CROWDSOURCING: PRACTICAL INSIGHTS FOR ENTREPRENEURS, INVESTORS, AND PHILANTHROPISTS
Crowdsourcing involves soliciting input from the public, usually on a digital platform, to address market gaps and surface promising solutions in an open, efficient way. It often has a voting component wherein the top-voted ideas win support. Crowdsourcing uses collective intelligence to help creative ideas rise to the top – while generating a real-time feedback loop and a shared sense of ownership in the project.
Crowdsourcing facilitates problem-solving and innovation across all sectors. In the private sphere, GOOD helped launch the Pepsi Refresh Challenge, a $20 million campaign that channeled Pepsi's marketing dollars to ignite citizen activism. Social impact endeavors like the Knight Foundation News Challenge and the Case Foundation's America's Giving Challenge harness broad-reaching input about information-sharing and philanthropic giving.
Even governments and the public sector are using crowdsourcing to drive economic growth or streamline interdepartmental functions: the White House's Strategy for American Innovation, Bloomberg Philanthropies, platforms like Citizinvestor, the City of Los Angeles' Innovation Fund, Santa Monica's use of CitySwipe, and Give Detroit Challenge in partnership with Crowdrise. Additionally, citizens are taking up civic challenges via self-organized crowdsourcing – as witnessed by the thousands who scoured DigitalGlobe's satellite imagery in 2014 in hopes of locating the missing Malaysia Airlines flight.
With LA2050, an initiative to create, drive, and track a shared vision for the future of Los Angeles, the Goldhirsh Foundation relies heavily on crowdsourcing. Citizen input via crowdsourcing assists us in investing a total of $1 million annually via the My LA2050 Grants Challenge to organizations (both for-profit and non-profit) with ideas that shape a better future for Los Angeles.
For four years, we have run this crowdsourced campaign to great acclaim – generating more than 1100 projects and engaging nearly 300,000 people in the voting process. Crowdsourcing encourages creative idea generation and promotion, enables us to connect the dots among ideas, supporters, and entrepreneurs, and allows us to co-create solutions for the future of Los Angeles.
Crowdsourcing benefits and concerns
Crowdsourcing is an effective tool to help realize an organization's goals, whether you are an entrepreneur seeking funding, an investor exploring a new idea, or a civic organization trying to identify a breakthrough process.
Benefits for funders:
Benefits for entrepreneurs:
Crowdsourcing also raises legitimate concerns that need to be addressed:
Isn't this just a popularity contest?
The idea most likely to succeed or to have the most impact may not win if the organization behind it has a small online constituency. To address this concern in our 2014 challenge, we allowed the public vote to determine five winners, while the foundation team chose the other five winners.
Competition pits social sector groups against each other.
What crowdsourcing really does is allow groups to compete publicly and transparently. When entrepreneurs submit their proposals to an investor, the selection is made behind closed doors, by a few people. We addressed this issue by encouraging more collaboration among participants and favoring collaborations in our selection process. We also hosted networking events for entrepreneurs to meet each other and join one another's projects.
There aren't enough benefits for participants who don't win.
In our second year we spent a full month honoring and promoting the submissions – before voting even began. In this way, we were able to showcase all the great ideas that were submitted. We also actively pitch great ideas that did not win to other funders.
CROWDSOURCING RESOURCE GUIDE FOR ENTREPRENEURS AND INVESTORS
Whether you are looking for a way to expand your funding, generate awareness about innovative ideas, unleash potential within your constituent base or increase participation in your initiatives, tapping into the crowd may help. The guide below offers some resources on how to effectively crowdsource – for both entrepreneurs and investors.
Running a crowdsourced challenge
Launching the campaign for your crowdsourced idea
Promoting your idea
Sharing feedback and analytics with supporters and participants