Crowdsourcing: The Past, Present and Future of Online Behavior and Business

6 Apr

What is a crowd?  Dictionary.com offers 14 variations on the definition of crowd (both nouns and verbs).  My favorite – and most relevant to Jeff Howe’s Crowdsourcing: Why the Power of the Crowd is Driving the Future of Business – is #7:

“noun. Sociology. a temporary gathering of people responding to common stimuli and engaged in any of various forms of collective behavior.”

Why is it important to discuss crowds in relation to business, the Internet and online communities?  How do crowds act online, why should we pay attention, and how can businesses effectively capitalize on crowd behavior to promote participation and loyalty among consumers?  And what is “crowdsourcing”?

Originally defined by Howe in a June 2006 Wired article , crowdsourcing is a revolution that involves “cheap production costs, a surplus of underemployed talent and creativity, and the rise of online communities composed of like-minded enthusiasts” (5-6).  Or, as Howe defines it on his blog, crowdsourcing is “the application of Open Source principles to fields outside of software.”  In the book, Howe does an excellent job of explaining both the history of and theories behind crowdsourcing.  Using examples of how certain companies (Threadless, InnoCentive, Etsy, Wikipedia, iStockphoto) became successful while employing business models that engaged the online consumer, Howe notes crowdsourcing is the “antithesis of Fordism” (14).  Online communities, where collaboration and commitment are their own rewards to users, are at the center of crowdsourcing.  “Crowdsourcing accelerates the globalization of labor and economic dislocation we see in outsourcing.  Like the Internet, crowdsourcing has no boundaries” (17).

Section I, How We Got Here,” is dedicated to describing the evolution of crowdsourcing.  Howe argues that four fundamental developments made “crowdsourcing not only possible, but inevitable” (18):

1. Renaissance of amateurism: The gap in knowledge between the experts and the rest of the populace is shrinking.  The Internet makes it more difficult to restrict information, so amateurs and professionals alike have access to the same information.  Where once professionals reigned, “the self-organizing community of amateurs shoulders a significant degree of the labor” (32) in various industries (ie, iStockphoto for photography).

2. Open Source software movement: Howe strongly argues that the Open Source software movement provided the blueprint for crowdsourcing.  There are three components to the open source model of production (62-63):

  • an enourmous task is distributed across a network,
  • there is no limit on the number of potential contributors,
  • the work is broken down into small, discrete tasks (aka “modules”).

Howe notes that open source works efficiently because “a large and diverse labor pool will consistently come up with better solutions than the most talented, specialized work force” (54).  He discusses the evolution of Wikipedia as the perfect example of crowdsourcing based on Open Source software principles.

3. Increasing availability of tools of production: The widespread availability and decreased price of means of production empower crowds to take part in a process long dominated by companies and industries (71).  Such tools allow amateurs the opportunity to be both a producer and consumer.  Corporations such as Google (YouTube) and News Corp. (MySpace) capitalize on user-generated content to make money off ad sales.  Electronic word-of-mouth, such as bands on MySpace, becomes a marketing strategy that doubles as a distribution strategy.  This is the democratization of media in action.

4. Rise of vibrant online communities organized around people’s interests: Howe defines the crowd as “the Billion” of people worldwide who have Internet access.  This is the size of the potential crowd who can contribute to crowdsourcing projects.  Howe emphasizes that community is the asset to crowdsourcing, and geography and common interests are potent forces in creating online communities.

Section II, Where We Are,” discusses how crowdsourcing currently manifests online and in business (or, at least in the moment the book was published in 2008.  Howe added a forward, published in the 2009 edition, which fully acknowledges that several of these current examples are already outdated).  The most relevant ideas from this section include:

1. Diversity trumps ability: Studies that show a large, diverse group of people will have an equal if not better ability to solve a problem than a small, homogeneous group of high ability.  Why?  Individuals each have knowledge or talents that, when shared with a community, create unparalleled collective intelligence.  A diverse array of approaches to solving a problem will allow the problem to be solved more quickly than people who all have the same knowledge and ability.

2. Collective Intelligence in action: Howe discusses “idea jams” and crowdcasting, which are efforts at customer collaboration to create solutions to problems that don’t exist yet (159).  Dell IdeaStorm, the Netflix algorithm challenge, and InnoCentive are examples of crowdcasting networks and prediction markets that utilize collective intelligence.

3. What the Crowd Creates: Here, Howe explains the role of the top 1% of contributors, or “creators,” in an online community, and how they are fundamentally changing how work gets done.  The crowd’s heaviest users need to have meaningful incentives for contributing – it’s not about the money (although it can be a welcome byproduct).  Creators need to have a sense of ownership over a site in a company’s transition from professional to community production.

4. Filtering the crowd: The 1:10:89 rule says that for every 100 people on a given site, 1 will create something, 10 will vote on it, and 89 will consume it.  (Think American Idol).  Communities don’t need to have a 100% active user base in order to be thriving and vibrant.  It’s the 10% who filter the 1% creators, ultimately determining what is valuable (and not paying attention to the crap) and thereby making the community and its information meaningful.  (Think Digg).

5. Crowdfunding: Also known as “social banking,” crowdfunding taps the collective pocketbook so people can finance projects they believe in on their own terms, on their own timetable.  The concept directly connects people with money to people who need money.  Kiva.org, the person-to-person microlending site endorsed by Bill Clinton, is a perfect example of crowdfunding.

In Section III, “Where We’re Going,” Howe posits ideas on the future of crowdsourcing and offers ten rules for effectively maximizing on crowdsourcing behavior.  Several of these rules reiterate the principles he discusses throughout the book and are useful “quick tips” for individuals and businesses looking to implement crowdsourcing effectively.  Here is a chart that shows crowdsourcing in eight steps:

However, Howe spends little time – except in the forward – discussing the potential downfalls and criticisms of crowdsourcing.  Clearly, the ethical and economic issues raised by crowdsourcing are debatable.  Certain businesses — Howe mentions the uproar over crowdSPRING and 99designs in the design community — denounce crowdsourcing because too many artists are providing free spec labor and not being compensated appropriately.  Since there are no written contracts in crowdsourcing, critics believe that contributors can be exploited, and it may be difficult to manage large-scale crowdsourced projects.  As Howe mentions, any successful crowdsourcing community needs to have a guide to organize the crowd — without two-way communication from the source to the crowd, users will leave or not contribute meaningfully.  While I believe that crowdsourcing is fundamental and crucial to today’s — and the future’s — online marketplace, there is no question that a company needs to provide a framework for the crowd to work successfully.

Here are some current examples of crowdsourcing. Crowd: what do you think?

Google Product Ideas

Automattic

The Late Age of Print Open Source Audiobook

Crowdsourcing Cover Challenge

Open Innovators

Ever Use a Crowd to Learn Something?

4 Responses to “Crowdsourcing: The Past, Present and Future of Online Behavior and Business”

  1. Chris van Denderen April 19, 2010 at 3:54 pm #

    another. Personally, it’s very hard to say. I think I’m not going to take a stand on this yet. Curious to see what others feel.

Trackbacks/Pingbacks

  1. Tweets that mention Crowdsourcing: The Past, Present and Future of Online Behavior and Business « Aye Blog -- Topsy.com - April 8, 2010

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    […] and why it should matter to you would be through books and blogs, of course.  Here is a good blog here (that provides insight into a good book that explains […]

  3. Crowdsourcing: a Low-Cost Approach to Acquiring Information from your Clients and Stakeholders | Marketing in the Public Sector - October 27, 2011

    […] and why it should matter to you would be through books and blogs, of course.  Here is a good blog here (that provides insight into a good book that explains […]

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