Crowdsourcing: A new business model to reduce daily commutes

Like Tamagotchis and the Arctic Monkeys before it, crowdsourcing started off as a relatively obscure craze before becoming the hot topic du jour largely thanks to word of mouth. Currently overlooked by most giant corporates but ardently embraced by legions of start-ups, you could almost describe crowdsourcing as the business model for the underdog.

For the organisations that don’t dispose of the necessary in-house workforce and services to deliver their product, the possibility to leverage thousands of workers to outsource tasks in a cost effective way allows them to challenge the large corporates.

One company doing just that is Matt Mickiewicz’s 99 Designs. Providing specialist graphic design skills, the company hosts online design contests for a global network of designers who compete to design logos, websites, brochures or business cards. Customers are offered the benefit that they can choose the budget they want to spend and a money back guarantee if they are not happy with the results.

99Designs’ model of employing of a vast crowd of workers brings significant benefits in both cost, time and quality as the majority of work is done by individuals at home all around the world and is now a realistic possibility with improving web technology and connectivity.

This results in a workforce that is scalable and works 24/7 whilst benefiting from a lack of overheads to cover including rent, holiday and profit which normal companies are burdened by. On top of this, because many of these crowdsourcing providers employ the model of 1st past the post, the quality of the work is often outstanding, as workers are motivated to deliver high quality so to ensure payment for their efforts.

Another lower key but very effective example nonetheless is online designer community Threadless. As a global talent pool of designers, they share ideas for new t-shirt designs that are voted on by the Threadless community. Winning designs are put into production with a payment and publicity for the designer, as well as a guaranteed order book for Threadless.

Aside from the creative advantage of having a multitude of artists lend their distinctive talents to the cause, both Threadless and 99Designs have access to the sort of workforce that would take a considerable budget to hire and the workers participate, not purely for financial reasons but because they also form part of a community.

It’s not just design, crowdsourcing allows for business innovation that previously simply wasn’t possible. Take for example the software testing company I work for, BugFinders, which uses crowdsourcing to provide 24/7 on demand pay per bug testing of web, mobile and gaming platforms.

Previously companies were faced with the option to take contractors, permanent or outsourcing – none with pay by delivery models. Crowd-funding companies such as KickStarter allows individuals to fund and take shares in early stage companies, an option previously reserved for large venture capitalists.

Inevitably, crowdsourcing also attracts its fair share of cynics. One of the main loopholes pointed out in 99 Designs’ business model is that with the high number of designers (which can easily range between 100 and 200) working on a project, the success ratio is comparatively slim, because only one will ultimately be selected. This means the majority of the participants don’t get any financial compensation for their work.

Some say that crowdsourcing is merely a fad lacking the longevity to become a successful business model. But to dismiss it as such is a mistake. Many crowdsourcing companies are taking large investments, including 99Designs which recently took $30million to expand its operations.

Whilst most big companies are still fearful of inviting their potential customers to be involved in the development of their products, some high-profile corporations are trialling the business model directly. Perhaps the most prominent examples are Dell and Starbucks, who invite their online users to share feedback and news ideas to improve the quality of their products.

Even politics is starting to see the power of the crowd and Nick Clegg has recently launched a site for crowdsourcing suggestions on the current set of UK laws.

Whilst crowdsourcing is still in its infancy, with more and more companies looking to leverage the crowd for their requirements, it is likely that the way companies do business and engage with their remote workforce in the future will be a very different situation to that of today. Perhaps we are starting to see the end to the rush hour commute?

Martin Mudge is the Director of BugFinders, a crowd-based on-demand software testing delivery company based in Cheltenham. He has worked in financial, manufacturing, security, government, Web-based and telecoms sectors and is passionate about risk-based testing, risk-driven testing and model-based testing. He has developed automation strategies, as well as advised many large organisations on recruitment strategies, but is currently dedicated to crowd-sourced testing services at BugFinders.

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