Developing and leveraging crowd capital: A valuable resource for organizations both global and local
Feb 17, 2015
Ian McCarthy, Associate Dean, Graduate Programs, at the Beedie School of Business.
The following article was written by Beedie School of Business Associate Dean Ian McCarthy, and adapted from an invited contribution by Derek Moscato.
Typhoon Hagupit, the devastating typhoon that hit the Philippines this past December, was notable for its particular ferocity – marked by 27 deaths and over one million residents evacuated. In some coastal areas, over 80 percent of all homes in the typhoon’s path were destroyed.
What leaves cause for hope in the aftermath of this tragic weather event was the innovative form of emergency response launched by the United Nations. While the Philippines was recovering from the devastation, the U.N. quickly deployed a crowdsourcing platform to provide humanitarian aid, respond to urgent needs, and assess infrastructure damage.
Teaming up with the crowdsourcing platform Micro-Mappers, the U.N.’s Office for the Coordination of Human Affairs (OCHA) asked Twitter users to identify posts highlighting damage, emergencies and individuals in need of help, as well as tweeted photos showing the damage. From this people-sourced information, a crisis map comprised of accumulated information showed where emergence response was needed most.
This is a global example of an organization tapping into the power of the crowd to address a problem – this one being particularly acute. But more companies and government bodies, large and small, are also reaching out to their publics via crowdsourcing. The cash-strapped City of Baltimore, for example, is using crowdsourcing on its revamped website to get feedback from city residents about how they want the city to budget their collective taxpayer dollars. Coca-Cola Shanghai, meanwhile, is utilizing crowdsourcing to garner what AdAge described as “impressionist market research” videos to describe what Coke tastes like – and ultimately deliver some creative marketing ideas for the company in China.
The simple premise of crowdsourcing for business is the combination of crowds and outsourcing. The activity has seen significant growth in recent years because of the proliferation of the Internet, the uptake of mobile technologies, and the massive explosion of social media usage. That’s not to say that crowdsourcing doesn’t exist offline, but as the above examples illustrate, its biggest advances and growth stories are happening via the Internet.
Crowdsourcing also represents a rather positive direction that is something new for crowds, which haven’t always been held in such high esteem. In 1895, the French sociologist Gustave Le Bon authored a book entitled The Crowd: A Study of the Popular Mind. In it, he warned of crowd psychology characterized by “impulsiveness, irritability, incapacity to reason, the absence of judgment of the critical spirit and the exaggeration of sentiments”, among other negative sentiments. Over a century later, crowdsourcing reverses such wariness of crowds, recognizing important crowd traits that were ignored for too long – intelligence, creativity, innovation and enthusiasm.
A new research paper I have with colleagues in the journal Business Horizons shows four different kinds of crowdsourcing. See Figure 1.
Figure 1. Four types of crowdsourcing (Prpić, Shukla, Kietzmann and McCarthy 2015)
Firstly, there is crowd-voting – think of online popularity contests, or reality TV shows like American Idol. The aggregate vote helps an organization come to a decision that is certainly democratic for voting stakeholders. Secondly, there is micro-task crowdsourcing – where an organization breaks a problem down into much smaller jobs to be completed by the crowd. Thirdly, there is idea crowdsourcing, which solicits creativity and new ideas from the crowd – whether they be t-shirt designs or movie trailers – helping organizations to leverage the diversity and innovativeness of their audiences. Finally, solution crowdsourcing invites real solutions to well-defined business problems. A good example is when video streaming service Netflix invited users to help improve the company’s predictive accuracy, a system that determines whether a particular viewer is going to enjoy a particular movie based on demographics, tastes and historical viewing habits.
The key here is that various crowdsourcing approaches can be used for different goals, and can even be used in collaboration with one another. In sum, the answer to which approach to use is – it depends!
But how do organizations get started on this path to harnessing both the expertise and the opinions of their respective crowds? How do managers implement a top-down approach to getting bottom-up resources – gaining crowd capital in the process? To this end, our research proposes three key stages to gaining crowd capital: constructing the crowd, developing crowd capabilities, and harnessing crowd capital (see figure 2).
Figure 2 – Constructing and harnessing crowd capital (Prpić, Shukla, Kietzmann and McCarthy 2015)
For the first stage, constructing the crowd, it is vital that the primary purpose for crowd engagement is strategic and aligned with organizational goals. Once addressed, organizations can fine-tune their selection process: How big is the crowd? Where does it exist in the online or offline worlds? What are its characteristics or capabilities? What specific requirements or conditions should it fulfill?
After deciding on the who of crowdsourcing, an organization needs to turn its attention to the how. Specifically, how does a firm acquire resources dispersed in a crowd, and how does it align crowd contributions with existing organizational operations and processes. Going back to the example of Hurricane Hagupit, the United Nations had to tap into the knowledge of online denizens while synching up their information with the know-how and operations already in place with its emergence response operations.
We know that successful organizations needs to be proficient in identifying and acquiring external resources. In a crowd context, this means they need to understand how to interact with crowds to draw out knowledge, and choosing an appropriate technology that facilitates this engagement. For Coca-Cola Shanghai, this was the crowdsourcing platform platform eYeka. For the city of Baltimore, it was a proper government website.
The assimilation element in the crowd capital creation process lies in the organizations ability to analyse, interpret and understand the crowd contributions. That is, how does an organization digest all of this new information? This might involve tasking teams or individuals within the organization to curate the crowd contributions and ensure such contributions are on target.
This leads to the harnessing crowd capital. Our research maintains that an organization’s own employees, for example, can serve as a filter for crowd contributions, while the crowd inversely can help make decisions based on an organization’s groundwork. What matters is that different types of crowdsourcing may be employed simultaneously or sequentially.
The sourcing of crowds to power organizations represents a remarkable milestone in the evolution of business and government. Crowd voting, micro-task crowdsourcing, idea crowdsourcing, and solution crowdsourcing are just a few crowdsourcing concepts that individual organizations are assigning to the many.
Over 100 years ago, Le Bon was right about the power of the crowd – but was wrong in downplaying their helpfulness to organizations. By both understanding and utilizing crowd capital, organizations can evolve to become more accountable, sustainable, and responsible — in certain cases even more profitable and efficient. Today’s organizations are wise to draw strength from numbers at this historic confluence of online technology and positive public engagement.
The ideas and frameworks are based on research presented in the following article: Prpić, J., Shukla, P. P., Kietzmann, J. H., & McCarthy, I. P. (2015). How to work a crowd: Developing crowd capital through crowdsourcing. Business Horizons, 58(1), 77-85.