Friday, July 17, 2015

Enterprise Crowdsouring: A Primer

When my grandmother immigrated to the United States, she couldn't afford to call her family on the telephone.  That was about 70 years ago.  Today, I have a friend whose brother moved to Sri Lanka to become a Buddhist monk and literally lives in a cave.  He and his family Skype.  This is the power of the Internet--for a significant portion of the planet, it's now possible for any two people to communicate from anywhere, in real-time, basically for free.

This technology has improved our lives in many ways, but it's also brought a lot of unexpected change, and will continue to do so.  Almost every human institution that exists today--companies, governments, academic institutions, systems of government and economics--were created at times when free real-time communication was unfathomable.  When you hear technology companies talk about 'disruption', they're usually talking about changing an institution whose methods assume that people can't communicate in real-time for free.

Enterprise Crowdsourcing isn't about changing a specific industry, but rather the very nature of how businesses and other enterprises operate.  We're challenging the command-and-control model of businesses, which says that tasks should be done by specialized departments, with information flowing up to decision-makers at appropriate time intervals and then back to departments at the discretion of their managers.  Command-and-control actually makes a lot of sense when communication is expensive, but it's becoming increasingly inappropriate as a way of doing business now that communication is free.

When you need to forecast your company's sales for the next quarter, the old model said you should hire an analyst or consultant and assign them the task of sales forecasting.  The new model says you should ask everyone at your company, perhaps using a prediction market.  This communication is reasonably cheap (compared to paying analysts / consultants) and your employees have access to the insight needed to make highly accurate forecasts.

Forecasting is one example of a business function where the crowd outperforms an individual/department, but there are many others, some of which I'll outline in upcoming posts.

Ben Golden is a software developer, economist, and evangelist for Inkling Markets.  You can find him on Inkling Markets as benthinkin, and on Twitter, @BenGoldN.

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