crowd·source
?kroud?sôrs/
verb

To utilize information contributed by the general public, often via the Internet

“Some companies may not understand how to take advantage of crowdsourcing. But the ability to collect and analyze huge amounts of data from customers and employees — whether directly or via statistics and software — creates a vast strategic opportunity to experiment with ways to mine small, individual ideas to drive major innovation, problem solving, efficiency and cost savings,” says Michael Morton in the Entrepreneur article Driving Innovation with Crowdsourcing.

Crowdsourcing, a term coined in 2005 by two editors at Wired Magazine, is not only a recent innovation in and of itself, but it’s also a process sparking new ideas around the globe. Whether it’s developing new technologies, solving problems, or deciding a company’s new ad slogan, crowdsourcing is more than just a way to spark innovation—it’s becoming a preferred method of gaining valuable insight for many small businesses, corporations and even government programs. The process, which uses online communities to help gather ideas, content or services, simply requires identifying the right opportunity and providing appropriate crowd perks in order to see measurable success. While there are many case studies and tutorials on how to dive into crowdsourcing, a successful crowdsourcing experience comes down to goals and rewards.

Identify the nature of your problem

To spark innovation through crowdsourcing, companies first need to identify problems that are appropriate for their audience to help solve. Crowdsourcing applications are vast, from garnering new PR and marketing ideas, to saving lives with innovative technologies.. Smart organizations understand the wide breadth of opportunities when it comes to crowdsourcing, and plan appropriately.

It’s good to keep in mind that what’s considered a problem at one company can look vastly different at another. According to Crowdsourcing: The ultimate IT talent pool, NASA Solve’s 2009 coding contest “called upon their online community to create algorithms aimed at optimizing medical kits for long space flights.” In June, the company announced a new contest designed to utilize crowdsourcing for “outside-the-box thinking about human space exploration challenges…” On the opposite spectrum, Sony’s Help Us With a Name contest asked consumers to weigh-in about what the company should name their new audio ball. While the electronics giant would have likely come up with a name on their own, they wouldn’t have received loads of free PR or over 39 pages of name ideas to choose from.

While NASA and Sony’s problems are wildly different in terms of complexity, both companies asked their audiences to solve real problems, which led to innovative results from an infinitely broader talent pool than their select team of employees.

Offer the right prize or perk

When it comes to motivating audiences, prizes and perks will look different for every crowd. Some audiences with strong fan bases won’t need a carrot dangled in front of their eyes to participate in a crowdsourcing challenge, but most companies need to offer some type of reward. Whether you supply a free e-book download for each entry, or the promise of a monetary prize for chosen winners, companies should consider appropriate incentives for the amount of work required. For example, the Heritage Provider Network gave away $3 million dollars in prizes as part of their Heritage Health Prize Competition which asked entrants to create an algorithm to predict how many days a patient will spend in the hospital. The prize was larger than the Nobel Prize for Medicine and the Gates Health Prize. On the other hand, Sony’s Help Us With a Name contest rewarded only five winners, each receiving a $69 Sony product.

Move past hesitation

Even though crowdsourcing is becoming a popular way to innovate, many companies are still proceeding with caution. Cost and intellectual property issues are real concerns, and require creative thought and planning. However, as Harvard Business Review points out, “excluding crowdsourcing from the corporate innovation tool kit means losing an opportunity…crowds are moving into the mainstream; even if you don’t take advantage of them, your competitors surely will.”

Are you ready to compete?

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