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Adapt to Crowd-Sourcing or Risk Losing Relevancy

3p Contributor | Tuesday August 19th, 2014 | 1 Comment

By Jennifer Tuohy

The advent of the Web brought about the greatest shift in business since the Industrial Revolution. Companies had to adapt or die, and many have suffered in the face of online competition (Barnes & Noble, Circuit City, etc.).

However, as with all great revolutions, the Internet revolution generated an unintended consequence: crowd-sourcing. The collaborative power of the people is growing, and it is perfectly poised to bite big business once again.

Collectively described as the “collaborative economy,” the various Internet-powered methods people are using to get what they need from each other (instead of from traditional businesses) include crowd-funding, the sharing economy, the maker  movement and peer-to-peer lending. From using someone’s bedroom instead of staying in a hotel, to asking thousands of people you’ve never met to fund your idea for the ultimate cooler instead of going cap-in-hand to the bank, the collaborative economy is leaving big business out in the cold.

“The 20th century economy was powered by big corporations that standardized everything because they never really knew their customers,” explains Brian Chesky, the 32-year-old founder of sharing economy darling AirBnB. “The 21st century economy will be powered by people.”

Once again, it’s time to adapt or die.

The crowd becomes a company

The uproar from “traditional” businesses affected by crowd-sourcing is getting louder by the day. Once legislature and lawyers get involved, you know you’ve hit a nerve, and evidently the collaborative economy is beginning to cut into numerous bottom lines. Just as with the Internet, crowd-sourcing is a threat for some, but it is also an enormous opportunity for businesses nimble enough to move with it and not against it.

“When you look carefully, the crowd is becoming like a company. Established industries need to pay attention to this,” said Jeremiah Owyang, founder of Crowd Companies, which links big business to the collaborative economy, in an interview with Triple Pundit. “This is the first time competition is coming from the customers. AirBnB hosts are competing with hotels. Regular drivers are competing with taxi companies; the list goes on and on. This is not just a disruption. This is an opportunity to change your business model to leverage this… to work with the crowd so that the crowd becomes a partner.”

By working with the crowd rather than against it, large companies can begin to shift their focus to making things people want, rather than making people want things. It’s opening the potential for sustainable business models that produce less waste and are driven by consumer needs, and today’s consumers are increasingly attuned to products that help rather than hurt the planet. At its essence, crowd-sourcing is the ultimate form of market research, capable of road-testing the market for a product before it’s made. Businesses that embrace this concept could see a huge return. Take GE, for example, which almost ditched its appliance arm before the economy crashed. Today it is partnering with a funky little startup called Quirky to make smart air conditioners.

Embrace the little guy

Quirky is a leader in the field of crowd-sourcing, although its founder Ben Kauffman, a dynamic 27-year-old who invented the Mophie case, hates the word. He prefers “social product development.”

Launched in June 2009, Quirky is an inventor-driven collaboration engine. Let’s say I drew my brilliant idea for a paper towel holder that could refill itself on the back of a napkin: I could snap a picture of it and submit it to Quirky.com. There, a community of inventors almost one million strong would vote on it. The would-be inventions that rise to the top are then presented at a sometimes-raucous Thursday night meeting at Quirky headquarters in New York. The event is broadcast online and you can watch live as Kauffman and crew debate the best.

The Pivot Power Surge Protector is one of Quirky's most successful crowd-sourced products.

The Pivot Power Surge Protector is one of Quirky’s most successful crowd-sourced products.

The chosen ideas then enter the modification process, where the crowd plays a role in every decision. From the simple (what color the product should be) to the complicated (how to solve a tricky engineering issue), the end product is entirely crowd-sourced. It’s not only the inventor who makes money; the community gains influence points as they work on projects, which translate into slices of the profit pie.

The most famous Quirky invention to go through this process is a pivot-able power strip that allows you to actually use all four plugs in a four-outlet strip. This ingenious device represents the essence of Quirky’s mission: finding simple solutions to small, everyday problems. Arguably large corporations are too focused on the next big thing to be able to look around at what basic things are still needed. From a wine stopper that lets you store your bottles horizontally in the fridge, to a smart propane tank that tells you when it’s time to refill, most of Quirky’s products are things you look at and say, “Now why didn’t I think of that?”

Quirky hopes its partnership with Home Depot will help bring its crowd-sourced connected products to the masses.

Quirky hopes its partnership with Home Depot will help bring its crowd-sourced connected products to the masses.

Get set for the future

While most of these products won’t have big manufacturers shaking in their boots, this bottom-up approach is gaining serious traction. GE has taken a proactive approach to the burgeoning competition by embracing this quirky start-up, investing more than $30 million into a partnership with the company. The smart air conditioner Aros is the first fruit of this, and more products are in the pipeline. According to the Wall Street Journal 30 such “connected home” products are coming from the collaboration over the next five years.

The connected home and its engine, the Internet of Things, is increasingly becoming Quirky’s main wheelhouse. More and more of the products it is green lighting are “Internet of Things” type products. This has prompted the company to give birth to Wink, a smart home app and hub that connects all its devices. There are many such smart hubs coming on to the market, but Wink has one thing most others don’t: a partnership with big business. National retailer Home Depot is making a big splash into the home automation world by showcasing Wink and the compatible Quirky products in all its stores as of July 2014. This move is just one more piece in the puzzle of how to bring the power of the people directly to the people.

Jennifer Tuohy writes for The Home Depot and likes to voice her insight on how technology is changing businesses. To view The Home Depot’s line of smart home products like the ones that Jennifer talks about in this article,click here.


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  • Rick

    Quirky is a good platform for new product development. But what about the existing products and services? I just signed up for Echo it platform, they seem to target the existing companies and infuse consumer innovation in products and services we already use. I love this new crowdsourcing era, I think it enables companies to innovate faster and better than ever before.