Can we make crowdsourcing available to small companies?

AAEAAQAAAAAAAASKAAAAJDE2OTRkNTI0LWM5ODktNDNmNi1iZTYyLTcwYmJhNmVlYmE5NgCrowdsourcing is a powerful open innovation tool allowing organizations to tap on the collective wisdom of their own employees (internal crowdsourcing) or pools of external talent around the world (external crowdsourcing).

Internal crowdsourcing (usually managed through Internal Innovation Networks) can be particularly useful for large multinationals having numerous, geographically remote locations, with the majority of employees barely seeing each other face-to-face and rarely communicating on strategic issues.

For external crowdsourcing, large companies can use two major venues. First, they can build their own crowds through creating external innovation portals that would solicit innovative ideas from the outside inventors. Although the effectiveness of external innovation portals can be questioned, companies use them also as a marketing/PR tool.

Then, companies can rent a crowd by hiring the so-called open innovation intermediaries, such as InnoCentive, Nine Sigma, IdeaConnection or HeroX. These service providers help their clients solve complex problems by outsourcing them to hundreds of thousands of on-line “solvers.” As I wrote before, using open innovation intermediaries can be remarkably successful way to crowdsource.

Unfortunately, while crowdsourcing is becoming an increasingly popular innovation tool for corporations, it’s practically unavailable to small companies. Why?

To begin with, small companies can’t use internal crowdsourcing because, due to their size, they lack the critical mass of diversity required for a meaningful crowdsourcing campaign. Nor do they have sufficient resources to run external innovation portals or pay fees for the services of open innovation intermediaries. Of course, small companies can take advantage of smaller networks of mentors and advisors–often acquired through business incubators and accelerators–but the utility of small networks can’t be but inferior to the intellectual power of large crowds.

What can be done to make crowdsourcing available to small companies?

  1. External funding could be provided to help small companies engage in open innovation activities. A precedent already exists. In 2013, the State of Ohio awarded NineSigma a grant of over $2M to provide services to the state’s mid-size companies (between $10M and $1B in revenues). The success of this initiative is manifested by the fact that 350 jobs will be created in Ohio over 3-5 years as a result of the program. Similar approach could be adopted nationwide by the U.S. Small Business Administration by providing financial resources to small businesses to pay for their open innovation activities. The SBA’s flagship 7(a) Loan program can be used as a “blueprint.”
  2. Small companies can crowdfund their crowdsourcing activities first. This approach was pioneered by HeroX that allows its clients to crowdfund their projects in case they lack resources to sponsor them outright. Other open innovation intermediaries can follow the HeroX’ suit.
  3. A more sustainable long-term approach would be to organize small companies into private innovation networks in which each member of the network can enjoy the collective wisdom of its own “crowd” by sharing intellectual resources with other members. Such networks could be originally built using the structure and resources of existing business accelerators/incubators and, perhaps, local Chambers of Commerce. Obviously, a viable business model will need to be established to make such networks operational.

Image credit: scottrileyirvine.tumblr.com

About Eugene Ivanov

Eugene Ivanov is a PMI-certified Innovation Management Consultant who helps organizations increase the efficiency of their internal and external innovation programs.
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One Response to Can we make crowdsourcing available to small companies?

  1. Pingback: Want the correct answer (and perhaps to be a millionaire too)? |

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