into thoughtful concepts. They both bring value to the organization.
Internal crowdsourcing
Inside
the company, all the employees can be the sources of innovation and knowledge.
The tasks of innovation, design and engineering are no longer limited to
R&D departments. That is the internal crowdsourcing. This is one of
collaborative shift because of crowdsourcing.
Actually
now more and more companies not just outsource their tasks, they turn to
internal crowdsourcing that depending on collaboration among their own
employees. Many companies create platform for employees to share their
information and knowledge among peers. For example Delta Company established “Ask
the Doers Discussion Board” for employees to distribute information (Simula, H., & Vuori, M. 2012). Knowledge
management is known as a process of acquiring, managing and sharing knowledge
to improve individual and organizational performance (Davenport, 2005). The
objective is to make the best use of knowledge.
As
Davenport
(2005) said one of the biggest barriers of knowledge sharing is
ownership. When ideas, concepts, and other kind of intellectual capital are put
into a knowledge shared system, the intellectual capital tends to be separated
from the author. People would not like to give their best ideas when they get
nothing back. Just like before crowdsourcing happens, people believe that
innovation is the task of R&D department. There is nothing to do with other
employees and they are not willing to share and manage knowledge with each
other. But crowdsourcing give other employees a chance to share their own idea
and get rewards. They can see their information and knowledge come into use. Even
there is no explicit reward; employees can get recognition from the online
community. As Ernest Gundling said the ability to transfer cross-border knowledge
efficiently and smoothly has become an important competitive advantage for a
company. The benefit of internal crowdsourcing is that it can help to transfer
internal knowledge and accelerate the learning different departments and
functions. So internal crowdsourcing offers an efficient mechanism for
implementing knowledge management well inside the company. Company cannot just
rely on the small group people of R&D department to solve problems and get
new ideas. 
Another typical example of the development internal crowdsourcing is that companies such as
IBM, Procter & Gambl have developed internal crowdsourcing systems to encourage
innovation. Howe (2008) called it ‘idea jams’ which are built to allow people
to find the solutions of fringe question and new ideas. Then people pay attention
to it and discuss it. IBM brought 150,000 IBM employees, business partners, employee
family members, university researchers and clients together to post new ideas
and innovation for future development of IBM. Actually they probed IBM’s most
advanced technologies and considered if they are applicative to real-world
problems and present business opportunities for IBM. The aim of this program is
to bring different perspectives and various minds together to find new
solutions for long-standing problems. Company shows trust to the
intelligence and creativity of its employees, clients and business partners. While
in the past, company only has confidence in Research and development
department. The innovation mind of company has changed. There are two phases of
innovation jams. First phase is idea generation then is moderated refinement.
However, the result of this crowdsourcing is not satisfactory. For almost no
ideas are complete original and many of them are irrelevant to IBM’s business. This
kind of one-time crowdsourcing is a bottom to up process. The executive can
clearly see what the idea and innovation from the common employees. Companies
are willing to use this kind of collaborative practice to figure the insight
opinions and ideas from the bottom level employees who may be more familiar
with the needs of customers. This is unbelievable before because there is no
digital platform to support bottom level of employees to share their ideas and
opinions. If the information is transferred step by step, the misunderstanding can
happen.
There
are many advantage of internal crowdsourcing, but there are also some resistances
for company to implement it. As we know, employees may not be ready to share
their ideas because as Davenport (2005) said they are unsure about what they
know. They have the fear of being wrong. On the other hand, most of the participant
just comment on the content but not create something new on it. So sometimes
the internal is not very efficient. Finally, the company should create a
company culture to encourage employees to participate in internal
crowdsourcing. If there’s no an organizational culture that there is no
incentive for contributing, there will be no contribution.
Open innovation and crowdsourcing
Open
innovation refers to ‘The use of purposive outflows and inflows of knowledge to
accelerate internal innovation, and to expand the markets to external use of
innovation, respectively’ (Chesbrough, 2003). Closed innovation is seen as the
history of open innovation. Before the start of open innovation, big companies
usually have big research and development centers. Most of the inventions are
invented in those big research and development centers. While as the time goes,
there are more and more high-skilled employees who are good at innovation and
high level innovation capability. Some of employees from research and
development center leaved their companies and started up their own companies
with their own invention. This trend caused the closed innovation less
profitable than before and the company cannot ensure that ideas and knowledge can
kept inside the company if company still invest a lot of money in research and
development center. This make companies think of the new idea of open
innovation. On the other hand single company’s internal R&D and innovation
ability have difficulty in meeting the increasing demands of cost and the
complexity of technology innovation, especially in high technology industries,
such as biotechnology and information technology industry. So companies start
to cooperate with universities, research institutions and other companies
including competitors. They began to form various forms of cooperation by
sharing resources, knowledge and ideas. The goal is to realize technology
innovation. Crowdsourcing is the newest way for companies to implement
innovation.
Companies
can still invest in research and development center because the ideas and
knowledge can flow out the company also they can ideas and knowledge from the
outside flow. Actually, external crowdsourcing is a kind of open innovation.
Years before, companies prefer to use the traditional business model of open
innovation, now many of them have shifted to crowdsourcing.
For
the traditional model, company looks at the existing outside reach to search for
the appropriate knowledge. This model is actually outsourcing. The company can utilize
the power of internet crowd to make innovation and solve problems that are
beyond the reach of the internal talents (KRIVDA, 2013). The transaction of
this kind of open innovation is dominated by contracting negotiation. The seeker
tends to gain as much as possible from the relationship while the solver may
intend to acquire as much as revenue from the weak commitment. This opposite goal
result in that pricing and patent ownership is negotiated in the contract.
While in crowdsourcing who will be compensated is unknown in advance. There is
no contract before. As KRIVDA (2013) said crowdsourcing recognize the need of
the seekers and seek for opinions from the unknown solver.
Obviously,
the most significant difference between traditional open innovation and
crowdsourcing is the scale of experts. For crowdsourcing, company uses an
undefined group of experts while traditional open innovation uses a predefined
group of experts. The approach of predefined group of experts is usually based
on the contract to collaborate with experts. As Thompson (2009) said sometime
negotiation does not work. People usually believe that negotiation focusing on
the long-term relationship can ensure a win-win deal with the other party. We
can see that the long-term relationship is main point of negotiation. But for
innovation, company does not want to keep a long term relationship. They need
various ideas and support at different time. The long-term relationship can
limit the range of innovation sources. Also the cost of keeping long-term
relationship is high. Does it worthy? That is the reason why now more and more
companies transfer to crowdsourcing. Crowdsourcing produces a more competitive
market for solvers and seekers. Negotiation is not feasible in all situations. Especially,
when the risk is low, the negotiation is not attractive, because it is
time-consuming. Also Sebenius (2002) said
it can be costly if you fail to understand other’s role even if you know who is
playing the role. That means in a market with many seekers and solvers it is
better to post the reward and process than in market with few seekers and
solvers. The innovation crowdsourcing can seek for and exploit more unknown
knowledge outside the company than traditional open innovation model. The two
parties of crowdsourcing are not necessary to keep long-term relationship so
far. It can be one-time cooperation without time- consuming negotiating. They
all expose their needs on the platform. The cooperation is based on the meet of
both sides’ need.
But
there is a collaborative problem of trust when company shifts to use
crowdsourcing. This trust means whether the crowd trusts in the company. Trust
is a key factor for individual’s willing to share their ideas. Trust here can
be defined as an individual’s dependence on the company and his willingness to engage
in crowdsourcing on online community. The traditional model of open innovation
does not have the problem of trust because the contract between two parties can
ensure the commitment. As we all know online collaboration is known as lack of
information about the other party of collaboration (Kosonen, Gan, Ol, er &
Blomqvist, 2013). So I think the trust in a company depend on the goodwill and integrity
of the company. Actually, our tendency to judge trustworthiness is usually
based on physical similarities and other surface cues when we process
information (Kramer, 2009). The crowd may be unfamiliar with the company, they can
just decide to trust or not trust based on the company’s reputation, corporate
social performance or even they judge based on the website of the company. As the
mere exposure effect say, we tend to form a preference for something merely
because we are familiar with them. This is a psychological tool that can be
used to build the trust between the crowd and company (Thompson, 2009). So the
famous company like P&G is easy to attract the crowd to join in the
crowdsourcing. As P&G is a company focuses on customer business, company
continues to search for new ideas and innovation. P&G use the patent which
has already owned by the company to collaborate with external crowd for more
new ideas and innovation. The project is called ‘The connect and develop
project’. Because of the reputation of P&G, more people trusted in its
project and are likely to join.
Practices of crowdsourcing in P&G
P&G
is typical example which has shifted its innovation to crowdsourcing. The ways
of collaboration have been changed. Actually the project of P&G is not only
an external crowdsourcing but also internal crowdsourcing. For the internal
crowdsourcing, ‘The connect and develop project’ helps employees to create,
transfer and utilize knowledge inside the company. Employee in P&G can use
the internal website of InnovationNet to contact with each other (Dodgson et
al., 2006). Usually, people who have the same interest connect each other all
over the world. Employees use this internet based system to share information
and knowledge internal the company. Also this system offers a new tool of
communication for people with same interest for example organic chemistry.
There are two types of knowledge: explicit knowledge and tacit knowledge. The
explicit means the documented information can facilitate action. This kind of
formal information is easy to access and share. While tacit knowledge is
knowledge, values and perspective in people’s hand. Only when people want to
share then others can get this kind of knowledge. So company should establish
the platform for employees to share their information and knowledge that is
internal crowdsourcing.
P&G
also succeed in external crowdsourcing. Because the business of P&G focus
on customer market, the packet design is important for company. So P&G
started CtreateInnovate program in order to produce brand identity through
designing creative package. P&G uses virtual prototyping to show the design
of package to the customer and get feedback from them. Also this program can
examine the virtual model. If any employees, business partners or customers
have ideas of packing, the new ideas can be realized through the virtual
prototyping. Then P&G can receive positive and negative comments of the
ideas immediately. The cost of virtual prototyping is much less than real
production. Although most of the models fail, also some good ideas still work. This
program is external crowdsourcing. The crowd gives new ideas and feedback
comments for P&D. This is like a kind of extensive market analysis.
Conclusion
Crowdsourcing is
becoming a new trend of innovation for many companies. With the aid of
internet, the development of crowdsourcing not only expands the way of company
research and development activities but also reduces costs for the company. And
amateurs can participate in the company research and development and make new
ideas, innovation to the company. Some existing collaborative problem in
company can be solved such as knowledge management, trust and negotiation. Also
crowdsourcing offers consumers chances to collaborate with companies. Actually,
crowdsourcing change the way of collaboration for internal company employees
and company with outside partners when company make innovation.
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