Should your company 'crowdsource' its next project?

Whether it's to increase loyalty among customers speed up development time or cast outward for innovative ideas, companies are trying on many styles of 'crowdsourcing'

When Constellation Energy Group's commodities group needed a new system recently, it considered the usual sources of labor: internal staff, a consultant, a contractor, offshore programmers or a mix of all four. Instead, it turned to a somewhat less traditional technique: Ask programmers from all over the world to compete with each other to write the best code for the system. When all is said and done, hundreds of programmers will labor over a system that, in the end, will represent the work of less than 100 developers, whose code will be hand-selected by Constellation and TopCoder, the company that is managing the competition.

Welcome to the world of crowdsourcing, defined by Jeff Howe, who maintains the Crowdsourcing.com blog, as "the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call." Howe is also writing a soon-to-be-released book on the topic.

Sound exotic? It may now, but get used to it. Everywhere you look companies are turning to a wide variety of crowdsourcing models to do everything from programming, to market surveys, to product development, to R&D. They're doing this in part because of the burgeoning number of people clamoring to share their thoughts, talents, ideas and critiques on all sorts of Web 2.0 platforms.

Thanks to the success of user-generated sites such as YouTube and Wikipedia, for instance, newly empowered consumers will increasingly demand having a say in product development plans, says Jonathan Edwards, an analyst at Yankee Group Research Inc. in Boston. "Crowdsourcing is an easy way to satisfy consumers' demands to be heard and to get free feedback at very little expense that is impossible to get otherwise," Edwards says.

Also compelling is the increasingly popular notion among companies desperate to stay competitive that the best, most direct and possibly cheapest sources of innovation lie outside the corporate walls, among customers and other previously hidden sources of talent. "The focus of every company today is on innovation, which has led to an 'all-hands-on-deck' mentality," Edwards says.

Recent examples of crowdsourcing abound. For instance:

  • Through a platform dubbed IdeaStorm, Dell invites users to post ideas and either promote or demote each other's suggestions. Highly rated ideas get pushed to the top of the site. Since IdeaStorm's inception in February 2007, according to Edwards, Dell has gone to market with more than 20 user-generated suggestions, including reinstating Windows XP as an alternative to Vista on its consumer PCs. "The crowd has spoken, and Dell is delivering," he says.
  • Tesla Motors, a California-based start-up that's working to build an all-electric sports car, recently asked readers of its blog to download a spreadsheet it developed, fill in information related to their home's circuitry and electrical load and submit the resulting data, which will reveal their home's available and required amperage. The company -- which will use this data to design its home-charging stations -- chose this technique because it was having difficulty finding other ways to determine the biggest EV charging circuit that could be installed in a typical house.
  • Netflix has staged a contest that's open through 2011 for people to improve upon its current tool that predicts how much a viewer is going to like a given movie based on his stated preferences. Winners can earn anywhere from US$50,000 to the grand prize of US$1 million.

Crowding around a system

In Baltimore-based Constellation Energy's case, the US$19.3 billion energy company didn't stage a completely open call; rather, it worked with TopCoder , a Connecticut-based company that stages regular coding competitions, ranks developers who compete and then makes this talent available to businesses that need systems built, also through a competition-based model. TopCoder currently has about 130,000 members from more than 200 countries.

A TopCoder project manager assessed the needs of Constellation Energy's commodities group, broke up the system design into dozens of small components and released about half of those component requirements to member developers, who could send in their best coding effort. (Constellation decided to build some of the components in-house.)

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Mary Brandel

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