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Businesses Embrace the Wisdom of the Crowd

Posted: 28/01/2013 10:34

From start-ups to large corporations, businesses are crowdsourcing their future. But is such a strategy wise, asks Tess Riley?

Before the dawn of digital conversation, it made sense for a business to decide on its strategy first, and then go public with it. The thinking went on behind closed doors, perhaps with the help of a select group of stakeholders from the outside world. Today, things are happening backwards: first you ask the public, and then you publish the strategy.

It's partly down to advances in ICT. Digital platforms mean businesses can ignite and sustain conversations with the outside world, letting new expertise inform their activities and decisions. Some businesses are taking this to heart, asking the crowd to help them find the best way forward.

The implications for sustainability are colossal. For businesses looking to nudge the public into new behaviours more in harmony with the resources to hand, engaging them from the outset is crucial. And for consumers and stakeholders wanting to see a bit more leadership on behalf of their favourite brands, there are new ways to speak up. Then there's the potential to come up with completely new ways of running the world - through brainstorms on a scale never seen before.

Forum for the Future is working on ways to nurture this through its project 'Wired For Change'. It's a series of worldwide 'hackathons': day-long events which bring together digital entrepreneurs and those campaigning for systematic change in the food, energy and finance spheres, to search for solutions.

"The key thing is to bring together the 'ideas people', the coders, the hackers and the designers", James Taplin, an expert on innovation at Forum for the Future, explains. "They then have 24 hours and all the support we can offer to develop a business model that is sustainable in both the ecological and business sense."

Taplin and his colleague Hugh Knowles believe that experimentation is key. If you can launch 1,000 experiments, 100 might have merit, 10 might happen, and out of these, one could create big change, goes the logic. Take HatchTag, for example, one of the projects to emerge from the first Wired for Change event, held in Bristol last September. The app links small-scale egg sellers with customers through a simple text system that then enables buyers to locate the nearest eggs to them through a mobile digital 'eggmap'. Scale this kind of project up, and you start to challenge the assumption that you need shops to help you find local produce.

Crowdsourcing goes far beyond the inception of new solutions. Start-ups are drawing on the masses for everything from funding - through investor platforms like Kickstarter - to development. Digital communities are fast-moving, open to experiment, flexible in approach and committed to refinement - all qualities that fit the climate in which social enterprises operate. But, of course, not all these communities see 'saving the world' as their raison d'être...

"There's great digital talent out there", says Taplin, "but, in the main, the focus of their work is not sustainability. It still has to register as an opportunity for them, so that these enterprises get fired up about using the crowd to address some of the most significant challenges we face."

The power of live feedback and criticism to drive innovation in business is not just beneficial for entrepreneurs, though. In the last year, one of the UK's largest retailers Sainsbury's asked an expert crowd to review its 20 x 20 Sustainability Plan, pioneering an approach to planning for the future which may become a blueprint for the sector.

Not that it was the first: Wikimedia launched a special wiki dedicated to its own strategy back in 2009, generating over 900 proposals over two years. But Sainsbury's is perhaps the first to do it for the sake of sustainability.

"The fundamental thing was to embed sustainability into our wider business strategy - to ask the crowd what was working and what we need to do differently and then to act on that", says Alex Cole, Corporate Affairs Director at Sainsbury's. "We had been quietly getting on with driving forward our sustainability agenda but became increasingly aware that mass stakeholder engagement was critical and would turbocharge momentum into what we were doing. The outcomes have been hugely positive."

Two things stand out from the Sainsbury's review: firstly, the crowd of 220 people included employees from direct competitor chains Tesco and Marks & Spencer. Cole admits that the team at Sainsbury's hesitated over this, but ultimately decided that if any aspect of the business was going to offer positive scope for cooperation, sustainability would be it.

Secondly, Sainsbury's was entirely transparent about what it did in the belief that only a wholly open process, warts and all, would deliver the innovative, strategy-shaping outcomes the company was seeking. As Cole points out, transparency is a trend, not a fad, "so it's important to manage it, and use it as an opportunity to get 360 degree feedback of your performance".

Jim Woods is CEO of the sustainable business network Green Mondays, which played host to Sainsbury's crowd review project: "There are two types of company who are going to benefit from getting naked in front of the crowd", he says. "At one end of the spectrum there are the leaders who are confident of their story and who therefore want to share their innovation, knowing that they'll get a good response. At the other end, and perhaps more surprisingly, are those for whom trust is a big problem, organisations like banks and utilities. If they are able to say 'We're broken, we know we need to change, so help us!', then the crowd will respond and get involved."

This touches on something that not many of those getting down with the crowd are saying overtly, but which much of their evaluation implies. Namely, that crowdsourcing information from external contributors is as tactical from a PR point of view as it is strategic from an operations perspective. In a world where collaborative consumption and peer-to-peer exchanges - from crowdfunding to sharing networks - are becoming the norm, no business wants to be left behind.

Andrew Perchard, an expert in contemporary trends at the University of Strathclyde Business School, believes seeking input from the crowd is above all a tactical corporate move: "Sainsbury's have carefully projected an image of themselves of being open. In light of public cynicism of business and politics in the current climate, cultivating that image of a trustworthy company could be a distinct boost and give them a comparative advantage."

Companies need to tune in to the shifting mood of the crowd to keep ahead

In this, therefore, start-ups and large corporations share an agenda. Both are looking for a way forward in the context of a new political and economic scene, in which local democracy, collaboration and openness come up trumps. We've already seen iTunes and Spotify knock CDs out of the ring, and Skype has given phone providers a shock. Those companies wanting to keep ahead of the disruptive innovators need to be tuned in to the shifting mood of the crowd.

For Taplin, this is where the real potential for change lies. "There are systems that need to be fundamentally overhauled: we need to find new ways of doing business that work in harmony with wider sustainability goals. The ideas with the potential to overturn the incumbents can come from the crowd, so it's vital that we, as individuals and organisations, have the desire, ability and vision to embrace that change."

Tess Riley is a freelance journalist and environmental campaigner.
@tess_riley

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