In need of a new logo design? Or perhaps a product extension that blows customers’ minds? No problem— just crowdsource it. After all, who can possibly do better—thousands of online participants (the crowd) or a handful of experts (perhaps your employees)?
No wonder then that engaging a keen crowd in innovations has been said to be the ‘new normal’. Long-standing competitive advantage can be upended almost overnight by those who digitalise and crowdsource their product development (hello, Encyclopaedia Britannica), or ensure their continuous improvement (think Linux).
Crowdsourcing has many merits and is often said to lead to faster, more-efficient, and more-creative product development.
But does it always deliver?
In our study, we test crowdsourcing as a market research method for various media products (both online and off) to see if, and when, crowdsourcing can replace more traditional methods of market research (e.g., focus groups).
In short, while we found that crowdsourcing is a powerful market research tool, it would be premature to send the market research team packing. Our data show that crowdsourced customer participation is not consistently superior in enabling firms to discover how to better serve customers. Instead, crowdsourcing is a tool whose strength – quickly and cost-effectively deploying many problem solvers – depends on different circumstances.
Here are a few circumstances when crowdsourcing does not make sense*:
- When the problem is difficult to define. A crowd will likely fail managers if the task at hand is not specific enough (say like developing a marketing plan including forecast figures). This is why many crowdsourcing platforms specialise in simple, distinct tasks like finding a name for a product or business (e.g., squadhelp).
- When non-verbal cues are required. In refining existing products with the help of customers, managers often gain valuable insights from non-verbal cues such as facial expressions. These cues, however, are much easier to obtain through more traditional market research than crowdsourcing.
- When product development is commercially sensitive. Crowdsourcing is an open research and development method that should best be avoided if firms fear that commercially sensitive product information may spill over to the competition. This is often the case if radically new products are being developed.
- When managers lack the ability to adapt and act quickly. One of crowdsourcing’s distinct advantages is speed. However, unless managers can match this speed to quickly seize opportunities that arise from the insights gathered, more traditional market research methods may prove more fruitful than crowdsourcing.
* For a more complete list of the circumstances our data reveal, we refer interested readers to our study (Gruner and Power 2017).
Does our study end the tug-of-war between conventional market research and the logic of digital transformation in driving firms’ innovation strategy? No. But, together, our results underscore how multifaceted this war is. On a more practical note, our study helps managers in deciding when to use crowdsourcing and when it’s best to rely on internal talent to drive innovations.
Read the original research article: Gruner, R.L. & Power, D. (2017). What’s in a crowd? Exploring crowdsourced versus traditional customer participation in the innovation process. Journal of Marketing Management. http://www.tandfonline.com/doi/full/10.1080/0267257X.2017.1325389
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