Business Brains

Crowdsourcing starts to clear away corporate cobwebs

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McKinsey reports companies are enhancing innovation with approaches such as internal 'stock markets' and Web forums.

Since it entered the popular imagination, crowdsourcing has been seen as an approach for bringing in ideas from the world outside corporate walls.

Now, crowdsourcing is becoming a mainstream business practice, and in many cases, it's unfolding as an internal activity targeted at bringing employees into the business decision-making process. Strategic planning is unfolding as the area particularly well suited for crowdsourcing.

In a new report, McKinsey's Arne Gast and Michele Zaninishow describes how crowdsourcing is working its way into the decision-making processes of leading corporations. What a great way to shake up calcified or biased planning processes, they observe. Enhanced employee engagement leads to greater financial health, Gast and Zaninishow add. However, they state, it's important that middle managers be sold on the process as well.

Gast and Zaninishow describe some mainstream corporate crowdsourcing initiatives:

Rite-Solutions, a software provider for the US Navy, defense contractors, and emergency responders, developed an internal stock exchange called "Mutual Fun." With this stock exchange, "would-be entrepreneurs" can pitch internal 'IPOs' and sell stock at $10 a share up to $10,000 in play money. "When an IPO gains momentum and breaks into the company’s Top 20, the initiative is funded with seed money." The company has surfaced 15 new ideas as a result of its internal IPO system.

HCL Technologies, the IT services and software-development company opened up its business-planning process, which formerly involved a few hundred top executives, into an online platform open to more than 8,000 employees across the organizations.  "A surge of advice followed. The inclusive nature of the process helped identify specific ideas for cross-unit collaboration and gave business leaders a chance to obtain detailed and actionable feedback from interested individuals across the company." Knowing their documents would be open to scrutiny, managers prepared more honest and action-oriented documents.

Red Hat, the open-source platform company, employed wikis and collaborative tools for its planning process, to generate and organize ideas so that any employee could respond with comments or suggestions. Gast and Zaninishow observe that the new process resulted in a "significant change in the way the company offers virtualization services for enterprise data centers and desktop computer applications" -- and even resulted in a new corporate acquisition. This type of move "would have been unlikely in the days when the company used its old, less inclusive planning process."

3M opened up its strategic planning process to all of its sales, marketing, and R&D employees through a Web-based forum called InnovationLive. Over a two-week period, InnovationLive "attracted more than 1,200 participants from over 40 countries and generated more than 700 ideas. The end result was the identification of nine new future markets with an aggregate revenue potential in the tens of billions of dollars." Since then, Gast and Zaninishow observe, "3M has held several additional InnovationLive events, and more are on the way."

AEGON, an insurer, launched a digital-networking platform called AEGON Square, which facilitated communities of practice and idea sharing on regarding corporate strategy. "In the end, 3,000 employees, 85 percent of the total, participated over 12 months."

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure