Selling the Opportunity of Crowdsourcing: Overcoming IP and Cultural Barriers

BY GINA SPARROW | 5 min read

Imagine you run a small software company that's been struggling to come up with new product ideas. One day, you have an "Aha!" moment - what if you could harness the collective creativity of your customers to come up with innovative ideas? Crowdsourcing seems like the perfect solution, but you're hesitant to dive in because you're not sure how to deal with intellectual property concerns.

You know that if you don't address these concerns, you risk alienating customers and damaging your company's reputation. You decide to do some research and learn about the different types of intellectual property, like patents, copyrights, and trademarks. You also learn about the importance of company culture in fostering open innovation.

After much consideration and discussion with your team, you decide to give crowdsourcing a try. You launch a contest inviting customers to submit ideas for new software products. To protect their intellectual property, you make sure to include a clear agreement in the contest rules that gives your company ownership of the ideas submitted.

The response is overwhelming. You receive hundreds of submissions, and the winning idea ends up becoming one of your company's most successful products. Your customers feel valued and invested in your company's success, and you feel empowered to continue innovating in new and exciting ways. Crowdsourcing played a crucial role.

In this blog post, we'll explore why some businesses are hesitant to adopt crowdsourcing and how to overcome those objections. We'll also take a closer look at the different types of intellectual property and the role of company culture in open innovation. By the end of this post, you'll have a better understanding of how crowdsourcing can benefit your business and how to navigate potential obstacles along the way.

How Crowdsourcing Can Benefit Your Business

Crowdsourcing can benefit organizations in many ways, from encouraging the creation of new ideas to improving company culture. Inviting "outsiders" to help solve issues or offer new ideas has worked for numerous big-name companies, including LEGO, Lay's, Starbucks, and more. 

For example, UK-based yoga outfitter Catalyst Activewear uses crowdsourcing via their Open Studio platform to create 3D designs and poll their customers on which designs they should sell—this helps eliminate waste and keep costs down. Some companies are getting creative (even radical) in their innovation strategy.


The Importance of Culture

One factor that can determine whether a company adopts crowdsourcing practices is its culture. While many organizations are happily jumping on the crowdsourcing bandwagon, many with a more traditional culture aren't there yet. A fresh perspective is sometimes just what your business needs to spark ongoing innovation internally. When the company's culture doesn't lend itself to welcoming open innovation strategies, sometimes the solution is to start small. Testing the waters of open innovation with a seemingly inconsequential challenge—like choosing the name of your new online-only product—is an easy way to influence change in the culture (and attract new audiences!).

It's never too late to help motivate a company's culture to accept the world of open innovation– take Microsoft, for example. Despite being a pioneer in software and being used in almost all homes across the globe, Microsoft was never known for its innovation or contemporary culture. That all changed when Satya Nadella became CEO in 2014 and pushed for the company to interact with its customers to gain new insights into what they want from the software giant.


Demystifying Intellectual Property (IP)

When it comes to open innovation, intellectual property rights are often one of the top concerns expressed by stakeholders. There are many options to choose from for a crowdsourcing challenge. A clear understanding of which type of IP agreement you want for your campaign starts with clarity on your options.

Four Types of IP Agreements:

  1. Shared IP: Innovator retains all IP rights to their technology and grants the Sponsor a royalty-free, non-exclusive license to the IP.
  2. Innovator Retains IP: Creator-takes-all approach, best used in ideas or design challenges.
  3. Open Source IP: Requires the winning Innovator(s) to make the IP of their solution open source using a code repository like GitHub. Most common in software-based challenges and generally not used in other cases.
  4. Sponsor Acquires IP: The Innovator essentially hands over the right to their IP should they be awarded a prize. The most strict form of IP agreement, it drastically reduces the number of participants willing or allowed to contribute ideas.

Once you determine which IP agreement fits your business needs, it's important to carefully review and negotiate its terms to ensure that your intellectual property is adequately protected and that you can use and monetize it as intended.

For example, before accepting submissions for your crowdsourcing challenge, ensure the ownership of the IP rights is clearly defined. Your challenge can also require participants to include a list of all parties contributing to the ideas submitted. You can take additional measures to protect the IP of the organization by implementing legal safeguards like copyright protection, trademarks, trade secrets, and patents.

It is possible to ensure that your intellectual property is adequately protected and that you can use and monetize it to its fullest potential. As a result, you can maximize the value of your business and remain competitive in today's fast-paced and innovation-driven economy.

Want to save time with made-for-your-business prize challenge IP templates? See here, or get in touch.


Overcoming Objections

Open innovation can bring about a host of benefits for organizations, such as:

  • Increased creativity and innovation
  • Greater access to diverse perspectives and skillsets
  • Faster time-to-market for new products and services
  • Cost savings
  • Improved brand reputation

Despite the benefits, some stakeholders may still have reservations about implementing open innovation. Here are some common objections and strategies to overcome them:

It's too risky: Trying a new method to gain innovative ideas can make stakeholders fear the investment may not be worth the cost. Start with small, low-risk challenges and deliver fast results to help curb this concern.

Internal teams will be offended or threatened: Sometimes the biggest objections can come from within an organization's workforce, especially in science or technology. The internal experts may feel their jobs are at stake or uneasy about inviting people outside the organization to solve its problems.

To overcome this (understandable) fear, reframe the open innovation as an opportunity for the internal team to oversee and offer guidance to the folks with less experience. Their genius will be used further down the line, and they can avoid the pressure of constantly creating new ideas or problem-solving.

It will replace outsourcing: Emphasize that crowdsourcing is different from outsourcing and that both can coexist. Outsourcing and crowdsourcing can be used together to complement each other's strengths. For example, a company may outsource a specific task or project to a third-party vendor to meet a deadline or benefit from specialized expertise. 

At the same time, they can use crowdsourcing to generate new ideas, gather feedback, or engage with a wider audience to build brand loyalty. By combining the two approaches, companies can optimize their resources, accelerate innovation, and stay competitive in their respective industries.

Embrace Open Innovation

Open innovation can help organizations generate more innovative ideas and stay competitive in today's fast-paced business environment. Overall, the benefits of open innovation far outweigh the concerns of potential risks. Having a toolbox of information to overcome objections can help push past the muddy waters of company culture and demystify common concerns.

If you're interested in harnessing the power of the crowd for your business, contact us today for a consultation.

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