Emerging Trends in Crowd Sourcing

You may have heard of the Netflix competition to improve the level of its predictions.  The DVD-rental company offered $1 million as well as continued ownership of intellectual property to anyone who could boost the accuracy of its predictions by 10%.  These winner-take-all races seem to fit in well with another 21st-century trend—crowdsourcing, or seeking help from others (often for no compensation) via the Internet. Indeed, many of the teams in the Netflix competition, including BellKor's Pragmatic Chaos, depended on such far-flung collaboration as teams came from different countries.

According to Wikipedia, “Crowdsourcing refers to the act of taking a task traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people or community in the form of an open call. The term has become popular with business authors and journalists as shorthand for the trend of leveraging the mass collaboration enabled by Web 2.0 technologies to achieve business goals.

A recent Business Week article argues that crowdsourcing will expand and that its impact on traditional businesses marketing, design and advertising needs to be clearly understood.  Some analysts, meanwhile, have predicted this practice of opening up a task to the public instead of keeping it in-house or using a contractor will be the demise of those businesses because of the downward pressure on prices. If LG crowdsources a new cell phone design on CrowdSpring for $20,000, as it did recently, what happens to the old model of paying a design firm millions of dollars for the same project?

The author expects communities and marketplaces to evolve further, supplying a more efficient and creative way for companies to engage with and harness the crowd for help. The increasing complexity of problems has also caused a rise in mass collaboration. Customers, of course, are increasingly demanding participation. They expect the ability to co-create and lead innovation, and their volubility has forced companies to devise creative solutions to be competitive in a new bottom-up age.  Challenges include managing submissions in line with business objectives and compensating people fairly for their ideas and how it will affect businesses such as design, marketing and advertising.