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Crowdsourcing: Future model for big corporations or outcome of socialization?

April 11th, 2010 · 2 Comments · AlexRomanovich, All Posts

“No matter who you are, most of the smartest people work for someone else”. – Bill Joy, Cofounder, Sun Microsystems

The word Crowdsourcing was coined by Jeff Howe of Wired Magazine, a portmanteau of the words ‘crowd’ and ‘outsourcing’. It is used to describe the phenomenon using group intelligence to solve problems and complete projects. A darling of Web 2.0, more and more companies are jumping on the crowdsourcing bandwagon, and even federal government agencies have begun to explore it, with the Federal Communications Commission crowdsourcing ideas on how to improve America’s broadband infrastructure.

The benefits of crowdsourcing are immense – not only does the crowdsourcing model have the potential to significantly reduce expenditure in the long term by not having to maintain permanent staff ‘on the bench’, it also allows companies to engage staff on a per-project basis, thus benefitting from having the people with the exact skills and expertise to fit each particular project.

However, it can be a double-edged sword. The skills and expertise that are so easy (relatively) to capture by assembling a temporary, specialized workforce are also easily lost, and cooperation is often short term. ‘Crowdsourced’ projects also need to be managed carefully – when working with unknown entities, it is vital that they are managed properly to ensure the most positive outcome is reached.

There is also a lack of stability. But in these days of financial turmoil, when even the most indispensible employee is worried about job security, we are naturally led to ask: is there such as thing as stability anymore? Employees are fast becoming a liability for some corporations. As well as take-home salary, there are taxes, training, insurance costs, and so on, and companies are being forced to consider entirely new ways of working in order to survive, including open source and crowdsourcing models.

But crowdsourcing is not just for startups – Google Summer of Code, an initiative which invites student programmers to compete for places on a scheme to develop open source projects for mentors, is probably one of the best known and successful examples of crowdsourcing.

Non-tech corporations are getting in on the act, too: household products giant Unilever has recently decided to drop its advertising agency of 16 years, Lowe, and will instead use the crowdsourcing platform IdeaBounty to source ideas for its future campaigns, by submitting a brief to the public and choosing the best among the ideas put forward. Naturally using Social Media to source talent, ideas and resources.

Large corporations have always used occasional freelancers; crowdsourcing is merely an extension of this. If properly coordinated and planned with legal and human resources, the crowdsourced environment is a tremendous vehicle for communication – a way to massively increase knowledge, and by extension, the ability innovate and increase production. Yochai Benkler, of Yale University, in his book The Wealth of Networks, sums it up extremely well: “The world is becoming too fast, too complex and too networked for any company to have all the answers inside”. Crowdsourcing as a concept is still in its infancy, and the company that is able to effectively harness its power now will without doubt be in a superior position to benefit in future.

This concept is proof of why Social Media and Crowdsourcing are seemingly becoming synonymous. Many ideas, case studies, and even human resources are gathered and distributed using Social Media. There are a number of examples where large brands and small start-ups are using ‘crowdsourced’ models to feature new products, solicit opinions on new features and improvements, and form groups of affinity, or professional social networks.

Examples such as LinkedIn Groups, TheSocialCMO, The CMO Club, Social2B, Experts Exchange, and many others, provide fertile ground for thought leadership, member exchange, aggregation of expertise and ideas, and channels for distribution of content, thus ‘crowdsourcing’ content and user feedback.

The CMO Club, one of the fastest growing social professional networks of leading top marketers worldwide, is yet another example of a well integrated model, with ideas, research content, online and off-line conversation leading to an improvement in the quality of the marketing discipline. “I was really tired of low quality marketing conferences and ‘vendor-centric’ presentations and decided that leading marketing executives could do better”, stated Pete Krainik, Founder of The CMO Club. “The crowdsourcing of ideas and conversations, leading to action and improvement is what we are all about.”

And through my participation with The Social CMO Crew which continues to emerge as a thought leadership and digital marketing collective, again joint participation and action are leading to the creation of new marketing ideas, models, roles and channels.

@JeffAshcroft who founded @TheSocialCMO and The Social CMO Crew in August of 2009 shared the following. “As we migrate further into this realm of social collective communications and action, new models, performing well beyond the sum of the parts, will continue to emerge and evolve resulting in exponential increases in reach, quality, effectiveness and social impact.”

Marketing expertise group Social2B is an example of the crowdsourcing model on an international scale – with associates and experts based around the world, including the US, UK, Russia and Eastern Europe, and Argentina, they leverage a bank of multilingual, multicultural experts to call upon when needed. This new way of doing business allows even the smallest of companies to harness the power of a large group of specialized talent.

The above entities demonstrate how Social Media and Crowdsourcing are integrally linked and at the same time how these new modes of organization are leading to an acceleration in the development and refinement of new ideas as well as the generation of new business models and positive social outcomes.

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  • Cheryl K. Burgess

    The old business models (reminiscent of traditional media dinosaurs) are being severely tested. Born out of a tough economy, entirely new business models are forming and the term “crowdsourcing” aptly describes the changing business landscape. And why not? It makes too much sense to ignore. For example, not long ago, the top five management consulting firms in the world were able to charge their clients several hundred dollars per hour for not even their best talent! Companies were willing to pay until the bottom fell out. Now, the new models Alex describes including “TheSocialCMO” founded by Jeff Ashcroft, The CMO Club, Social2B are comprised of a network of very bright people with varying skills and backgrounds. I know first-hand that this type of model is indeed starting to have impact and become idea factories, leveraging the best thinking of its members. Indeed, good examples of “group intelligence” at its best. Although, this blog cites a few potential disadvantages, in my view none are significant. Indeed the benefits of “crowdsourcing” far outweigh any disadvantages. I believe this trend will not only continue but pick up speed for several reasons. First, this trend will lead to even greater innovation. Secondly, the “talent on the bench” in this new model is armed with an arsenal of experience and ideas. Lastly, this future model (taking shape today) is too logical not to gain momentum. This new model has strong potential to generate far greater effectiveness and significantly higher efficiency versus today’s over-stressed, declining business models. Today, social media is about blazing new trails – not following the old ones.