5 important ways in which crowdsourcing creates business value
The intelligent use of crowdsourcing can have many benefits for companies – as well as government and non-profit organizations – in achieving their objectives.
Here is a brief excerpt from Chapter 3 on Crowds and Business Value of Getting Results From Crowds
The business value of using crowds
Through history, companies have been limited in what they can achieve through the scope of their internal resources and how well they can draw on external resources. Crowdsourcing has the potential to create enormous value for businesses by giving easy access to an essentially unlimited pool of talent and capabilities. Those organizations that have the skills and competences to draw on external crowds, as well as in tapping the best ideas from their ‘internal crowds’, have an immense advantage over those companies that rely solely on their internal resources and traditional service firms.
While there are many potential benefits of using crowds, there are five primary outcomes that create the most value for organizations.
1. Increase flexibility
A major benefit of using crowd work is that it is available on demand, and so is fully scalable from nothing to extremely high levels as required. Particularly for smaller organizations, this means they do not need to hire people into specific roles when they do not need a full-time person in that function, or can’t anticipate their future need for that role.
This is particularly important for startups or when companies are trying new ventures that may or may not succeed. They can draw on resources as needed to establish the project. If it doesn’t work, they can easily close it down, whereas if it does work, they can very quickly scale up the operations.
2. Access talent and ideas
Even the largest organizations in the world recognize they do not have all the talent they require internally. Drawing on crowds gives access to a vast global pool of talent, some of which will be perfectly suited to your requirements. That talent may not always be as inexpensive as some newcomers to crowdsourcing expect, but it is available to companies as never before.
One of the principles of crowdsourcing is that market mechanisms can help match needs and solutions. In distributed innovation, where companies are looking for highly specific insights and solutions, a large proportion of the winning ideas come from people who already had a good idea of the answer. The ideas you need probably already exist; now you have the mechanisms to access them.
3. Reduce costs
There are a variety of ways in which using crowds can reduce costs, including substituting expensive professional service firms with lower cost service providers, ensuring simple, low-level tasks are not being done by high-cost internal staff, and lowering the costs involved in innovation and product development.
In some cases these cost savings can be substantial. As noted below it is important to note that there can also be costs associated with tapping crowds. And as emphasized throughout this book, focusing solely on cost reduction is unlikely to lead to the best outcomes.
4. Increase capabilities
In many cases companies can build capabilities and undertake initiatives that simply would not have been possible without access to external crowds. For example, services that require a pool of specialists or need to be rapidly scaled can only be delivered by large companies, or those with flexible access to crowds. Microtasks enable tasks and service that simply would not have been possible previously.
In addition, crowdfunding can support a wide range of ventures that would not have been feasible through traditional fundraising mechanisms.
5. Reduce time to market
As the pressure increases on companies to bring new products and services to market faster, crowdsourcing provides valuable support in bringing to bear whatever resources are required. These can be applied to both product development work and project management functions, as well as the myriad administrative and marketing tasks that are required.
While the transaction costs of dealing with crowds limit how quickly resources can be brought in to projects, those companies with experience using crowds and established relationships can often support substantially faster project delivery.