August 3, 2010

Crowdsourcing is a skill, not a theory

At #OUI2010, intra-organizational crowdsourcing has been one of the more interesting topics. (Of course, I am a producer of OSS and OI research of and a consumer of crowdsourcing work, so I am not as up-to-speed on the latter.)

Of the four long papers on crowdsourcing presented at the conference, two were about internal crowdsourcing.

The most ambitious was a paper by Hind Benbya and Marshall Van Alstyne (presented by the latter) about crowdsourcing can be used to create internal markets for knowledge, rather than the more hierarchical and bureaucratic approaches of more traditional knowledge management. As in external crowdsourcing, they use the two-sided market perspective (which Van Alstyne helped invent) to match buyers and sellers.

However, their new wrinkle is to argue that a price system — rather than internal fixed incentives or a rating system — is necessary to stimulate the right quantity and quality of idea generation. They spend a lot time trying to establish an appropriate price with its own currency that can be mapped onto a dollar price, and have a real system up and running that's being used already by a few banks.

Appropriately for a talk presented in the basement of MIT’s Sloan School of Management, the paper has been accepted by Sloan Management Review. It’s not yet finalized or on the SMR website, but the authors presented an earlier version at HICSS in 2008. (Update: last night they posted a new version to SSRN, and both authors emailed me asking me to link it.)

For external crowdsourcing, Karim Lakhani talked about his research with Kevin Boudreau on using TopCoder to crowdsource a solution for NASA to reduce the weight of medical kits for space shuttle astronauts. The company issued a press release last week about the success of the competition.

I previously argued (in June and Sept last year) that crowdsourcing better fits the user innovation paradigm or the open innovation paradigm. Now, I think crowdsourcing is more of a process or set of skills, enabled by an understanding of the two-sided market framework. (Are two-sided markets a phenomenon, a framework or a theory? It doesn’t seem like a new theory, but …)

In other words, crowdsourcing is really about systems and incentives, not any great new theory. The systems are the same sort of IT systems that have been refined over decades for online communities and collaborations. The incentives, as economists like Van Alstyne correctly note, are a matter of setting up efficient markets to self-regulate the supply and demand for ideas that are being sourced — and, as with all markets, the institutions to make the process run with transparency and efficiency.

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