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Crowdsourcing is essentially an idea, concept or problem that is introduced to a “crowd”, usually through electronic means such as the internet. Once an idea, concept or problem is introduced, the “crowd” is then called upon to generate unique solutions in response. The crowd is typically brought together through online communities in order to collaborate on the croudsourcer’s (the individual or business who introduced the idea, concept or problem) issue. The crowd systematically submits their own ideas and solutions and then sorts through them in order to identify the best ideas. Although the solutions are owned and acted upon by the crowdsourcer, the individuals in the crowd with the best ideas are sometimes rewarded. In some cases, these individuals are compensated through currency, prizes or even simple recognition.

The concept behind crowdsourcing is not new. It is essentially a brainstorming session aimed at solving a problem or generating something which did not exist previously. However, true crowdsourcing uses contemporary tools, technologies and communities in order to tap a wide range of ideas. It uses the resources associated with the internet age to generate a larger volume of ideas and potential solutions. Crowdsourcing produces solutions from amateurs, business professionals, students, volunteers, experts and small businesses alike. Where businesses were previously restricted to the brainstorming power of their employees, contractor and consultants, they now have the collective wisdom of the internet crowd at their disposal.

The word "crowdsourcing" was first coined by Steve Jurvetson and popularized by Jeff Howe in a June 2006 Wired magazine article.

"Crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call."

-Jeff Howe, June 2006


Benefits of Crowdsourcing:

Solutions to problems can be explored at comparatively little cost, and often very quickly in comparison to traditional outsourcing or in-house efforts. Substantial time can also be saved by alleviating some of the workload from in-house employees, and distributing it amongst a crowd. Crowdsourcing allows employees to focus their efforts on other duties and responsibilities, rather than spending hours of their own time trying to come up with innovative solutions to potentially difficult issues.

A business or organization can use crowdsourcing to tap a wider range of talent than might be present within its own workforce. It allows an organization to utilize a pool of collective intelligence, where many individuals are happy to put their talents to use. This is usually done at a much lower cost in comparison to outsourcing and contracting outside professionals. Through crowdsourcing, an organization can employ hundreds, thousands, and even millions of creative minds to work toward a common goal. This collective effort can help spawn growth and progression within an organization.

Crowdsourcing can benefit an organization by providing fresh ideas. A fresh look at a problem by one person or group can reveal substantial solutions that someone else may have completely overlooked. It is also important to note that an individual who may not know all the facts or data surrounding a problem may actually generate more creativity, thereby arriving at better solutions. Many organizations, especially small businesses, do not have the resources or time to dedicate to creative problem solving. The everyday functions of a business are often overwhelming as it is. It only makes sense to allow a crowd to do the problem-solving for you. A crowd is not limited by company constraints or organizational policies, nor are they concerned with impressing a superior. The creative freedom of the crowd allows individuals to think outside the box.

Through crowdsourcing, a business or organization can gain a wealth of pertinent information and feedback from a community that can be applied towards improving your business entity. This information can maximize marketing efforts simply because it lessens the allotted capital needed for market research. Crowds can also provide inexpensive demographic research data. By providing the crowd a platform to express what they want, an organization can gather useful feedback on how the community views them and what can specifically be improved upon.

Crowdsourcing provides an organization’s community with an outlet to share their thoughts on everything from business practices to the look and feel of a website. This feedback can be used by an organization to better meet the needs and wants of its customers, thereby keeping the community satisfied. By updating business functions based on feedback, an organization can show a crowd that their input is both valued and appreciated. This allows the individuals within the crowd to feel a sense of importance, which in turn, builds trust in the organization.

Compensation is based on results. Individuals within a crowd are rewarded on a per-solution basis rather than through a standard salary or hourly rate. This essentially means an organization does not necessarily need to employ full-time talent, nor does it need to bring in consultants, contractors or specialists. This is especially important to small businesses who typically need to balance expenditures very carefully. Crowdsourcing is certainly a good technique for maximizing an entity’s return on investment.

Crowdsourcing can also assist with the design and development of new products and services. Outsourcing research and development saves money and decreases the time associated with typical outsourced R&D. A crowd is essentially as big as the organization wants it to be. An important concept within crowdsourcing is crowdcasting. Crowdcasting allows a business to recruit a more select group of individuals within the crowd. This specialized crowd can assist an organization with gaining insight with a particular service or product.
Crowdsourcing also has potential to be an effective problem solving mechanism for governments and non-profit organizations. Urban and transit planning projects are prime areas for crowdsourcing. Civil engineers can’t possibly anticipate all the issues that may arise for the individual user. A project to test the efficiency of crowdsourcing for transit planning is currently underway in Salt Lake City. Started in 2008, this project is being funded by a U.S. Federal Transit Administration grant.

Competitive Advantage to Crowdsourcing:

Online-based technology makes crowsourcing easy, efficient, practical, inexpensive, convenient and accessible in comparison to more traditional business models. Leveraged by Web 2.0 methodologies, open crowd participation has grown into an effective innovation method. The collaborative knowledge and “out of the box” creativity of a crowd often generates innovative solutions and provides invaluable resources for new idea generation.

Utilizing crowds has certain advantages like cross-sector collaboration and creation beyond barriers. Specific problems have often already been solved in another sector. Crowdsourcing channels and widens the use of the individual's knowledge as well as their creativity. It enables organizations to look beyond traditional solutions. Another key advantage is cost reduction. Users are generally rewarded for the knowledge and creativity they share. However, these potential costs are usually no where near the costs associated with employing individuals in-house or recruiting consultants and/or contractors. As a result, crowdsourcing essentially equates to cheap labor.

Crowdsourcing Drawbacks:

The social, ethical and economic implications of crowdsourcing are currently the subject of wide debate. Some reports have focused more on the negative aspects of crowdsourcing on businesses and organizations.
Some possible pitfalls of crowdsourcing include:

  • Additional costs associated with bringing a project to an acceptable conclusion.
  • Increased likelihood that a project will fail due to lack of monetary motivation, too few participants, lower quality of work, lack of personal interest, language barriers, or difficulty managing a large-scale project.
  • Below-market compensation or no compensation at all. Barter agreements are often associated with crowdsourcing.
  • Legal concerns. No written contracts, non-disclosure agreements, or employee agreements or agreeable terms with crowdsourced employees.
  • Difficulties maintaining a working relationship with crowdsourced workers throughout the duration of a project.
  • Lack of “face to face” time which can weaken the “team” attitude and atmosphere.
  • Susceptibility to faulty results caused by targeted, malicious work efforts.
  • Vulnerability to hackers and cyber-attacks.


Crowdsourcing Organizations:

The following is a list of companies that use the crowdsourcing business model to generate revenues and sustain their organizations:

Cambrian House – "Cambrian House's mission is to discover and commercialize software ideas through the wisdom and participation of crowds".

**Innocentive** – Created by the pharmaceutical company Ely Lilly with the objective of bringing together companies with specific R&D needs (called seekers) and scientists dispersed all over the world (called solvers).

**iStockphoto** –Offers a huge collection of images with professional quality for prices as low as $ 1. What They enable anyone to upload their own pictures and earn royalties as people or organizations purchase them..

**Mechanical Turk** – Created by Amazon.com to link together companies requiring HITs (Human Intelligence Tasks) performed and people who have spare time and want to earn some money.

**Trendwatching** – The company relies on trend spotters around the world who are responsible for tracking and reporting any changes in the market place and consumer behavior. A.

**Threadless** – Artists or anyone with some spare creativity can submit their T-shirt designs. The designs get vote by the community and the most popular ones get produced and sold back to the company.

**John Fluevog** –One can submit his design for a shoe or even only part of a shoe. If the design subsequently passes the voting phase it will enter the production line.

**Second Life** – Linden Lab developed a virtual world completely created and customized by the users. Relies on the work of thousands of people worldwide to build the content and create value for the “game”.

**Rent A Coder** – International marketplace where people who need custom software developed can find coders in a safe and business-friendly environment. Rent A Coder receives requests for software development and forwards them to their pool of coders.

Joshua Ball is an Electronic Commerce major at the University of Toledo.