Crowdsourcing: A New Paradigm Of Knowledge Management

Dec 30, 2013 4 Min Read

There is a saying “the more the merrier,” thus the concept of collective intelligence. What is better known as crowdsourcing is fast becoming a new paradigm of knowledge management.

The Oxford dictionary defines knowledge as facts, information, and skills acquired through experience or education, and the theoretical or practical understanding of a subject. It describes memory as the capacity to store such information.

But more importantly the ability to use any form of knowledge to one’s advantage is strategically known as knowledge management. This basic principle applies to any organisation as well.

Knowledge management in organisations is often dependent on two factors. One is from the experience and knowledge of the senior management team, and the other is the ability for the organisation to learn especially through formal education or training.

However, there is a new paradigm to knowledge management, and it is called crowdsourcing.

Crowdsourcing in a nutshell is about tapping into the knowledge pool internally or externally in order to produce ideas and insights which can give the organisation a competitive advantage.

Tapping into such collective intelligence can be done through various forms. Crowdsourcing can be divided into two types, internal and external.

External crowdsourcing

External crowdsourcing refers to an open call to the general public to contribute ideas.

This can be very insightful and minimise risks associated with uncertain marketplace demand because it involves a cadre of customers in key marketing, branding and product development processes.

A good example is Pepsi’s “Do Us A Flavor” campaign where Pepsi’s potato chips brand asked consumers to come up with a new flavour.

The campaign awarded US$1mil to the person who submitted the winning flavour. Apart from getting a winning flavour the company gained a strong social media following.

Another example is Starbucks, “My Starbucks Idea” was one of the early crowdsourcing-like initiatives that gained widespread attention.

It encourages customers to submit ideas for better products, better customer experience, and new community involvement, among other categories.

Customers can submit, view and discuss ideas along with employees from various Starbucks departments.

The company regularly polls its customers for their favorite products and has a leaderboard to track which customers are the most active in poll participation and submitting ideas and comments.

As of early 2013, they have received more than 150,000 ideas and of these, 277 have been implemented. This is a great example of marketing success and nothing less of a good innovation story.

External crowdsourcing is also a great way to engage end users for product design and development where products can be developed, not necessarily via research and development alone, but from crowd ideas.

Caterpillar Inc, an American corporation which designs and manufactures construction and mining equipment, launched a website called the Online Customer Research Panel that asked potential buyers to weigh in on features they wanted to see in a new truck the company was designing.

It encouraged professional truckers and trucking companies to submit ideas via a website. These individuals were also encouraged to provide feedback about existing designs.

Caterpillar’s crowdsourcing effort helped the company offload production costs it would normally have spent on guessing what customers wanted.

External crowdsourcing is usually done via social media or web portals. Most of these platforms do not cost a lot of money to set up but it can have a huge impact on the companies’ performance in terms of demand driven products and services, not to mention brand engagement from the public.

Internal crowdsourcing

The second type of crowdsourcing is to tap into the collective intelligence of the company within the organisation amongst employees without prejudice.

So anyone, regardless of rank and file, education background or experience, can have the chance to submit an idea. This could help to improve processes or even potentially be a game changing idea for the organisation.

A good example here is AirAsia’s “BRAIN” programme, which stands for AirAsia Big Red Awesome Idea Network.

BRAIN is an internal crowd-sourcing website where employees cansubmit an idea on how to improve AirAsia’s business in terms of operations and market development.

Employees are given the opportunity to contribute, comment and vote for ideas put forward to improve business related tasks and services.

The best ideas bubble to the top and feasible ideas get rewarded. Ideas which are not feasible are also given a lapen pin as recognition for their effort. This is a best practice which engages staff at all levels to play an active role in helping the organisation to succceed.

AirAsia also uses crowdsourcing to get suggestion on routes to travel from their 841,271 followers on Twitter, which is evidently a great pool for external crowdsourcing.

Another interesting example is IBM’s “Innovation Jam” which was the largest IBM online brainstorming session ever held with more than 150,000 employees from 104 countries and 67 companies.

As a result of this initiative, 46,000 ideas were produced and 10 new IBM businesses were launched with seed investment totaling US$100mil.

This could have saved the company hundreds of millions in terms of research and staff cost.

The liberalisation of knowledge management is the key to success in an ever changing market environment.

Insights to demand creation can be quickly understood as compared to numerical data which is often skewed towards the supply side.

Crowdsourcing has proven to be a strategic approach to improve open innovation and creativity while minimising labour and research expenses.

It is convenient and time saving, especially with the use of the Internet to solicit feedback from an active and passionate community of fans.

Organisations should consider crowdsourcing as a serious initiative to remain competitive and innovative especially in an ever changing business environment today.

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Tags: Business Model

Raj Kumar is vice-president of Global Consulting for UCSI Consulting Group and is a Blue Ocean Strategy Expert and helps companies around the world to reconstruct market boundaries. Visit for more info.

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