Engineers on the Niagara Falls Suspension Bridge were out of ideas on how to get the first line strung between the US and Canada. The 800 foot gorge under Niagara Falls could not traversed by boat (the typical method), other ideas included: shooting arrows with lines attached, rockets, cannons, etc. A steel worker suggested a kite contest to deliver the line. The bridge company accepted the contest idea, and a fifteen year-old boy by the name of Homan Walsh won the contest by landing his kite on the opposite side. This crowdsourced project cost the bridge company a grand total of $10. This is crowdsourcing at its best and most simplistic – taking a task normally preformed by “professionals” and farming it out to amateurs.
Crowsourced products are all around us. Use a Swiffer brand brush? P&G reached out to its network of retired scientists to develop this leading product[i]. The mountain bike, developed collaboratively by riders on Mt. Tam, CA[ii]. Kodachrome color photography, invented by two musicians[iii]. The thermometer, invented by a British cabinet maker and amateur watch maker[iv]. The steam engine, perfected by a community of British coal miners[v]. The number two web browser, Firefox, created by volunteers[vi].
Today there is a rush of companies using the crowd to do everything from recommending which DVDs you might like to developing breakthrough medicines. Wikipedia used the crowd to grow faster and in many cases be more accurate than traditional encyclopedias. If you drive a BMW, you are driving on the open source software Linux which manages the engine, radio and climate of your car[vii].
What makes crowdsourcing tick? Why would people work for free? And how do they get so much accomplished with no money?
Crowdsourced teams operate by a different set of rules than traditional business working groups. Many companies such as P&G, Google and Netflix have figured out ways to allow crowdsourcing and traditional business to coexist peacefully and complement each other. Here are some of the conditions under which crowdsourcing excels.
- Self Selection - People do a wonderful job matching their skills to volunteer tasks. Would you volunteer for something you’re bad at?
- Democratic Decision Making - The crowd is unfettered by politics and will (on balance), make objective decisions. Most crowdsourced projects make use of member ranking systems to promote or demote ideas that are based solely on the ideas merit.
- Fresh Perspectives – people from outside a particular discipline can often solve problems in unique ways. The little girl freed the truck because she was unfettered by experience. Experts are always welcome in crowdsourcing but well run crowdsourced teams often include a mix of backgrounds that keep fresh ideas coming.
- Equal Voices - By not meeting physically a greater number of participants will participate. Most crowdsourced teams never meet, they collaborate online and avoid the human tendency to blindly follow the “alpha” team leader.
- Meritocracy - Those who have consistently contributed the highest quality work and shown dedication to the team will be the best managers. Crowdsourced teams often elect members to positions of responsibility. This is how Linux and Firefox manage their software development.
- Natural Selection - What works well is absorbed into the whole, what does not work is rejected without malice. Crowdsourced teams have no problem cannibalizing thousands of work hours and starting over again. It’s called “branching” and it allows crowdsourced projects to maintain a deadly objective viewpoints regarding their own projects.
- Self Healing - Since project contributors are themselves consumers of the end product, great care is taken to fix problems. An error on Wikipedia is on average, corrected in three minutes.
Crowdsourcing is all the rage now but before there were large corporations and patent law, governments sponsored open contests offering rewards for the solutions to challenges of the day. The British solved the dilemma of maritime navigation this way[viii] and the Nobel Prize has its roots in a similar French programs[ix].
So what changed? Why did we rediscover crowdsourcing?
The widespread adoption of the Internet is the catalyst for a renaissance of collaboration and a limitless repository of knowledge. We have found new ways to gather and share thoughts using the Internet as the platform for exchange, and that has allowed people to converse about their hobbies and interests, make smarter purchases, and do something totally new; create important products and services in their spare time. Now open innovation and crowdsourcing are powerful economic forces, and three market realities made it happen:
- The Internet allows people to freely associate, form groups and publish on a scale never imagined before. Individuals and groups have the power to get their ideas across at a level once enjoyed only by large organizations, corporations and governments.
- People can and will find ways to express themselves outside of their job descriptions and these expressions rapidly turn into powerful products e.g., Linux, Wikipedia and Firefox...
- The price of knowledge is falling to zero. Anything from powerful server computer software to how to become a six-sigma black belt can be found on the Internet. A child in India can monitor classes at MIT for free[x]. The quality of this information is getting better all the time.
These three factors contribute to a new economy that some companies are starting to harness. Welcome to the post-consumer era where we all pitch in to build the products & services we use:
- 50% of all web sites are brought to you by open source software, built and maintained by volunteers[xi].
- Google, the world’s most popular search engine and an economy unto itself, relies primarily on the recommendations of web page authors to drive its search engine[xii].
- A 2006 Forrester Research study shows almost 40% of Gen Y consumers research products online before making an offline purchase[xiii]. Conversely, the influence of advertising is falling at a similar rate.
- IBM now makes twice as much money servicing its Linux open source software customers than it does selling intellectual property and patents ($2 billion in 2003)[xiv].
- BestBuy allows its employees to place bets on which products will sell and which ones won’t[xv]. Among all BestBuy employees, the person who consistently outperforms all other employees in this most critical task is the CEO’s secretary. Why? (they studied this) Because she types all the meeting minutes for important meetings. No one else in the company has such wide exposure to what’s going on.
Netflix SideBar:
This week an important milestone in crowdsouring was achieved, a diverse team of computer scientists, statisticians, and psychologists won the $1 million dollar Netflix Prize[xvi]. What’s the Netflix Prize you ask? Do you like movies? Do you hate it when you rent a movie that looks like something you might like and it really stinks (“Sphere” is my personal greatest movie let-down). OK, the folks at Netflix feel the same way and they understand if they can suggest movies their customers like, they will have more dedicated customers. Three years ago they created the Netflix Prize offering $1 million dollars to anyone who could improve their movie rating service by 10%. In order to make the contest work, Netflix had to release all kinds of data on what their customers liked and did not like about the movies they watched. Heresy! Many shouted. If you give away the data, Blockbuster will use it to copy your business model and put Netflix out of business! Netflix looks that the release of data in a different way. A 10% improvement in their recommendation engine is a revolutionary improvement and far outweighs any advantage competitors might gain from sifting through their old rental data, Netflix will already be on to bigger and better things.
Endnotes:
[i] Tapscott, Don & Williams, Anthony. (2006). Wikinomics. Portfolio. www.wikinomics.com/
[ii] Sawyer, Keith. (2007) Group Genius. Basic Books. http://keithsawyer.wordpress.com/
[iii] http://en.wikipedia.org/wiki/Kodachrome
[iv] http://en.wikipedia.org/wiki/Bi-metallic_strip
[v] Sawyer, Keith. (2007) Group Genius. Basic Books. http://keithsawyer.wordpress.com/
[vi] http://www.mozilla.org/about/
[vii] Tapscott, Don & Williams, Anthony. (2006). Wikinomics. Portfolio. www.wikinomics.com/ and BMW Wants Joint Effort to Develop Open-Source In-Vehicle Platform http://www.autonews.com/article/20081023/COPY/310239911
[viii] http://en.wikipedia.org/wiki/Longitude_prize
[ix] http://en.wikipedia.org/wiki/Leblanc_process and http://en.wikipedia.org/wiki/Beno%C3%AEt_Fourneyron
[x] http://ocw.mit.edu/OcwWeb/web/about/media/
[xi] Netcraft December 2008 Web Survey http://news.netcraft.com/archives/web_server_survey.html
[xii] Google’s page rank technology explained http://www.google.com/technology/
[xiii] Forrester. Marketers: Keep A Keen Eye On Gen Yers http://www.forrester.com/Research/Document/0,7211,40303,00.html
[xiv] Yochai Benkler, The Wealth of Networks, P. 47 http://cyber.law.harvard.edu/wealth_of_networks/Main_Page
[xv] Best Buy Taps 'Prediction Market'. The Wall Street Journal, September 16th , 2008. http://online.wsj.com/article/SB122152452811139909.html
[xvi] The Science Prize: Innovation or Stealth Advertising? The Wall Street Journal, May 8th, 2009. http://online.wsj.com/article/SB124173078482897809.html
