Study Refutes 3 Major Criticisms of Crowdsourcing

February 3, 2012 By IdeaConnection
Image by xedos4
Image by xedos4

Crowdsourcing comes in for its fair share of criticism as not everyone is sold on its numerous benefits.

But a new study by researchers from Carnegie Mellon University refutes three of the biggest criticisms levelled against this form of open innovation.

The study, “Crowdsourcing New Product Ideas Under Consumer Learning,” set out to investigate the following critiques of crowdsourcing:

  1. That only niche products are generated because individuals only have a limited known of a company’s products and services.
  2. Consumers come up with infeasible ideas because they have a limited view of a company’s cost structure.
  3. A lack of response from companies leads to customer dissatisfaction.

Crowdsourcing Needs the Right Conditions

The researchers found that under the right conditions crowdsourcing creates more knowledgeable consumers, and that in time, this leads to the generation of cost-effective higher potential ideas.

What companies have to understand is how to foster those conditions to create the most beneficial crowdsourcing environment.

“Although crowdsourcing initiatives are being widely adopted in many different industries, the number of ideas generated often declines over time, and implementation rates are quite low,” said Kannan Srinivasan, one of the study’s authors.

“Our findings, however, suggest that a better understanding of the dynamics at work in the crowdsourcing process can help us to address the common criticisms and propose policies that draw out the most consistently valuable ideas with the highest potential for implementation from crowdsourcing efforts in virtually any industry.”

For crowdsourcing to be effective the study authors suggest a number of policies should be implemented:

  1. A system for peer evaluation.
  2. Rapid response from companies those ideas that receive significant community endorsement.
  3. Companies to provide more details about costs so that participants can avoid overestimating the feasibility of their ideas, and underestimating their implementation costs.

Poorly implemented crowdsourcing projects often generate a rush of ideas that have no hope of being implemented, and cost companies time and resources to evaluate them. This new study finds that when crowdsourcing is done right, the quality of the ideas improve while the number of contributed ideas decreases. Therefore screening costs go down and only those ideas with the highest potential for implementation get through.

To read more about the paper’s findings click here.

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