Platt Perspective on Business and Technology

Crowd sourcing and the opening up of open innovation

Posted in social networking and business, strategy and planning by Timothy Platt on March 19, 2010

Open innovation is almost one of our business model Rorschach tests from the way it can mean different things to different viewers. When this term is used by owners and managers of specific businesses that seek to tap into its potential, it often means looking outside of the business to bring new sources of information, knowledge and innovation into that organization for its internal use in building better, more responsive products and services. It is about internalizing what begins as external value and making it your own and ideally at least uniquely so.

This is a very legitimate approach to open innovation, and it is one that a growing library of business books and journal articles have elaborated on as a way for the business to be more responsive to its marketplace and it offers an approach for its building a greater market share there.

When crowd sourcing enters the business model, this more strictly inflowing view of open innovation becomes too constraining. Product and service design and marketplace insight still flow into crowd sourcing businesses but members of the crowd sourcing community that offer this value hold a very different relationship to these businesses than would have been the case just a few years ago, in a more traditional business environment. Active, involved crowd sourcing participants buy the products and services they help design and bring to the market and they help in sales with their viral marketing contributions. They also influence production and production scheduling and prioritization from their ongoing collaborative contributions. The very nature of the walls that define these businesses per se, and their marketplace communities begin to blur and the distinction between in-house employee, outside consultant and client/customer can become vague and even at times arbitrary.

Here, open innovation does not so much flow into the organization for it to act upon (or not) in developing products and services, and market share. Open innovation becomes a commonly accessible resource that any business in that marketplace can tap into, that resides in key measure outside of the businesses themselves and in the crowd. And tapping into this sea of options and opportunities depends on effective collaboration with members of that crowd as peers, and this certainly applies to the hub networkers and other key social networking members of these crowd sourcing communities (see Social Network Taxonomy and Social Networking Strategy).

The primary point I am focusing on in this posting is how businesses have to reconsider the fundamental nature of innovation, and of ownership of business knowledge and innovation. The raw data that a business collects about its market and about the crowd it connects to, and the knowledge it develops from that may still be its own. But the innovation options and insights that it draws from that crowd are not insofar as the same crowd participants can continue to provide innovation insight or stop, and they can offer their insight to you or to your competitors or to both and at the same time.

As an extreme representation, and admittedly as something of a stereotype, I would argue that a pure crowd source business model organization captures market share and succeeds insofar as it more effectively:

• Taps into and tracks its surrounding marketplace communities as social networks.
• Enlists members of their marketplace communities into an open innovation crowd that would contribute to their general product and service objectives.
• Track the numbers so they can know and manage the effectiveness of this ongoing series of connections by more effectively resourcing and conducting their side of the crowd sourcing conversation.
• And effectively dipping into and draw from the surrounding streams of innovation that do not and cannot reside in-house, to convert innovation potential into actualized products and services.
• Innovation becomes a perhaps even completely external commodity and resource.

What happens to brand in this? In a pure crowd sourcing organization, brand shifts towards becoming a recognizable pattern of relationships to the crowd and in how those relationships are conducted and made visible to the crowd. If you do not in any real sense own the design innovation that formats your products and services, your brand is not in the recognizable, identifiable consistency of your products and services per se. It is in how you engage with and through that, influence and help shape the crowd that collectively provides that consistency.

When I posted my first note on crowd sourcing in this blog with Crowd Sourcing, Open Innovation and Open Organization – 1 I cited nine specific businesses that are following a crowd sourcing model and others have been added to this list in comments submitted by readers.

When I review their web sites and businesses with the above thoughts about open innovation and the crowd sourcing business model in mind, I in fact see evidence they are all following variations on the basic model I propose here.

The value and insight of open innovation can be internalized into the organization and made into unique value proposition but it does not have to be internalized and made unique to offer this type of sustaining value. It is, however, necessary to reconsider the nature of the organization and whether it can have firm boundaries or not to make this wider range of opportunity work for you. It is necessary to reconsider and even significantly reframe branding and business identification and labeling and how they work to make this wider range of opportunities work for you.

One Response

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  1. Lily said, on July 9, 2010 at 12:29 pm

    A very interesting view on crowsourcing as it can be used as an effective tool for fostering innovation.
    I have recently read a post at http://www.innovatrs.com/blog/5-ways-start-ups-should-use-crowdsourcing/ on why and how start – ups should use crowdsourcing.


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