1. The crowdsourcing compendium

2. Crowdsourcing: The act of taking a job tradi2onally performed by a designated agent (usually an employee) and outsourcing it to an undened, generally large group of people, in the form of an open call Je Howe, Crowdsourcing 3. The logic: Given the right set of condi2ons, the crowd has the poten2al to outperform any number of employees 4. More and more companies are becoming aware of this logic, and are aEemp2ng to exploit it by tapping into the excess capacity and collec2ve brainpower of the crowd usually, for liEle or no compensa2on 5. Making crowdsourcing possible Emergence of open source soIware movement Tools of produc2on: widely available, faster, cheaper, easier to use Rise of online communi2es Renaissance of amateurism/DIY 6. Why does the crowd do it? Intrinsic mo2va2ons A belief in a project Obliga2on to community Enjoyment Fulllment (crea2ve or other) Altruism Showing o (prove how smart/crea2ve you are) Reputa2on enhancement OCD Extrinsic mo2va2ons: Financial reward Non-comprehensive list, of course. Usually several mo2va2ons will coexist. 7. 5 types (some overlap) 1. Collec2ve intelligence 2. Crowd crea2on 3. Crowdtasking 4. Crowd ltering 5. Crowdfunding Je Howe, Crowdsourcing [except for #3] 8. 1. CollecBve intelligence Asking people inside and outside the company to help solve problems and suggest new products 9. No maDer who you are, most of the smart people work for someone else Bill Joy, Sun co-founder 10. 3 types of collecBve intelligence Problem-solving networks Idea jams Predic2on markets Je Howe, Crowdsourcing 11. 3 types of collecBve intelligence Problem-solving networks Idea jams Predic2on markets 12. In the beginning 13. The longitude prize 14. John Harrison Picture source needed 15. Eric von Hippel: DemocraBzing InnovaBon Users leading companies to the cubng-edge Scien2c instruments Computer chips Sports: windsurng, snowboarding, mountain biking Many other areas 16. The collaboraBon imperaBve The current R&D model is broken In some cases, R&D expenses rising faster than sales e.g., 10-15 years and $Bns to develop a new drug With the escala2on in R&D costs, collabora2on is becoming an aErac2ve economic solu2on Businesses, research ins2tu2ons, government labs, universi2es are moving towards collabora2on 17. If I can tap into a million minds simultaneously, I may run into one thats uniquely prepared. Alpheus Bingham, Eli Lilly [at the 2me] 18. Used by more than 150 corpora2ons: Eli Lilly, Boeing, DuPont, P&G, Colgate-Palmolive 19. PolyvaBon: mulBple sources of innovaBon 20. InnoCenBve and The value of diversity Harvard research: 166 problems from 26 dierent companies The odds of a solvers success were higher in elds in which they had NO formal exper2se The farther a challenge is from the solvers specialty, the more likely it is to be solved 75% of solvers already knew the solu2on to the problem The problem simply needed a diverse enough set of minds to have a go at it The Value of Openness in Scien2c Problem Solving, Karim R. Lakhani, Lars Bo Jeppesen, Peter A. Lohse and Jill A. PaneEa, Technology and Opera2ons Management, January 2007 21. innocen2ve.com 22. Example: Ed Melcarek Problem from Colgate-Palmolive: how to inject uoride powder into a toothpaste tube without the powder dispersing into the surrounding air Solu2on: impart an electric charge to the powder while grounding the tube An electrical solu2on to a seemingly chemical problem 23. People whose networks span structural holes have early access to diverse, oTen contradictory, informaBon and interpretaBons which gives them a good compeBBve advantage in delivering good ideas... This... is creaBvity as an import-export business. An idea mundane in one group can be a valuable insight in another. Ronald Burt, The Social Origin of Good Ideas 24. wired.com 25. The trailblazer 26. In 2000, we decided to stop being Fortress P&G, and move to an open innovaBon system that could aDract innovaBons of all stripes from the outside. Great invenBon is going on anywhere and everywhere in the world. [We have] about 8,500 researchers, and we gured there are another 1.5M similar researchers with perBnent areas of experBse. Why not pick their brains? A.G. Laey, CEO, P&G 27. When I became CEO of P&G in 2000, we were introducing new brands and products with a commercial success rate of 15 to 20 percent Today, our success rate runs between 50 and 60 percent. Thats as high as we want [it] to be. If we try to make it any higher, well be tempted to err on the side of cauBon. Over the same period, weve reduced R&D spending as a percentage of sales; it was about 4.5% in the late 1990s and only 2.8% in 2007. [We] focused on creaBng open innovaBon: taking advantage of the skills and interests of people throughout the company and looking for partnerships outside P&G. In essence, we are building a social system with the purchasers (and potenBal purchasers) of our products, enabling them to co-design and co-engineer our innovaBons A.G. Laey, P&Gs Innova2on culture, Strategy & Business magazine 28. This was important to us for several reasons: First, we needed to broaden our capabiliBes Second, building an open innovaBon culture was criBcal for realizing the essenBal growth opportunity presented by emerging markets A third reason had to do with fostering teams For all these reasons, we consciously set in place a series of measures for building an open innovaBon culture A.G. Laey, P&Gs Innova2on culture, Strategy & Business magazine 29. pg.com 30. pg.com 31. brandchannel.com 32. The Diversity Trumps Ability Theorem A randomly selected collec2on of problem solvers will outperform a collec2on of the best individual solvers 33. Why is a community a more ecient? BeEer at iden2fying talented people The community doesnt need to nd the person most suited for the task, because The person with the right combina2on of talent, willingness and spare 2me will self-iden2fy for the task and undertake it without permission, contract or instruc2on Transac2on costs = zero BeEer at evalua2ng output If the contributor has overes2mated his or her own abili2es the community will iden2fy that, too Clay Shirky, Here comes everybody 34. CondiBons for diversity to trump ability Scale of diversity = a large enough pool to guarantee a diverse array of approaches Qualied members (not just subway passengers) Method of aggrega2ng and processing individual contribu2ons A real problem (=challenging) Clay Shirky, Here comes everybody 35. More network examples (Some overlap with idea jams) 36. Challenges and prizes (A few examples) 37. wired.com 38. readwriteweb.com 39. techcrunch.com 40. techcrunch.com 41. 44k entries 5k teams 186 countries 42. The mining rm made its proprietary data about a mining site in Ontario public, then challenged outsiders to advise where to dig next The par2cipants suggested more than a hundred possible sites to explore, many of which had not been mined by Goldcorp and that yielded new gold 43. 3 types of collecBve intelligence Problem-solving networks Idea jams Predic2on markets 44. Idea genera2on by employees Set up in 1996 Annual seed funding budget: $40M Employees receive $300k-$500k for proposals that turn into business plans 45. ibm.com 46. 2006: The biggest ever jam 150k minds in 104 countries Clients, consultants, employees, families 4 subject areas: transporta2on, health, environment, nance & commerce 46k ideas; $100M invested in 10 of them 47. The world is my lab now. John Kelly, Director of IBM Research, discussing IBMs collaboratories (=open innova2on laboratories) 48. The Linux pre-installment idea was brought up on the day of the launch (February 16 2007) 30k users quickly gave it a thumbs up In May, Dell launched 3 such models 49. By July 2009: ~12k ideas, ~85k comments, ~675k vo2ngs, 354 implementa2ons 50. 51. Idea jam plajorms 52. Google 53. Powered by Google Moderator More than 125,000 users submiEed over 44,000 ideas and cast 1.4M votes 54. Powered by Google Moderator 55. Other examples (Not all of them 100% crowdsourcing) 56. L Genius 57. guardian.co.uk 58. mashable.com 59. 3 types of collecBve intelligence Problem-solving networks Idea jams PredicBon markets 60. [Nearly every individual] has some advantage over all others because he possesses unique informaBon of which benecial use might be made. Each member of society can have a small fracBon of the knowledge possessed by all, and each is therefore ignorant of most of the facts on which the working of society rests One of the ways in which civilizaBon helps us overcome that limitaBon is by conquering ignorance, not by the acquisiBon of more knowledge, but by the uBlizaBon of knowledge which is and which remains widely dispersed among individuals CivilizaBon rests on the fact that we all benet from knowledge that we do NOT possess. FA Hayek, 1974 Nobel Prize in Economics. From The use of knowledge in society, 1945 61. Nobody knows everything. But everybody may know something. James Surowiecki, The Wisdom of Crowds 62. Correct on 80% of Oscar nomina2ons Never missed more than one top award since 1996 launch 63. Drawbacks of internal predicBon markets Not using real money Lower credibility Skewed incen2ves Thin markets Not enough trades/traders Not enough diversity 64. No longer with us (Some of them predicted it) 65. Marketocracy [ini2al incarna2on] The Masters 100 mutual fund was comprised of the leading 100 porzolios out of 100,000 virtual porzolios managed on the Marketocracy website. Masters 100s performance consistently beat the S&P500 . 66. 2. Crowd creaBon 67. The 1% rule Geek 0.01% gods Content creators 1% Content contributors 10% Content downloaders 70% Casual surfers 100% Source needed 68. How it all began 69. The free soTware movement Free as in free speech, not free beer (liberty, not price) Started well before Linux was created, but its probably the most widely-known example 70. Some lessons Given a large enough beta-tester/co-developer base, almost every problem will be xed quickly Given enough eyeballs, all bugs are shallow (Linuss Law) More users nd more bugs because adding more users adds more dierent ways of stressing the program The next best thing to having good ideas is recognizing good ideas from your users. Some2mes the laEer is beEer. Eric Steven Raymond, The Cathedral and the Bazaar 71. Crowd-created soTware Apps, app stores and app challenges. Heres a (really) par2al sample. 72. In the beginning marke2ngvox.com 73. Now at more than 18Bn 74. Not just mobile, of course (Many in the form of app challenges) 75. mashable.com 76. marke2ng-interac2ve.com 77. Crowd-created journalism 78. We think of our members as an army of eyes and ears. But were not asking them to be journalists. The phrase ciBzen journalism makes about as much sense as ciBzen denBst. Leonard Brody, CEO, NowPublic.com 79. InvesBgaBve reporBng milestones Ft Myers News-Press: contribu2ng to serious journalis2c inves2ga2ons 2006 housing development, bid-rigging Talking Points Memo and the ring of state aEorneys, March 2007 Awarded the George Polk Award for Legal Repor2ng for tenacious inves2ga2ve repor2ng When Dept. of Jus2ce dumped 3,000 pages of documents on the press, site members divided the pile into 50-page slices and made stunningly quick work of the subject 80. guardian.co.uk 81. Crowd-created maps 82. readwriteweb.com 83. Picture source needed 84. techcrunch.com 85. techcrunch.com 86. mashable.com 87. techcrunch.com 88. Crowd-created markeBng Flavors, ads, plazorms 89. Crowd-created avors 90. Walkers Do Us a Flavor: 1.2M ideas [no, thats not a typo] prot sharing is a great incen2ve 91. Crowd-created ads A few of the pioneers 92. The chain thing caught on J 93. mashable.com 94. In a class by itself 95. The compe22on generated 1Bn impressions (= media investment of $36M) During and aIer the compe22on, the ad garnered 600M views Cost of the winning ad: $12.80 96. Success led to implementa2on in more countries 97. 2nd year was a op 98. Back to basics in 3rd year + more money 99. news.bostonherald.com 100. If it aint broke, dont x it 101. mashable.com 102. MarkeBng crowdsourcing plajorms 103. Where art thou? 104. Formerly XLNT Ads 105. Crowd-created content (Just a few examples) 106. Those were the days marke2ngvox.com 107. Crowd-created (physical) products Lego, crowdsourced hardware, Threadless & Etsy 108. Lego 109. The company wrote a right to hack into the mindstorms soIware license 110. Source: LEGO 111. Source: LEGO 112. Source: LEGO 113. Source: LEGO 114. With Lego Factory we can expand beyond our 100 in-house designers to marvel at the creaBvity of more than 300,000 designers worldwide. Mark Hansen, Director, Lego Interac2ve Experiences 115. Lego provides a community-like environment where users can share their Lego experience and the company can get feedback as well as new ideas In Lego Creator, users upload their own crea2ons; other users vote, and Lego turns the most popular ones into real products. The company brings high-spenders to the more advanced Brickmaster program 116. Crowdsourced hardware Open source + P2P (and not really new) 117. Dozens of hardware inventors around the world have begun to freely publish their specs. There are open source MP3 players, VOIP phone routers, mobile phone, laptop Clive Thompson, Wired 118. wikipedia.org 119. Threadless & Etsy P2P, really (especially Etsy) but I couldnt resist 120. Customers as R&D, designers, sales force, employees 121. 3. Crowdtasking 122. Crowdsourced science 123. Iden2fying and measuring landforms (craters, ridges, valleys) in order to nd evidence of water As a pilot, an already-categorized dataset was put online 88k images Within a month all were categorized accurately by the community Took a professional geo-scien2st two years 124. Observa2ons grown 10-fold in a period of 5 years You dont need a PhD to count the birds in your backyard Ornithology, like astronomy, is by now highly dependent on amateurs for gathering and siIing through raw data 125. Crowdsourced weather 126. readwriteweb.com 127. Crowdsourced patent review 128. Outsourcing patent review The system is broken On average, 2.5 years between ling and decision Backlog of 1M patent applica2ons, ~470k in 2007 alone 5,500 examiners only 20 hours/applica2on Patent parking Overlapping, dubious patents (e.g., system for crea2ng a note related to a phone call MicrosoI) Solu2on: open the review process to public comment 129. IBM, MS, GE, US Patent & Trademark Oce 130. Crowdsourced law 131. Crowdsourced surveillance 132. Crowdsourced translaBons 133. mashable.com 134. readwriteweb.com 135. techcrunch.com 136. Crowdsourced transcipBon 137. springwise.com 138. Crowdsourced fact-checking 139. ps.com 140. Crowdsourcing along the value chain 141. springwise.com 142. ps.com 143. Crowdsourced microtasks 144. Crowdsourced crisis informaBon 145. 4. Crowd ltering Passively and ac2vely ltering the exponen2ally-increasing catalogue of the Web 146. Mass amateurizaBon has created a ltering problem vastly larger than we had with tradiBonal media, so much larger that many of the old soluBons are simply broken. The brute economic logic of allowing anyone to create anything and make it available to anyone creates such a staggering volume of new material that no group of professionals will be adequate to lter [it]. Mass amateurizaBon of publishing makes mass amateurizaBon of ltering a forced move. Clay Shirky, Here comes everybody 147. The acBvity of the 10% [who lter] is as valuable to any online community as the acBons of the [1% of] supercontributors. Bradley Horowitz, former VP of Advanced Development Division, Yahoo 148. Filtering websites 149. fortune.com, techcrunch.com 150. Filtering news 151. Those were the days 152. Those were the days 153. readwriteweb.com 154. Filtering media content 155. paidcontent.org 156. Filtering soTware 157. Filtering people 158. Filtering locaBons 159. Product reviews 160. If an appliance manufacturer nds a reviewer on buzzilions.com saying that his ovens door melts on the self-cleaning cycle, then the manufacturer has a quality problem, not a review problem. Groundswell 161. Amazon has branded itself by gathering informa2on from consumers and then returning it to them in the form of services such as product recommenda2ons, sales ranking and client reviews. 162. Up to 23 collabora2ve features on any Amazon product page Picture source needed 163. emarketer.com 164. emarketer.com 165. emarketer.com 166. Web 2.0 companies... build systems that get beDer the more people use them... The architecture is such that users pursuing their own selsh interests build collecBve value as an automaBc byproduct. An architecture of parBcipaBon. Tim OReilly 167. The crowd produces mostly crap. The crowd nds the best stu. The rise of Crowdsourcing, Wired Magazine 168. The ltering sequence has been reversed From Filter-then-Publish To Publish-then-Filter Clay Shirky, Here Comes Everybody 169. 5. Crowdfunding 170. hungtonpost.com 171. cnet.com 172. guardian.co.uk 173. alleyinsider.com 174. readwriteweb.com 175. techcrunch.com 176. businessinsider.com 177. techcrunch.com 178. thenextweb.com 179. Summary 180. 5 types (some overlap) 1. Collec2ve intelligence: what the crowd knows Solu2on networks, idea jams, predic2on markets 2. Crowd crea2on: what the crowd creates The 1% rule 3. Crowdtasking: what the crowd does 4. Crowd ltering: what the crowd thinks The 10% rule 5. Crowdfunding: what the crowd nances Je Howe, Crowdsourcing [except for #3] 181. Crowdsourcing rules 1. Pick the right model out of the 5 (or a combina2on) 2. Pick the right crowd (=target audience) 3. Oer the right incen2ves Personal glory, sense of community or even cash 4. Ask not what the crowd can do for you, but what you can do for the crowd Crowdsourcing works best when the individual/company give the crowd something it wants Create a horizontal rela2onship within the community. It could be more important than a ver2cal rela2onship between the company and the individual contributors. They want to talk to each other 5. Keep the pink slips in the drawer Je Howe, Crowdsourcing 182. Crowdsourcing rules [cont.] 6.Keep it simple and break it down Be clear on what you want your contributors to do Get the division of labor right While crea2ve capacity and judgment are universally distributed in a popula2on, available 2me and aEen2on are not (Yochai Benkler) Because everyone already knew what an encyclopedia entry was (Jimmy Wales, when asked why Wikipedia has done so well) 7.The dumbness of crowds, or the benevolent dictator principle Have someone there to greet them when they show up Someone needs to guide, and some2mes decide 8.Remember Sturgeons Law 9.Remember the 10% rule, the an2dote to Sturgeons Law 10. The communitys [almost] always right Dont try to control the discussion provide the plazorm for it 183. If youre not conducBng an exercise like that in your organizaBon, you risk missing the boat on a sea change thats transforming business. You must overcome natural organizaBonal resistance to the idea of relinquishing signicant control to people outside the company. Even without knowing your business, Id be willing to bet that contribuBon systems can address one or more of the business challenges you face beDer than the methods you currently use. Your company probably has advantages that start-ups can only dream of: exisBng customers, trac to your website Naturally, adopBng those methods is easier when compeBtors have beaten you to the punch... But what if you want to lead your rivals? ScoE Cook, Intuit Founder & Chairman, The contribu2on revolu2on, Harvard Business Review