How to Work a Crowd: Developing Crowd Capital Through Crowdsourcing

📝 Abstract

Traditionally, the term crowd was used almost exclusively in the context of people who self-organized around a common purpose, emotion or experience. Today, however, firms often refer to crowds in discussions of how collections of individuals can be engaged for organizational purposes. Crowdsourcing, the use of information technologies to outsource business responsibilities to crowds, can now significantly influence a firms ability to leverage previously unattainable resources to build competitive advantage. Nonetheless, many managers are hesitant to consider crowdsourcing because they do not understand how its various types can add value to the firm. In response, we explain what crowdsourcing is, the advantages it offers and how firms can pursue crowdsourcing. We begin by formulating a crowdsourcing typology and show how its four categories (crowd-voting, micro-task, idea and solution crowdsourcing) can help firms develop crowd capital, an organizational-level resource harnessed from the crowd. We then present a three-step process model for generating crowd capital. Step one includes important considerations that shape how a crowd is to be constructed. Step two outlines the capabilities firms need to develop to acquire and assimilate resources (knowledge, labor, funds) from the crowd. Step three addresses key decision-areas that executives need to address to effectively engage crowds.

💡 Analysis

Traditionally, the term crowd was used almost exclusively in the context of people who self-organized around a common purpose, emotion or experience. Today, however, firms often refer to crowds in discussions of how collections of individuals can be engaged for organizational purposes. Crowdsourcing, the use of information technologies to outsource business responsibilities to crowds, can now significantly influence a firms ability to leverage previously unattainable resources to build competitive advantage. Nonetheless, many managers are hesitant to consider crowdsourcing because they do not understand how its various types can add value to the firm. In response, we explain what crowdsourcing is, the advantages it offers and how firms can pursue crowdsourcing. We begin by formulating a crowdsourcing typology and show how its four categories (crowd-voting, micro-task, idea and solution crowdsourcing) can help firms develop crowd capital, an organizational-level resource harnessed from the crowd. We then present a three-step process model for generating crowd capital. Step one includes important considerations that shape how a crowd is to be constructed. Step two outlines the capabilities firms need to develop to acquire and assimilate resources (knowledge, labor, funds) from the crowd. Step three addresses key decision-areas that executives need to address to effectively engage crowds.

📄 Content

How to Work a Crowd: Developing Crowd Capital through Crowdsourcing

John Prpic, Prashant P. Shukla, Jan H. Kietzmann, Ian P. McCarthy

Abstract

Traditionally, the term ‘crowd’ was used almost exclusively in the context of people who self- organized around a common purpose, emotion, or experience. Today, however, firms often refer to crowds in discussions of how collections of individuals can be engaged for organizational purposes. Crowdsourcing–defined here as the use of information technologies to outsource business responsibilities to crowds–can now significantly influence a firm’s ability to leverage previously unattainable resources to build competitive advantage. Nonetheless, many managers are hesitant to consider crowdsourcing because they do not understand how its various types can add value to the firm. In response, we explain what crowdsourcing is, the advantages it offers, and how firms can pursue crowdsourcing. We begin by formulating a crowdsourcing typology and show how its four categories—crowd voting, micro-task, idea, and solution
crowdsourcing—can help firms develop ‘crowd capital,’ an organizational-level resource harnessed from the crowd. We then present a three-step process model for generating crowd capital. Step one includes important considerations that shape how a crowd is to be constructed. Step two outlines the capabilities firms need to develop to acquire and assimilate resources (e.g., knowledge, labor, funds) from the crowd. Step three outlines key decision areas that executives need to address to effectively engage crowds.

1. Crowds and Crowdsourcing

Not too long ago, the term ‘crowd’ was used almost exclusively in the context of people who self- organized around a common purpose, emotion, or experience. Crowds were sometimes seen as a positive occurrence– for instance, when they formed for political rallies or to support sports teams— but were more often associated negatively with riots, a mob mentality, or looting. Under today’s lens, they are viewed more positively (Wexler, 2011). Crowds have become useful! It all started in 2006, when crowdsourcing was introduced as ‘‘taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an “open call’’ (Howe, 2006, p. 1). The underlying concept of crowdsourcing, a combination of crowd and outsourcing, is that many hands make light work and that wisdom can be gleaned from crowds (Surowiecki, 2005) to overcome groupthink, leading to superior
results (Majchrzak & Malhotra, 2013). Of course, such ambitions are not new, and organizations
have long desired to make the most of dispersed knowledge whereby each individual has certain knowledge advantages over every other (Hayek, 1945). Though examples of using
crowds to harness what is desired are abundant (for an interesting application, see Table 1), until recently, accessing and harnessing such resources at scale has been nearly impossible
for organizations. Due in large part to the proliferation of the Internet, mobile
technologies, and the recent explosion of social media (Kietzmann, Hermkens, McCarthy, &

Silvestre, 2011), organizations today are in a much better position to engage distributed crowds (Lakhani & Panetta, 2007) of individuals for their innovation and problem-solving
needs (Afuah & Tucci, 2012; Boudreau & Lakhani, 2013).

As a result, more and more executives–—from small startups to Fortune 500 companies alike–— are trying to figure out what crowdsourcing really is, the bene- fits it can offer, and the processes they should follow to engage a crowd. In this formative stage of crowdsourcing, multiple streams of academic and practitioner-based literature–—each using their own language–—are developing independently of one an- other, without a unifying framework to understand the
burgeoning phenomenon of crowd engagement. For executives who would like to explore crowd- based opportunities, this presents a multitude of options and possibilities, but also difficulties. One problem entails lack of a clear understanding of crowds , the various forms they can take, and the value they can offer. Another problem entails absence of a well-defined process to engage crowds. As a result, many executives are unable to develop strategies or are hesitant to allocate resources to crowdsourcing, resulting in missed opportunities for new competitive advantages resulting from engaging crowds.

To help provide clarity, we submit an overview of the different types of crowdsourcing. Then
we introduce the crowd capital framework, supplying a systematic template for executives to recognize the value of information from crowds, therein mapping the steps to acquire and
assimilate resources from crowds. Finally, we discuss the

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