What differentiates crowdsourcing from co-creation? These two buzzwords are used a variety of contexts today, which leads to a general confusion about the difference between these terms which are, let’s admit it, conceptually close. Even Quora’s answers are more confusing than enlightning! Joyce Van Dijk brings a valuable contribution to the discussion, and in this post we will complement it by findings from an academic paper, Crowdsourcing of Inventive Activities : Definition and Limits (Penin & Burger-Helmchen, 2011). This blog post builds on this research to highlight the advantages and limits of crowdsourcing… and the complementary role of co-creation.
What is crowdsourcing?
Crowdsourcing literaly means outsourcing an activity to a large and undefined group of people, a crowd. According to Pénin and Burger Helmchen, it relies on two things: an open call and a crowd. I would also add the fact that crowdsourcing is necessarily initiated and managed by an organization, either private or public. In their paper, they focus on what they call crowdsourcing of inventive activities which consists of a company posting a problem online, a vast number of individuals offering solutions to it, the winning ideas being awarded, and the company using the idea for its own gain (Brabham, 2009). In other words, crowdsourcing of inventive activities is very much using contests. Here’s how crowdsourcing of inventive activities relates to other forms of crowdsourcing:
According to Transaction Cost Theory, which considers the well-known trade-off between make or buy, something should only be outsourced if it is cheaper to rely on the market than to do something internally. Crowdsourcing inventive activities is a specific case of outsourcing; but is it always a good solution to crowdsource an innovation-related task? According to GfK, crowdsourcing can generate a rich pool of new product ideas, which is crucialfor innovation. But the answer is also that, as an inherently unfrequent, uncertain and often unspecific technique, crowdsourcing has some major limitations when you’re looking for knowledge-intensive answers.
Transaction-cost theory puts forward the important costs that stem from crowdsourcing of inventive activities when the problem is know-how intensive
(Pénin & Burger-Helmchen, 2011)
What the researchers don’t say is that the actors of the market offer solutions to overcome these problems, even for complex problems. Relying on innovation intermediaries like Hypios, InnoCentive or eYeka, who manage crowdsourcing of inventive activities for big clients on a daily basis, can be helpful. They take care of handling the whole crowdsourcing process, allowing companies to leverage the crowd on a much more regular basis; they close success-based contracts or guarantee KPIs in order to reduce uncertainty; and they curate or refine submissions in order to facilitate knowledge transfer. These services are ways to reduce the drawbacks inherent to crowdsourcing.
Crowdsourcing of inventive activities raises the problem of transferring knowledge between two entities which have not developed specific links and which do not know each othe
(Pénin & Burger-Helmchen, 2011)
But let’s be honest, crowdsourcing on inventive activities does not allow deep engagement. Remember the reach vs. richness distinction made by Evans and Wurster in Blown to Bits (1999)? Well, this trade-off definitely applies to innovation: while you can access a large and diverse pool of people by crowdsourcing a problem (reach), you can’t really engage in interaction with each of these people (richness). Hence, if you’re looking for deep engagement, you might be better off using co-creation.
What is co-creation?
The original concept of co-creation was value co-creation, which states that “informed, connected, empowered, and active consumers are increasingly learning that they too can extract value at the traditional point of exchange” (Prahalad & Ramaswamy, 2004). Co-creation denotes an active, creative and social collaboration process between producers and consumers, facilitated by the company (Piller et alii, 2011). The notion of long-term involvement is also important in co-creation. As Promise Corp’s whitepaper about co-creation says, “the aim of co-creation is to enhance organisational knowledge processes by involving the customer in the creation of meaning and value“.
Brands who wish to see long-term, tangible results [need] a social co-creation strategy to partner with brand advocates and build a lasting relationship with a community
There are loads of other definitions of co-creation out there, but this one nicely emphasizes that the process is interaction-based, and that it happens when companies and consumers collaborate. Again, I invite you to read Joyce’s post about the topic for further information. A promising way to create meaningful interaction is to set up online communities dedicated to specific subjects, brands or products. Companies like Promise or Face Group do that very well – Innovation Excellence already blogged about it. However, co-creation also has its disadvantages:
People inside the company are not used to work with people who are not employees, who are not paid for the input they provide
Bernard Cova states three disadvantages of co-creation for a company: employees are not used to work with consumers or fans (see above quote), their topics of interest might differ from the community’s interests, and they might feel dispossessed by the whole process. It is a very recent phenomenon to hand over so much responsibility to external stakeholders, and this implies a lot of learning – and unlearning – on the company-side. This is even the case for the “believers” : the CEO of the Intuit, which is quoted as a leader in co-creation in the book Brand Together, revealed that upper-level managers at his firm resisted co-creation because of its “challenge to long unquestioned beliefs about the role of management, the value of experts, the need for control over customer experience, and the importance of quality assurance” (via O’Hern & Rindfleisch, 2010).
How do crowdsourcing and co-creation complement?
All these observations lead me to propose the following illustration, based on what’s stated in this post. Do you agree? Do you think that crowdsourcing and co-creation are complmentary techniques that differ by the intensity of the interaction? Don’t hesitate to share your thoughts!
Brabham, D.C. (2009) Crowd sourcing the public participation process for planning projects, Planning Theory, Vol. 8, No. 3, pp.242–262.
Evans, P.B. & Wurster T.S. (1999). Blown to Bits: How the New Economics of Information Transforms Strategy. Harvard Business School Press: Boston, MA
O’Hern, M., & Rindfleisch, A. (2010). Customer Co-creation : A Typology and Research Agenda. Review of Marketing Research, 6, 84-106.
Penin, J., & Burger-Helmchen, T. (2011). Crowdsourcing of inventive activities : definition and limits. International Journal of Innovation and Sustainable Development, 5(2/3), 246-263.
Piller, F., Ihl, C., & Vossen, A. (2011). A typology of customer co-creation in the innovation process. New Forms of Collaborative Innovation and Production on the Internet (pp. 31-61). Göttingen: Universitätsverlag Göottingen.
Prahalad, C. K., & Ramaswamy, V. (2004). Co-creation experiences: The next practice in value creation. Journal of Interactive Marketing, 18(3), 5-14. doi:10.1002/dir.20015
image credit: abaldaia
Yannig Roth graduated in marketing and is currently Research Fellow at eYeka and PhD student at University Paris1 Panthéon-Sorbonne in Paris (France). His main research interests are creative crowdsourcing and community co-creation. Yannig regularly blogs at http://yannigroth.wordpress.com