It makes a well-structured and presented case for co-creation, drawing on examples such as Lego, Coca-Cola, SFR, and others, and is definitely worth a read.

There is much to share. For now, I will quickly review the events I’ve run so far and highlight just one insight that was prominent in the questions or discussions from each event. Many of themes mentioned were in fact echoed across several events. I will write soon in more detail about a number of these topics.

- Ketchum Pleon Amsterdam client presentation
Insight 1: Know when to use open calls and managed crowds.
A question that frequently arises when you discuss crowdsourcing is how to manage the sheer quantity of input you can get. Of course the best approach depends on what type of crowdsourcing you are doing, but the first answer is in the filtering mechanisms that you use, which enable the most valuable input to become visible. However another approach is to use a closed crowd, where participants are selected by quality or profile. In this case you can take a ‘managed crowd’ approach in which a more individualized approach optimizes outcomes. While many definitions of crowdsourcing refer to an ‘open call’, in fact in many siutations restricting the pool of contributors will lead to better results.

- TheNextWeb CxO Summit keynote in Amsterdam on The Future of Crowds.
Insight 2: We need to understand where crowds are and are not useful.
In Andrew Keen’s presentation following mine he said that it is individual brilliance and not crowds that drives progress. I wrote a response on why I think he is wrong. I also intend to create a framework that shows where crowds are most relevant and where they should not be used, because there are many domains where crowds are not superior to individual insight or other approaches. My evangelism for crowds does not mean I think they are always relevant. Let’s use them where they can create most value, and understand the boundaries.

- TheNextWeb Conference keynote in Amsterdam on The Future of Crowds
Insight 3: Crowd business models are moving to the center of the startup space.
TheNextWeb Conference is at heart a startup event, attracting entrepreneurs from across Europe and beyond, and crowd business models were much in evidence among those presenting there. Notable ones included Babelverse, a crowdsourced real-time translation app that won the People’s Choice award at TheNextWeb, Seedrs, which is very interesting UK-based venture in the equity crowdfunding space, and crowd photojournalism platform Emphas.is. Immediately after my keynote (see here for video of the full presentation) I was approached with enquiries to speak at major startup conferences in Kiev and Istanbul, also showing the appetite from entrepreneurs for insights about crowdsourcing and crowd business models.

- Future of Crowdsourcing Workshop in Cologne.
Insight 4: IP governance can drive crowd product development.
In this interactive workshop following the Crowdsourcing Summit in Cologne, I asked the participants to select four topics related to crowdsourcing they wanted to examine in detail. Two of the topics were Future of Intellectual Property and Future of Product Development and Innovation. The choice was undoubtedly partly driven by the economic context in Germany, which still sports a massive trade surplus driven by product excellence, yet its traditional industrial strengths are being challenged by the East. The crossover of these two topics is a particularly pointed one, with apparently a panel discussion on IP at the Summit bringing little clarity on cross-border IP protection. I argue in Getting Results From Crowds that often too great a focus is placed on IP protection to the expense of value creation. However there are real and challenging issues to grapple with in managing IP in crowds. Those that can establish (preferably lightweight) IP governance processes have a solid foundation for using crowds successfully for product development and innovation.

- Ketchum Pleon London presentation.
Insight 5: The most valuable crowds are often communities.
The word ‘crowds’ evokes a collection of disparate people. Yet in a world of increasingly divided attention, it is very hard to get access to a crowd of people unless they feel they are engaged together and their contribution supports others’ participation. For marketers in particular the challenge is usually to coalesce a community from which distilled or aggregated insights can come. That gives the continuity to the crowd, which would otherwise disperse. Of course some kinds of crowdsourcing require maximal diversity and independence of thinking, in which case you need to be cautious about recruiting too like-minded communities. The nature of the crowd must be suited to the purpose.

- Crowdsourcing for Startups and Social Innovation at Hub Westminster London.
Insight 6: Equity crowdfunding will be a game changer for entrepreneurs.
Close to half the workshop participants were especially interested in the topic of equity crowdfunding, with the intention of either using it or potentially establishing platforms. The hype around equity crowdfunding today is probably a little premature given that it looks like some time until the first crowdfunding based on the US JOBS Bill will happen, however I’m clearly not the only one to believe that this will provide massive new opportunities for entrepreneurs, ultimately leading to a far better allocation of capital to where it can create results (if good reputation measures are allowed). We were fortunate to have Charles Armstrong at the workshop as an expert panelist, sharing his experience in equity crowdfunding in the UK. One of the legal loopholes he exploited was that while he was not allowed to say publicly that he was looking for capital from approved investors, journalists could. so prominent coverage in the mainstream press enabled them to raise Stg500,000 from the crowd, keeping Trampoline Systems afloat.

- Crowdsourcing Breakfast with Boostzone Institute in Paris.
Insight 7: New roles and structures for crowds are needed in large organizations.
It is perhaps not surprising that this extremely important theme came up particularly strongly in France, where institutional structures are still strong. Irrespective of the nature of the organization, a variety of new roles and structures are required. I am for example spending time defining the emerging role of ‘external talent manager’ and how it relates to existing functions in business units, legal, HR, risk, and IT. The rise of these kinds of new roles, however, can change the scope of current organizational roles and functions. The introduction of structures to help organizations interface externally can (and will) have a ripple effect through the entire organization.

- Crowds and the Future of Work with Fyronic in Brussels.
Insight 8: There is a massive market for effective crowd filtering mechanisms
As discussed in Insight 1, there can be real challenges in distilling the greatest possible value from massive contribution. There are many mechanisms in common use, including competitions, crowd voting, prediction markets, reputation measures, gaming, and so on, though all of these are best used in particular circumstances and have limitations, not least in how much value they can leave on the table. Developing more effective and efficient mechanisms to aggregate value from crowd contributions will be an important sector in years to come.

This list just scratches the surface of the sessions over the last two weeks. I will write more on these and other prominent crowdsourcing topics in the coming weeks and months.

Front page Flickr credit: kevin dooley

The full 30 minute video is below, including discussion of the impact of crowds on work, organizations, business models, capitalism, reputation, media, marketing, innovation, opportunity, and government.

My keynote was supported by a full motion graphics presentation enabled by crowds. It is only partly visible through the video, so I will later release the full motion graphics video accompanied by my voice.

I have covered the early moves towards equity crowdfunding in the US that resulted in this bill and included a chapter on the topic in Getting Results From Crowds. It is very exciting to see this come to fruition, in the end faster than almost anyone could have predicted.

I believe that this is a critical shift that is taking capitalism into a new phase. The capital markets are – finally – becoming more open, allowing capital to go where it will be best used.

Of course there will be massive challenges along the way – this is just a first step and there will be much experimentation and discovery. There may be backward steps along the path too, but this move by the US government paves the way for legislatures around the world to also try equity crowdfunding in various guises.

It is interesting quite how divisive this bill is proving to be, with the enthusiasts evangelical, and the nay-sayers portenders of dire scenarios.

Sure, some things will go wrong, but it would be a massive mistake not to see how we can make crowdfunding and more democratic flows of capital work, rather than sticking with our current antiquated capital markets.

However there is a fundamental flaw to the JOBS bill in its current form: it does not allow reputation measures.

Rafe Needleman did a nice analysis JOBS Act: 5 things to look forward to (and 5 to dread) in which he notes:

Directories and “portals” of crowdfunding opportunities will be severely limited as to the information they can display to users, since they’ll be forbidden from making recommendations on investments. That means no rankings, no scoring, and no editorial advice. Companies will be able to put their information out to consumer investors, but it will be difficult for investors to rate the companies against each other. Companies like CrowdCheck and EquityNet (story) are building tools for investors that may help counteract this negative.

I have long proposed that the rise of the reputation economy would enable better allocations of resources including capital.

The power of crowds is less about giving money, and more about collectively judging where we should be allocating capital.

Of course reputation measures for companies seeking crowdfunding will be massively gamed. Yet that can be overcome. The choice between having flawed but gradually improving reputation measures and none should clearly be on the side of having measures.

I am less confident in the success of crowdfunding measures that do not allow reputation measures.

I hope that the US government – or perhaps another more insightful government – will allow reputation measures on companies seeking crowdfunding. There will be multiple reputation measures available, and people can choose the one they trust the most (i.e. the best one will win). There is a direct analogue to the ratings agencies such as Moody’s and S&P’s in the public equity markets, however there will be more choice, and probably a better job done.

I look forward to a rich and rapidly developing marketplace for reputation measures on crowdfunded companies.

** See information on our global series of Crowdsourcing Workshops starting with Sydney on April 16 and then Cologne, London, Paris, Brussels, New York, San Francisco and other cities **

Flickr credit for front page image: TheAlieness GiselaGiardino²³

The big news today is that global advertising conglomerate Havas has taken a majority stake in V&S, also naming John Winsor as Chief Innovation Officer for the group.

John Winsor shares the history and background of the deal on his blog, saying:

In the last couple of years, I’ve had the chance to talk with some of the best thinkers about the future of advertising. Along the way I had the good fortune to meet David Jones. While many in the advertising industry talk the talk about innovation, very few walk the walk. David takes it one step further and runs the run. I was impressed not only by his vision for Havas and One Young World, but also by his bold philosophy outlined in Who Cares Wins. Every conversation we had flowed from a similar world-view that collaboration, co-creation and crowdsourcing are the future of not only advertising, but business itself; and that a deep dedication to becoming a social business can make the world a better place. We both believe that the new competitive advantage is a collaborative advantage.

From those conversations grew a vision to work together to create even more global cultural momentum for collaboration, co-creation and crowdsourcing. I believe that Victors & Spoils and Havas together can change the way advertising is done for both clients and creatives for the better.

The majority of the use of crowdsourcing in advertising until now has been done by smaller and niche agencies, with the larger agencies far slower to adopt the approaches, not least because so many of the executives they believe they have all the creative talent any client could ever possibly want.

Havas’s move is significant in indicating that it is seeking a significantly different operating and business model than has been the norm in advertising for many a long year now. It is very likely that the other major advertising groups will follow suit in taking on crowdsourcing approaches.

There are few other agencies in the space of real size and stature, so many will have to experiment and build their own ventures.

I will be focusing significantly on crowdsourcing for agencies over the coming period, and will be writing a lot more on some of the drivers of the uptake of crowdsourcing approaches by mainstream advertising groups, and what they experience along the way. It will be a fun and exciting odyssey to watch.

It was a sell-out audience, and the question session following our presentations showed a strong eagerness to learn about how to use crowdsourcing effectively.

I wrote Getting Results From Crowds because using crowdsourcing well is not as easy as it may seem. There are many who get turned off by bad initial experiences, just because they didn’t approach it the right way.

A combination of increasing awareness of crowdsourcing, together with the realization that it is not always straightforward to get good outcomes, is leading to a real and rapidly growing appetite for learning how to crowdsource well.

Our global series of crowdsourcing workshops, starting on April 16 with two half-day crowdsourcing workshops in Sydney, and followed shortly after by sessions in locations including Cologne, London, Paris, and other cities are attracting strong interest.

A diverse group including small business owners, entrepreneurs, creative agency executives, and corporate innovation executives are joining us at the workshops. In addition to the pragmatic approaches and guidelines we will cover, one of the important outcomes of the workshops will be identifying what people want and need to learn, and the best ways to help people gain the relevant experience and insights.

We’ll be sharing what we learn along the way.

Crowdsourcing Workshops: Getting Business Results

Sydney, Monday 16 April
Getting Results From Crowds: 9:00am-1:30pm
Crowd Business Models: 1:30pm-5:00pm

Crowdsourcing is one of the most important trends in business today. It enables organisations to draw on talent and resources from around the world, build efficiencies, create flexibility, save costs, and generate value.

Australia is in fact a global crowdsourcing hub, with dozens of significant crowdsourcing sites hailing from Australia, including world-leading platforms such as Freelancer.com, DesignCrowd, Kaggle and 99designs.

The latest highly successful book from globally recognised futurist Ross Dawson is titled Getting Results From Crowds: The definitive guide to using crowdsourcing to grow your business. He is running a series of interactive workshops around the world to help businesses to use crowdsourcing effectively.

The first of the global workshops will be held in Sydney on 16 April, swiftly followed by other major cities around the world.

The premier event in Sydney, led by Ross Dawson, author of Getting Results From Crowds, will include authorities in crowdsourcing:

• Matt Barrie, CEO, Freelancer.com
• Alec Lynch, CEO, DesignCrowd
• Alan Crabbe, Co-Founder, Pozible
• Luke Metcalfe, CEO, Rapid Intelligence

And authorities in developing effective crowdsourcing business models including:

• Phil Morle, Co-Founder, Pollenizer
• Rebekah Campbell, Founder, Posse
• Sebastien Eckersley, Founder, Blue Chilli

In a practical and intensive morning half-day workshop on how to use crowdsourcing tools they address topics including:

• Why high-growth businesses would want to use crowdsourcing
• Understanding crowdsourcing, crowdfunding, service marketplaces & other ways to tap crowds
• Learning how to manage crowds effectively to create massive business value
• The future of how Australian companies will use crowdsourcing

The afternoon workshop is a highly interactive workshop examining crowd business models addressing topics including:

• Monetisation models and success factors for each model
• Learn from the business models of successful startups
• Design and adapt crowd business models to your own ventures

FOR MORE INFORMATION
For workshop details and registration: bit.ly/crowdsyd
For $20 discount use code: RDBLOG

Getting Results From Crowds book, including free chapters: www.resultsfromcrowds.com

Tapping crowds has a long and illustrious past, with of course an acceleration over the last 15 years as humanity has becoming connected, vastly broadening the scope of crowd participation.

The image below is taken straight from a two-page spread in the book. Click on the image for the full-size version.

Prominent VC Fred Wilson of Union Square Ventures has just written a post The Nature Of The Firm and Work Markets, referencing, as I did in both of these books, the seminal work of Ronald Coase. Wilson writes:

Coase argues that transaction costs that make “trading bilaterally through contracts” expensive spur the organization of firms. And if those transaction costs could be eliminated, more individuals would choose to trade with each other rather than forming partnerships, companies, and other business entities.

Enter the internet and having a computer in your pocket into this model and things change. Technology has been causing these transaction costs to drop precipitously for years now and the result is we have seen the emergence of work markets in which “individuals trade bilaterally through contracts.”

He goes on to reference one of their portfolio companies, WorkMarket, that plays at the heart of this space. He also points to a post by his colleague Christina Cacioppo who suggests in an interesting post on the biggest themes for tech entrepreneurs today that “work is shifting toward a peer-to-peer model”:

The first two decades of the modern internet broke industries built on distribution monopolies (e.g. music, news) and facilitated coordination between the consumer and the provider without the need for a middleman (e.g. hotels, car rentals.) The same will happen for a large fraction of our work, especially in cases where the work is standardized or employers “distribute” their workers to pools of customers.

One reason to create firms is the coordination and signaling problems of situations with imperfect information and transaction costs. As technology increases information flows and decreases transaction costs, individuals can leave their old employers and strike out on their own. Their livelihoods will still depend on providing valuable services in exchange for fees, but they’ll do so as freelancers – and on their own, they’ll capture more of the value generated by their work.

Just as blogs allowed talented writers to build audiences without being affiliated with large media organizations, and as Twitter and Tumblr allowed news- and tastemakers to succeed outside of established news or media properties, new web services will allow individuals to engage with customers without needing to work for a firm.

Indeed, while what I call ‘service marketplaces‘ have already significantly changed the work landscape, this is just the beginning.

Investors as well as workers, companies, and nations need to understand and shift to the heart of liquid flows of work around the world, as transactions costs move towards zero.

Originally all the service marketplaces used fixed fees. Odesk, by introducing hourly pay supported by a provider monitoring system, grew rapidly, resulting in almost all the other service marketplaces following suit with this model.

However one of the many challenges for those new to using crowds on service marketplaces is working out whether to pay fixed fees or hourly rates.

We addressed this issue in Chapter 8 of Getting Results From Crowds. Below is the relevant excerpt from the book, supported by visual icons to represent the different situations. Each row shows the situations that support the use of fixed fees or hourly rates.

Click on the image for full-size pdf