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The Top 5 Crowdsourcing Advantages and Disadvantages

BY HEATHER BAKIRE | 4 min read

No one would blame you for testing the depth of the water before you dive in or checking how well your meat is cooked before you take a bite. Having a thorough understanding of crowdsourcing advantages and disadvantages before you rely on this new business model is also a wise choice.   

The concept of using crowdsourcing to replace traditional R&D is a relatively new one, and it can be difficult to identify all of the pros and cons when you’re not very familiar with it. Every company is different, and it’s important to consider how crowdsourcing could work for your organization specifically.

You may have heard of huge companies like Lockheed Martin, Starbucks, Samsung, and Coca-Cola leaning on crowdsourcing to spark new product ideas or uncover solutions to complex problems. If crowdsourcing works for them how can you be sure it will work for your organization too?

Here are the top 5 crowdsourcing advantages and disadvantages to keep in mind as you’re considering using this method to solve your company’s conundrums.

 

The Top 5 Advantages of Crowdsourcing

 

1. Cost-effectiveness

 

No matter how much they strive to contribute to the common good, every company is concerned about its bottom line. After all, how can you change the world if you can’t even stay in business? There’s a clear profitability aspect that drives many companies to choose crowdsourcing.

Consider how much you would spend on hiring a new team of experts specifically for a new project. You would have to pay wages, provide office space, and cover health insurance. With crowdsourcing, you can simply offer a one-time reward for finding the solution. No surprise fees. 

 

2. Hands-off approach

CEOs and company managers may have lots of resources at their disposal, but time is typically not one of them. When conducting a traditional R&D project, the manager needs to constantly supervise the project and ensure the team is working efficiently and meeting deadlines.

When relying on crowdsourcing, all the management team has to do is create the challenge and then sit back while the worldwide innovators do their thing. No need to check in on individuals during the process.

Photo by Ann H from Pexels

 

3) Fresh perspective

Unlike your employees, the crowd does not have a bias towards your company. They can bring a new perspective to the problems your team has been struggling with for ages. Sometimes all it takes is a new pair of eyes to find the missing piece you’ve been looking for all along.

One of the huge benefits of the crowd is their diverse backgrounds. They come from different countries, different socioeconomic statuses, different experiences, and different worldviews. When you look to the crowd, you’re inviting an extremely diverse group to take a seat at your table and consider the challenge from a variety of perspectives. It only makes sense that one of them would discover an innovative solution.

 

4. Brand promotion

There’s nothing wrong with using your crowdsourcing challenge as an opportunity to build your brand image. When LG utilized crowdsourcing to design its new phone model, it received a ton of publicity when the news of the challenge was released (even before the winner was chosen and the new model went on the market). 

People love to hear about companies taking an innovative approach and giving average Joes and Janes the chance to change the world. You may be surprised to see how much great PR your company gets from launching a crowdsourcing challenge. 

 

5. New hires

Most companies find it quite difficult to recruit creative and innovative employees to work for them. Participating in crowdsourcing challenges gives people an opportunity to showcase their talents, which in turn allows companies to provide job offers to the winners if they so choose.

If you’re impressed by the solutions that the winners come up with, you might invite them to join your team. Their problem-solving skills could be a huge asset to your company again and again. After all, there are some projects that can’t be crowdsourced due to confidentiality or other concerns.

Photo by Chuttersnap from Unsplash

 

The Top 5 Disadvantages of Crowdsourcing

 

1. Confidentiality

As you might guess, crowdsourcing doesn’t leave much room for confidentiality. Like practically everything on the internet, crowdsourcing challenges can be accessed by almost everyone. This is a concern for companies who have highly sensitive information linked with the problem they’re trying to solve.

The best way to avoid this potential risk is to be cautious with what you choose to share. It’s possible to create a challenge with clear enough guidelines to be solved effectively without relying on classified information. Make sure the information you include portrays your company in a positive light and does not give competitors the opportunity to take advantage of you.

 

2. Plagiarism

With crowdsourcing, there’s always the possibility that a few bad apples try to play the system by plagiarizing someone else’s work or ideas in order to win the prize. Some may even plagiarize unintentionally. For example, if a company is looking for help designing a new logo, a challenge participant may suggest a logo that already belongs to another company without realizing it.

For this reason, it’s extremely important to check all entries (or at least the top 10) for possible plagiarism before making your final decision, using legal help in certain cases. Of course, this issue is not unique to crowdsourcing and may happen inadvertently on a team within your company as well.

 

3. Intellectual property rights

This disadvantage has the potential to become disastrous if not managed properly. Typically, intellectual property rights belong to the inventor of the idea. That means companies need to ensure the intellectual property rights of the winning idea are transferred to them upon completion of the challenge.

The best way to do this is to construct agreements with carefully articulated terms and conditions between your company and the idea originator. At HeroX, our challenge experts help you dot the I’s and cross the T’s to make sure your new intellectual property is protected. If you choose to work with us, you shouldn’t have any problems in this area.

Photo by Andrea Piacquadio from Pexels

 

4. Amateurs

It may seem like crowdsourcing mostly relies on amateurs, and that is partially true. There are many amateurs who participate in crowdsourcing challenges, but there are experts as well. This begs the question: what drives people to participate in challenges that result in someone else using their ideas?

Usually, it’s not about the money (though that certainly doesn’t hurt). People long to contribute something that will make a difference in the world, and many support the causes and companies behind the contests they choose to participate in. And let’s face it, it’s pretty cool to be able to say something like, “I helped NASA fix one of the biggest challenges facing space travel.” The crowd is full of both amateurs and experts who are looking to share their innovative ideas with the world.

 

5. Potential for failure

Most organizations have this concern. What if you put lots of time and effort into conducting a crowdsourcing challenge and then end up with nothing to show for it? That would be devastating, especially if the problem is time-sensitive and you’re out of options.

Fortunately, HeroX has an amazing success rate, with 90% of our challenges finding a winning solution. Because we have solvers in over 180 countries, including some of the brightest minds in the world, it’s very rare for a challenge to go unsolved. Maximize your impact by choosing HeroX to host your crowdsourcing challenge. You’ll have lots of help from our challenge experts every step of the way.

 

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