Businesses Harness Power of the Crowd

Unlike outsourcing, where a company moves for cheaper labor costs, crowd sourcing opens up work and creative inventions to everyone — "the crowd." It's come to mean using the Internet to put out a call for research, ideas or products, using monetary awards or prizes as an incentive.

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The word outsourcing is becoming common - moving a business to another location, usually one with cheaper labor cost like India or China. But the term crowdsourcing is new. That's opening up jobs or innovation to everyone, to the crowd. The term is only about a year and a half old. It's come to mean using the Internet to put out a call for research ideas or products using monetary awards or prizes as incentive.

NPR's Margot Adler has this report.

MARGOT ADLER: If you want to get a notion of crowdsourcing, think of NASA giving a $200,000 prize to an inventor, Peter Homer, who designed a new space glove in his dining room. His goals, he said...

Mr. PETER HOMER (Inventor): One was to beat the NASA glove, and my second goal was to impress the NASA guy.

ADLER: Getting $200,000 was icing on the cake. Or think of something like Wikipedia, where people create a product together - in this case, an encyclopedia.

Clay Shirky, a professor at Interactive Telecommunications Program at NYU, says it used to take a big corporation with thousands of people to do a huge project. But the Internet has so lowered the cost of information that that's no longer true.

Professor CLAY SHIRKY (Interactive Telecommunications Program, New York University): Groups of individuals can now do it. So for example, the open source, the Wikipedia, all of those are cases were, previously, you had to have central management, and now you don't.

ADLER: Most crowdsourcing involves an open call over the Internet. Take the company InnoCentive. InnoCentive pairs seekers, groups and companies that need solutions with solvers, researchers who want to provide answers. If I register as a solver, I can go on the Web site and see lists of requests for solutions.

Novel quantitative analytical method to quantify sugar is needed. Clearly out of my line. Rigid, stretchable and eco-friendly material is desired. Read more.

One day, David Bradin, a chemist and patent attorney living in Durham, North Carolina, was just scrolling through the InnoCentive Web site and he saw a chemistry problem that he thought he could answer.

Mr. DAVID BRADIN (Chemist, Patent Attorney): So I filled up the paperwork and I gave them a rough sketch of what I thought was the solution, and then about a month later, they wrote back and said, you know, your answer has a lot of promise. Could you send us some catalysts and conditions that might work? It may sound that mine was the best solution to making this particular product.

ADLER: Bradin tinkered with the idea a little more and then resubmitted it and won $4,000 for his solution. At the time, Bradin had no clue who he was working for. Although some companies are very public about their work, others are working on proprietary material that they don't want to reveal before it is marketed. So Bradin only found out who he was working for by chance, when an article appeared in The Boston Globe that mentioned the project by Procter & Gamble.

Mr. BRADIN: And they were describing the solvers that they had found. And so we've got somebody in Russia, they've got somebody in China, and there's this patent attorney in Durham. I suspect that's me.

ADLER: Founded in 2001 as a part of Eli Lilly, InnoCentive spun off on its own a little more than a year ago. There are more than 120,000 researchers who have registered on InnoCentive's Web site, and they come from 175 different countries.

InnoCentive helps companies form questions for researchers to solve. Anyone who registers as a solver can take a shot. Prizes for the best solutions can range from a couple of thousand dollars to hundreds of thousands, even a million dollars. The company has posted around 500 challenges, a third have been answered successfully.

Since David Bradin didn't know who he was working for, I asked the president and CEO of InnoCentive, Dwayne Spradlin, how could Braden know he wasn't doing the project for al-Qaida, or a company he might have qualms about? Spradlin says the customer list is screened carefully and the company complies with the State Department's rules and regulations.

The solvers who submit the answer are also anonymous. That fact sold Maria Blair(ph) of the Rockefeller Foundation on InnoCentive. It meant there was no bias toward expertise. Innovation was open to all.

Ms. MARIA BLAIR (Associate Vice President, Rockefeller Foundation): What the company or the organization who's asking the question gets is all of the answers, but they don't get the resume of the person who submitted it. They don't get their names. They don't get their location. They don't get how many years they've been working in the field or what their particular experience is. All they get is the answer. It opens up problems to entirely new answers that the asker would have never contemplated before.

ADLER: And since Blair's work focuses on creating opportunities for the poor, she believes crowdsourcing could harness the potential of people who have never participated in research. It could democratize innovation.

It's not only companies. Groups of people are getting involved with this too. Nate Boaz is with Prize4Life. It began with a group of friends at the Harvard Business School who became determined to do something when one of their group got Lou Gehrig's Disease or ALS. The group came to feel that there was not enough attention being given to rare diseases like ALS. So they teamed up with some ALS researchers and InnoCentive, and offered prizes for research in the field.

Mr. NATE BOAZ (Co-founder, Prize4Life): None of us are scientist. You know, we have a banker, two ex-military guys, which, I think, speaks to this whole situation of using crowdsourcing. You don't discriminate against what knowledge people have.

ADLER: Crowdsourcing, or open innovation, as it has also been called, has been used for all kinds of projects - big and small. People have designed everything from Lego sets to shoes to space vehicles.

Take Threadless, a T-shirt company out of Chicago. Instead of having a graphic designer on staff, anyone can submit a design on the Web, and anyone can rate them from one to five. The company prints six or seven winning designs each week. The winners get $2,000 and some prizes. The company started out six years ago with two guys and a Web site offering a $50 prize for a T-shirt design. Now, they ship 80,000 T-shirts a month, and the company has 27 employees. At 31, Bob Nanna is one of the older guys at Threadless.

Mr. BOB NANNA (Publicist, Threadless): I love it because it really puts 99 percent of the creativity in the community's hand.

ADLER: Crowdsourcing has been good for Threadless, but no one yet knows how big a phenomenon crowdsourcing is going to become. Dwayne Spradlin, the president and CEO of InnoCentive says, remember, it's only in the last year that...

Mr. DWAYNE SPRADLIN (President, CEO, InnoCentive): Crowdsourcing - the tools, the technologies, kind of the approaches to market - have really began to mature.

ADLER: In other words, opening innovation to the crowd is very new. And we don't really know all the pluses and minuses yet. Clay Shirky of New York University says...

Prof. SHIRKY: It's neither wholly good nor wholly bad. I mean, crowdsourcing, obviously, creates a lot of productive capacity that didn't previously exist. It also challenges a lot of existing jobs. We're going to have to manage with a workforce that's now a workforce that's now not just global, but temporal.

ADLER: After all, if volunteers and amateurs do the work, trained professionals might be in trouble. As we enter this brave, new online world of work, it's clear that few people are asking large questions about its implications, and fewer still have come up with good answers. Maybe it's a research project for InnoCentive.

Margot Adler, NPR News, New York.

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