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Innovation through Crowdsourcing in 4 steps.

Innovation is among the top priorities of many companies worldwide. Almost all of the CEOs polled by PWC in 2013 see innovation as their primary focus or one of their priorities. But kick-starting innovation is a big hurdle to overcome for most companies. A study of Booz & Company shows only a quarter of all companies are effective in the beginning. One of the key reasons most innovation programs fail is due to the organizations dependency on in-house innovators. Employees are either overwhelmed with their current workloads or lack the required skillsets to find innovative solutions. How can organizations overcome this barrier to innovation?

Well, how about getting the solutions from the crowd? At first glance, the landscape of possibilities on working with the crowd may seem bewildering but the benefits outgrow the challenges. The scale and heterogeneity of the crowds offer such great incentives that companies find difficult to match otherwise. Existing incentives culture and organizational structure, with rigidly defined roles and responsibilities, discourages employees from embracing the innovation culture. Crowds, research shows, are energized by intrinsic motivations of the desire to experiment, learn and add to their current skill set. The Linux operating system started on the same principle, was adopted widely and many billion-dollar businesses were built along with it.

4 steps to leverage the crowd are:
— publish a challenge
— get innovative solutions from the crowd
— reward the best solution
— prototype the solution

Publish a challenge

The most straightforward way to engage a crowd is to publish a challenge. The sponsor (the company), also called the problem seeker identifies a specific problem, offers a prize, and broadcasts an invitation to problem solvers to submit solutions. Such an approach has cracked some of the toughest scientific and technological challenges. Netflix challenge is one example. The challenge was to search for the best collaborative filtering algorithm to predict user ratings for films. The US$1,000,000 prize was won by BellKor’s Pragmatic Chaos team, which bested Netflix’s own algorithm for predicting ratings by 10.06%.

Get Innovative Solutions from the Crowd

Although a company might in the end use only one of the solutions it receives, the evaluation of many submissions can provide insight into where the most innovative solution lies. In contrast, in-house R&D may generate far less information and with the uncertainty on whether an even better solution might still be found. Also the coordinated and organized way of innovation in companies works count intuitive to the de-centralized and loose nature of the crowd.

Reward the best solution

In crowdsourcing, crowds are primarily motivated by two goals: earning a reward and doing work that makes them proud. The offer of a reward gives the problem solver that extra motivation to go above and beyond. Some rewards may cost money, whereas others are investments in time and effort.

Prototype the solution

The final step of the crowd sourced based innovation is to prototype the solution that was selected among the ones which were submitted as part of the challenge. This is the most important and most difficult of the 4 stages. In some cases the companies, which published the challenge works on the prototype since they have the required resources to complete the prototype. This is usually the case if the problem in question is very proprietary to the company. The other way is the leverage the crowd to complete the prototype

As perceived crowdsourcing challenges are not as straightforward as it looks, Firstly there are management related roadblocks in running a crowdsourcing challenges. Managers remain understandably cautious. Putting out problems out to a vast group of strangers seems risky and even unnatural, particularly to organizations built on internal innovation. There are issues regarding intellectual property, also integrating a crowd-sourced solution into a companies innovation eco system could become an administrative nightmare. Secondly, identifying and articulating the problem is very important and difficult. The problem then needs to be “deduced” from the organization and translated in order to be immediately understandable to the community of problem solvers. It must also be “generalized” to avoid revealing any proprietary or company confidential details. That may involve breaking it down into multiple sub problems and challenges. And finally, the challenge must be well organized and structured to yield solutions the organization can feasibly implement.

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