Any business that can continuously come up with innovative solutions to significant problems will invariably win. In the good old days, the way to solve problems was to get the smartest people in an organisation into a room and allow them to combine their intellectual firepower in brain storming solutions.
But the problems confronting organisations and society today are more complex and more challenging than many problems in the past and the tools for solving problems and challenges have advanced.
Modern day innovative organisations no longer rely on conventional brainstorming methods to solve problems. With advances in communication technology and the ability to reach large pools of people, many innovative organisations now get immense benefits from tapping into the wisdom of the crowd to solve their most pressing problems.
Organisations that have got it right
1. Top Coder Inc tackles clients’ most complex and intricate software development challenges by creating software development competitions for its community of 210 000 independent geeks. If your business faces a challenge in writing an algorithm, architecting a system, writing code, sorting out bugs or any other software development obstacle, you can go to Top Coder Inc and they will, for a fee, create a challenge for their community.
The community tackles the challenge and submits solutions in the hope of winning a substantial prize. To date, Top Coder has given away more than $7 million dollars in prizes to geeks in its community and created innovative software solutions for an elite client list. With revenue of close to $20 million and growth of almost 1 000% over the past three years, the competition based business model exemplified by Top Coder Inc may be a sign of the future.
2. Best Buy, the US electronics retailer, has a $1 billion gift card business. One of the challenges for the small team that managed the gift card business was predicting gift card sales for any single month. Typically they were off by 5% making their budgets and forecasts inaccurate.
To resolve this problem, Jeff Serverts, a Best Buy VP sent an email to hundreds of Best Buy employees, inviting them to submit guesstimates of gift card sales for the following month. To help them make a decision, he provided them with data of gift card sales for the previous 12 months. He also offered a $50 gift card as a reward for the individual with the most accurate guesstimate.
Once the sales data for that month had been collected, the gift card management team was off by the normal 5% in its estimate whereas the average of the 192 employee responses that Serverts received was less than half a percentage off. The crowd was over 10 times more accurate than the experts. This logic was later applied to generating estimates for holiday sales on all merchandise (with 98% accuracy) and now Best Buy uses a system through which it gathers data from thousands of employees to solve its most challenging forecasting problems.
3. Global Ideas Bank is a repository of ideas for solving some of the world’s most challenging social problems. People from across the globe submit ideas pertaining to social innovations (4 000 ideas have been submitted thus far) and then others visit the site and vote for the ideas displayed (160 000 visitors have voted for ideas on the site).
This creates a mechanism for the best ideas to rise to the surface and then for the people who have come up with the good ideas to get input from others and the recognition and confidence required to take the idea forward. It is a mass vetting system for ideas related to solving social problems.
Solving Business Problems
This same philosophy can be used for solving problems in multiple business contexts. Here are some guidelines for implementing a “wisdom of the crowd” problem solving solution.
- Be clear about the problem. Even if there are many complex issues involved, make it as simple as possible.
- Search far and wide for people to contribute. The more diverse and the larger your problem solving base, the better the solution is likely to be.
- Make it simple and easy to respond. Provide a very easy means for people to provide you with the input you need.
- Recognise people’s efforts. To everyone who contributes send out a thank you note and if possible share the main elements of the crowd-sourced solution.
- Offer rewards. Rewards increase participation and accuracy. If people know that there is potentially something in it for them, they are likely to apply more effort to providing a solution.
- Experiment. Using this as a problem solving tool does not always work perfectly first time around. You need to be willing to experiment with various aspects of the process to make it work effectively.