Crowdsourcing for profit

Broadcasting schedules are packed with a plethora of programmes about, or produced by, the general public. In times of economic austerity, the cost of programming is crucial to the profitability and survival of a network. From ‘fly-on-the-wall’ documentaries and viewer diaries to talent competitions, they all have one thing in common; they are relatively cheap to produce. In addition they are often extremely popular – take ‘X Factor’‘ or ‘American Idol’ as examples; the ‘Average Joe’ loves seeing himself on TV, however, awful he may be as an individual, or how talentless.

The world is more competitive than ever and innovation processes and systems in small firms often fail to keep up with rapidly changing markets and external environments. The cost of innovation is increasing while the returns are diminishing. Although, it is considered vital for firms to actively research their target markets to establish needs, wants, trends and preferences, this is usually a costly and time-consuming business and consequently only the larger corporations can research extensively, often using specialist agencies. Not surprisingly, therefore, organisations in both the profit and non-profit sectors have been attracted to the idea of using the general public in a more organic way to gain vital marketing and consumer information, using the power of the blogosphere and social media. As a result, the term ‘crowdsourcing’ has entered the business lexicon.

Crowdsourcing is the equivalent of Wikipedia for everything, with online communities providing the building blocks. The term has become shorthand for mass collaboration to achieve business goals, enabled by the use of web 2.0 technologies. The general public are invited to undertake a wide number of tasks on behalf of business; and what is more… for no monetary reward. Jeff Howe, one of the first authors to employ the term crowdsourcing, outlined the concept as ‘an open call to an undefined group of people to develop new technologies, collect and analyse data, design products and marketing materials, write computer code and reflect on business ideas and services’.  The process often attracts those best suited to perform these tasks: the serious users, the fanatics, the technical experts, the opinion-formers, the gatekeepers of information and/or those with a vested interest. In the same way that Wikipedia has been developed by the community, the public are solving complex problems and contributing relevant and fresh ideas to support the development of new and innovative goods and services. Businesses are applying open source principles outside of software development.

A search of the internet will bring up many stories and diverse links to crowdsourcing ventures and news reports, for example:

• 99designs – a popular site where startups and other small businesses can crowdsource their graphic design needs.

• Crowdsourcing a clinical trial to treat ALS –  PatientsLikeMe is using the increasing trend to share information by crowdsourcing a clinical trial, obtaining data on the effectiveness of off-label use of a drug to treat Amyotrophic Lateral Sclerosis (ALS); a pretty grim disease. Victims experience progressive muscle weakness, leading to death. Currently, there are no effective therapies. So it’s not surprising that when a preliminary study shows a hint of efficacy, patients will do what they can to get access to the drug and share their experiences with fellow patients.
• The Guardian newspaper discusses whether the FBI was right to crowdsource a murder case.
• Nina Maya is a forward thinker fashion designer and. but she has recently ditched her big name department store stockists in favour of turning the role of Head Buyer over to the public. Following the lead of designers like Derek Lam, Ms Maya is using crowd-sourcing to determine what designs get put into production; meaning the public can decide which styles make the grade for her Spring Summer 2011 collection.
• Wikileaks has been crowdsourcing classified data. The release by Wikileaks of more than 90,000 documents about military operations in Afghanistan and a raft or other classified materials, revealing what it claims are unethical behaviour in their governments and institutions around the world, has been accompanied by the challenge to visitors to the site to crowdsource the information the documents contain.
• The blog  ‘Crowdsourcing‘, focuses on how crowdsourcing is driving the future of business and includes the following video as an introduction to the topic:

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• Storyful is a Dublin based business developed through the use of collaborative journalism. It bases its stories on information from social media sites such as facebook and twitter, but filters out the ‘noise’ of the real-time web. It leverages the wisdom in the crowd by identifying gatekeepers of  information and reputable credible sources to relay stories about world events. Every news story it claims creates a community:

Storyful’s golden rule is there is ALWAYS someone closer to the story. And in the last few months, we’ve worked with people at the heart of the action, capturing turning points in history in words, pictures and video.

Sometimes our sources are local journalists, amateur photographers, or filmmakers. But often the people with the best view of the action are citizens in the right place at the right time.

We believe that there’s a good chance that person is you.

Outsourcing has also been used recently to excuse certain potentially nefarious activities. For example, last month Apple responded to charges that it has been gathering location information about iPhone and iPad users by denying it was tracking each and every phone, but instead claimed it was ‘crowdsourcing’ data from Wi-Fi hotspots and cell towers and cacheing information that it received. The idea, they say was to get a representative sampling of groups of users, not to spy on individuals.

Class Assignment

Ask your students, individually or in groups, to select five potential business applications or opportunites from these sources:

Twitter Paid $6 or Less for Crowdsourced ‘Birdie’ Graphic

The Guardian newspaper Crowdsourcing section

The Daily Crowdsource reports breaking web news, analyses new implementations and trends, reviews new web sites and services, and offers crowdsourcing resources and guides and accepts breaking news reports from the general public.

InnoCentive connect seekers of innovation to internal and external communities of problem solvers to find solutions.

The students should then produce a report including some, or all, of the following:

• a definition of crowdsourcing
• the background to the five potential business applications or opportunities identified from the sites
• a more detailed analysis on two of these applications or opportunities in the form of a marketing plan
• a conclusion evaluating the role of crowdsourcing as a  marketing tool

Once the report has been written, students can present the key findings to the rest of the class.

Extension activity: Your students can investigate and report on ways that your school or educational institution can use crowdsourcing as part of its strategic development process.

IB style questions

1.  Define the following terms:

• target market
• social media.

2.  Explain the process a new business will have to go through to start up.

3.  Analyse the effectiveness of social media sites, such as facebook and twitter, as promotional tools.

4.  Evaluate the use of crowdsourcing, both as a method of market research and as a marketing tool.