Can Crowdsourcing Really Work for Unilever?

Unilever has an offer for all you idea people. The company has a vision of a better future for our world and its business and it needs your help to make it happen. It unveiled a new Open Innovation website to gather and assess ideas from external resources, inviting “anyone who has a fresh, serious approach to new thinking” to pitch in. What do you get in return? The opportunity to make a difference to millions of people's lives and a financial reward if Unilever decides to pursue your idea.

Some would say it’s a great way to generate the sort of innovation Unilever needs to meet the ambitious goals it set in its Sustainable Living Plan. Others would argue it’s a waste of time and the company should look inside and not outside for solutions. So which one is it? Or in other words, can crowdsourcing really work for Unilever?

The starting point of the new open innovation platform is the Sustainable Living Plan. Announced in 2010, it includes some bold targets, from doubling Unilever’s sales by 2020 while halving its carbon footprint to helping more than 1 billion people take action to improve their health and well-being. When Unilever announced these goals, it didn’t have the exact plan for how to meet them, and it was pretty clear to the company that it needs partners to develop the right roadmap. “Delivering these commitments won’t be easy. To achieve them we will have to work in partnership with governments, NGOs, suppliers and others to address the big challenges which confront us all,” Paul Polman, Unilever’s CEO wrote in the introduction to the plan. Yet, I’m not sure if he or others in Unilever thought they would end up inviting all interested parties to join the process.

Unilever’s call for new ideas, designs and technologies is focusing on 12 ‘challenges and wants’, which are key areas where the company needs your help. Some are more specific like sustainable washing or less salt in food, while others are more general, like renewable energy storage or changing consumer behavior. To manage all the aspiring inventors that submit ideas, Unilever hired the consultancy Yet2.com to review submissions and make first assessments of the suggestions.

Although Unilever seems to be doing here something quite refreshing and innovative, it’s not the first time a public company has used crowdsourcing to develop new products. GE, for example, created the Ecomagination Challenge to crowdsource innovative clean energy ideas across America in 2010. Other examples include Dell which has its IdeaStorm community to improve its products, Volkswagen creating a contest (App my Ride) to develop its first App, and Starbucks asking stakeholders to help develop ideas to reduce waste.

Actually, the idea of crowdsourcing is no stranger to Unilever either. According to Bloomberg Businessweek, Unilever established an open innovation unit to work with outside partners in 2009, which resulted in increase of the share of external ideas that are adopted by the company’s business units from 25 percent to 60 percent. It sounds pretty impressive, but does it mean that crowdsourcing actually works? Not necessarily. In Unilever’s example, we know that the company is accepting more external ideas, but it doesn’t necessarily mean that these ideas are better than ideas created internally in terms of sales/profit generation.

If Unilever looks into research on the value of crowdsourcing it will find that the jury is still out. On one hand, some studies show clear positive outcomes from using crowdsourcing, from cost reduction to development of products that are closer fit to consumer needs to improved engagement with customers. On the other hand, consumers’ limited knowledge of a company’s cost structure can lead to too many infeasible ideas. Putting too much power into consumer's hands can lead a company to make bad choices (like Kraft's short-lived rebrand of Vegemite as iSnack 2.0).

While the pros and cons of crowdsourcing are pretty well known, it’s still not clear if outsourced new product ideas are actually better than new product ideas generated by a firm’s professionals. One study that actually did such a comparison was conducted by Marion Poetz and Martin Schreier. In their experiment, which was presented in 2009, executives of a company evaluated ideas for a new product coming both from the company’s professionals and customers (blind to their source). The researchers found that "user ideas clearly score higher on average in terms of novelty and customer benefit, and somewhat lower in terms of feasibility."

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.