What Are The Risks Of Using Crowdsourcing?

Click to access Dr. Gebert's Linkedin profile

Click to access Dr. Gebert’s Linkedin profile

How risky is it to use crowdsourcing? What are companies afraid of? What risks are experienced crowdsourcing practitionners aware of and how do they manage it? These questions are being addressed by Dr. Michael Gebert’s thesis, which sought to provide an understanding of the risks associated with crowdsourcing, the potential of the concept to improve business practices and possible strategies that can be used to manage the
identified risks.

His research showed that crowdsourcing’s most salient perceived risk is not external (like the risk of leaking confidential information to the crowd, or not knowing what the crowd will come up with) but internal, and he calls it « turbulence risk. » Here’s a Q&A with Dr. Gebert, one of Germany’s leading crowdsourcing experts and thought leaders.

Michael Gebert surveyed people who had used crowdsourcing to explore their perception on the risks that might be associated with it

Dr. Michael Gebert surveyed people who had used crowdsourcing to explore their perception on the risks that might be associated with it

Crowdsourcing. The concept is marred with criticism and controversy such as economic constraints, social ramifications and ethical implications. But how do people who use crowdsourcing for business really perceive it? Is it really « spray and pray »? Or are there other risks that are associated with it? « Despite the many benefits of crowdsourcing, the main barrier affecting its acceptance is still the perception of risk, usually by members of the organization who have not yet encountered it first-hand, » Dr. Gebert explains in his thesis.

Despite the many benefits of crowdsourcing, the main barrier affecting its acceptance is still the perception of risk

But we wanted to find out more.

Here’s our Q&A with him:

How has the use of crowdsourcing affected the business processes and outcomes generally?

My research results showed a positive impact on costs and potential benefits for firms using crowdsourcing. The survey unveiled also a possible enhancement of the company´s performance to communicate effectively innovation and ideas. In other words, crowdsourcing provides value to a vast majority of fims I surveyed. But the effect on business processes and outcomes is far from its full potential, mainly because firms don’t fully understand the rsisks and potential benefits of crowdsourcing.

What risks are involved with the use of crowdsourcing in a business context?

Overall, the level of the risks involved in crowdsourcing is still highly subjective and dependent on several factors, such as number of participants, area or field of practice, scale of the company, level of intellectual property protection policies, amount of financial investment, standards and practices for quality verification, level of crowd control, and crowd motivation practices. In my thesis, I identified 6 types of risks.

Overall, the level of the risks involved in crowdsourcing is still highly subjective

The risks associated with crowdsourcing (click to see Dr. gebert's whole presentation on Slideshare)

The risks associated with crowdsourcing (click to see Dr. Gebert’s whole presentation on Slideshare)

Specifically, I found the following risks: turbulence risk, organizational/societal risk, financial risk, market/consumer risk, technological risk and creative. I won’t go into details of them all to keep it short. But let me explain that the highest perceived risk, among companies, was the so-called « turbulence-risk, » which has been identfied as most prominent on among crowdsourcing practitionners, followed by organizational/societal risk and financial risk among others.

My thesis identifies turbulence risk as the most prominent source of risk in crowdsourcing

What exactly is « turbulence risk »?

Generally, the risk dimension of « turbulence-risk » can be described as uncertainty, unpredictability and increasing complexity of the business environment, and are usually experienced by large-scale businesses due to unforeseen factors. They limit the validity of traditional planning approaches, because they render the consequences of strategic actions to be unpredictable. Turbulence risks usually result from several factors such as technological changes and innovations, competitor moves, political and economic volatility, and radical shifts in institutional frameworks, among others.

The use of crowdsourcing in a corporate context is in general a new and mostly uncertain endeavour of doing business and clearly needs the commitment of the people in the company. Being experienced in crowdsourcing, the participants in the study were quite aware of the unpredictable nature of the crowdsourcing approach. Turbulence risk is, if we want to paraphrase it, the risk of engaging in the unknown in an environment where risk-taking is not necessarily encouraged.

The use of crowdsourcing in a corporate context clearly needs the commitment of the people in the company

How has risk management been incorporated with the use of crowdsourcing?

Several risk management approaches by the participants were practical in nature, though some recommendations were very creative, such as anonymizing the data and gamifying the process, reflecting participants’ relatively extensive experience with crowdsourcing. Analyses of the survey data uncovered various risk prevention methods applied by the firms – all with a shared objective: to conduct proper risk management schematics for the crowdsourcing process. Current risk management strategies often vary by individual approach.

Analyses of the survey data uncovered various risk prevention methods applied by the firms

No firm stated to keep track of any risks realized, most of them adopt a “wait-and-see” approach on how risks are handled. Hence, firms usually took an optimistic approach to handle risks, and they realize that the « turbulence » risk can be minimized to make crowdsourcing more predictable and controllable by having proper guidance and moderation of the crowd.

Thank you!

You can download Dr. Gebert’s thesis (501 pages!) here:

Closing remark: Note that one way to reduce the crowdsourcing risk is to have a safe and fair legal framework – which Gr. Gebert doesn’t talk about it here. If you want to know more about it, read how eYeka designed its legal framework to make crowdsourcing safe for brands and fair for creatives. And don’t hesitate to get in touch!

About Yannig

Yannig was Marketing Manager at eYeka, responsible for PR, communication and research. Interested in marketing, innovation and design-related topics, he also loves to free his head by cycling, running, reading or drawing. Yannig, who holds an MSc from ESSCA School of Management and a PhD from University Paris 1 Panthéon-Sorbonne, tweets under @YannigRoth and blogs at www.yannigroth.com
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