Crowdsourcing, or accomplishing tasks through the power of distributed labor, has received a fresh interpretation in the 21st century. Although crowdsourcing was first used to describe the principles of distributed computing, such as open networks and parallel processing, the concepts underlying traditional crowdsourcing are now regularly applied to solve business challenges in the real world using real people.

When Jeff Howe coined the term “crowdsource” in the 2006 Wired magazine article, “The Rise of Crowdsourcing,” no more than a handful of brands were attempting to look outside their own employees for creative ideas and problem solving. However, over the next several years, hundreds of the world’s largest enterprises had adopted crowdsourcing practices. In fact, Interbrand’s list of the Best 100 Global Brands for 2012 noted that 11 of the top 12 brands were running various types of crowdsourcing projects.

Understanding crowdsourcing

The term “crowdsourcing” refers to different types of actions, but all involve distributing a project across a vast online collection of users with different skills and abilities. For this reason, crowdsourcing has also been called “collaborative co-creation.” Crowdsourcing.org defines the term 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.”

Or, in shorthand for the tech culture, crowdsourcing is the application of open-source principles to fields outside of software.

Companies using crowdsourcing techniques include not just high-tech firms like Google and Microsoft, but also traditional firms like Toyota and General Electric. Perhaps the best way to understand why these companies are turning to crowdsourcing is to take a closer look at specific business applications and successes across industries.

Case studies in crowdsourcing

Current crowdsourcing industry trends point to a future of creative solutions and breakthroughs with no limits. Although they are not alone, the following companies are leaders in leveraging vast, worldwide human resources to realize their unique visions.

Procter & Gamble

One of the first major corporations to employ crowdsourcing, Procter & Gamble (P&G) has committed considerable resources to efforts that it refers to as “open innovation.” Although its vast research and development operations comprise more than 9,000 researchers and scientists, P&G has solved some intractable problems by engaging many more original thinkers spread out across the globe.

Connect + Develop is P&G’s program created to assist external innovators in submitting new ideas to P&G for development. The Connect + Develop Team website not only lists issues that P&G is trying to solve, but also contains an open submission area where innovators can suggest original ideas for review. In a related venture, P&G has partnered with InnoCentive, which rewards innovation with prizes.

The success of this approach has been swift and profound. Innovators have proposed workable solutions for 75 percent of the problems posted on the website over the past year, and prize money awarded has exceeded $40 million to date. Meanwhile, P&G’s productivity has jumped 60 percent, and it has introduced more than 100 new lines across various markets.

Waze

Waze is a tiny company with fewer than 100 employees in a single office located in Ra’anana, Israel. However, Google found its crowdsourced traffic solution impressive enough to buy the company for $1.15 billion. That breaks down into $1 billion for the owners and a little over $1 million for each employee.

What makes it worth such a hefty sum is that Waze has built up a network of 70,000 volunteer map editors and 15 million users looking for real-time traffic data so they can get to work on time. As enterprise cloud apps now allow more data to be gathered and processed quickly, crowdsourced mobile data collection has become an area of rapid development.

At the end of last year, Waze added social features to address commuters’ concerns in greater detail, covering a wide range of potentially hazardous conditions along preferred pathways. Incidents now include not just heavy traffic and accidents, but also temporary road work, spills, road hazards and speed traps.
Waze joins the following crowd-driven Google acquisitions:

• CustomMade – A crowdsourced online marketplace of custom-designed home furnishings and personalized items
• SpaceMonkey – A peer-to-peer storage solution that uses a crowdsourced cloud provided by subscribers as a virtual data center

Who are the new crowd workers?

A recent study of workers in the crowdsourcing industry came up with some surprising information about their demographics:

• Crowd workers are primarily women – Female workers outnumber males by two to one. The number of males is rising, but at a relatively slow pace.
• Crowd workers are mostly millennials – Over 50 percent of workers report a birthdate after 1975. When the number of workers born after 1970 is included, the group represents 70 percent of the total. Millennials, also known as Gen Y, are drawn to crowdsourcing by their self-identified interests in building consensus and closely guarding their independence.
• Crowd workers are surprisingly skilled and college educated – Crowd workers are frequently considered to be unskilled and uneducated. The opposite turns out to be true. Half have graduated from college and one-fifth have completed a master’s degree.
• Crowd workers live in smaller households – More than one-third of crowd workers surveyed are single, and 55 percent live in households of two or less. Fewer than one- third support a spouse or children.
• Crowd workers are already employed – The majority of crowd workers report that the work they do on crowdsourcing platforms serves as an additional source of income. Just over 40 percent earn between $40,000 and $100,000 per year.
• Crowd workers say it’s not about the money – Only 15 percent of crowd workers use this system as their primary income source. More than two-thirds say they do it as an extracurricular activity or to make a little extra cash on the side.

The future of crowdsourcing

The market for crowdsourced professional services racked up over $1 billion in 2012 and continues to grow more than 60 percent year over year.
Carl Esposti, founder of Crowdsourcing.org, recently summed up his insider view on the future of crowdsourcing: “The crowdsourcing market is growing at an accelerated rate with the venture capital community investing nearly $300 million in CSPs in 2011 alone. What’s more surprising, large enterprises with revenues above $1B are early adopters of crowdsourcing; however, there is still significant untapped opportunity for crowdsourcing penetration across the board.”

The next step for crowdsourcing, beyond content creation, will be in the area of content curation. That means that crowd workers will be increasingly searching their social networks and peer-to-peer subscriptions for already existing content and ideas that fit the needs of their employers. Companies already encouraging this next development include 99Designs, DesignCrowd and ImageBrief.

As some analysts have suggested, we appear to be moving toward a multi-contract world where full-time employment is rare and crowd-working entrepreneurs choose their careers on a daily basis.