Crowd sourcing – how online platforms are reorganising work

More and more companies are using crowdsourcing to collect ideas from an unknown crowd. But what other forms of crowdsourcing are there and how can companies and individuals use and implement them successfully? The phenomena of crowdsourcing, crowdworking and crowdfunding are first described below. Application scenarios are then outlined and the benefits and challenges explained.

Crowdsourcing refers to the outsourcing of tasks to an unknown crowd. Companies can thus benefit from the swarm intelligence and generate new ideas. Individuals who participate in such crowdsourcing campaigns are primarily intrinsically motivated to share their ideas. Crowdsourcing enables the crowd to submit ideas for the next flavour of chocolate, a type of crisp or a toy series, for example. After the submission deadline, the crowd can vote on the best idea. The winning product is then produced and launched on the market. Lego Ideas has used this approach to launch many playsets on the market that reflect the interests of customers. In this case, crowdsourcing can support or even replace market research. As an incentive, the winners of the individual crowdsourcing campaigns often receive the right of first refusal for the corresponding product or receive it free of charge. Crowdsourcing campaigns are advertised on the website of the respective company. After creating a profile, which primarily contains demographic data, individuals can take part in the advertised crowdsourcing campaigns and either submit ideas or vote on submitted ideas.

In addition to collecting and evaluating ideas, crowdsourcing also allows people to perform tasks such as designing logos, creating websites and other programming tasks. As the crowd is motivated in these cases by being paid for completing the tasks, this is referred to as crowdworking. If the tasks can be completed without specialised knowledge, they are referred to as microtasks. As part of microtasks, images are classified (e.g. a dog or a cat can be seen in an image) in order to train algorithms. The payment is in the cent range and is used by crowdworkers as an additional source of income when they are waiting at the bus stop or sitting on the bus, for example.

If more complex tasks that require specialised knowledge are outsourced to the crowd, these are referred to as macro tasks. These include designing logos, writing and/or translating texts, designing and/or programming websites and apps and developing social media campaigns. Crowdworking platforms act as intermediaries to bring together crowdworkers and companies wishing to outsource tasks. In addition to supporting the matching of both parties, the platforms help to define the task, handle the payment process and mediate any disagreements between crowdworkers and crowdsourcers.

The classic process of a crowdworking campaign can be divided into five phases: the initiation phase, the tendering phase, the decision phase, the execution phase and the evaluation and payment phase. In the initiation phase, the crowdsourcer selects a task to be assigned to the crowd. This is followed by a precise description of the task, which includes the required competences and a detailed list of the individual steps required. Depending on the type and complexity of the task (micro or macro task), the crowdsourcer decides on a platform and prepares the open call. In the tendering phase, crowdworkers apply for the advertised task on the respective platforms. As different platforms appeal to different crowdworkers, the choice of platform is highly relevant. In the third phase, the crowdsourcer selects the crowdworkers applying and provides further information as required. In particular, demographic characteristics such as age, gender and skills (foreign language and programming knowledge) as well as previous tasks and experience in the advertised area influence which crowdworker the crowdsourcer chooses. In phase four of the crowdworking process, the task is finally carried out by the crowdworker and handed over to the client upon completion. In the final phase, the evaluation and payment phase, the client has another opportunity to review the submitted task. If adjustments are required that are clearly defined in the task description, the task can be returned to the crowdworker. If all requirements are met, the crowdworker receives their payment from the platform. To ensure that the crowdworker receives their money, the crowdsourcer can only post a task on the platform if they have already paid at least the equivalent value to the platform. After payment, the crowdsourcer has the opportunity to evaluate the collaboration with the crowdworker and assess the submitted result.

The advantage of crowdsourcing and crowdworking is that tasks can be completed in parallel and the company can draw on external expertise for individual tasks. As the task description, open call, matching, task fulfilment and payment processing all take place digitally via an IT-based platform, this is referred to as crowdsourcing. This distinguishes it from freelancing. If companies do not want to rely on external expertise but on external sources of funding, this is referred to as crowdfunding. Here too, the company or private individual calls for financial support for a (business) idea. Crowdfunding campaigns can also be used to realise social projects. In a crowdfunding campaign, the company publishes the idea, the amount required and the duration of the campaign. Depending on the campaign, the reward or consideration that you will receive if you participate in a successful crowdfunding campaign is also listed. A crowdfunding campaign is considered successful if the funding target is reached within the duration of the campaign. If this is the case, the platform forwards the money raised to the company to be financed. If the funding target is not reached within the term, the platform pays back the contributions received up to that point.

Comparability with analogue phenomena

Crowdworking:

As crowdworkers are considered to be self-employed, the concept is similar to the analogue phenomenon of freelance work. The fact that both the awarding of contracts and the fulfilment of tasks in freelance work can take place in analogue form differs significantly from crowdworking, where this all happens digitally.

Crowdworking can also be compared to the analogue phenomenon of temporary work. In crowdworking, it is not temporary employment agencies but crowdworking platforms such as Amazon Mechanical Turk or Clickworker that arrange small digital tasks that can be carried out flexibly and for a limited time by many individuals. The same applies to more complex macro tasks: Here too, crowdworkers are contracted for a specific (partial) project in a similar way to temporary work.

As the term crowdworking suggests, crowdworking is comparable to the analogue phenomenon of outsourcing. In both analogue outsourcing and crowdworking, companies outsource certain tasks or services to external service providers in order to save costs or buy in expertise. Crowdworking makes it possible to outsource certain tasks to a large group in order to have them carried out cost-effectively and flexibly.

Crowdfunding:

Crowdfunding is similar to the analogue phenomenon of traditional fundraising campaigns, where money is collected for a specific cause. Both models appeal to a broad public to make small contributions that add up to a larger sum. The difference between analogue and digital fundraising is that traditional fundraising campaigns are often organised in person and locally, while crowdfunding campaigns are organised via the internet to achieve a global reach. Both approaches enable the collective collection of money for a business idea, a good cause or the financial support of (young) companies.

Social relevance

Crowdworking:

Due to the flexibility that crowdworking offers both employees and companies, this new form of work organisation is becoming increasingly important to society. Crowdworking offers the opportunity to achieve an optimal work-life balance. Globalisation is being driven by crowdworking, as companies can draw on a broad spectrum of workers worldwide. This contributes to the globalisation of labour markets, reduces costs for companies and provides access to specialised skills.

Innovation and creativity thrive on crowdworking platforms as companies can utilise the collective intelligence of a large group of people. This leads to innovation, new ideas and creative solutions that might not have been discovered in a traditional corporate structure.

For many people, crowdworking is a way to generate additional income or even earn a living. Young, highly qualified people in particular appreciate the self-determination and flexibility that the concept of crowdworking brings.

Crowdfunding:

Crowdfunding has contributed significantly to the democratisation of financing in recent years. Crowdfunding enables projects and ideas to be financed by a broad public without the need for traditional financial institutions or major investors. This new form of funding encourages wider participation and gives people the opportunity to support projects that they personally consider important.

Crowdfunding also enables the realisation of innovative and creative projects that would otherwise not find support. These include technological innovations as well as artistic projects that contribute to cultural diversity. Crowdfunding is an important source of financing, especially for small companies and start-ups. Many use these platforms to realise their business ideas, which can help to create new jobs and strengthen the local economy.

Another important aspect of crowdfunding is the promotion of community building and social networks. Crowdfunding platforms enable the formation of communities around specific projects or causes. People come together to support common interests, which can lead to greater social cohesion. In addition, project initiators are often required to provide detailed information and regular updates, which promotes a culture of transparency and accountability.

Crowdfunding is also often used to support social and charitable projects. Charities and social entrepreneurs can do important work and mobilise wider support. This significantly lowers the barriers to entry for funding and allows people from different socio-economic backgrounds to pitch their ideas and receive financial support, which can lead to a more inclusive economy. The global reach of crowdfunding allows projects to attract supporters from all over the world. This can contribute to international collaboration and intercultural exchange. Overall, crowdfunding is helping to fundamentally change the way projects are funded and implemented, promoting participation, innovation and social justice.

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