Crowd Innovation: Enhancing Innovation Processes with External Knowledge

If individuals try to estimate the slaughter weight of an ox and one then takes the mean value of all estimates, one has pretty much determined the actual weight of the animal. Individual evaluations by experts – in this case, for example, a butcher – do not score with the same accuracy. With this anecdote about a competition at a livestock fair in 1906, James Surowiecki introduces his book “The Wisdom of the Many”. Collective intelligence or swarm intelligence is a well-known phenomenon from the animal world and psychological or sociological research. The public joker in “Wer wird Millionär…?”, the location of the missing American submarine USS Scorpion or the ox meat estimate mentioned at the beginning are common examples of shared intelligence. Perhaps it would be more accurate to speak of a stochastic phenomenon instead of shared intelligence since it is initially nothing more than a mean value analysis: As the number of estimates increases, it approaches the actual value. What is certain, however, is that under specific conditions, a group of people makes better decisions than individuals. It is the size of a group that acts as a corrective here.

Enough detour, back to James Surowiecki, the wisdom of the many and the conditions it takes to enable shared intelligence. It is particularly important that there are heterogeneity and diversity of opinion within the group. This diversity ensures different approaches, solutions and competences and thus creates the basis for creativity and the emergence of something new. People should also have the opportunity to express their opinions independently. If the opinions of other group members are known, people tend to adapt their own views to those already expressed, either out of uncertainty or because of a desire for unanimity. Hierarchies also logically distort individual opinions. In summary, this means that a heterogeneous, non-hierarchical and decentralized group is most likely to make intelligent decisions.

There is a good reason why divided or swarm intelligence has developed into a real buzzword in recent years. Digitalization creates precisely the right conditions for shared intelligence. It creates spaces for heterogeneous, non-hierarchical and decentralized communication and interaction. Information, ideas and opinions can be expressed independently of place and time, and an unlimited number of people with different professional backgrounds, different experiences and individual knowledge have the opportunity to get in contact with each other. Under this circumstance, one can truly speak of collective intelligence, which, in the best case, produces new solutions and ideas.

When Open Innovation and Crowd Sourcing Meet

Companies have recognized that digitalization creates the infrastructure for using the intelligence of many to generate ideas and solutions. Especially in a business world characterized by low barriers to market entry, shorter product cycles, and constantly changing needs, new ideas and the ability to innovate are particularly important for companies. Digitalization not only creates space for communication and interaction but also supports organizations in making innovation processes more open. This means using digital channels to open up company boundaries and by this make the integration of not only internal sources such as the company’s employees, but also external sources such as customers, suppliers or experts into innovation initiatives easier, faster and more successful. Although the company’s employees are at the top of innovation sources – they know the processes, products and customers – it is only logical, especially when developing new products, to integrate consumers into the innovation process. Crowd innovation is an opportunity to increase the innovation power of an organization in collaboration with customers. It combines open innovation approaches with community-based Crowd Sourcing. Terms that are often mixed up and everyone understands something different. We will try to make a short distinction to show what Open Innovation and Crowd Sourcing are, what they are not, and which advantages result from the combination of both approaches to the Crowd Innovation Method.

The father of Open Innovation, as Henry Chesbrough calls himself in an article in Forbes magazine, defines Open Innovation as “[…] the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.” It is the opening of company boundaries in order to integrate external ideas, knowledge and stakeholders into the innovation process. The outside world is used to increase the company’s innovation potential. The traditional understanding of Open Innovation corresponds to the transactions or internalization of external technologies and solutions into the company. These processes work not only “outside-in”, but also “inside-out”. Ideas, a company does not want to pursue further, can be carried out externally. In general, it applies that Open Innovation is not dependent on a large number of people or digital processes. Modern technologies, however, facilitate the opening of company borders and accelerate the acceptance and integration of external input.

Crowd Sourcing, on the other hand, requires a digital infrastructure to reach the high number of people involved, which defines this method. In short, Crowd Sourcing is a modern form of division of labour that enables efficient and cost-saving task management through outsourcing to a mass of volunteers. When it comes to Crowd Sourcing, we talk about an anonymous mass that is not defined by the establishment of a long-term relationship. Moreover, the method, in its original sense, has nothing to do with the optimization of innovation processes.

Co-Creation with Customers

Crowd Innovation uses digital technologies to combine the opening of company boundaries for external input with the collaboration potential of the masses. It is the digital opening of innovation processes for scalable collaboration with a community and offers the opportunity for co-creation with customers. By crowd innovation, we mean a customer- and consumer-centric innovation initiative that, unlike traditional Crowd Sourcing, enables a permanent and active dialogue with customers. This not only takes place between the company and the community but also enables the exchange of people within the community. In contrast to the original Open Innovation approach, Crowd Innovation is characterized by an open approach, which is not only carried out offline, e.g. in workshops, but also with large numbers of participants via the Internet. This makes collaboration scalable and external knowledge can be networked and made useful through long-term relationship building. The networking of customers on an online platform not only makes the sharing of ideas and knowledge possible, but the community members can also enter into exchange and discussion with each other. This increases the probability of developing innovative ideas and solutions, since heterogeneous, interdisciplinary sources of knowledge meet, and new impulses are generated.

Crowd Innovation ProcessThe challenge in online collaboration is to give the community as much creative freedom as possible while ensuring a structured and goal-oriented process with realizable results. Collaboration projects with customers should, therefore, be divided into successive phases. Before you ambush the customer with a request for market-ready products, you could first identify customer needs, product requirements or improvement potential. At the beginning of customer collaboration, as much input as possible is collected before the question is concretized step by step using the funel logic. This ensures that the results are limited to those that can be implemented. Within the individual phases, customers have the opportunity to design proposals and develop them further together. Interactions within the customer community with individual suggestions and evaluation systems of the platform help to recognize and prioritize relevant ideas. With the collected knowledge, more concrete questions can be derived for the following phase. Through interaction between open discussion and subsequent consolidation, the relevance and quality of the proposals can be guaranteed. Once relevant ideas have been identified, the next step is to develop collaboratively with the customer solutions and finally finished product ideas. Voting or Prototype Testing ensure a user-centred realization of the ideas.

Advantages of the innosabi Technology

With Crowd Innovation, needs and improvement potentials can be worked out in cooperation with the own target group, whereby products are developed that are really in demand on the market. The innosabi platform supports companies in Co-Creation with Customer communities that allow direct and iterative customer feedback within the entire innovation process. The networking of relevant stakeholders on an online platform creates the necessary freedom and heterogeneity to design innovative and creative development processes and at the same time ensures the uniformity of the collected data. Through timely and open dialogue, customer proximity can be established, innovation accelerated, and risks and costs minimized.