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Crowdsourcing has been a popular term ever since it appeared in a Wired Magazine article earlier this summer. This past week, Business Week jumped on the crowdsourcing bandwagon with an article in their second issue of Inside Innovation (may require subscription - but you can find a good description of the article by Renee Hopkins Callahan over at IdeaFlow).

What is confusing about the “crowdsourcing” terminology in both articles is that they use “crowd” to refer to the “wisdom of crowds” - a term introduced a few years back by James Surowiecki to describe the fairly simple idea that large groups of people are smarter than an elite few. Many of the crowdsourcing examples used in both articles, however, like the use of iStockphoto to source images cheaply, do not rely on wisdom of crowds at all. Getting your images from iStockphoto instead of from a professional photographer is like outsourcing your photography to the public - where everyone can be a semi-pro with high end cameras below $1,000 these days. In the end you still buy your images from individual photographers. There may be a crowd, but there is no wisdom of crowds involved here.

When a company like John Fluevog Boots & Shoes asks its fans to submit and vote on new shoe designs - that is a model based on the wisdom of crowds. The wisdom of the mass is more likely to identify a winner than a select few (see also related post on when wisdom of crowds does not work).

The Business Week article spells out four rules for successful crowdsourcing - or should it be to outsource your task/process to an outside community.

First, be focused and provide clear guidelines to what you want to have done. Not really all that different from any outsourced project. If you give vague guidelines you will likely get something back that you did not expect.

Second - get your filters right. Since by outsourcing a task to a large set of people you will get a large number of ideas, you need to filter all those ideas so that you can find the gems. But why not use the wisdom of the crowd to do the filtering? IBM solicits ideas from customers and employees during two day innovation jams - which led to 37,000 ideas the last time around. They then use their own employee “crowd” to filter those ideas. As most companies do not have 140,000 employees to draw upon, they could use their fans and customers to select the best ideas. An idea could be emailed to a randomly selected set of active people for voting, rating or ranking.

The third is to tap the right crowd. Pretty obvious when you think about it. Just like you would not outsource a complex engineering problem to a company of 14 year old summer students, you need to be picky about the community you outsource your task to.

Lastly is to build your community into social networks. While this may be key to success in getting certain communities to function in the long run, enabling networks or teams to form within your community goes against the principle of the wisdom of crowds - adding to the terminology confusion.

Renee adds two more rules in her post - find ways to feed the ideas into your company’s existing processes and fund the process - as incentives fuel creativity.

In the end, successfully outsourcing product innovation and other processes to outside communities comes down to a deep understanding of two factors:

• understanding of the traditional keys to success for that particular process
• understanding of the fundamentals to successfully create (if needed), manage and interact with communities - virtual or otherwise

[Tags: crowdsourcing community community management outsourcing]

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