October 22, 2014 / Melissa Faudree

We have all heard the term outsourcing and it often gets a bad name. Have you heard the term crowdsourcing? What exactly is crowdsourcing?

Jeff Howe originally coined the term crowdsourcing in an article for Wired Magazine in the June 2006 issue. He defined the term as, “Simply defined, crowdsourcing represents the act of a company or institution 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.”

The word crowdsourcing is combined two words, crowd and outsourcing. The term outsourcing is not to be confused with crowdsourcing (despite the fact that the word is used in Howe’s definition). They have different meanings but have a similar idea. Crowdsourcing uses a crowd to get involved in a project and typically uses the web. The community is essential for crowdsourcing. Outsourcing uses a third party to complete business or task for an organization. Outsourcing uses management or corporate to hire a third party to help with labor. The difference is crowdsourcing uses people we wouldn’t usually think of to contribute, design or participate but in fact, they are talented and skilled to perform a task. It doesn’t matter what previous experience you had; it is the quality of the work that matters.

Howe discusses four different types of crowdsourcing for the commercial world.

  • Crowd Wisdom
  • Crowd Creation
  • Crowd Voting
  • Crowd Funding

Crowd wisdom uses the knowledge of others to solve problems and predict outcomes. An example of crowd wisdom is The Sim Exchange. The Sim Exchange is a stock market website that allows people to use virtual money to predict the best and top rated video games.

Crowd creation deals with using the skills people have to create new assets. It brings people together to share their knowledge and information to others. Because crowd creation creates new content, people are able to continue to contribute to a project. A good example of crowd creation is iStock. It is a stock photo website where artists are able to contribute their royalty-free photos (videos, music clips, and illustrations) and sell them to a community. If artists didn’t contribute, the site would fail. The site depends on the contribution of others. Another example of crowd creation is Wikipedia.

Crowd voting is one of the most popular forms of crowdsourcing. It organizes content based on the judgment or rating of others. Essentially the community votes on ideas to make a decision. Probably the best examples are TV shows that involve voting such as American Idol or America’s Funniest Home Videos.

Crowd funding raises money by engaging in social media or through some kind of web platform. It helps finance those individuals or groups that might not otherwise have the opportunity. Essentially crowd funding is a fundraiser. An example of crowd funding is disaster reliefs like for Hurricane Katrina. Another example is Kickstarter, a website for funding new projects and ideas.

Think about your organization, in what ways (if any) has crowdsourcing affected you? What can we learn from crowdsourcing? Can your business or organization survive without it?

Posted In: Blog, Business