Books: 'Crowdsourcing' and the Future of Business

Procter & Gamble had a problem. The Ohio-based consumer-goods company wanted to create a dishwashing detergent smart enough to reveal when exactly the right amount of soap has been added to a sink full of dirty plates. But the challenge stumped their formidable in-house research and development team. So they turned to a contractor—not a well-regarded scientific firm, but a little-known Web site called InnoCentive. InnoCentive, in turn, handed the problem over to its global network of volunteer tinkerers. In short order, an Italian chemist working from her home laboratory had pioneered a new kind of dye that turns dishwater blue when a certain amount of soap is added. She won $30,000 in prize money, and P&G had a solution.

This process is what Jeff Howe, a journalist for Wired magazine, dubs "crowdsourcing." Howe has been writing about the subject in articles and blog posts since 2006; his book, "Crowdsourcing: Why the Power of the Crowd is Driving the Future of Business" (Crown Business. $26.95), was released last week. Howe's argument is that technology now allows certain businesses to get around the chore of hiring full-time employees. Instead, they outsource labor to a network of amateurs who, because of their passion for scientific conundrums or T-shirt design, are willing to work for little or no pay in exchange for recognition and access to a like-minded community. The book is an engaging mix of business, sociology, organizational theory and technology writing and fits the mold of Malcolm Gladwell's perennial best seller, "The Tipping Point." It might even convince you to fire all your employees and rely instead on the virtual crowds.

"Crowdsourcing" is most enjoyable when Howe tackles the inner workings of cutting-edge companies like InnoCentive. He explores Threadless, a T-shirt company where all the designs are created and voted on by users; iStockphoto, which sells the licensing rights to amateurs' photos, and even the U.S. Patent Office, which uses crowdsourcing techniques to help overworked government employees. In each case, the work of the crowds is as good or better than the professionals. Howe also gives his readers a wonderful history of amateurism, which stretches from the days of well-rounded dabblers like Francis Bacon to the current era of extreme specialization. And while it's been covered in-depth elsewhere, his introduction to the open-source software movement, which laid the groundwork for crowdsourcing, is an enjoyable romp perfect for nontechnical readers.

Crowdsourcing has been enabled by the declining costs of all kinds of technologies, from digital cameras to design software, and Howe is downright rapturous about its potential. It "has the capacity to form a sort of perfect meritocracy," he writes, since it allows anyone to solve a scientific conundrum or create a television show, irrespective of age, education or profession. The idea of a profession, in fact, might very well become an "industrial-age artifact," since crowdsourcing liberates office slaves to pursue whatever most interests them, and in their spare time. Crowds, like gene pools, work best when they're diverse, as that increases the chance of useful "mutations" occurring and driving a product (or a species) forward—one key advantage over the specialist, who quickly loses the ability to see a dilemma from a fresh perspective. The crowd in that sense forms a useful "parallel source of labor," Howe muses, one that "might one day cure cancer."

That's optimistic, to say the least. But Howe is surely right that we'll see more institutions embrace crowdsourcing in coming years. Already, there are experiments in journalism, politics, lending, microfinance and more. Many businesses scoff at the idea of opening up their inner workings to an amorphous and often prickly "crowd," which can develop proprietary feelings about the company that manages it, but Howe's message is that they ignore crowdsourcing at the risk of losing a powerful competitive advantage.

Strangely, Howe barely touches on the dark side of crowdsourcing. While it's true that the power of Wikipedia lies in the fact that experts on Central Asia from around the world contribute to the article on Uzbekistan, so too do Uzbek nationalists and their enemies. Crowdsourcing projects can be hijacked by extremists, and editing out or blocking the fringe often means sacrificing vibrancy for a dishwater-colored blandness. And there's no mention of ill-intentioned hackers or trolls, who utilize crowdsourcing techniques to wreak havoc on Web sites, businesses and even offline. (Earlier this year, for example, a network of hackers bombarded forums on the Epilepsy Foundation's Web site with flashing animations designed to trigger seizures and migraines.)

And then there's the worry about what, exactly, a "shadow workforce" means for current professionals. If firms can get loosely knit communities to work for next to nothing, will crowdsourcing destroy more jobs than it creates? Why hire T-shirt designers when the crowds at Threadless do just as well? Who needs professional photographers when we have iStockphoto? Crowdsourcing might be to professionals what the roboticized assembly line was to General Motors workers. Ironically, these ill effects will fall most heavily on the shoulders of researchers, designers, photographers—exactly the kind of white-collar and creative professionals who have so far been immune to the pains of the globalization and technological advances.

But Howe is probably right to stay focused on the positives. Crowdsourcing may represent a true revolution in how human communities form and interact, and an early indicator of where the Internet is leading society. And Howe's book does a better job than anything I've seen of convincing you of that fact.