Social business

Virtual Partnership in Ascendant as Enterprises Harness Power of the Crowd

In an interview with the Business Value Exchange last year, Professor Christian Catalini highlighted the value of the crowd as innovation partner of choice for enterprises. Using the crowd as a virtual partner has big benefits, though this kind of partner has to be handled with care: while the ideas and resource are for free, any souring of this very public relationship can rebound, and fast.

“Crowdsourcing is a way to resource ideas, and crowdfunding platforms are sensors of where demand will be,” Catalini explained. Both can help enterprises determine where the money goes next. Crowdsourcing can also be a useful tool for killing off bad ideas, he added. If there are five different products in contention, one way to select the best is to get a massive focus group to review online.

Academics, with their long tradition of online collaboration on the internet, have been at the fore of crowdsourcing innovation. Biologists at the University of Washington used crowds of external contributors to map the structure of an AIDS-related virus that had stumped academic and industry experts for more than 15 years, reports HBR.

Related article: PayPal and MIT Sloan Luminaries in Conversation on Digital Innovation

Karim R. Lakhani in his paper Innovating with the in-crowd points out that crowdsourcing is an honourable tradition. A growing list of success stories, especially in the pharma sector, is encouraging commercial companies to view the crowd as a valuable member of their partnership ecosystems. Among the best applications for crowdsourcing are quality assurance and usability testing, reports Forbes.

Crowd management does need risk mitigation though, and there are intellectual property and PR issues that could emerge, confirmed Catalini. “A crowd contest or community needs careful management and ideas must be filtered to safeguard brand reputation. Often, the problem is that no one engages and that is embarrassing, and so a form of failure. It’s also controversial to invite – and then not reward – the crowd for contribution,” he explained.

Crowds are part of the mainstream and enterprises that don’t acquire the production management skills to engage with them are missing out on a valuable virtual partnership.

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Helen Beckett

Author: Helen Beckett

Helen Beckett is the Community Manager of the Business Value Exchange. She has been a writer and editor for over 20 years and takes a particular interest in the challenges facing the CIO in today’s business climate.