Is Crowdsourcing The Right Choice For Your Business?

The notion of ‘extended enterprise’ gets a boost through the power of crowdsourcing, viral branding and service outreach. How to leverage such trends?

Harnessing the power of crowdsourcing, viral branding, and service outreach has propelled the notion of the “extended enterprise” into high gear in a hyper-connected global world where ideas and information are shared instantly and constantly. The term "extended enterprise" was coined in the 1990s at the Chrysler Corporation to explain the necessities to extend collaborative relationships between internal and external organizations.

Today, this extension reaches further than anyone could have imagined just a couple decades ago. The consumerization of technology, communication and connectivity allows any enterprise to reach out to anyone anywhere in the world at any time.

Evidence of the growing extended enterprise can be found in any industry or initiative. Consider the following two examples:

As soon as news of the deaths, devastation and destruction caused by Hurricane Sandy hit, relief efforts flooded social media platforms. The majority of funds quickly collected by the American National Red Cross came mainly from major corporate donors and a live televised concert (people in the impacted areas couldn’t watch because of widespread outages) to benefit victims of Hurricane Sandy, which brought in nearly $23 million. But most grassroots efforts that are bringing supplies and aid directly to victims in the hardest hit areas are being organized online and are gaining traction very rapidly via various social networks. Some of these shoestring startup charities outpaced the Red Cross in dispatching immediate aid.

In Brooklyn’s Sunset Park, 10,000 meals were sent out to people on a single Saturday from St. Jacobi’s Church in a massive effort organized by Occupy Sandy, the post-hurricane incarnation of Occupy Wall Street. The church turned hub also sorted, labeled, and distributed thousands and thousands of pounds of clothes, and sent out supplies like heaters and generators to the Rockaways, Staten Island and other ravaged areas.

Luxury automaker BMW is crowdsourcing designs for a 2025 version of the BMW and MINI. The winner of the BMW Urban Driving Experience Challenge will receive $7,500, a trip to Munich, and lunch with the managing director of BMW Group Research and Technology. BMW Group has no shortage of innovative ideas for its BMW, MINI and Rolls-Royce Motor Cars brands, but the global giant knows the public offers direct insight into what consumers want. BMW prides itself on technological developments and innovation, and this crowdsourcing contest isn’t its first foray in expanding its extended enterprise. BMW Customer Innovation Lab 1045 users shared their ideas on innovative telematics and online services, as well as driver assistance systems of the future. Participants made suggestions in a structured multimedia environment, where they could view, evaluate and build upon proposals made by other participants.

The 4 Ps
Despite the ongoing proliferation, the idea of having people who aren’t on the payroll or otherwise directly affiliated with the enterprise acting as agents of the company still makes many leaders uneasy. It also raises a series of new questions.

Before you corral the crowd, please ponder these points as outlined by the BTM Institute:

1. Power: Don’t assume there’s power in numbers alone. Getting a million likes isn’t worth a lick if you’re not finding the right followers, fans and funders. You can harness the power of crowdsourcing to build your extended enterprise only if you apply the same rules that guide your overall mission and goals. Every crowdsourcing quest must be part of your overall operating blueprint. You can quickly relinquish the power of your own enterprise if you make the wrong request. You’ve mastered the message in your marketing materials, so maintain that mantra when you mine the masses for meaningful material. Remember it’s intelligence you’re interested in, not just information.

2. Proliferation: There’s no denying crowdsourcing is rapidly expanding efforts to extend almost any enterprise. If you’re not already clamoring for the crowd’s contribution (though you may be without even knowing it), don’t just send out a random request. You need to first evaluate your own goals and determine whether crowdsourcing is right for your agenda and your enterprise at this time. You may not be ready to unleash all your ideas ahead of a big decision or announcement into an environment that could threaten your success by alerting rivals of your intentions. Face it, Facebook isn’t for everyone and it’s certainly not right for every business. Do your research on platforms and consider where you could or should crowdsource.

3. Problems: Aside from the possibility of a power shift, loss of power or playing along with the proliferation without a game plan, there are many ways you can potentially sabotage your efforts via crowdsourcing. Just because some members of your extended enterprise may come cheap, or even free, that doesn’t mean they’re free of risk. Opening up your thought process and brainstorming with a random crowd may not be productive, and could even be destructive. Every choice you make must be in concert with your overall business plan and operating blueprint. Crowdsourcing is a major decision, whether you’re shopping a new product or idea, seeking insight into customer and public appetites and attitudes, selling from your existing inventory or encouraging input and insight from a broader community.

4. Potential: There’s plenty of evidence of successful crowdsourcing campaigns, in business, in charity and nearly every facet of work and life. Startups and entrepreneurs are always seeking the newest ways to seize the latest technology, social media and other free or inexpensive tools and platforms, and crowdsourcing can be an effective component in achieving your goals. Even the established multinational mega corporations crowdsource, often to stay current and compete with those newer, nimble firms and get a pulse of the quickly evolving consumer base.

The Power Shift
The world has transformed tremendously since Jeff Howe coined the phrase in a June 2006 Wired article: “Crowdsourcing is the process by which the power of the many can be leveraged to accomplish feats that were once the province of a specialized few.” And a lot more will change, very quickly.

Artists, creative types and savvy startups hoping for financial backing–-or even a few bucks, which can add up in a clamoring crowd--are increasingly relying on crowdfunding vs. traditional venture funding via sites such as Kickstarter, Indiegogo, and Rockethub to bring a product to market or pay for a project.

In Europe, equity-based crowdfunding allows people buy an ownership stake in your business. That practice is illegal in the U.S., but will likely gain steam in a global marketplace where individuals can use platforms like Symbid to help propel an interesting new business into the marketplace. Social lending sites like LendingClub or Prosper permit you to legally crowdfund your for-profit startup in the U.S., but you’ll have to start paying it back immediately, and you could be left liable for the loan if the business fails.

Crowdsourcing will only grow, and it’s up to you to weigh the risks and benefits of using it to extend your enterprise. It may serve a single, specific purpose, or support a key component of your operating blueprint across your organization, or it may not be the right choice--at least not yet.

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[Image: Flickr user Dimitris Kilymis]

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