Book: Crowdsourcing

Crowdsourcing by Jeff Howe

Executive Summary:

This document summarizes key themes and examples from Jeff Howe's Crowdsourcing, focusing on how tapping into the collective intelligence and resources of large groups of people (the "crowd") can lead to innovation, efficiency, and new business models. The book explores diverse applications of crowdsourcing, from design and software development to scientific research and financial forecasting, illustrating how it disrupts traditional hierarchies and leverages the power of distributed expertise.

Main Themes and Ideas:

1. The Power of the Crowd: The central argument is that a large, diverse group of individuals can collectively outperform experts or traditional hierarchical organizations in various tasks. This is due to the aggregation of knowledge, skills, and perspectives. Howe emphasizes that “the many can work together to outperform the few."
2. New Business Models: Crowdsourcing enables entirely new business models that are more efficient and cost-effective. Examples:

• Threadless.com: A T-shirt company where designs are submitted and voted on by the community. The company doesn't need significant marketing budgets because "designers spread the word as they try to persuade friends to vote for their designs." Threadless demonstrates "design by democracy" is good for the bottom line.
• iStockphoto: A microstock photography agency leveraging a global network of amateur and semi-professional photographers. It provides stock photos at significantly lower prices than traditional agencies. "Bruce’s brilliance is that he turned community into commerce.”

1. Democratization of Expertise and Tools: Crowdsourcing breaks down traditional barriers to entry, allowing amateurs and hobbyists to participate and contribute in fields previously dominated by professionals.

• Amateur Renaissance: The rise of do-it-yourself (DIY) culture, exemplified by Etsy and ReadyMade magazine. There are many signs of the "amateur renaissance" all around us.
• SETI@home: A distributed computing project where millions of individuals contribute their computer's processing power to analyze radio signals for signs of extraterrestrial intelligence.

1. Open Source and Collaborative Innovation: Open-source software development, exemplified by Linux, demonstrates the power of collaborative innovation where a large community of developers can create complex systems.

• "Linus Torvalds’s style of development—release early and often, delegate everything you can, be open to the point of promiscuity —came as a surprise."
• "In the bazaar, everything is coordinated—if that word even applies—from below."
• Richard Stallman and the GNU project were crucial in setting the stage for the "copy left" movement.

1. Reputation Economy: Contributors are often motivated by factors beyond monetary compensation, such as recognition, reputation, and the satisfaction of contributing to a community.

• Threadless: "...it’s about the emerging reputation economy, where people work late into the night on one creative endeavor or another in the hope that their community… acknowledge their contribution in the form of kudos and, just maybe, some measure of fame."

1. Breaking Down Tasks: Successful crowdsourcing often involves breaking down complex tasks into smaller, more manageable components that can be distributed to a large group of individuals. TopCoder, a software development platform, is a prime example. “We knew from the inception of the company that we’d have to break larger jobs into very short, very defined bits of work,” says Hughes.
2. The Importance of Community: Building and nurturing a strong community is crucial for the success of crowdsourcing initiatives. A sense of ownership, collaboration, and shared purpose fosters engagement and contribution. This concept is highlighted in the case of iStockphoto. "Livingstone still gets the community’s approval at every step of running his company. When he says he works for the community, he laughs, but he isn’t kidding."
3. Crowdsourcing as Market Research: Tapping into the crowd can also provide valuable market research and validation before investing in new products or services.

• Threadless: "All products sold by Threadless are inspected and approved by user consensus before any larger investment is made into a new product.” This helps avoid failures.

1. Prediction Markets: Information markets or prediction markets can be used to harness the collective wisdom of crowds to make accurate forecasts. Hewlett-Packard used a futures market to predict sales.
2. Democratizing Distribution: The internet has turned traditional distribution models upside down. Hawthorne Heights achieved its popularity without significant radio or TV airplay.
3. Downsourcing Innovation: Eric von Hippel termed "downsourcing," in which a manufacturer shifts the burden of certain functions—innovation, in this case—down the supply chain to the customer.

Examples and Case Studies:

• Threadless: (T-shirt design) – Shows the power of community-driven design and validation.
• iStockphoto: (Stock photography) – Illustrates how microstock agencies disrupt traditional photography markets.
• SETI@home: (Scientific research) – Demonstrates distributed computing.
• Linux: (Operating system) – Exemplifies open-source software development.
• Wikipedia: (Encyclopedia) – A massive, collaboratively created knowledge base.
• InnoCentive: (Problem-solving) – Connects companies with external experts to solve R&D challenges.
• Netflix Prize: (Algorithm improvement) – A competition to improve Netflix's movie recommendation system.
• Dell IdeaStorm: (Customer feedback) – A platform for customers to suggest and vote on new product ideas.
• Kiva: (Micro-lending) – Connects lenders with entrepreneurs in developing countries.
• SellaBand: (Music funding) – Allows fans to invest in musicians' careers.
• MATLAB Contests: Illustrates how intense competition can lead to extremely efficient solutions.

Key Quotes:

• "The many can work together to outperform the few."
• "Design by democracy, as it happens, isn’t bad for the bottom line."
• "When a photographer makes $10,000 a month from something he considers a hobby, it’s probably time to redefine the term 'amateur.'"
• "Bruce’s brilliance is that he turned community into commerce."
• "The iStockalypses are crazy, dude. You wouldn’t believe the level of fanaticism."

Implications:

• Organizations can leverage crowdsourcing to improve efficiency, foster innovation, and create new revenue streams.
• Individuals can participate in crowdsourcing initiatives to gain recognition, build their skills, and contribute to meaningful projects.
• The rise of crowdsourcing is reshaping industries and challenging traditional business models.

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