The term crowdsourcing has been around since 2005 when editors at Wired Magazine, Jeff Howe and Mark Robinson, started discussing how businesses were using the world wide web to outsource work to individuals. In this blog post we discuss how the power of the crowd can be harnessed for greater competitive advantage.
First, what is crowdsourcing all about? As an approach, crowdsourcing describes the process of obtaining needed services, ideas, or content by outsourcing work to a crowd of external people, rather than from in-house employees or service providers. Hence, crowdsourcing can be distinguished from outsourcing for the fact that:
- The work may come from an undefined public rather than an outside organization
- The company using crowdsourcing is not bound to medium- or long-term sourcing contracts
Using crowdsourcing, businesses can overcome their own limitations and knowledge gaps by relying on the collective intelligence on a pay-for-use basis.
Leveraging the scale of the crowd
Even though crowdsourcing comes in many different formats, more often than not it is seen as a compelling approach from an economic viewpoint. It maintains a task-based and project-oriented focus that accommodates the emerging rapid-cycle way of doing business, affording a particular degree of organizational agility. Thereby, it has the capability to fulfill growing demands for fast solutions to business problems by leveraging the scale of the crowd.
At the same time, and as part of its nature, it exposes a problem to widely diverse individuals with varied skills, perspectives and experiences that are not bound to or limited by organizational structures, routines and habits. This on a scale that exceeds the size of the biggest and most complex global corporations, bringing more bright minds to find a solution to a given challenge.
Driven by intrinsic motivations
The majority of employers operate on basis of traditional incentives to motivate employees such as salary and bonuses and occupy an employee with clearly assigned roles, responsibilities and tasks. These organizational structures have been proven to discourage employees from seeking challenges that stretch beyond their delineated roles to some extend. This is different with crowdsourcing.
Crowds are not bound to a specific company, employer or else. They are not defined by one specific role or tied to any particular structures. These crowds are energized by intrinsic motivations and driven by their individual desire to learn and explore. These intrinsic motivations can drive better and more efficient outcomes for the sourcing company.
On the other hand, and despite the great motivations, the central risk of crowdsourcing is the fact that the standards of the provider might not meet the expectations of an organization in terms of quality. Since businesses must rely on a diverse set of independent contractors, quality standards become difficult to enforce.
When crowdsourcing becomes a success: the case of Amazon
Amazon Home Services (AHS) is a great example of crowdsourcing in the FM arena. The platform provides a one-stop shop where consumers can compare, contract and eventually contact local service providers such as plumbers, electricians, cleaners, technology specialists and other laborers. The Amazon Home Service model streamlines the process of service provision, putting every step on a single access point where a customer is able to choose everything between expensive concierge services offering 24/7 access and professional, low-cost, easy-to-use platforms.
Amazon Home Services works similar to Amazon’s marketplace for physical goods. Service providers compete for top-billing in a given category through price, ratings and other factors. Higher rankings naturally often lead to higher sales.
For safety and reliability of the service, Amazon vets the providers through background checks and customer satisfaction audits. The company also works as a middleman to help resolve conflicts, maintaining the ability to refund a customer’s money instantly in case of a bad experience.
In order to launch, Amazon Home Services already had 2.4 million service offers covering more than 700 types of service. Considering the 85 million Amazon customers, Amazon Home Services has significant growth potential. To make the business profitable, Amazon takes a cut between 10% and 20% of every service arranged through its platform, depending on the type.
To sum up
Due to its plug and play nature, crowdsourcing gives business immediate access to enormous crowds of people, qualified to solve their challenges at low costs. At the same time, leveraging the power of the crowd takes advantage of the collective learning and knowledge in a given location that otherwise would not be possible to obtain. Despite benefits, crowdsourcing has limitations and the central risk lies in the expectations of the quality of the delivery. That is also why organizations preferably should rely on crowdsourcing for smaller and independent projects.
Would you like to know more about crowdsourcing? Please download our new White Book: Future of Outsourcing and Perspectives for Facility Management.