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Entrepreneurship and innovation October 1, 2014

Companies failing to tap full potential of crowdsourcing

By Linus Dahlander and Henning Piezunka
In a new piece of research from ESMT’s Linus Dahlander and INSEAD’S Henning Piezunka called “Distant search, narrow attention: how crowding alters organizations’ filtering of suggestions in crowdsourcing,” they address two research questions, whether organizations that elicit distant knowledge ultimately pay attention to distant knowledge? And whether organizations pay more or less attention to distant knowledge as they are exposed to crowding?

They tested their hypotheses using a unique longitudinal dataset that captures how 922 organizations responded to 105,127 crowdsourced suggestions from external contributors.

The results of their research strongly support their argument that “crowding” (that is, a large pool of responses) leads organizations to narrow their attention, and focus on suggestions that are already familiar to them and filter out distant knowledge.

They show that organizations’ very success in eliciting new information may also contribute to their failure to pay attention to the distant knowledge they have collected, the knowledge that is most likely to contain innovative ideas. 

There are many examples of large successful companies like Coca-Cola and Unilever innovating through crowdsourcing. They seek to gain access to knowledge that is not currently available within their organizations and so seek distant knowledge from external contributors.

However, the success of a crowdsourcing initiative can be judged on a company’s handling of the suggestions it receives and whether they pay attention to the suggestions that represent distant knowledge.

While one might presume that a large pool of responses (“crowding”) is a positive result containing new suggestions and knowledge, the research has in fact found that when “crowding” occurs, organizations tend to narrow their focus and focus on knowledge that is already familiar.

In response to such a large volume of suggestions, companies tend to simplify and rationalize their filtering processes so that they focus on suggestions that are already familiar to them.

This research has important implications for companies seeking to innovate through crowdsourcing. The researchers suggest that firms might fail to innovate, not despite, but because of their success in generating new knowledge.

Organizations with greater access to external suggestions may therefore be no more innovative that firms whose search for external information is more ambivalent.

Conclusion: Companies are failing to tap into the full potential of crowdsourcing/Don’t be lured or lulled by the crowds!

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