Which risks and problems will companies, that run Crowdsourcing business models, face in the future? Amongst other things
// April 13th, 2008 // Crowdsourcing, Virtual Community
From time to time I help out people who are writing their dissertation around Crowdsourcing or Communities and have read mine, I never expected any real interest when I uploaded it so its been a nice fun bonus. Last week I answered some questions for a student at the University of Vienna specifically about Crowdsourcing, if you’re interested you can find them below.
1. Which aspects of a Crowdsourcing business model are crucial for its success?
Most importantly, a large active community. There have been many new crowdsourcing Community sites recently, often very similar in function to Threadless which have been unsuccessful. In my opinion those that didn’t succeed failed to turn site visitors into Community Members. Community Members will visit most often, vote most often, get other people to visit and importantly buy most often. They’re the lifeblood of the site and drive the whole company forward.
I think people over-estimate the effect that voting has on its chance of moving through the process and getting produced (despite what most communities sponsor would tell you), but the fact that people are sticking around to vote and discuss does have a huge effect on the potential success of the company.
Secondly, and directly following the above the sites user interface, and to a certain extent the business model itself must be sticky and entertaining. Only this will allow people to develop an affinity for your brand, and to become an active Community member.
Other factors that are important are fairness and transparency, so people understand why they should take part and if they didn’t win, why.
What are the motive forces for the members of Online-Crowdsourcing-Communities to submit design proposals or to give feedback to other design proposals regularly?
2. What do you think are the major benefits of a company which runs an Online-Crowdsourcing-Community?
Well let’s start with the obvious ones, you’re outsourcing the entire product design and market research parts of your business for a very small cost. During the OLP for example we had over 1400 logo submissions. That’s such a breadth of creative input which if it was possible to find via traditional channels such as ad agencies (which it isn’t) would cost a huge amount of money and time. Secondly you get fantastic data on potential sales, which allow you to alter the number of the product you produce and lowers the chance of you sitting with stock you can’t sell without having to offer a price reduction (Estimates suggest this costs the apparel industry alone over $300bn every year (Sanders 2001)).
Marketing – End result is a product the community already knows about, so the amount of marketing required is reduced. We’re not stuck in the old days of first creating a product, then going out and creating a demand through marketing. Crowdsourced products have run the demand gauntlet; everyone who took part knows they exist so you don’t have to market that product from scratch. You’re found your potential customers, they’re the ones who voted highly for that design. Now just let them know it’s available.
I’m certain there is also a strong link between involvement in the crowdsourcing process and willingness to purchase. This area definitely needs more research. I asked the community of Threadless this when I did my Thesis their a few years back, only 22% thought they wouldn’t be more likely to purchase a design they had voted for, than one they had not.
3. How crucial do you think are feedback on and discussions about design proposals for the quality of the designs?
Assuming we’re talking about qualitative (not votes) I would say that depends heavily on the inherent complexity of the product. If we’re talking about technical designs for a crowdsourced electronics component from Crowdspirit, it’s going to be vital. That product has to solve many different problems, for many different people, things the original designer may have never considered. Feedback and versioning will allow that. For simpler apparel products like t-shirts, it’s going to help new and inexperienced designers but I’d say its unlikely to shape the designs of experienced designers too much, unless 100 different people shout “MAKE IT GREEN”!, then they might be able to request a small change.
4. Do you think that highly creative community members of xy.com are able to attract attention in the designer-scene and gain job-related advantages?
Definitely, there are high profile examples like Threadless hiring the guy that won there 12, 13 times. We talked to various participants of the OLP about vacancies at Spreadshirt, although nothing came from it at the end. For designers submitting to these competitions allows you to expand your portfolios, getting your work in front of thousands of people everyday.
Which aspects of the business model of Online-Crowdsourcing-Communities do you think are essential for attracting potential community members?
5. How crucial for the success of an Online-Crowdsourcing-Community is the fair treatment of the community members?
I guess that depends what you mean by ‘fair’. These systems should give everyone a fair and equal chance of winning, but there is always going to be some possibility to bias the system a little. In the same way a famous authors name being on a book spine will influence its sales, the designs of a designer who is particularly well known within a community are probably more likely to get more and possibly higher votes. Designers that network better within the community will likely find that their designs are favoured. What’s important is that the community sponsor makes the selection process as transparent and fair as possible. At the OLP we gave out what we thought was a very detailed briefing about what we were looking for, but we only actually gave a very small number of requirements. We did this to give the designers the creative freedom to surprise us and challenge our assumptions of what we wanted. But some designers will read a guide, take every word as gospel law and then submit a design based on that. Some designers gave us a hard time if they felt a design progressed which didn’t meet the suggestions in our guide, or criticised us if we ruled out a design citing a guideline from the briefing, as it was a guide, not a rule. It’s a really hard balancing act, as if you have a very clear idea what the winning design should look like before you start then you don’t need to hold a crowdsourcing contest, just call an agency.
I think the best you can do is just ask be open, honest and invite plenty of feedback from them so you can adapt as the contest continues. You have to evolve with the contest and be flexible. You’re never going to make everyone happy, so all you can do is listen and make sure the majority of people understand why you made the decision you made, even if for a minority it may not seem that they were ‘fair’.
6. How do you think, the members of an Online-Crowdsourcing-Community will react, if they perceive, that they are treated unfair?
Best case scenario they’ll kick, scream, punch, boycott, sabotage, fill up your day and inbox with insults. These people care and you can work with them on the problems. Worst case scenario they’ll just slip away and join a new community, never to be heard from again, unless they are saying negative things about their experiences with your community externally. Then you’re in big trouble.
7. What do you think is crucial that members of Online-Crowdsourcing-Communities stay loyal to their community?
I don’t think it’s crucial that members stay loyal to their Online-Crowdsourcing-Community. There will always be a natural coming and going of members within a community and that’s perfectly normal. So is being a member of multiple community sites and submitting a specific design that you think will do well to a specific contest, as each community with have its own particular style. I personally don’t see any problem with unsuccessful drafts from one contest being resubmitted in another. But designers should stick to the design brief of that competition, and doesn’t just resubmit anything from their profile even though it doesn’t match the creative brief of that contest as often happened during the OLP.
If Community Hosts want people to be loyal, get them invested in the community. The easier you make it for them to build friendships with other members and build their own profile the more loyal they will be. I’d say it’s the depth of the relationship they have with other community members that will decide their loyalty. Otherwise they are most likely to go where the prize money is best, or where they are most likely to win.
8. Which risks and problems will companies, that run Crowdsourcing business models, face in the future?
Well with more and more crowdsourcing contest opening up you’d think at some point we will run out of community members to take part. People only have time to be active in a few communities and with the rapid growth of social networking sites like Facebook, that free time is only decreasing. I don’t think it’s an issue for designers, as where there is a contest to be won (with the possibility of money and fame) they’ll always be people queuing up to take part. I’m talking instead of the people who lack the design talent to submit, but instead rate, give feedback and connect with other members to keep the message boards and blogs interesting places to go while you wait for new products to buy, or designs to vote on. These guys are the lifeblood of the company, the ambassadors without them you’re only ever going to be struggling to stay afloat.
