In one of my last blog posts, I described the widespread possibilities to apply crowdsourcing for various purposes. In this article, I will focus on crowdsourcing for innovation and describe how organizations can use crowdsourcing contests to solve problems or develop new products. Furthermore, I will touch upon the question why a high number of contributions can be very problematic.

First, it is important to point out that innovation is one of the most important activities an organization must perform in order to stay competitive and alive. As research on open and user innovation has shown, users can be an important source of innovation. One way to harness the innovativeness of users is crowdsourcing. For that reason, organizations increasingly use crowdsourcing contests to receive novel ideas for issues like product innovation or problem solving.

Crowdsourcing contests are ideation contests which are posted in the form of an open call to a large network of potential contributors, including amateurs and professionals. Even though simple forms of crowdsourcing contests have already been used for a very long time (Napoleon used crowdsourcing to find solutions to famine and irrigation), the rise of the internet has immensely accelerated the adoption of crowdsourcing contests.

The method builds upon the phenomenon of the wisdom of the crowd and assumes that a crowd can outperform experts on various dimensions including novelty, customer benefit, and feasibility (Poetz & Schreier, 2012; Surowiecki, 2005). In tournament-based crowdsourcing, each contributor from the crowd self-selects to work on its own solution to a problem, and the best solution is chosen as the winning solution. Oftentimes, such an external approach can be cheaper than solving the problems in-house. For example, Neftlix crowdsourced the development of an algorithm to further improve its movie recommendation system and gave away the price of 1 million USD to the winner (Afuah & Tucci, 2012).

However, such open calls can also come with unintended consequences. During the devastating oil spill of the platform Deepwater Horizon, BP issued an open call for suggestions how to deal with the catastrophe. The company received more than 120,000 suggestions from all kinds of contributors (Piezunka & Dahlander, 2015). These huge amounts of contributions lead to the question, how the organizer can efficiently and effectively evaluate the submissions.

In one of my next blog posts, I will talk about ways the crowd can support organizations in the selection process.

References:

Afuah, A., & Tucci, C. L. (2012). Crowdsourcing As a Solution to Distant Search. Academy of Management Review, 37(3), 355–375. https://doi.org/10.5465/amr.2010.0146

Hoornaert, S., Ballings, M., Malthouse, E. C., & Van den Poel, D. (2017). Identifying New Product Ideas: Waiting for the Wisdom of the Crowd or Screening Ideas in Real Time: IDENTIFYING NEW PRODUCT IDEAS. Journal of Product Innovation Management, 34(5), 580–597. https://doi.org/10.1111/jpim.12396

Piezunka, H., & Dahlander, L. (2015). Distant Search, Narrow Attention: How Crowding Alters Organizations’ Filtering of Suggestions in Crowdsourcing. Academy of Management Journal, 58(3), 856–880. https://doi.org/10.5465/amj.2012.0458

Poetz, M. K., & Schreier, M. (2012). The Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?: The Value of Crowdsourcing. Journal of Product Innovation Management, 29(2), 245–256. https://doi.org/10.1111/j.1540-5885.2011.00893.x

Surowiecki, J. (2005). The wisdom of crowds (1. ed). Anchor Books.