Special Guest PostBy Angela Brennan

Are companies using crowdsourcing to make money? Yes, and it’s a fascinating story.

Companies that our fathers worked at (that we envision being like those on “Mad Men”) functioned like vaults and protected their information, contacts and ideas. Employees were expected to have the answers, and companies believed that it was their duty to tell consumers only what they needed to know. Companies also believed that the masses would be as excited about a product innovation as those inside the company were. In other words, go back just a decade or more, and the belief was that the company was in control of both its product line and its line to the consumer.

Angela Brennan
Enter crowdsourcing.

This new disruption to the traditional business model has left a lot of companies feeling as if they are losing control. This is because social media broaden the conversation about companies and their products immensely. Information about products (and opinions!) are shared in volume around the world in an instant. The customer is now empowered.

All smart companies are at the moment closely monitoring the use of crowds and social media to drive the direction of their product development and even strategies. Several are conducting analyses of the impact and future potential of these channels. Some have sought the advice of experts through consulting or even hiring a social media advisor [link]. And fewer still have even embraced these channels as competent voices in the boardroom.

In fact, the empowerment of customers is making companies more efficient at answering customers’ demands and — by analysing the e-conversation — has the potential to lead companies toward their next great idea. These conversations are currently asking how companies can use social media and the crowds from being merely a means of connecting and gathering ideas to optimising these channels to collect data that could be utilised and built upon.

Because of the race for data (any and all that we can think of), new business opportunities and career paths are emerging. Individuals and organisations are becoming expert resources in helping companies navigate these new technologies and reach the ever increasing and connected masses. Large consulting companies have seen the opportunity to support clients through analytics and answer which data to gather, how to collect it, and how to interpret it.Crowdsourcing

But crowdsourcing has generated some new questions as well. As companies become more comfortable interacting directly with their past, current and target customers, will these voices and the collective brainpower of the masses replace certain types of employees? What will “marketing” mean in the future, and what about marketers only trained in the techniques of the past? What methods for gathering this data will companies need to put in place to keep the process interesting? Which companies will be bold enough to trust their product designs to the masses? In those circumstances, what rights (both legal and moral) will a company have to the intellectual property produced?

The Guardian just published an article about “How crowdsourcing and open innovation could change the world”. And it’s not hard to find articles with the theme of this one: “Crowdsourcing — Starting a Business with a Cast of Thousands”. But be especially attentive to articles such as the one by Teresa Meek on Forbes: “Crowdsourcing: Great For Your Business (A Handy Primer)”.

This is why you can’t allow anyone to convince you that crowdsourcing is a fad. Nor should you allow yourself to believe that business and social media are trains that run on separate tracks, never merging. If anything, businesses have more to gain by managing crowdsourcing deftly than almost anyone else.

Angela Brennan (@AngelaLBrennan) has 10 years of experience in executive education, working for business schools in Europe and in the US. She has experience in executive education program design and delivery, business development and programme management. Recent interests include cooking, learning Portuguese and furious organising.