Authors: Julia Deeg, Laura Kremer, Barbara Hertinger, Birgit Guggi, Laura Weckbach

1. Definition, history and differentiation

Letting the masses of internet users do a job for their own company sounds tempting as well as very advantageous to organisations. Yet the process is not without risks. In the following the history and the term of crowdsourcing will be described, and its modes, advantages and disadvantages explained. The question is how crowdsourcing matches the communication concept of an organisation and which aspects have to be considered in the process.

The first person who wrote about “crowdsourcing” was Jeff Howe. In his article “The Rise of Crowdsourcing” he coined the term combining “crowd” and “outsourcing” and defined this conceptualization as follows: “Crowdsourcing is the act of taking a job traditionally performed by a designated employee and outsourcing it to an undefined, generally large group of people in the form of an open call“ (Howe, 2006).

But long before the term was born, companies and organisations had already made use of crowdsourcing: An early example is the NASA Clickworkers project in 2001. At this time NASA had taken images of the Martian surface and asked volunteers to help digitize craters of the surface (Fountain, Mergel & Schweik, 2009). This way an enormous amount of work can be completed in little time.

Crowdsourcing has its origins in the field of Open Innovation. The outsourcing of work and creative processes to a large group of internet users becomes more and more popular. Crowdsourcing has lots of sub-categories such as: Crowdfunding (communal funding of projects), crowdtesting (testing of software, products etc by a large group of people), microworking and -tasking (the users complete smaller jobs and tasks that are added in the end), co-creation (communal creation of work), collaborative knowledge (the community accumulates and shares its wisdom; the most famous example for this is the free online encyclopedia ‘Wikipedia’). (Pelzer, 2011)

2. What are the advantages of crowdsourcing for companies?

Nowadays companies are faced with big challenges: in times of social media and decreasing attention on the part of the target group companies need to come up with creative concepts enabling them to stay in contact and to communicate with their customers in a way to achieve maximum attention. The way things are the practice of crowdsourcing proves a good possibility. Due to the abundance of its benefits and possibilities we will restrict ourselves to the three following advantages:

Crowdsourcing connects companies with their customers, supporters and users. It offers them a platform to live out their creativity and ideas thereby forging a closer link with them. Moreover, it provides a good tool to boost the customer’s loyalty.

By recruiting a target group to invent new products or food flavors the company is able to find the perfect-fit solutions together with their customers and is for this reason on the safe side when it comes to later acceptance of the product: the developed product/creation is already approved by the target group.

Another benefiting side effect is the saving of costs: for example, user brainstorming is utilized to save costs for expensive marketing research studies. And employees can be relinquished due to outsourcing a project to supporters and users.

Goals of crowdsourcing

As stated previously, the outsourcing of micro-jobs is one of the most important goals of companies using crowdsourcing. Furthermore, crowdsourcing contributes to innovative and creative marketing solutions as well as to increased communication thereby enhancing the attention for the product and the company itself.

Market saturation and an incredible choice of products can render it difficult for companies to successfully expand their own range of products. By using crowdsourcing to create new flavours, packing solutions, product designs or whole new products invented by the target group it becomes easier to satisfy the customers buying desire and to develop a sense for their needs at the same time.

User motivation

Why would customers participate voluntarily in crowdsourcing competitions in their free time? And why would they spend their free time to invent a solution for everyday life for a company which they are no part of?

Papsdorf mentions a various number of reasons in his book: Commitment, autonomy and flexibility can be possible motives to take part in crowdsourcing. (Papsdorf, 2009, p. 109-125)

In times of rigid job structures and fixed tasks, customers crave to live out their creativity and to act and to communicate within a community while having fun participating in crowdsourcing platforms. An inventive solution, into which was put a lot of work, always stands for an effective self-realisation and thereby good feelings with respect to the customer.

Besides -as is so often- the acceptance within the crowdsourcing group and winning the competition may be strong incentives.

The risks of crowdsourcing for companies and users

In general it can be said that the crowdsourcing process is hardly controllable for companies. Despite the fact that crowdsourcing generates good and creative solutions which are mostly free of charge for the company, the firm also takes a certain amount of risk launching an online competition like that.

As we have seen in the negative example of „Pril“, crowdsourcing can also turn into a serious risk for the reputation and the image of a company – especially after repeated failures. It is therefore vital for the respective firms to define relevant goals and to analyse the target group before launching a project. It must also be considered that the target group is used to the internet and social media.

But by which measures of precaution can companies secure themselves against damage of their image? Until now there are no science-based or consolidated findings and thereby no satisfying answers to that question. Helpful proposals for a solution can be found on closer inspection of other practical examples like „Griesson De Beukelaer“ with its crowdsourcing project for the product „Prinzenrolle“. In November 2011 De Beukelaer started a new kind of social media crowdsourcing competition called „Die Prinzen-Fanrolle. Back dir deinen Traumprinzen“ which offers the 100.000 Facebook-fans to create their own favorite Prinzen Rollen cookie. In preparation of the competition the company fixed several categories of ingredients, like fruits, nuts or spices and elected a jury consisting of internal employees and three Facebook-fans to choose the 20 best cookie creations at the end. By that line of action De Beukelaer was able to benefit from the user’s creativity while concurrently defending themselves from fake-creations or disgusting cookie-ingredients. (De Beukelaer, 2012)

But not only companies have to protect themselves when it comes to crowdsourcing projects. There are also disadvantages for the participating users: E.g. the voluntary work on internet projects is not subject to labour law regulations. The user is for example not entitled to any compensation and the copyright is mostly owned by the company. That means a negative cost-benefit factor on the part of the users.

3. The five crowdsourcing-modes

Christian Papsdorf, research assistant at the department of applied social studies at the German university of Chemnitz, developed five modes of crowdsourcing to subsume the term. The basic idea represents an “abstraction of specific contingent features of individual phenomena developed for extraction of universal and necessarily structural features”. (Papsdorf, 2009, p. 52) The basic concept for the following five modes leads back to the integration of the amount of work on the part of the customers for the particular company.

Open Idea Competition

The open idea competition is based on a public request sent out from a company. The request concerns all Internet users meaning that it does not matter whether actual customers, prospective clients or detractors are participating. The participants are asked to come up with ideas for the solution of a specific task. It is distinctive for this mode of crowdsourcing that the participants pass the copyrights of their ideas automatically on to the company. In doing so there is a possibility to decide on the part of the company or the community. However, there is no obligation for a realization of the conception. Furthermore, the open idea competition is an important element of customer retention. (Papsdorf, 2009, p. 53 ff.)

Therefore, those open idea competitions take place in various industrial sectors and societal areas: BMW, Chrysler and Ford (BMW, 2012) for example are asking for suggestions and innovative solutions relating to the automobile sector while the German company for consumer goods and retailing, Tchibo, is relying on the users with their platform “Tchibo ideas” to solve problems in the daily routine. (Tchibo, 2012) Also there is an increasing use in terms of environmental questions. The Austrian Federal Government Department of Traffic, Innovation and Technology for example gathers information for reducing the C02-emission in an annual competition. (Papsdorf, 2009, p. 54)

Result orientated virtual micro-job

This mode of crowdsourcing is characterized by a singular task with a defined goal. Moreover, the realization of the task is objectively testable. Such being the case the settlement of the task is the determining factor, not its actual implementation. Generally a reward is given from the company to the user who solved the given task. (Papsdorf, 2009, p. 56)

An up-to-date example for such result orientated virtual micro-job is the McDonalds “Mein Burger”-campaign. Users do have the possibility to make proposals for their own favorite burger. In Germany the recent contest took place from January 5th to February 3rd, 2012 and with 327.000 proposals was one of the most successful “Mein Burger”-campaigns of the fast food company. (McDonalds, 2012)

By contrast the recent “Mein Pril – Mein Stil”-idea contest of the German dishwashing liquid company Pril reflects one of a worst case scenario of a result orientated virtual micro-job. Here users were asked to take part in decision-making of the new design of the dishwashing liquid bottles by making design-proposals and agreements. The campaign ended in a PR-debacle where Pril was not only facing a so called shit-storm but also lost a good number of customers.

User-designed mass production

In general the user-designed mass production is a combination of industrial mass production and an opportunity for individual creation on the part of the users. Therefore the company offers the raw material while interested customers can modify these materials for their needs by means of different online programs, which are also provided from the companies. Furthermore, the so created end products can be offered for resale in most instances. Whether or not there is an opportunity of profit sharing depends on the company concept. (Papsdorf, 2009, p. 56–60)

The subject of user-designed mass production varies according to technical opportunities. The most notable transformation of this mode would be t-shirt design based on crowdsourcing as performed by the t-shirt producer Spreadshirt. Here the users also have the possibility to resell their designed t-shirts. But there are also other companies who have developed the user-designed mass production for themselves. For example Lego, the popular line of construction toys, did offer a factory to design individual Lego-construction kits between 2005 and 2012.

User-collaborated based idea platform

The forth mode of crowdsourcing is the user-collaborated based idea platform. Those platforms are characterized by passive appearance of the company. This means that the company is only the platform provider while the actual outsourcing is performed from crowd to crowd. Users evaluate, comment and support other users with their ideas. (Papsdorf, 2009, p. 61)

Examples for such user-collaborated based idea platforms would be Inpama or Cambrian House, two crowdsourcing platforms where ideas to all different areas can be published, discussed and enhanced.

Indirect utilization of user content

The indirect utilization of user content, the last of the five modes of crowdsourcing, differs from the other four in the way that it does not offer direct utilization of concrete suggestions. This means that the main idea of this mode is not based on the generated content of the crowd, but on the utilization of the user activity. However, the original generated content is subordinated. (Papsdorf, 2009, p. 62)

“Bild”, a German tabloid, is using this indirect utilization of user content since 2006 by means of their “Bild-Leserreporter”-mission. Readers have the possibility to send in pictures, videos or tips. The tabloid’s main interest is not to use the material, but to increase the popularity of their website. The possible use of in pictures or videos is just an addition.


Sources

BMW Innovation Agency (2012). Online: http://bmwgroup.com/via/ [13.05.2012]

Fountain, J. E., Mergel, I. A., & Schweik, C. M. (2009). The Transformational Effect of Web 2.0 Technologies on Government. Online: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1412796 [13.05.2012]

Griesson De Beukelaer. Back dir deinen Traumprinzen (2012). Online: http://www.griesson-debeukelaer.de/deDE/pressecenter/pressemeldungen/2011/artikel/news/back-dir-deinen-traumprinzen-facebook-community-kreiert-eigene-rezeptur-fuer-die-prinzen-roll/back/510/hash/a2b1e446d9e526d7e177732fffe395f4/ [12.05.2012]

Howe, J. (14.06.2006). The Rise of Crowdsourcing. Wired Magazine. Online: http://www.wired.com/wired/archive/14.06/crowds_pr.html [14.05.2012]

McDonalds. Mein Burger (2012). Online: http://www.mcdonalds.de/mein_burger/index.cfm#/finalisten [11.05.2012]

Papsdorf, C. (Frankfurt/Main, 2009). Wie Surfen zu Arbeit wird – Crowdsourcng im Web 2.0.

Pelzer, C. (12.02.2011). Crowdsourcing Terminologie. Online: http://www.crowdsourcingblog.de/blog/2011/02/12/terminologie/ [14.05.2012]

Tchibo Ideas (2012). Online: https://www.tchibo-ideas.de/ [10.05.2012]

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