Special Feature Crowd-sourcing

When a Crowd is Company

n 2010, when India’s cen-tral bank decided to cre-ate a symbol for the rupee, instead of asking a design house, it asked, well, eve-ryone. The Reserve Bank of India invited the public

to post their designs on its website. It received 3,000 designs, from which it chose the design of Udaya Kumar, an IIT student.

While that was a rare outreach by a government arm, it’s a routine exercise for the $82.6 billion Proctor & Gamble (P&G). The US-based con-sumer goods major has a dedicated website, P&G Connect+Develop, to solicit ideas for products, technolo-gies, businesses and innovation -- from one and all.

The ideas sought are both general and specific. Currently, P&G has 85 ‘needs’ like ‘new ingredients or products that reduce the severity of common cold’. This open strategy works for P&G. “More than 50% of the ideas for our new products and innovation came from here,” says Raju Konduru, head of P&G’s in-novation centre in Bangalore. Like Olay Regenerist, an anti-wrinkle cream, the peptide technology for which came from a small, unknown French firm via Connect+Develop. “It (the site) helps accelerate innova-tion,” adds Konduru.

It’s called ‘crowd-sourcing’, and it involves the outsourcing of a func-tion once performed only by em-ployees to the public. The Internet is expanding the idea of the ‘crowd’ as partner, helping companies and em-powering professionals. It is shaping all sorts of business engagements and business models in developed markets, where crowd-sourcing is about six years old.

On the one end of the spectrum are large corporations like P&G and Dell, which have dedicated sites to tap ideas relating to their businesses from the public. On the other end are smaller enterprises, which are trying to ride on websites that are in the business of creating a meeting place for crowds and companies. “It (crowd-sourcing) can help busi-nesses keep costs low while getting their work done by qualified people who can deliver good quality,” says Sitashwa Srivastava, CEO of Jade Magnet, a Bangalore-based crowd-sourcing platform.

Both these templates, though nas-cent in India, are gathering steam. So, for example, the logo of Ashok Soota’s new IT venture, Happiest Minds, came from Jade Magnet. “We had a specific and well-defined project that didn’t require any serious background research,” says Salil Godika, chief strategy & marketing officer, Happiest Minds. “So, we chose to crowd-source it as a faster way that would give us fresh and diverse thinking.”

Besides ideas, it is birthing ven-tures that would probably be still-born in a conventional financing scenario. Crowd-funding is helping small and independent film-makers to make the films they want to. And it’s creating a new model in the

microfinance sector, with online platforms like Milaap, Rang De and MicroGraam connecting people who want to lend or donate for small, livelihood loans with those who need them.

What’s In It For SMEs…For small- and medium-sized enter-prises (SMEs), lower costs, without a corresponding drop in quality, is a major incentive to crowd-source. The premise: in one-to-one client dealings, overheads pad up costing. In crowd-sourcing, overheads are minimal. For smaller and simpler projects, then, costs come down drastically.

Jessie Paul, the former chief marketing officer of Wipro and who now runs a marketing consul-tancy, has used crowd-sourcing platforms for brochure templates and logos. She is a satisfied client. “Their advantage is that you pay only for what you use. You don’t have to pay for the person’s down-time,” says the CEO of Paul Writer. Godika estimates that for a logo design, crowd-sourcing is cheaper by a minimum 20-30%; this can increase depending on the project brief and stature of the design firm hired in a direct dealing.

Paul says the world is shifting towards informal labour networks and India will follow. “As more work can be done remotely and digitally, the need for these digital equivalents of temping firms will only rise.” Already, in India, crowd-sourcing is funding microfinance and films, testing software and websites, doing design jobs, creating advertising and firing innovation, among other things.

According to Sandeep Khanna, founder and editor of crowdsourc-ingindia.com, an online Indian crowd-sourcing publication, over 500 SMEs have used such platforms in the past year. “It is growing fast because of the growing freelance culture,” he says. “Since the model helps SMEs, more people are able to use it and benefit.”

Take Jade Magnet, which primarily hosts projects related to logo and website design, bro-chures, demo animation, and print and banner ads. CEO Srivastava says it has delivered about 1,200 projects in two years and the adoption rate is increasing. “Convincing clients, especially SMEs, is never easy. But when they see the cost advantage, they agree to give crowd-sourcing a shot,” he says. “Also, viral effects and refer-rals is popularising crowd-sourcing among small companies and start-ups.”

One of Jade’s recent clients is Sure Fertility, a fertility clinic in Bangalore. The clinic posted a de-sign brief for a logo on Jade, includ-ing its budget and time. It received about 35 designs. It short-listed one. After a few iterations with the de-signer through Jade’s Magnet mes-saging application, it arrived at the final design.

…For Working Professionals… As more enterprises take some of their work online, it’s opening up freelance opportunities for certain skill sets: visual artists, software testers, web and marketing profes-sionals, copywriters and actors, among others.

Deepti Goel, for instance, has earned about $7,000 (about ̀ 3.5 lakh) by designing logos and doing animation work on Jade Magnet for about 15 clients from the UK and India. The 29-year-old graphic de-signer is currently designing a web-site for a client in the Middle-East. “It has provided lot of freelancers, individuals and firms a good plat-form to work on,” she says, from her home in New Delhi.

Doing a few assignments on a platform tends to open up a line of communica-

tion for the provid-ers with it, which translates into work. “Over the months, we have built fa-miliarity with the platform and they have also under-stood our quality of work,” says Ronak Meghani, a software engineer and web designer, about Jade.

“That makes it easier for us than, say, new providers.”

“This works equally well for small and large businesses,” says Paul. “This gives them access to talented people they probably could not afford or retain on a full-time basis,” she adds.

…For Crowd-sourcing Platforms… Crowd-sourcing platforms usually charge clients either per transac-tion or per subscription. Part of this goes to the providers. According to Srivastava, Jade keeps 20% of the client fee and passes on the rest to the provider. Some like Talenthouse also charge a registration fee.

Selling advertising on the web-site is another revenue stream. “We seek brand sponsorships for each ‘creative invite’ that we put up,” says Arun Mehra, CEO of Talenthouse India, a joint venture between Reliance Entertainment and Talenthouse, a crowd-sourcing platform for performing arts.

However, given the nascent nature of the business, hardly any crowd-sourcing platforms are making prof-its. “Each project ends up making an operational profit,” says Srivastava of Jade. However, adds Khanna of crowd-sourcingindia.com: “Most platforms are in investment mode.” With an eye on a wider audience, platforms are investing in technology, marketing, research and delivery methods.

The challenge for a crowd-souring platform is to bring together a large number of providers and vendors on a platform, while keeping its marketing spends low and main-taining high quality in delivery. Says Srivastava: “Platforms are also

struggling with payments. They need to figure out the best way to accept payments from vendors and distribute it to providers.”

Srivastava says a mature online presence is needed for crowd-sourcing to be effective. “Internet penetration in India, as well as speed and bandwidth, is still not very high, though this is changing,” he says.

Paul says 23% of the 500,000 active contractors of Elance, a US-based platform that has facilitated pro-gramming jobs worth $400 million, are based in India. “With loads of talent available in smaller cities and towns, crowd-sourcing can help businesses access it without having to wait for these people to migrate to metros,” says Paul. “On top of that, there is a significant cost arbitrage within the country. That makes for a nice value proposition.”

…And Large Corporations Even big companies are adapting crowd-sourcing into their business. In early-2010, Parle Agro used Twitter to identify supply-chain gaps. When it launched Hippo, it asked consumers and retailers to tweet to a specified Twitter handle the non-availability of this brand of potato chips in their neighbourhood. The company says it received tweets from 25 cities and sales jumped 76% that week. “The symbiosis of crowd-sourcing and social media makes for a perfect busi-ness plan,” says Nadia Chauhan, joint MD & CMO, Parle Agro, who plans to develop such channels and communi-ties for each of its brands.

Hero MotoCorp’s ongoing ad cam-paign, ‘hum mein hain hero’, asks the public to upload their video to the AR Rahman tune on its website, which the company then incorpo-rates into its TV ad. “Its genesis lies in this ownership displayed by people: what if every individual was given a chance to create a video that could be seen by others?” explains Anil Dua, senior vice president-mar-keting and sales, Hero MotoCorp.

As is evident, large Indian compa-nies are still using crowd-sourcing for soft activities, unlike, say, the US. Dell, for example, launched a crowd-sourcing site, ideastorm.com, in ear-ly-2008. According to Dell, the site has logged about 11,000 ideas, of which, 350 were implemented. These include making USB 3.0 port a standard fea-ture on its PC and laptops, a common charger for devices, and introduction of anti-glare on notebook screens.

The real appeal of crowd-sourcing, though, is for smaller, less main-stream outfits and ideas. In microfi-nance, for example, crowd-sourcing is enabling a meeting of minds. According to Rangan Varadan, founder of Micrograam, the power of the crowd-sourcing model is two-fold. One, because investors are socially-conscious individuals, there is little pressure on a micro-credit company to be aggressive in repayment and collection, or pursue excessive profits or growth.

Second, it offers an effective vehicle

I

Besides ideas, crowd-sourcing is birthing ventures that would be stillborn in a conventional financing scenario

talking heads

More than 50% of the

ideas for our new

products and

innovation came from

here (its own crowd-

sourcing website)

Crowd-sourcing in

India is currently at

the stage where

e-commerce was two

years ago. It is about

to explode

RAJU KONDURUHead, P&G’s innovation centre

in Bangalore

ARUN MEHRACEO, Talenthouse India

The public is a fount of resources, skills and ideas. More and more companies are tapping this via the Internet to

solve business problems. Crowd sourcing is cheap and efficient, and is fast gaining scale, reports Bhanu Pande

for thousands to contribute towards ru-ral development. “We should also look at this model from the perspective of people who are interested in doing something for the benefit of the poor in India, but are not sure how,” says Varadan. “Until recently, the only option they had was to donate to charity.” In films, crowd-sourcing is promoting independent films. For example, in 2009, Onir raised one-third of the ̀ 3 crore budget of his last film ‘I Am’ using Facebook and other social-networking sites. “Hundreds of people from many countries contributed as little as ̀ 1,000 and as much as ̀ 15 lakh,” he says. Directors Anurag Kashyap, Ashvin Kumar and Guneet Monga want to follow suit. “Crowd-sourcing in India is cur-rently at the stage where e-commerce was two years ago,” says Mehra of Talenthouse India. “It is about to explode.”

PEPSICO FOODS: The Mastana Mango flavour

for its Lay’s brand of potato chips came from a

public contest that, according to the company,

drew 1.3 million responses

DELL, US: From its crowd-sourcing site, ideastorm.

com, came the idea to provide a USB 3.0 port on all

its computers, a common charger for devices, and

anti-glare on screens

PROCTER & GAMBLE, US:A new peptide

technology

developed by a small

French cosmetics

company was picked

up by P&G from its

crowd-sourcing site,

Develop+Connect.

Thus was launched

Olay Regenerist

ARINDAM

HERO MOTOCORP: Public can upload

their videos on

heromotocorp.com for

its ongoing ‘hum mein

hai hero’ campaign

SAMSUNG: Tweets from people

suggest ideas for artworks, which are

then drawn using design apps in its

Galaxy Note phone, and advertised

INKFRUIT: The garment

maker constantly solicits

T-shirt designs on its

website

HAPPIEST MINDS: Ashok

Soota’s new IT venture got its logo

from crowd-sourcing platform

Jade Magnet

BANGALORE INTERNATIONAL CENTRE: An upcoming

cultural hub in the city,

plans to ask architects

across the globe to give

suggestions on its ̀ 100

crore building on a crowd-

sourcing platform

FILMS: Onir Anirban raised

one-third of the ̀ 3 crore

budget for his film ‘I Am’

through social-networking

sites. Also, platforms like Film

Interactor and Kickstarter

enable public financing

MICROFINANCE: Milaap,

MicroGraam and Rang De

bring together lenders

and borrowers for small

livelihood loans

Fund Raising

Architectural Inputs

New Products

Design

Advertising

New Technologies Independent

PlatformsThey are the online interface

between companies, especially

small ones, and the ‘crowd’. Some

crowd-sourcing platforms in India

ekjaa.orgEnables grants and loans to social

enterprises and NGOs

99tests.com Testers locate bugs and judge user

experience for softwares and websites

ideaken.comIntermediates between those who seek

innovation and those who want to solve

jademagnet.comDesign, web and marketing solutions

onebillionminds.comProblem solving in science, technology,

design, business or social innovation

brandpotion.comDevelop products, re-imagine brands and

create innovative advertising

hoonur.comProfessionals and businesses from

entertainment, TV, media and advertising

can promote and share their services

milap.org, rangde.org micrograam.orgConnect people who want to donate or

lend to the poor with borrowers

talenthouse.com filminteractor.com Kickstarter.comFund-raising for performing arts,

including films

Crossword 5166

Dilbert by S Adams

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