The Economis of Crowdsourcing
In order to fully understand crowdsourcing business leaders need to understand why it makes economic sense and how organizations who use crowdsourcing benefit financially.
Traditional Companies are Characterized By:- Functions in Vertical (silo(s))
- Product development is tightly held secret
- Scale by locking out competition (Apple)
- Service is treated as a neccessary evil
- Vendors are told what to do
- Innovation is for company elite, flow is top down
| Crowdsourced Companies Are Different:- Create a market (Linux, Facebook, tripadvisor) created markets and then gave away core product. They make money by selling services to that product.
- Giving the product away creates some advantages:
- Price competition is gone (cannot be under sold on core product)
- IBM nullified competition by abandoning their proprietary product, joining Linux and giving away product
- Removes financial strain of developing competitive product (Linux)
- Lots of smart people will help you develop product (IBM, Lifian)
- Focus is on customer relationship and innovation (profit leaders)
- Product development is all or partly outsourced; employees job is to filter / focus crowd’s input.
- Scale is unlimited (P&G claims 90,000 developers, SETI is world's largest computer)
- Vendors are partners, open systems (Toyota, Lifan)
- Innovation no longer sacred, find value in smallest suggestion, start conversation with customers, flow is bottom up
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Below is a YouTube video on the topic of crowdsourcing economics.
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