Digital Initiative Summit: The Business of Crowdsourcing

Gaining the community's trust is vital to building a successful business with crowdsourcing.
by Dina Gerdeman

Gaining the community's trust is vital to building a successful business with crowdsourcing, agreed business leaders at the Digital Initiative Summit at Harvard Business School on March 30.

When Tongal got its start in 2009, some members of the community questioned whether the Santa Monica-based platform might be too good to be true. The company was crowdsourcing creative work, inviting people to both pitch ideas and create marketing videos — and promising to pay anywhere from a few hundred for the best concepts to several thousand for top-notch produced projects.

"People would be like, 'Is this a scam?' For us, the most important thing we've done is build trust with the community," said James DeJulio, co-founder and chief product officer of Tongal. "Our marketing strategy was to pay people as fast as we possibly could. If you win $1,000 for your idea, we will send you a check that day."

Greg Lipstein, an MBA student at HBS who is also co-founder of DrivenData, agreed during a summit session called "Innovating With the Crowd" that it's important to maintain a healthy dialogue with the community to build credibility — which in turn boosts participation and engagement.

"Part of that is establishing your authenticity in this space," Lipstein said.

DrivenData hosts online challenges, usually lasting two to three months, in which data scientists compete to come up with the best statistical models for tricky community problems, with winners taking prizes of $5,000 and $7,500, for example.

Many nonprofits and other organizations can't afford to hire data scientists, so DrivenData taps into college students and professionals who are looking to work with real-world data sets. For instance, the company is seeking a model for using Yelp reviews of restaurants to help the city of Boston predict which places might be violating public health regulations. And it is working with an education nonprofit in Watertown, Mass., Education Resource Strategies, to study how school districts spend money.

"The outcome is that this nonprofit can take a school budget and use this piece of technology to process and compare where school spending is going well," he said.

Companies Work On Getting The Question Just Right

In working with organizations, both DeJulio and Lipstein said a lot of work goes into crafting questions to put out to the community.

"How much are we involved? The answer is quite a bit in scoping out the right question with them so the community can be of value to them," Lipstein said. "If it's a simple question, there's no reason to crowdsource."

DeJulio agreed that framing the question just right — free from "marketing double-speak" — is important to getting quality responses from the community. A beverage company client for Tongal initially asked for an ad that would convince people that its product was healthier than competitors. But if the question were posed in that way, many of the submissions would look the same, DeJulio said. So Tongal convinced the client to draft a challenge focused on getting consumers excited about the product.

Community Members Are Eager To Participate

Tongal, whose client list includes Lego and Colgate-Palmolive, said "the client is coming back because it's getting great work from people who (care) about the product."

In return, many of Tongal's members have done quite well. In addition to a vast array of marketing videos, Tongal had seven films in the Sundance Film Festival this year, and 41 of its people earned more than six figures last year.

"We have 70,000 workers," DeJulio said. "They have no obligation to work with us, and yet we have never missed a delivery."

That's largely because people truly want to be part of crowdsourcing projects, said HBS Associate Professor of Business Administration Karim Lakhani.

"There is this thing, this intellectual access capacity," Lakhani said. "(These are) people with amazing amounts of free time. Put a problem in front of them, and they will participate."

Lipstein said the combination of "cool data sets" and a social mission has led to strong engagement on his company's challenges.

"People are incredibly willing to help," he said. "We're offering something they find valuable that is hard to get."

Plus, it's important for a company to nurture an ongoing relationship with its contributors, particularly its strongest participants. In addition to money and prizes, DeJulio said Tongal awards points for the projects people submit and provides bonuses to those who earn the most points during certain periods. It even holds an annual black-tie gala called The Tongies in which the most talented community members are recognized for their creative work.

"That's how we keep the best talent coming back," he said. "We're constantly feeding them information and treating them with respect. One thing that drives participation is fun. If somebody is doing something in digital, it's got to be fun."

A growing number of companies are benefitting from crowdsourcing, but session leaders acknowledged they have encountered impediments to scale. DeJulio said Tongal is always seeking new demand for creative projects to keep up with the supply of community members eager to take up challenges.

"We're displacing a way of doing business in a big organization for the last 70 years," said DeJulio, who was a production assistant before getting involved in Tongal. "We don't want to offend BBDO. (Many) organizations haven't come around to this way of doing business. There's this organizational complexity and this thing out there called fear. 'I like my six-figure job, I like this big organization, and I don't want to do anything that will make me lose my job and credibility.'"

Lakhani said business leaders have an opportunity to further harness the power of crowdsourcing platforms, particularly by finding ways of enticing traditional organizations to use them more.

"It's a darn exciting time," he said.

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About the Author

Dina Gerdeman is a senior writer for Harvard Business School Working Knowledge

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    • Chintamani Rao
    This is not really germane to the content of this piece, but I have to say I am surprised to see "intellectual access capacity". You mean 'excess', surely? It's surprising because it's not just a typo: it's ill-educated English in HBS Working Knowledge.