We got some face time with flamboyant Massolution CEO, Carl Esposti (and founder of the Crowdsourcing.org community platform) about next week’s first-ever crowdsourcing & crowdfunding conference.
Phil Fersht, CEO HfS Research: Good morning, Carl, we’ve been keeping tabs on your firm’s development over the last few years in the enterprise crowdsourcing and crowdfunding space. Can you give us a quick snapshot of the company and the premise behind it?
Carl Esposti, Founder Crowdsourcing.org and CEO Massolution: Yeah, absolutely Phil. Thanks for the discussion. So growing up in outsourcing, offshoring and shared services, I realized few years ago that a big shift was underway, one that was much greater than the shift off-shoring had on outsourcing. The next stage of the globalization of services was occurring and work was now being distributed more broadly through the development of online communities where you can tap into workers to do a whole bunch of different things. Whereas offshoring just made outsourcing cheaper, this new distributed online model was also making things quicker and better. It was a very different model and it was really going to shake things up!
So, seeing that this was going to be a big play for large enterprises, I established Massolution to help companies explore and implement crowdsourcing and crowdfunding solutions and Crowdsourcing.org to really organize and publish information and data around these new models so that enterprises
could understand how they fitted with the more traditional models they understood so they could learn what new things were possible with these new approaches.
Phil: Crowdsourcing hit the sourcing industry with quite a lot of hype about three or four years ago – and we ‘re still waiting to see how it’s going to become part of the broader outsourcing scenario. What’s been going on, here, and how do you see this evolving?
Carl: So, I think the first thing is to try and help people put their arms around exactly what crowdsourcing is and it’s pretty straightforward when you describe it in simple terms. Think of it like this; unlike outsourcing where you award larger packages of work to companies, with crowdsourcing you outsource much smaller packages of work, sometimes discrete tasks, to the best worker for the job. This could be based on availability, price, skills, etc.
It’s about using distributed workers that are connected online that you reach through worker communities. You can tap into these workers, as and when you need them to fundamentally do two things: perform work (e.g., find and organize this data) or to solve problems (e.g., we are losing customers, how can we improve our retails stores?).
Crowdsourcing gives you an opportunity to integrate new ways of performing work into current outsourcing models or to outsource different types of work into crowd where traditional outsourcing models don’t fit.
You have access to abundant capacity provided by all of these workers; over six million are currently engaged performing crowdsourcing work. They can perform high volume routine tasks quickly with many; often thousands of workers, working concurrently or you can use them in a whole new way to solve difficult problems. Giving you ideas and feedback on products that you are developing, providing ideas on how to improve your brand or it can be solving complex problems like supply change issues around material forecasting, for example.
If you look at how crowdsourcing is impacting outsourcing, we are now seeing the innovation, strategy folks in large enterprises and in the big ITO/BPO providers, responsible for looking out onto the horizon, starting to embrace this model and explore it. Seeing the model as a way of processing work faster and at lower cost that traditional outsourcing. Also, requirements to outsource new types of work that have come about because of the new internet-centric businesses that simply just didn’t exist 10 years ago. This work can be crowdsourced more effectively than other sourcing options: big data problems, content problems, problems with connecting with customers globally. Crowdsourcing offers us a solution to address these new types of issues. These types of new business needs haven’t needed to be addressed before in such a scale or so rapidly as in previous more traditional businesses that move more slowly.
The big BPO and ITO providers know that for most enterprises, outsourcing and offshoring has become table-stakes so they are looking for the next level of change in terms of delivering new services or processing work cheaper and quicker. And they are looking at it really from two perspectives. First of all, what can they do in crowdsourcing that allows them to go to market with new offerings to generate additional revenue streams. They are looking at these plays either to establish a stronger footprint with existing clients or as a competitive differentiator to help win new logos. Then the other side is that they are looking at how crowdsourcing is changing service delivery in terms of their own back office operations whether that’s client work or whether it’s their own work. They are also realizing that as well as using ‘public crowd” workers, crowdsourcing technology and processes also allows work to be distributed into the internal workforce, we call that the “private crowd” – which allows them to drive much higher utilization within their captive workforce and to tap into internal experts that aren’t necessarily assigned to a particular client account but they might have the right answer to a given problem.
Phil: So would you say it’s more small- to mid-sized businesses which are being taking advantage of crowdsourcing today, than the enterprise? Or are you beginning to see enterprises look at this more strategically?
Carl: So it’s a great question and it’s best answered by looking at the supply side of the market. In the crowdsourcing provider side of the market is there are three types of company. There are the freelance market places that have traditionally serviced small to medium sized businesses. We all know that there is a big cost of entry to outsourcing so utilizing freelancers allow smaller companies to access work on a more sort of agile basis. Those freelance companies, the likes of oDesk, are building technology to enable larger enterprise to utilize their labor pools on a task-bases (aka crowdsourcing) rather than the more common “worker for hire” basis. So larger enterprises are now able to start to tap into the freelance market labor pools for crowdsourcing task-based work.
So the predominant customers of the cloud-labor forms of crowdsourcing at the moment are enterprises under a $100M that are predominantly tapping into to it through the freelance market places or very large enterprises that are using a range of crowdsourcing providers to solve some of the big enterprise problems around data, content and analytics and things of that nature. And then on the problem solving side, ideation type of activities, that’s mostly the larger enterprises that have large problems to solve, new markets, new competitors, new customer demands. Most of the adoption in the ideation side is in the larger, more established companies that are finding that in some instances, there are better or fresher ideas outside the enterprise than inside.
Phil: What are the hot areas of crowdsourcing now where you are seeing real traction? What types of processes and expertise are clients leveraging?
Carl: So in one area there’s this what we call micro-tasks. And these are pretty straightforward; they are very short tasks that require a simple workflow. So there are jobs that can be done in very high volume and processed by lots of people at any one point in time like data management and categorization. There are more complex tasks we call expertise-based tasks like content creation, transcription, localization and analytics.
Take for example large online retailers. In order for ecommerce retailers to have their products found by the search engines, their catalogues have to be created, optimized and simply found! A lot of content has to be written to create unique product descriptions in order to be indexed by the various search engines. As companies expand internationally, they need that content translated or localized. So the crowd is doing massive amount of work in these type of area.
There is a lot of general data management type of activity. You can use the crowd to improve data sets and organize them. There is a lot of crowdsourcing work being done to validate documents that have been scanned by OCR systems. Machines are able to read handwritten forms at an accuracy level of 85-90 percent but if think about claims processing and invoice processing etc., at the end of the day it requires a level of human judgment to be able to accurately compare electronically scanned forms with what’s on the paper, when 100% accuracy is needed and 90% isn’t good enough. So there is a tremendous application of the crowd around improving further the work that can’t be performed by machines. So that’s one of the largest use cases in the simple micro-tasks category.
Computer systems can do an awful lot in terms of processing data but there’s an awful lot that computers are too dumb to do where a human needs to use judgment in order to be able to do creative things and things like entity matching, determining whether two data field are the same or different or two phrases are the same or different.
A lot of crowdsourcing work is being done in the area of sentiment monitoring and analysis. A particular division in tweet maybe a positive or a negative reference and it requires human judgment to make these sorts of calls and it’s very difficult for machines to determine those nuances. So when big companies are looking to see what their customers are saying about their products and brands and how they are reacting to campaigns for example, the crowd is being used very extensively to mine, organize and to filter sentiment and the type of information that’s being communicated around brand and around companies.
Phil: Do you see the BPO’s really looking to leverage crowdsourcing in their own models or do you think some of them see it as a threat to their traditional model?
Carl: We absolutely see some of the most progressive BPO companies looking at how crowdsourcing affects their market model and what opportunity it presents and what new doors it opens. I mentioned earlier that a number of large ITO/BPO providers are already investing in crowdsourcing strategies. I can tell you that during the course of the next four-six months, a number of the big ITO/BPO providers will be launching different types of crowdsouring market offerings. For example we are aware of a number of Tier 1 companies that are launching crowdtesting market offerings. Basically that’s about testing, mobile and web applications, faster, cheaper and more thoroughly and under real world circumstances rather than relying on lab simulations. There are a couple of big Tier 1 providers that we are working with are very aggressively exploring crowd as a very central part of the competitive strategy over the next five years.
Phil: So – finally – you are having an enterprise crowdsourcing conference coming up in New York next week and hopefully we will get some HfS readers to attend as well. In a snapshot can you just give us a quick lowdown on what to expect?
Yeah certainly. We have a one-day main event on the 19th of September. And there is also a half-day pre-conference workshop for the large enterprises that already performing crowdsourcing work or are really serious about exploring it and are wishing to set up pilots. We have structure the content for the conference with a focus on how is crowd relevant around four key elements of enterprise strategy – how does “crowd” affect an enterprises strategy regarding innovation, sales, growth, and customers. How does enterprise crowdsourcing affect these aspects of the business?
And we have got a very strong line up. Some of the biggest enterprises including LEGO, Xerox, Walmart, Amazon, Google, LinkedIn, IBM, Genpact, will be presenting, talking about their uses of crowdsourcing. So the event will help attendees learn how the most progressive companies are developing enterprise crowdsourcing models and strategies. And then we have got some of the leading crowdsourcing providers who are really developing the technologies and new models for how crowdsourcing can being applied.
The other thing that we are going to cover is enterprise crowdfunding. We will be looking at crowd funding from the point of view of how does it affect the enterprise not just how small businesses are raising capital via crowdfunding. We have use cases of enterprise crowdfunding projects by the like of Coca-Cola, American Express and ABN AMRO – talking about how these large enterprises are using crowd funding as a new model for market validation of products and how crowdfunding is being modeled as an online incubator. You have companies like Proctor & Gamble and General Mills for example that have realized that through crowdfunding they get access to human capital, Intellectual Property, and demand signals on what the market actually needs and at what levels of demand, far better than traditional focus group models. So we’ll be hitting on that as well.
Phil: We’ll look forward to seeing you folks there. And thank you very much for spending some time with the readers today.
The first 20 HfS Readers to email [email protected]
Carl Esposti (pictured above) is CEO of Crowdsourcing and Crowdfunding insights and advisory firm Massolution. You can learn more by clicking here.