The IOC-model: Integrating Crowdsourcing In Decision-Making

While there is a lot of buzz about crowdsourcing, there is mainly a great lack of insightful tools to give the concept a meaning and place within existing organizations. As a result, not many companies know what crowdsourcing actually is, let alone they are able to integrate it in their businesses. The IOC-model^TM is a very simple tool that shows how and when crowdsourcing can be relevant by integrating it in your decision-making processes.

In traditional business thinking, there are two viable generic options for performing a certain activity: either you do it In-house, either you Outsource it to a specific party (with levels of collaboration in between). Coase’s theorem provides basic insights in this choice on the level of transaction costs. With the rise of the internet however, transaction costs are lowered furthermore, resulting in a new, third option: Crowdsourcing. In this third option, the task is formulated as an open call towards an undefined, generally large group of people. As such, the IOC-model^TM looks at leveraging the wisdom and skills of the crowd, not necessarily only your customers. Crowdsourcing is bottom-line a new generic option to perform activities/tasks/functions, and should be integrated that way in business decision-making.

How to use this tool? Print-out the figure above, and try to apply it systematically when thinking about activities. For example the design of a new logo: should we do it in-house, outsource it to a specific design agency, or crowdsource it in the form of a challenge like spreadshirt? The content on a new website: are we going to do it in-house, outsource it to freelancers, or crowdsource it like YouTube does for video content? Below, the model is applied to the case of corporate R&D.

Example: Solving a certain R&D problem

1. In-house: In a completely closed innovation model, all corporate R&D is done within the walls of the internal R&D department. When a certain R&D problem arises, it will automatically be assigned to internal R&D personnel.
2. Outsourcing to a specific agent: In a more open approach, core or non-core R&D can be outsourced to specific parties, like universities and research centers. In between, you have collaboration opportunities.
3. Crowdsourcing as an open call: option three is a whole new business model whereby the company phrases a certain R&D problem, and crowdsources it to an undefined, large group of people, in the form of an open call. P&G is a pioneer in this area, posting R&D problems that they can not solve internally, on intermediary platforms like Innocentive. On the other side of the Innocentive platform, about 100,000 (retired) physicists, mathematicians, chemists, and others, are cracking the posted problems. On average, a challenge that P&G’s internal staff of 9000 R&D employees has not been able to solve for 6 months to 2 years, is solved in less than 74 hours on Innocentive, which is in fact quite impressive.

So to conclude, crowdsourcing is an important new option in executing and assigning activities. The IOC-model^TM is not a very ingenious framework, but it can give crowdsourcing a place and meaning within existing organizations in a very accessible way. The different options will be discussed more in-depth later on. I am very interested in hearing your thoughts about the tool.

Interested in Open Innovation & Crowdsourcing? Subscribe to RSS!