Crowdsourcing Risk and Reward – How to Evaluate Options for Success

Risk: Crowdsourcing does not solve your organization’s problem

Some of the biggest companies in the world rely on crowdsourcing. Starbucks, Nokia, Dell, IBM, Netflix and many, many more organizations have successfully used crowdsourcing in a number of ways. Some of the greatest innovations at these organizations have come from the ideas brought forward by the crowd. However, in order for crowdsourcing to work, the crowd needs to know what you expect from them and the project needs to be very focused. Your organization’s culture plays a major role in the success of crowdsourcing. In a New York Times article by Steve Lohr, “The Crowd is Wise (When it’s Focused),” Lohr wrote about the importance of corporate culture:

Opening the corporate doors to ideas and inspiration from the collective crowd holds great potential, but there are pitfalls, warns Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Berkeley. To succeed, Mr. Chesbrough said, a company must have a culture open to outside ideas and a system for vetting and acting on them.

“In business, it’s not how many ideas you have,“ he observed. “What matters is how many ideas you translate into products and services.³

Risk: The crowd doesn’t have the answer

Many organizations don’t feel that the ideas offered by the crowd will actually solve the problem at hand or lead to innovation suitable for investment. The solution to your problem isn’t always going to be found within the walls of your organization. Organizations are expected to do more with less, and that often means fewer employees. In the article 2 Ways to Reduce Open Innovation Risk: Convert the Naysayers and Bring on the Seasoned Veterans, Hutter writes:

Because of this “extreme downsizing,” however, the experienced coaches and seasoned players are not on the usual playing fields; that is, they are not in the corporations where they learned their crafts (on someone else’s dime). Moreover, many of them–presumably the best and most entrepreneurial of them–are not sitting on the sidelines after being cut from the corporate teams for which they have been playing for many years.⁴

Risk: Failure to participate

Some people worry that crowdsourcing is that shiny new thing that everyone wants to be part of at the beginning, and the hype will die down a few campaigns in. Crowdsourcing isn’t new. The term itself has been around for six years or so, but organizations had been using various forms of crowdsourcing before then. Look at the longevity of crowdsourcing projects like My Starbucks Idea, Dell’s Ideastorm and Nokia’s IdeasProject. These projects continue to receive widespread support from their crowds – and they have all been around (and producing results) for many years. One of the things each of these organizations does well is communicate with their crowd. These groups promote ideas that have become a reality and the crowd that they are listening – and that their ideas do have value.  Simple tasks such as commenting on ideas and getting in on the conversation help to build deeper relationships. These relationships help build loyal crowd members, who in turn get involved in more projects and share projects with their own crowds.

Risk: Crowdsourcing takes too much time

People worry that projects will take too much time to complete if crowdsourcing introduced to the process because of the large number of people involved and the number of submissions received. In many organizations, they think that it will just be easier to limit participation to a team in the company or the company as a whole because there are fewer ideas to deal with and decisions can be made faster. However, just because you can move through a process faster, doesn’t mean the solution is going to be the best one. There are two ways to address the time issue:

• Different projects require different response times
• Create contest type projects that have time deadlines attached to them.

In addition to these options, you’ll also want to develop a plan for handling submissions so that they are all reviewed in a timely manner. If needed, set deadlines and work backwards to figure out which activities you need to complete and when. This will help you stay organized and keep the crowdsourcing project on track.

For time-sensitive projects, crowdsourcing can be used to bring large groups of people and information together in a short period of time. Using social media to leverage your crowdsourcing project allows you to cast a wide net, reaching your crowd to solve a problem/find an answer.

Crowdsourcing focuses on small asks, where people often have an easier time of relating to the project or ‘getting their head around it’ in order to support it to the level they wish. Reaching a wider range of people through crowdsourcing and social media often means that projects can be funded on time.

Risk: Idea theft

Another thing organizations often worry about is idea theft. Ideas are only ideas until they are executed. Sometimes an organization may not have the resources to execute the ideas. While some companies will modify ideas to put their own spin on them in order to make them a reality.

Risk: Maintaining privacy

Many of the crowdsourcing platforms use technical security measures such as SSL certificates when they develop their platforms to protect the privacy of those that participate in the campaigns run by our clients. Because platforms often closely integrate with clients’ websites, making sure they are developed properly in order protect privacy is taken seriously from the start.

Risk: “Gaming the system”

There are many ways to try and prevent gaming of the system – but there it can be a balancing act. Restricting access to people you know (ie. log in to access a campaign) is one option, but the problem with this is that you risk narrow your crowd, which isn’t not always desired for the campaign you are running. The crowd also does a fairly good job of preventing people from trying to gain the system by reporting abuse, etc. Any platform that you would consider should have security features in place that prevent gaming of the voting functionality, for example, to ensure integrity of the system around voting and ranking.

Crowdsourcing best practices

There are a number of crowdsourcing best practices, whether for open innovation or citizen engagement that should be considered as a way to reduce risk for your organization.  Since these endeavours require commitment to execute successfully, there are a few questions you’ll want to answer and research you’ll want to do as a starting point.

In conclusion, asking whether crowdsourcing is right for you after evaluating the risks and benefits is the natural question. You need to think about the main objective and ask if crowdsourcing is right for your organization. Here are some questions you’ll want to give some thought to:

• Is your organization culturally open to input from outside – there is no sense going down the crowdsourcing or open innovation path if your team is closed minded or will feel threatened?
• Do you have the resources to investigate the ideas and innovation that come from the crowdsourcing process?
• Does the presence, or not, of a reward for the winning idea change things? What is the risk associated with this?
• Do you want to use internal development resources to create something from scatch or use an existing platform? If you choose to use a platform that exists, have you considered the criteria you might use to evaluate crowdsourcing platforms to make sure they contain the functionality you require?

Crowdsourcing risks shouldn’t get in the way of enabling open innovation or citizen engagement at your organization. Using your crowd to solve problems is a great way to make your crowd feel included and empowered, helping boost brand loyalty. Crowdsourcing risks cannot go ignored, as wrong turns can have a negative impact on the success of your crowdsourcing or crowdfunding project.