Businesses are always under pressure to reduce their spending and improve their bottom line – that’s just the nature of commerce. But, in recent years, that trend has continued to reassert itself across industries. In 2011, businesses (particularly small businesses) were cutting their spending by up to 44%. That’s some serious belt-cinching and, sadly, a lot of that money comes from eliminating payroll overhead.
Still, there are more tools available to small business owners looking to improve their spending and increase earnings. One of those tools (employed more and more, lately) is crowdsourcing. Let’s take a look at a few stories that showcase the variety of savings that we’re talking about:
• One of my favorite crowdsourcing classics: GoldCorp. Rob McEwan of GoldCorp wanted more accuracy when it came to mining his gold in Canada and struggled for years with his internal team of geologists. In March 2000, however, he enacted a program that had never been done before: the Goldcorp Challenge (with a $575,000 purse). He published geological data of his mine from as far back as 1984 (information considered to be highly confidential at the time) and invited the crowd to advise on where to seek gold. And it paid off, aided by teams of guest geologists, Goldcorp went from being a $100 million company to a $9 billion company. I simply love that the idea of sharing geological information could appear to be scandalous.
• In 2009, when Unilever was looking for a new marketing campaign for its Peperami Nibblers, they opened the challenge up to the crowd. The result was an offbeat commercial and a reported 60% savings on the marketing costs typically associated with a product campaign.
• Or how about the American people who are also benefitting from IdeaScale technology from the President’s SAVE Award? More than 85,000 ideas have been shared from federal employees. Three winning ideas as well as other finalist ideas have been integrated into the new budgets. The first winning idea alone is reported to save taxpayers $14.5 million by 2014. The second year’s idea results in $4 million saved every year. And that’s just by making a few simple employee-suggested changes.
Growing companies by billions of dollars? Saving millions? That can be the power of the crowd. And, in an age when constant innovation is necessary under the burden of a very firm bottom line, crowdsourcing is definitely a recurring resource that we will see employed more and more.
However, it doesn’t always work out like that. For example, earlier this year Netflix announced that they had not and would not be applying the solution generated by the much-publicized Netflix Prize, because “additional accuracy gains that we measured did not seem to justify the engineering effort needed to bring them into a production environment.” So, although the Netflix Prize was a great leap forward into business strategy, it wasn’t quite the pay-out that they expected from their investment.
So what can you do to make sure that a crowdsourcing solution ends up benefitting the business?
• Understand the investment. Be clear before you begin how much these efforts typically cost your company, whether they are research, marketing, development, etc. Make sure that you adequately scale the investment that you’re making in the crowd.
• Understand your role. Sure, you might not be designing a logo, architecting a strategy, or making a suggestion to eliminate waste. But you’ve got to be ready to implement an idea or solution, you’ve got to be able to steward inspiration into reality. It’s still not free. It takes time and resources to sort through ideas, follow-up, and implement. Can you meet that investment?
• Engage your network regularly. Whether they’re employees, fans, citizens, or clients, if you keep the dialogue going all the time, they’ll be more inclined to talk to you when you need something, because they’ll already be there, ready to participate.
So what do you think? How much can crowdsourcing save you?
image credit: accounting image from bigstock
Jessica Day is a marketing and technology writer and editor for IdeaScale. She received her Masters in Writing from the University of Washington. Day also blogs about crowd-based innovation and idea management solutions at blog.ideascale.com.