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 ew business models have taken off the way crowdsourcing has. First coined in an article in Wired magazine and expanded to a book by journalist Jeff Howe, the approach — in which customers volunteer, debate, and refine ideas about everything from marketing strategies to product development — is becoming an R&D strategy for companies that understand that creativity and expertise are not limited to their employees.
As Howe defines it, crowdsourcing is “the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.” Corporate EVENT spoke with him about the concept, when it works and when it fails, and how event marketers can harness the power of the crowd to improve their next event.
Corporate Event: Can you summarize two or three situations, broadly speaking, in which industries are using crowdsourcing today?
JEFF HOWE: The two examples that turned this into a monetizable business model are Threadless.com and iStockPhoto.com. Threadless is the T-shirt site that accepts shirt designs from consumers, then produces those that are voted to the top by its site audience. Similarly, iStockPhoto turned the stock-photography business on its head by accepting amateur work and selling it at a price point far lower than other available resources at the time.
Threadless was extremely successful from a consumer standpoint. But the stock-photography explosion was the canary in the coal mine for crowdsourcing as a business tool. By summer 2008, it was clear that this new business model was going to spread.
CE: What, if any, impact do you think the economy will have on how and when companies will turn to crowdsourcing? Will the objectives change?
JH: Last fall, I was wondering if the economic downturn would dampen people’s enthusiasm because crowdsourcing has a Web 2.0 connotation and can be seen as the extra to the actual, the froth on the coffee. But it’s been the opposite. The explosion of Twitter as a research and insight tool this year is just one example. I think when budgets are tight, companies need to be sure they’re absolutely heading down the right path with their new product and service ideas, and what better way to ensure that you’re hitting a market need than to get real-time feedback or ideas from the market?
There are definitely economic benefits associated with crowdsourcing, but to truly save money, it needs to be implemented very well. If you actually think you’re going to end your account with Ogilvy and go with the crowd for your advertising program, for example, you might be in danger.
H.J. Heinz Co. decided it was going to do a user-generated ad-campaign competition for its ketchup. But people really aren’t that passionate about ketchup. And for crowdsourcing to work in a viral kind of way, it needs to tap into a real passion of the crowd. So Heinz realized that to get people to make commercials about its ketchup, it needed to hire an agency to make a commercial to get people to make commercials. Then it got thousands of consumer-generated ads, but most of them were complete crap. Thus, Heinz had to hire another agency to sift through all these ads and choose finalists. I have to imagine it cost them an enormous amount of money.
Predictions of the death of ad agencies and professional creative or management partners are premature to say the least. Yes, agencies are
adjusting to make room for consumer-generated content and ideas, but the mature model for this will be a hybrid — combining really smart editors, brand managers, and marketing managers who have years of experience with good community managers who also have years of experience harnessing the crowd.
CE: Much of your commentary talks about crowdsourcing online to
create tangible goods like T-shirts and photography. Event-marketing managers produce something that is intangible in many ways: an event experience. How will crowdsourcing impact how event marketers do their jobs today and into the future?
JH: I don’t see anything limiting why event marketing, planning, and hosting couldn’t take advantage of crowdsourcing. Why wouldn’t participants of the event determine its nature? And why wouldn’t they collaborate ahead of time to determine how they are going to get the most out of the face-to-face event experience? The corporate event is now a facilitator for people to accomplish something. It’s not where ideas are introduced anymore — it’s about taking that idea to a next logical step.
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 Why wouldn’t participants of the event determine the nature of the event? And why wouldn’t they collaborate ahead of time to
determine how they are going to get the most out of the face-to-face event experience?
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CE: So it seems an event marketer could harness crowdsourcing in two distinct ways: event design and R&D while at an event. Can you give some examples of companies who have done this successfully?
JH: In 2007, a small iPod peripherals
company called Mophie asked the crowd at MacWorld to design a new product. That product became one of the company’s best sellers, and Mophie’s founder soon sold the company. He took his capital from the sale and started Kluster.com, which he launched at the TED Conference in 2008. Kluster is building a business around the founder’s experience at MacWorld — banking that an energized crowd can come up with a better solution in 72 hours than a small staff team or individual employee.
It’s a total shift in how companies view R&D. They’re in the business of creating ideas, not the business of creating iPod peripherals. Their goal is to capture the best and brightest ideas and turn those into a design. When you get outside your own corporate head and engage your crowd, you can find opportunities your company is not aware of that your customers are craving. Your event can be a great place to ask. It might open up an entirely new category for your company. There is magic when the power of the network combines with the power of place.
In terms of event design, you can not only ask for the crowd to help you ahead of time, but in real time, on site. Take the great example of BusinessWeek’s Sarah Lacy interviewing Facebook founder Mark Zuckerberg at South by Southwest Interactive (SXSWi) in 2008. Zuckerberg is notoriously tight-lipped, but the crowd thought Lacy was putting herself at the center of the interview, asking irrelevant questions, and being flirtatious.
The crowd rebelled. They wanted more trenchant questions. They started Twittering with each other. Quickly, the tweets translated into real-time blog posts. Lacy caught the tenor in the room, and added an unplanned audience Q&A to the agenda. She didn’t handle it well, but in the end the crowd was able to direct the session toward content that was more interesting to them.
CE: Nokia recently asked consumers in fast-growing wireless markets in South America, Africa, and India to come to a pop-up studio to design their idea of the perfect mobile phone. It’s an interesting use of an event strategy for R&D purposes. What’s your thought about this approach?
JH: I would say companies that aren’t actively pursuing projects similar to what Nokia is doing are really missing out on a very low cost — and more important, very effective — way to create better products. Ostensibly, they are missing a more efficient way to bring products to market.
CE: This kind of “free” R&D is one of the flashpoints about crowdsourcing. You have said that companies should consider compensation for certain kinds of crowdsourced contributions. Should event marketers compensate for contributions to event design?
JH: In general, the currency in crowdsourcing is passion. If people are not passionate about something, they aren’t going to contribute regardless of the compensation — unless it’s actually commensurate with what they’d get for full-time employment. While there are models that do work that way, actual financial compensation is usually fairly negligible. People are often motivated enough by having their idea chosen. It feels like winning something.
There is a phrase that comes up a lot: collaborative competition. People like to compete and collaborate at the same time. You can set up carrot-type systems and you don’t have to spend a lot of money — you can trade something of value you already have.
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 Crowdsourcing works well when companies say, “We could produce a much better event and our attendees would be much happier and more fulfilled if we gave them the power to set the agenda and determine the content.”
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CE: Your first rule of crowdsourcing is: Choose the right model. Is there a single right model for a face-to-face customer event?
JH: When I say, “choose the right model,” it’s about understanding what you’re looking for from people, then creating an open call for them to respond.
It might mean you want people to contribute a mass of ideas — like the unconference movement, where attendees are the agenda. Or there’s the crowd-creativity model in which people contribute ideas, read others’ contributions, and comment and vote. It’s something easy to implement on, for example, a Salesforce.com Ideas platform; it’s very simple and very effective. And, it can be really valuable if what you’re trying to do is get attendees to an event for which they help shape the agenda.
But there is a big difference between just collecting ideas and what I’ve just described. You want suggestions that people are going to get behind. You want to create a virtual conference room where people can brainstorm.
CE: Are there any circumstances in which crowdsourcing doesn’t work?
JH: Crowdsourcing fails when it is applied incorrectly. When a company says, “Gosh, we could really save money if consumers would do this work for us,” that’s a disaster in the making. Crowdsourcing works well when companies say, “We could produce a much better event and our attendees would be much happier and more fulfilled if we gave them the power to set the agenda and determine the content.” People catch which vibe you’re sending in your promotional solicitations.
In the last paragraph of my book,
I talk about the cardinal guiding
principal: Ask not what the community can do for you; ask what you can do for the community.e
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