Since the publication, in 2004, of James Surowiecki’s highly influential book, “The Wisdom of Crowds,” the idea that large groups of people are smarter than a few individuals, however brilliant, has been gradually gaining prominence in academic circles, business communities and, most importantly, public opinion.
The practical application of this idea has taken shape in the approach called crowdsourcing which was defined as “the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.” Numerous organizations, including corporations, government agencies and non-profits, are now using crowdsourcing as a problem-solving, new product development, operational improvement and marketing tool. Crowdsourcing has also been successfully applied to public policymaking: from writing state constitutions to creating “smart cities.”
Another approach that engages crowds in important socioeconomic activities is crowdfunding. Although the idea of raising monies from the public (i.e., for charitable causes or disaster relief) is nothing new, the invention of the on-line crowdfunding platforms, such as Kickstarter and Indiegogo, has made this process substantially more streamlined and cost-effective. Equally importantly, crowdfunding has democratized the process of raising capital to start a new business or to launch a new product. It does so by allowing entrepreneurs to present their cases to larger audience of potentially interested parties, in addition to a limited number of professional investors.
However useful crowdfunding might be to startups and early-stage ventures, it doesn’t solve all of their problems. For example, crowdfunding appears to be more relevant to mid-stage pre-market products, when potential buyers can already recognize existing market opportunities, but its benefits might be less obvious in the early stage product development.
Moreover, for a small company trying to do something truly innovative, the primary benefit of crowdfunding is not always the money; very often, it is the community. Having financially invested in the company, people become emotionally invested too. This emotional investment prompts them to help the company in some other ways: by providing feedback, sharing ideas or even their time (as beta testers and early users). It is this offer of additional human resources that startups and early stage projects often need more than money. However, so far no systematic way for small businesses to raise human capital has existed.
Enter crowdraising, an approach allowing crowds to pledge time instead of money to support causes they like. CrowdRaising.co, a startup founded by a NYC-based team that is passionate about open innovation, is building the world’s first crowdraising platform. (Full disclosure: I’m a member of the CrowdRaising.co Advisory Board.) Any project with a creative or innovative goal can use this platform to hire a “crowd” to perform business-related activities. These activities could be as simple as taking part in a survey, beta testing, giving a feedback on pricing or social media shares. But they also could involve more complex tasks, such as coding, design work or strategic advice. After completing their work on the project, the members of the crowds are expected to be rewarded: from a website mention or a free product for simpler tasks to cash or equity for more complex activities.
Crowdraising is a new and exciting idea, whose full potential is yet to be realized. However, it’s tempting to speculate that at the very least crowdraising may create a new paradigm of finding and hiring employees in the gig economy. But one thing is certain: new ways of exploiting the wisdom of crowds will keep emerging.