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The dangers of crowdsourcing (Johann Füller’s post on Harvard Business Manager)

9 July 2012

harvard-business-manager-blog-post

Johann Füller is CEO of Hyve AG, a company that organizes crowdsourcing for co-creation and/or open innovation purposes, and professor at the University of Innsbruck (Austria)

I already blogged about academic articles in French that should have been translated into English, because they’re pretty darn interesting and useful for people interested in co-creation or user innovation. This post is about a blog post that Johann Füller, an experienced researcher and businessman, wrote in German on Harvard Business Manager. It’s called Die Gefahren des Crowdsourcing (The Dangers of Crowdsourcing) and highlights some of the dangers that brands should be aware of before kicking off a crowdsourcing campaign. Not only does he give some examples, but he also cites 3 often encountered sources of crowd-resistance, as well as 5 ways to avoid failures. This post is an unedited translation, I only changed the illustrations and added a couple of links in the text.

“The Knowledge of the Best”

More and more companies use the internet to involve customers as active (co-)developpers and (co-)marketers. This is not always unproblematic: the worst case scenario is that small communication skirmishes turn into big, uncontrolable battles on online platforms. This is how you can prevent this from happening.

Managers increasingly rely on the crowd. They open up the value creation process, they leverage the creativity, knowledge and willingness to cooperate of customers, suppliers and other stakeholders. “Crowdsourcing” and “Co-Creation” projects spring up like mushrooms. They are supposed to improve the traditionnaly closed innovation process by involving numerous external stakeholders.

never underestimate the power of stupid people in large groups

A t-shirt I saw in a shop…

While companies can strongly benefit from external knowledge, this systematic openness also induces threats. Managers have to acknowledge, address and steer these risks. One example is provided by Kraft Foods: the comapny had to stop the relaunch of “Vegemite”, a product that is very popular in Australia, after a naming contest turned sour (iSnack 2.0). Another example of the power of consumers is the action of the Canadian musician Dave Caroll. in 2009, he had composed the song “United Breaks Guitars“, in which he complained about the way the United Airlines staff handled his valuable instruments. The YouTube video gathered 150,000 views in the first day, and today Caroll enjoys more than 10 million views on that video – a PR-disaster for the airline.

Note: I don’t agree that the latter example is actually crowdsourcing. It’s more a “consumer” video that went viral, but it’s not a crowdsourcing initiative as it hasn’t been initiated by a company nor did a crowd participate in any way. See my definition of crowdsourcing.

Various examples and scientific studies show that crowdsourcing-projects can quickly turn into nightmares. This happens particularly when managers fail to address the crowds’ expectations. The following points annoy community members and can lead to crowd-resistance:

  1. Unfairness: An important trigger of crowd-resistance is unfairness, for which managers of crowdsourcing-platforms can be held responsible because of opaque communication or unfair treatment of participants. For example: How are contest winners chosen? How clearly has the jury’s decision been communicated to the crowd? Which submissions are actually being implemented? Who own intellectual rights? Are the terms & conditions fair? What are the company’s long-term goals? These are all questions, that a company should answer and discuss in a transparent manner.
  2. Distrust: A lot of employees are critical towards crowdsourcing initiatives. Some sectors, like the design sector, often fear that their job could get lost in the global creative crowd. This skepticism is not totally unfounded, as the underlying trend is the fundamental shift in the value creation process. This change implies that the roles of consumers and companies, as well as the way they interact together, are being redefined. (But there are also new opportunities for creative agencies as well as the increasing relevance of design.)
  3. Manipulation: When the mood of the community turns bad, this is often a consequence of something that happened within this community. The common reasons for discrepancies in a community are often manipulative behavior from individuals or intentional disrigarding of contest rules (keyword: netiquette). If a community is not big/structured enough, or if the uprising of troublemakers is too important, a community can be hijacked by user groups. This means that they can be taken over a influenced in a particular direction by these users.
pril crowdsourced design contest

Henkel launched a crowdsourced packaging design contest on facebook… click on the image to see which one won! (image via http://www.pcgameshardware.de)

How big the strife can be is shown by the following examples. In 2011, Henkel started a design contest for the label of its dish soap brand Pril. In just a few weeks, consumers submitted more than 50,000 designs via the online platform, they discussed them, and they rated them. The company promised, that the jury would select two out of the 10 most popular designs, and that these labels would be produces and sold. Scared by a lot of weird designs, Henkel quickly pulled the string and sorted out some of them… the official statement said that some users had manipulated the voting. The following uprising of the crowd was inevitable (see here or here)

facebook

Image via writerunderground.com

Another example of a crowdsourcing PR-disaster is Moleskine, the Italian stationary brand. A crowdsourcing-project, by which the brand wanted to redesign its logo, has led to an uprising of its fanbase (more than 120,000 fans on facebook). Tthe main reason was the lack of esteem for designers, who perceived the prize money and the IP-rights as unfair, since the winner would receive about 7,000€ and all participants would loose their rights on the submitted designs.

Note: Actually Moleskine wasn’t looking for a logo for its brand, but for its brand blog Moleskinerie.

In both cases, the companies did not manage to channel the movement and to round up the protests by transparent or fair communication. Such crowdsourcing disasters are not a fatality. Companies can avoid them by thoroughly planned, transparent and fair interaction with participants. To get there, they should stick to the following principles:

  1. Transparent communication: Transparent and comprehensible communication is a fundamental prerequisite for every co-creation project. This aspect should be taken into consideration in the creation of the platform, in the planning of the processes and in the active community management. How get winning ideas chosen? What are the criteria? What type of submissions are wanted? What roles do experts have on the platforms and what is the basis for jury decisions? What happens to the ideas, when the active phase has ended? These are all questions to be addressed in a clear way by companies.
  2. Fast interaction: Crowdsourcing projects usually happen on online platforms or social media networks. The users expect very dynamic interactions and spontaneaous reactions by the initiating entities – sometimes even outside of the usual business hours. An unanswered question, or questions that take several weeks to be generated, are seen as lack of interest by the community.
  3. Authentic behavior: To avoid that participants feel utilized, the company’s intentions as well as the communication thereof have to be absolutely authentic. This can be attained by having employees of the company being active members of the platforms, by having a high-profile jury and by explicitely formulating how ideas will be implemented. To use innovation contests as pure marketing operations would be deadly.
  4. True esteem (for participants): In order that (potential) participants see a crowdsourcing platform as fair, it is essential to genuinely value the members and their contributions. This starts with motivating comments by community members of community managers, over the choice of the prizes to the implementation promises or potential revenue sharing.
  5. Sufficient support: The fifth point is fundamental. By opening up the corporate borders and utilizing virtual cooperation, (hierarchical) borders between the company and its users/consumers are vanishing. Strictly speaking, both parties of a co-creation platform should feel comfortable. This implies, that there should be room for spontaneous needs on the side of the community, so that fertile discussions and long-term networking with members can happen. For example, suggestions for communication, technical or content modifications should not only be taken seriously, but also be implemented.

Even succesfull projects like the Bag Design Contest for SPAR Austria, the product testing campaign for Svarowski Optik or the design contest for n°4711 hide some potential for conflict (note: these contests were all organized by Hyve AG, of which Johann Füller is CEO). But they also show, how such projects can succeed, when managers follow the above rules. My experience tells me that a crowdsourcing platform is significantly less likely to be puposely torpedoed if the community perceives the activity as fair. Then, you can also have a series of positive side effects such as a positive atmosphere on the platform, strong cohesion, higher growth through viral effects, more discussions; this leads to better results as well as a loyal community.

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Source: Harvard Business Manager and Journal of Business Research

If you’re interested in this topic, I’d advise you to read Bernard’ Cova’s insights about crowdsourcing and co-creation

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8 Comments leave one →
  1. John permalink
    18 July 2012 15:36

    Well, that’s very interesting, for sure :-)
    By the way, this has been first described as a possibility of value co-destruction, in the Journal of Services Marketing, 2010 (October), in a paper by Plé & Chumpitaz (http://dx.doi.org/10.1108/08876041011072546). In fact, what happens is that one of the parties (the company or the customer, in this case) does not behave in a manner that was expected by the other party, which results clearly in a destruction of resources, and thus in a loss of potential value co-creation, which was labeled in this paper as value co-destruction

  2. 13 November 2012 20:43

    John and Yannig! Thanks to both of you , i am researching service innovation in the context of social media, looking forward to read more about value co-destruction!

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