With the rise of social media and the increasing interconnectivity of the world a new kind of labor has been created. This type of labor draws upon the intellects and abilities of all people, instead of only employing the powers of a prescribed labor force. In 2006, Jeff Howe finally gave a name to this labor form, when he coined the term “crowdsourcing” (Howe). To date, crowdsourcing has opened up an entirely new dimension of labor and innovative possibilities. It may be the start of a new era of labor infrastructure with social media as the primary venue through which it occurs. Thus, it is important to understand what crowdsourcing is and evaluate its potential functions in business.
What is crowdsourcing really? Defining it requires further reference to Jeff Howe, the creator of the term. As defined by Howe, crowdsourcing is “the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.” He further explains, that while “this can take the form of peer-production (when the job is performed collaboratively)” it is also “often undertaken by sole individuals” (Howe). The “open call” aspect of crowdsourcing ensures that there is no discrimination of who can participate in the labor. This is important because it ensures that the “employers” receive responses from only those who are interested in completing the task, which are often those who are the most capable of doing so. People are naturally drawn to working in things they are good at; things that come easy to them. Therefore, the open call ensures that for any given project those “hired” for the work are those who will produce the best end result. But how does this really work? Is there a means of guaranteeing that only the best laborers will be the ones who answer the call? The truth is, it doesn’t always work perfectly in a business setting. This is often because the businesses implement crowdsourcing incorrectly or try to use it for the wrong functions. What are the “right” functions to use crowdsourcing for and how is it implemented correctly?
In order to understand the functions of crowdsourcing, it is necessary to first examine why a business would choose this form of labor. This can be best illustrated by understanding how crowdsourcing may be a superior form of human capital compared to traditional employment systems. Looking at businesses that have utilized crowdsourcing successfully will elaborate this point more clearly.
James Surowieki, the founder of Wikipedia, wrote The Wisdom of Crowds to explain the merits of creating a crowdsourced encyclopedia. He begins with a summary of the findings of a British scientist named Francis Galton who in 1906 found that collective crowds of ranging intelligence levels could produce answers that far exceed those of individuals. In the story, he describes the experiments of Galton who in his attempt to prove that people are generally stupid actually proved the opposite after conducting a statistical study of a weight-judging competition. The competition asked a crowd of eight hundred people to guess the weight of an ox. This crowd included farmers and butchers, but was primarily was made up of people who had no background or understanding of cattle or their weights. No one guessed correctly. Galton then collected and studied the guesses of the people who participated in the contest and found that the average of all of their estimations was only one pound off from the correct weight of the ox. Thus showing that the crowd’s collective intelligence, even with a range of intellects, was more accurate than individuals with vast knowledge on the subject (i – iv, Surowieki).
However, it’s not as simple as aiming a bunch of people at a project and watching it go. In his book, Surowieki also describes the four necessary conditions of the crowd to be “sourced” in order to create quality production. First, the crowd must have diversity of opinion, which means each person has their “private information” even if it’s just an “eccentric interpretation of the known facts.” Second, the individuals of the crowd must have independence, which means “people’s opinions aren’t determined by the opinions of others.” Third, the crowd must be decentralized, which means that “people are able to specialize and draw on local knowledge.” Fourth, the crowd must be able to be aggregated, which means it has “some mechanism for turning private judgments into a collective decision” (10, Surowieki). Breaking down each of these elements will help clarify why these four things are essential to creating a “wise crowd.”
Independence is the next element of wise crowds because it ensures that the group won’t be as prone to jumping on one idea without thinking it through. People are naturally susceptible sway by the majority rule so maintaining independence is a smart way to allow each person within a group to have an equal share of input. Without independence imitation can occur and often results in the form of an “information cascade,” in which choices are made in continuous sequence without allowing much room for anyone to disagree with the initial decision. One additional problem that can occur is emotionality, which includes inter-crowd influences like peer pressure or herd instinct (acting together without a planned decision). Emotions, while useful in some situations, are not always prudent in group-decision making because they can blind individuals from seeing the logical action if it is distorted by negative sentiment (“The Wisdom of Crowds”).
The decentralization of crowds is what allows them to “divide and conquer.” Without this element, centralization can occur, which can lead to the establishment of a hierarchy within the group. This hierarchy simply dictates opinions from the superiors down instead of allowing those who specialize in a given area to provide information. When making decisions, especially those that affect the long-term plan, it is crucial to look at every possible outcome. Therefore, it is logical that decentralization is a necessary element to creating a wise crowd because it allows for every member of the group to utilize their individual strengths; in a large enough group this can mean that the strength of one individual will cancel out the weakness of another (“The Wisdom of Crowds”).
Lastly, when evaluating the element of aggregation, it is necessary to first reiterate why crowds can create better solutions. The aggregation of all information, whether it be intelligent or erroneous, must be included in the final “average” of the group’s opinions. So while it’s important to keep
Concluding the discussion of the four elements, it's possible to translate this to a business perspective, specifically by addressing the functions of crowdsourcing. understand how crowdsourcing functions in business. Since the possibilities are truly endless these functions will be explained as generalizations. To begin, it may be best to discuss the functions of crowdsourcing that are already successfully being used by businesses, specifically through social media and online interactions. Dailycrowdsource.com categorizes the crowdsourcing into four types of common business operations. These four categorizations are: crowdsourcing design, “crowdfunding,” “microtasks,” and open innovation. Each of these practices can be explained in terms of what the “employer” of the work must do and how crowds respond to these requests (Bratvold).
Crowdsourced design is perhaps the most widely used form of crowdsourcing to date. In the context of this discussion, design will refer to any type of work that requires creative thought or imagination. In order to be effective, the employer must clearly explain what he needs, what it will be used for, and any other details which may include compensation (if any) and deadline for completion (Bratvold). Crowdsourcing in this capacity will either result in the submission of ideas by many individuals or submission of a few ideas by collaborative efforts—meaning the crowd works on the problem together through some sort of group-editing process. The former provides the employer with a range of products to choose from, though they were created without mass collaboration, and the latter provides a few products that are more “well-rounded;” this fits into Surowieki’s criterion.
The second major use of crowdsourcing is for fundraising or “crowdfunding.” These types of projects are typically orchestrated by artists, non-profits, and
Moving forward, the third primary function of crowdsourcing is for “microtasks,” which are small tasks that only require a modest amount of effort to complete. Microtasking requires the employer to first break up a large project into small tasks and then send the work to a “crowd” of different individuals. For example, a website administrator may request that all 3,000 pictures in his/her site be tagged with titles and descriptions. Each picture would take only a moment to complete individually so splitting this work up among 100 people would significantly reduce the effort each has to put in. Since the work is so minimal, compensation is typically somewhere between $0.01 - $0.10 per completed task (Bratvold). This function is a useful way of outsourcing the “grunt work” that corporations usually delegate to the lowest employees. Leveraging the labor of crowds can save business’s time and effort for more important work.
Open Innovation is perhaps the best examle of creating the “wise crowd” that Surowieki advocates. If used in the context of a problem or decision, open innovation is exactly the type of function he proposed crowdsourcing be used for, namely, decision analytics. Additionally, Surowieki identifies forecasting or predictive models to be a choice area of utilization for crowdsourcing. He points to multiple historical cases in which crowds were able to draw highly accurate decisions out of problems with uncertain conditions (“The Wisdom of Crowds”). Since forecasting can be a difficult task for businesses, crowdsourcing may be a cost-effective and powerful solution. In fact, some companies are already employing this on a mass scale through social media monitoring. By understanding the sentiment of the public towards a particular idea of brand, the company can more easily determine the best course of action given their estimations of public response to each one.