Crowdsourcing: Consumers as Creators

A new trend allows customers to help design the products they buy. Just don't expect to get paid a fortune for that brilliant idea

Every business has customers who are sure they could design the products better themselves. So why not let them? Crowdsourcing is the unofficial (but catchy) name of an IT-enabled business trend in which companies get unpaid or low-paid amateurs to design products, create content, even tackle corporate R&D problems in their spare time.

Crowdsourcing is a subset of what Eric von Hippel calls "user-centered innovation," in which manufacturers rely on customers not just to define their needs, but to define the products or enhancements to meet them. But unlike the bottom-up, ad-hoc communities that develop open-source software or better windsurfing gear, crowdsourced work is managed and owned by a single company that sells the results.

To paraphrase von Hippel, it relies on would-be customers' willingness to hand over their ideas to the company, either cheaply or for free, in order to see them go into production.

HARNESS THE POWER.  MIT's Sloan Management Review recently published a paper on the topic of crowdsourced product design written by Susumu Ogawa, a professor of marketing at Kobe University in Tokyo, and Frank Piller, a professor at TUM Business School in Munich.

The two profs don't call it crowdsourcing, but they studied how companies are "reducing the risks of new product management" by using ever-spreading, ever-cheaper information technology to bring people outside the company into the design process. Their paper condenses years of research into a snapshot of two companies that illustrate the degree to which customers can be harnessed.

The first, Threadless, is a Chicago-based T-shirt maker whose design process consists entirely of an online contest. Each week the company receives hundreds of submissions from amateur and professional artists. Threadless posts these to its Web site, where anyone who signs up may give each shirt a score. The four to six highest-rated designs each week are put into production, but only after enough customers have pre-ordered the design to ensure it won't be a money-loser.

NOW LIE IN IT.  Each week's winners get $2,000 in cash and prizes, but the real motivation is the chance to have their work seen and potentially worn in public. Threadless puts the designer's name on the label of each shirt. For designers, it's a creative outlet. For customers, it's a wider range of choices. From Threadless' point of view, the company doesn't have to hire a design staff, and only commits financially to shirts with proven, pre-ordered, appeal. It's not a revolution—it's risk reduction.

The other example is Japanese specialty furniture retailer Muji. Through its community site, Muji.net, the company solicits novel and radical product ideas from a member base of roughly half a million people. Muji then asks members to pre-evaluate the designs. The short list of highest-ranked ideas is given to professional designers, who develop the production-grade specifications.

Like Threadless, Muji then tests the market by soliciting customer pre-orders rather than conducting a focus group or survey, or using other traditional market research methodology. Simply put, if 300 customers pre-order an item online, it goes into production.

DEGREES OF INFLUENCE.  Muji.net has a page touting its customers' greatest hits: A lamp that fits near the head of a bed, where there's no power socket. Wall shelves for renters that can be hung without using nails. A small, cubical, beanbag chair that can be used in different positions—and that outsold the rest of Muji's models more than fifty times over.

Threadless and Muji fit customer-designers into their businesses in very different ways. Threadless' entire design and approval process is outsourced to the crowd. Muji taps the crowd for ideas and feedback to come up with a few innovative products, yet keeps professional designers in the loop and doesn't rely on outside ideas for its entire product line.

These are baby steps. Most companies' products are a lot more complicated than T-shirts and lamps, and require deeper domain expertise to design them. I've got some great ideas for the Corvette, but not a clue how to whip up a CAD file to send Chevrolet's engineers.

Still, as design software improves it will only get easier and cheaper for outsiders to create and submit professional-quality product specs that once required expensive in-house work. Look for more and more companies to find ways to tap the creative wisdom of the crowd.

Posted via web from sdn's posterous