Crowdsourcing

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Adam Arvidsson
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Crowdsourcing is the next new term in the vocabulary of Web 2.0. First introduced in a Wired article this summer by Jeff Howe. Crowdsourcing refers to techniques and strategies that aim at utilizing the ‘Wisdom of Crowds’, the innovative and productive abilities that spontaneously arise among the multitude of net-users, as a productive externality to tap for innovation, product and brand development, or content production like, predominately, photo and video. In this sense, the contemporary managerial interest in Crowdsourcing is part and parcel of a long lasting enthusiasm for ‘user led’ (or, ‘user –driven’) innovation. It belongs to a long-established trend within the information economy, where the production of (mostly) immaterial values is increasingly outsourced to consumers and users themselves. The main difference is that Crowdsourcing denotes a more ambitious strategy. It seeks to involve the mass of creative net users, and not just some select groups of ‘trend setters’. It also aims at involving users in a deeper and more multifaceted way, making them responsible not just for creative input but also for actual innovation and product development, as well as for the organization of distribution and marketing systems.

Media and Creativity
Attempts to draw on user creativity as a resource for aesthetic, market or even technical innovation have a long history. It goes back to the very origins of mass media. Already the French sociologist Gabriel Tarde, writing in the first years of the last century, recognized that the more mobile forms of public communication made possible by (then) new media like the newspaper meant that public opinion acquired an immediately productive role. Now public opinion contributed directly by determining the social value of an object: its ‘truth, beauty and utility’. Tarde was a visionary in many ways, but his insights about the productive potential of mediated communication networks were not taken up by the advertising and marketing complex, which remained fixed in its views of user and consumer agency as an obstacle to be overcome, rather than a resource to draw on.

 

It was fist in the 1960s that marketing discovered the productive potential of consumers and their social interaction. This happened largely because that decade saw the emergence of new and powerful autonomous communication networks like the counter culture and the new youth culture. Within these new global networks consumer goods, records, blue jeans and scooters together with pieces of media culture, pop music and films began to function as symbolic tools that were employed in the ongoing construction of new value-systems, fashions and forms of life that could be successfully appropriated and turned into new market niches. (This early ‘Conquest of Cool’ has been masterfully documented by Thomas Frank). However it was with the diffusion of the networked computer with broadband access that the productive potential of such communication networks really became apparent.


There are chiefly two reasons for this. First, the networked computer manages to mobilize and connect a much wider range of actors. Commercially interesting forms of user creativity are no longer limited to fashion conscious inner city youth but involve a wide range of actors with a wide range of interests and competence. That way it is always possible to find someone who has the solution to a problem, (almost) no matter how esoteric. This principle has proved its worth in the construction of Wikipedia and stands behind sites like Innocentive where companies can post their R&D problems for public scrutiny.


Second, networked INFORMATION AND COMMUNICATION TECHNOLOGESs actually enhance the productive potential of such autonomous communication networks. The combination between networked computers with broadband access and digital cameras have made possible the production and agglomeration of photos and movies on sites like iStockphoto, which has become a serious competitor to private firms in the stock photo market. Other well-known examples are YouTube (more popular than television among American teenagers) or iFilm. Here, the crowd emerges as an enormous productive power, generating a mass of content which is both greater in quantity and, sometimes, richer in quality than what private content producers can manage. This productive potential of the crowd is also visible in Peer to Peer systems, like those behind the development of Open Source or FLOSS software. These projects would be impossible without networked information and communication technologies. These allow the mobilization of a critical mass of participants, the sharing of knowledge; the coordination of complex forms of cooperation and not least the circulation of immaterial rewards like, chiefly, peer recognition. The spread of computers and broadband access (and even more so, RFID tags and mobile internet) thus makes it possible to expand the P2P principle from the more narrow niches of software coding, to the more mainstream activities like buying, investing and marketing. This is the real promise of Crowdsourcing.

Capturing the Crowd

From a managerial point of view, Crowdsourcing is about making this great, but autonomous and essentially undisciplined productive power work for one’s own interests. There are basically three ways of doing this. One way is to scan for individual competence. These solutions mostly takes the form of networking or task-finding sites like InnoCentive, where companies can post particular research tasks to be solved and , mostly offer a cash bonus.

 

P&G has made efficient use of this site as a complement to its internal R &D department, and thus managed to counter a situation where increasingly demanding customers and growing pressures towards product differentiation have made R & D budgets rise much quicker than revenues. Similarly Kraft seeks to spot the occasional genius among it ordinary users offering cash prices for lucrative ideas about new products, brands or packaging.

 

A second way is to offer a platform where users can work together. Skinnycorp and threadless are two famously successful examples of how this can be implemented in clothing design. Both companies let users form design communities that then design the clothes that are eventually produced. SmartGirl seeks to do something similar on the teenage trend-spotting market, creating a place where teenagers can come together to produce trends and fads. The Japanese apparel and design firm Muji has also experimented with something similar. Third, one can simply buy into an existing community of creators. This is what Google has done with YouTube and IBM with the Open Source community. The challenge here is to keep the community vibrant despite new demands on discipline, productivity and streamlining. (Google is facing this problem with YouTube, which it recently purchased: It has now become responsible for the mass of copyrighted material available on that site. But, at the same time, imposing stricter discipline on copyright infringement might seriously reduce its popularity.)

An Asian Mode of Production?

It seems that is in Asia that Crowdsourcing as a business model is having its most interesting development. Indian companies like the cell-phone operator Bharti are recurring to what they call Open Distribution in order to outsource the marketing and distribution of their products to existing social networks in villages and other communities. Graameen bank, the brainchild of Nobel Peace Price winner Muhammed Yunus has done the same, structuring the bank around a multitude of lending committees, consisting off 25-10 local borrowers, who evaluate the credit and trustworthiness of potential borrowers and decide on loans. Together with clever uses of information technologies, like the It kiosks that Indian farmers can now use to keep abreast with seed prices and trade their produce form home, these systems manage to cut distribution costs hugely by mobilizing the social networks and the knowledge that already exist among their users.

 

Similarly, innovative Chinese business, what John Hagel in his The Only Sustainable Edge calls the ‘Third China’ (with reference to the idea of the ¨Third Italy’ of small industrial districts that fascinated development scholars in the 1980s): small Chinese high-tech companies, mainly in electronics. outsource innovation to suppliers as far as possible. This mode of production is radically different from the modernist (or Fordist) western model where one big company tended to centralize innovation and design, and impose this on its suppliers and subcontractors. Instead Chinese businesses establish huge networks of hundreds or even a thousand suppliers, and build on innovative business process solutions that manage to coordinate these ultra-complex production networks in ways that encourage cooperation and knowledge-sharing so that the ‘tacit ‘ or hidden knowledge of each participant can contribute to the whole.

 

Whether it is a matter of Open Distribution, Open Production and or Open Innovation corporate crowdsourcing relies on and mobilizes exiting social networks and embedded forms of knowledge, endowing them with smart applications of information and communication technology, in order to make them co-produce the value or products. In order to achieve this, three principles are crucial.

 

Modularity: it must be possible for users to concentrate on a unique aspect of the innovation process, otherwise it becomes too complex. Such modularity was the secret behind the success of Linux. It only took off once Linus Torvalds had devised a way to divide the system into a number of distinct modules that could be worked on separately and then linked together through of common standards.

 

Reward systems that encourage participation and knowledge sharing. These need not be monetary, but can also work on the basis of reputation. It has been shown that a lot of people contribute to these processes mainly to gain the respect of their peers. Some new systems, like linux, enable users to transform such accumulated ‘respect’ into real money.

 

Sophisticated media platforms that can manage the huge problems with coordination. These often work best when they employ various forms of user-generated classifications like tagging or folksonomies.

 

Markets after Capitalism?

Indeed it seems that a huge potential for crowdsourcing lies in user-generated market systems that rely on a host of other variables than money. Such ‘affinity markets’ allow users to determine the performance of a good, service or investment according to non-monetary criteria that are important to them: this could be a matter of ethical performance (how does the company treat its workers), environmental performance, or affinity in terms of religious or other values (is this product made by a woman or am Islamic entrepreneur etc). User- generated classification systems , or folksonomies, mobilize a multitude of actors to generate reliable information on these issues, often through aggregator sites like Urban Logic.

 

Actics, a Danish start-up that I am working with aims to do something very similar with Corporate Social Responsibility, employing user generated ratings to determine a company’s ethical performance. (Their ‘ethical barometer’, a logo/widget that continuously displays the ethical rating of a company has just been adopted by the networking organization Crossroads Copenhagen.) RFID tags and mobile Internet massively expand the possibilities for such affinity markets. Just scan a piece of cheese with your mobile and you’ll know how the producer ranks on your scale of eco-feminist values! Alternatively such services can work with various forms of reputation systems where users rate each others, as is the case with Prosper or Zopa , much like the Whuffie made famous by sci-fi writer Coory Doctorow.

 

Finally, new information and communication technologies and broadband connectivity make possible radically new forms of collaborative production, for example OpenBasicResearch could be a clearinghouse where people contribute for free in solving basic research problems (possibly a complement to under-funded universities). Also new aggregator software able to put together online affinity groups would mean that virtually anyone could start an online foundation, drawing a long tail of small contributions. In short maybe we are seeing something more radical than new kinds of user-driven innovation systems. Maybe the wisdom (and productivity) of crowds can actually translate into new ways of producing and distributing things that are market based but not (exclusively) money based. Maybe what we are seeing is the emergence of post-Capitalist markets! I believe that one litmus test could be A Swarm of Angels, a trans-national project that aims at raising funds for, producing and distributing a £ 1 million feature film using the internet. Will they make it?

 

Tjek også Crowdssourcing:

http://del.icio.us/tag/crowdsourcing

 

 

 

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