In with the in-crowd

NEC Faculty Fellow, NYU Stern School of Business

Over the last few years there has been increased interest among start-ups in using Internet-based platforms to crowd­source a wide variety of resources, including funding, labour, design and ideas. Does this approach work?

Coined by Jeff Howe of Wired magazine in 2006, crowdsourcing means taking, “a function once performed by employees and outsourcing it to an undefined (and generally large) network of people.” Ostensibly, the primary motivation for companies to go down this road is to reduce costs as well as to harness the skills, collective knowledge and wisdom of the crowds to complement the skills of their employees. The typical approach is to allocate this activity to a specific online crowdsourcing platform, such as Quirky, 99designs, and Innocentive, among many others.

In 2000, the CEO of Goldcorp, Stan McEwen, shocked the gold industry with the Goldcorp Challenge. Mr McEwen wanted new ideas of where to dig for gold, and he figured that if his employees couldn’t find the gold, then someone else would be able to. It was a blockbuster success. In all, more than 110 sites were identified of which 50% were previously unknown to the company. Furthermore, more than 80% yielded significant gold reserves. What the Internet does is enable crowdsourcing on a scale and at a level of granularity that was previously unimaginable.

Today, small start-ups and massive enterprises alike have embraced crowdsourcing and co-creation to conduct smart business. New online platforms help businesses connect with individuals seeking software development opportunities and thus will pave the way for the virtual offices of tomorrow.

But while entrepreneurs and companies can use crowdsourcing to harvest knowledge and ideas from users, there are challenges, too. Take product design, for example. Hundreds of individuals will have different expectations that can be a challenge to manage, if not ineffective. Start-ups and entrepreneurs also need to be careful about product development. In some situations idea refinement and feedback is very useful in the early stages of a product’s lifecycle, when reworking ideas is cheaper. But in many situations when there is a credible threat of plagiarism or some intellectual property contamination by releasing an idea too early, it is better to crowdsource after you have a product, not before.

Another downside of crowdsourcing is the potential influx of a very high volume of half-baked ideas and the resulting overhead cost of evaluation. This breadth of creative input, while attractive in its own right, can often require considerable review to find the best insight. When ideas are not completely thought through they simply create a lot more work, which would be needed to vet and validate the merits of the ideas. This can waste critical resources, especially for start-ups, which are often starved for time and money. To avoid this, some of the more mature crowdsourcing services now have filters and controls to more readily tune the “relative influence” of various types of participants.

For any start-up to successfully crowdsource, one best practice is to build a relationship with the people who actually care about your product or service. This approach starts by adopting a longer-term perspective on returns from crowdsourcing, as opposed to maximising a one-off experience. In fact, academic research has also shown that crowdsourcing is best utilised when it becomes a continuous practice rather than a single event (such as an innovation contest). These studies suggest that users should be engaged in the innovation process throughout the lifecycle without disruptive gaps in their involvement.

Crowdfunding is another form of crowdsourcing where the selection mechanism is such that the crowd votes with its money. Essentially the crowd evaluates and selects projects for funding and, additionally, will often provide suggestions to the fundraiser on how they should implement their product or service. The crowd may well engage in promoting the product or service to help it succeed. However, if the start-up does not respond to their suggestions or deliver the rewards on time, the crowd may turn against it, which will be detrimental in the long run.

In short, the benefits of crowdsourcing can be substantial. According to the MBO Partners’ State of Independence in America (see report, the number of independent workers is expected to rise to 23 million by 2017. The future of crowdsourcing is unequivocally bright and we expect start-ups to increasingly embrace it in the coming years, especially for many mission-critical tasks.

This excerpt is adapted from an opinion piece by Anindya Ghose published in The Wall Street Journal, 27 October 2014. The original piece is available here:


MBO Partners (2015), State of Independence in America

Innovation and the digital economy at the OECD Forum 2016

The future of work at the OECD Forum 2016

Other OECD Forum 2016 issues

OECD work on the Internet economy

OECD work on innovation

OECD work on industry and entrepreneurship

OECD Observer on the future of work

© OECD Yearbook 2016

Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.3% Dec 2017 annual
Trade: +4.3% exp, +4.3% imp, Q3 2017
Unemployment: 5.5% Dec 2017
Last update: 23 Feb 2018


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Ambassador Aleksander Surdej, Permanent Representative of Poland to the OECD, was a guest on France 24’s English-language show “The Debate”, where he discussed French President Emmanuel Macron’s speech at the World Economic Forum in Davos.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018