Crowdsourcing: Is It Effective for Your Business?

There is a practice that has been around for a few years. The term, “Crowdsourcing” is attributed to Jeff Howe (contribution editor at Wired magazine) in 2006, yet the practice goes back further. Quite simply, it’s a practice of using the “crowd” to drive competition to lower prices, sometimes, as creators lament, to a point where they can’t compete or survive in more developed nations with higher costs of living. The question is: “Does low prices assure the same quality and service and is it worth it?”
According to Wikipedia, the definition of crowdsourcing is:

The practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, and especially from an online community, rather than from traditional employees or suppliers. Often used to subdivide tedious work or to fund-raise startup companies and charities, this process can occur both online and offline. The general concept is to combine the efforts of crowds of volunteers or part-time workers, where each one could contribute a small portion, which adds into a relatively large or significant result. Crowdsourcing is different from an ordinary outsourcing since it is a task or problem that is outsourced to an undefined public rather than to a specific, named group.
Although the word “crowdsourcing” was coined in 2006, it can apply to a wide range of older activities. Crowdsourcing can involve division of labor for tedious tasks split to use crowd-based outsourcing, but it can also apply to specific requests, such ascrowdvoting, crowdfunding, a broad-based competition, and a general search for answers, solutions, or a missing person.

While some people believe Wikipedia is a crowdsourced form of information and therefore not accurate, Merriam-Webster dictionary defines it as:

The practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community rather than from traditional employees or suppliers.

Not that much different but the similarity that interests and offends people on both sides of crowdsourcing is “rather than traditional employees or suppliers.”

How People Use Crowdsourcing

There are several uses that are prevalent these days. One is to use freelance suppliers to work on a project, often for either an hourly rate that is bid upon with the lowest bidder winning the project, or a call for a certain project in which vendors do the work on speculation, with the winner of the finished project being paid a pre-set amount and the other people who have done the speculative work, getting nothing. “Losing out,” as opponents label it.
Crowdsourcing uses the internet to draw a global bidding base for projects, rather than searching among local workers who will all have the same cost of living to consider. For companies and businesses that use this practice, they believe they will receive the same quality for the lowest possible cost. For vendors who participate, there are those to whom $50 is a good months salary, whereas there are those for whom $50 is a weeks worth of coffee.

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There are different web sites for crowdsourcing (DISCLAIMER: Listings are, in no way a sponsorship or recommendation. Sites are listed solely as examples). First, there are bidding sites such as eLance and oDesk. These sites present a project and registered members, designers, writers, illustrators, photographers, etc. bid on how much they can charge to complete the project using their talents. It is up to the person who posted the project, wrote the creative brief of the scope of the project, to decide among the bidders, who will receive the project. Sometimes it’s not the lowest bidder.
With web sites that run the projects more like a contest, the person or company will also write a creative brief for a project, such as a logo, web site, book cover designs, etc., set the price and wait for individual creatives to submit finished designs for judging upon the deadline for entries. A winner is chosen and paid. The other entrants don’t.

The Positives for All Parties

• Those who want the finished product use globalized competition to get their project at a price they feel is within their budget or for the lowest price. Talent is not a commodity restricted by country or location and the output can be very professional. While some vendors are against this form of outsourcing, thanks to the web, competition is borderless and while displeasing to those who can’t match or beat lower prices, it’s just a fact in a globalized world.
• Building the economy of nations with lower costs of living support stability in those nations and eventually, the standards and costs will rise to meet the costs of living elsewhere in the world.
• Small businesses and under-funded startups can afford the design work they need to grow and evolve and hire more local employees, which helps their local economy.
• It weeds out the weaker vendors who can’t compete on a global scale, leaving those who can in a stronger position among less local competition.

The Negatives for All Parties

Yes, there are always two sides to every action. Crowdsourcing, naturally, has its problems.

• While web sites such as the ones described offer quick, easy and often cheap solutions, they remove interaction that some say is important to any project, whether design-based or intellectual. For example, brainstorming is a process that is better done in groups with interpersonal interactions.
• A logo, is not just a logo for some businesses — it’s part of their brand and that branding needs to be done with consideration of all parts of the business and not piece by piece. A logo ties in with stationery, a web site and all other signage, printed and digital material.
• There is also the relationship a client and vendor build that is necessary for an evolving business where the vendor is familiar with the client’s needs, as well as their desires. The process is often an evolution and that cannot be done blindly, through a short creative brief, delivered quickly, as if it is a product to be placed on a shelf for a consumer to pick among other items on a shelf.
• Cheap solutions do not incorporate the search and consideration of copyright laws, which may force businesses, down the road, to reprint all of their materials as they throw out a logo with legal problems under the international copyright law and possibly pay hefty fines for such a problem. Shortcuts often lead to cliffs from which we can fall.
• All creative organizations are firmly against crowdsourcing and aren’t rushing to change their minds.

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A Sound Comment on Crowdsourcing

In a recent article on crowdsourcing, Jace Nickell, the Founder and CEO at Threadless (a crowdsourcing company, with contests and sales for popular T-shirt designs), wrote:

This version of crowdsourcing is not only cheap, but it’s so very innovative! Take advantage of the networked world with crowdsourcing, and you can save a bunch of time and money. Why isn’t every company across the globe operating like this?
Because it’s exploitive. Because it doesn’t work. Because this isn’t how crowdsourcing really works. It’s short-term thinking.
The best crowdsourcing businesses work the opposite way. They find a common interest that a group of people invest their lives in. The members of this “crowd” would pursue this interest whether a crowdsourcing platform existed or not. The platform doesn’t abuse their talent. Instead, it adds value to what people would already be doing, usually as a hobby. The platform provides new opportunities and helps the individuals in the crowd grow — both independently and as a group.

One might question how Mr. Nickell runs a crowdsourcing company but has this opinion. He continues to explain Threadless’ business model:

Threadless started 12 years ago. A friend and I thought art would be way better on t-shirts than logos. We started a thread on a forum asking people to post designs for tees they would actually want to wear. We printed the ones that were the most popular. We just kept doing that until we realized Threadless had become a business. What’s funny is that we were crowdsourcing long before such a term even existed.
We’re not the only company that uses crowdsourcing in this way. Take a look at Kickstarter. Last year, 18,109 projects were funded on Kickstarter. The business is built on a crowd of individuals pursuing their passions, whether it’s music, art, film, or publishing. The crowdsourcing platform helps them grow, succeed, and bring their projects to life.
Etsy is another example of crowdsourcing done right. The platform gives independent artists a marketplace for their work. More than 850,000 people have shops on Etsy. And as Etsy grows in popularity, it brings more eyes to these individual’s shops. The ones who have the products people most want to buy become successful enough to quit their 9-to-5 jobs and can make their passion their full-time gigs.
I think you see what I’m getting at. The most important pillar of crowdsourcing is its individuals. The crowd isn’t just one big, anonymous, single entity. It’s made up of a bunch of people, each with a vision of their own. The crowd comes in when the car or phone goes to market, and people start reacting to it. They vote with their dollars when the product enters the marketplace.

A unique look at the crowdsourcing business model. There will, of course, be supporters and detractors from this practice. As one commenter on a similar article wrote:

You have the freedom of choice to participate or not. It won’t destroy the design industry as those who have little to no budget for design work aren’t, nor will they be my clients. Let them take a chance on a design contest site.

Still, there are those that do feel crowdsourcing is slave labor and taking advantage of those with lower standards of living. They feel the low prices destroy the markets in other countries. It seems there are several strong feelings about the practice.

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One commenter on Mr. Nickell’s articles summed it up, with respect to any initiative that uses people of all financial and work levels:

This is an informative article that highlights and complements Value-Centered Leadership — respecting the value that participatory employees bring to the table and allowing them to make significant contributions toward a specific cause/goal in exchange for the things that they value most, i.e., impact, recognition, security, etc.

In all of the complaints aired about crowdsourcing and all of the compliments, you will rarely, if ever, find the words, “respect,” “contributions” or “value.” At least you don’t hear them used towards the participants in crowdsourcing — both the client nor the vendor. Perhaps the crowdsourcing business model needs a little more evolving before it’s seen as a viable solution, acceptable to all needed to make it succeed?
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