Magazine Summer 2017 Issue Research Feature

Developing Innovative Solutions Through Internal Crowdsourcing

Internal crowdsourcing, which enlists ideas from employees, is not as well-known as other forms of crowdsourcing. Managed well, however, it can open up rich new sources of innovation.

Arvind Malhotra, Ann Majchrzak, Lâle Kesebi, and Sean Looram Reading Time: 18 min 

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Internal Crowdsourcing

As organizations look for better solutions to their everyday problems, many are encouraging their employees to use their experiences to develop new ideas and play a more active role in the innovation process. Whether the issue involves improving hiring practices, deciding which new products or services to offer, or creating better forecasts, companies including AT&T Inc., Google Inc., and Deutsche Telekom AG have turned to what’s known as internal crowdsourcing.1

Although external crowdsourcing, which involves soliciting ideas from consumers, suppliers, and anyone else who wants to participate, has been widely studied,2 internal crowdsourcing, which seeks to channel the ideas and expertise of the company’s own employees, is less well-understood. It allows employees to interact dynamically with coworkers in other locations, propose new ideas, and suggest new directions to management. Because many large companies have pockets of expertise and knowledge scattered across different locations, we have found that harnessing the cognitive diversity within organizations can open up rich new sources of innovation. Internal crowdsourcing is a particularly effective way for companies to engage younger employees and people working on the front lines.3

We conducted a four-year study of how multiple companies used internal crowds that included frontline employees to find new solutions to business challenges. We observed internal crowdsourcing in practice, interviewed executives who sponsored internal crowdsourcing innovation challenges, and surveyed participants. We also participated in the design, implementation, and execution of internal crowdsourcing events at several companies. (See “About the Research.”) In this article, we will examine the benefits of internal crowdsourcing, the roadblocks that stand in the way of successful initiatives, and ways crowdsourcing efforts can be designed to overcome those roadblocks.

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About the Authors

Arvind Malhotra is the H. Allen Andrew Professor of Entrepreneurial Education and professor of strategy and entrepreneurship at the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School. Ann Majchrzak is the USC Associates Chair in Business Administration and a professor of data sciences and operations at the University of Southern California’s Marshall School of Business, in Los Angeles. Lâle Kesebi is the chief communications officer and head of strategic engagement at Li & Fung Ltd. Sean Looram is executive vice president at Li & Fung.

References

1. L. Myler, “AT&T’s Innovation Pipeline Engages 130,000 Employees,” Dec. 5, 2013, www.forbes.com; A. Ivanov, “Crowdsourcing vs. Employees: How to Benefit From Both,” April 4, 2012, www.cmswire.com; R. Moussavian, “Work 4.0 Put in Practice,” Aug. 24, 2016, www.telekom.com; and R. Singel, “Google Taps Employees to Crowdsource Its Venture Capital Arm,” May 3, 2010, www.wired.com.

2. E. Bonabeau, “Decisions 2.0: The Power of Collective Intelligence,” MIT Sloan Management Review 50, no. 2 (winter 2009): 45-52; and K.J. Boudreau and K.R. Lakhani, “Using the Crowd as an Innovation Partner,” Harvard Business Review 91, no. 4 (April 2013): 60-69.

3. A. Siegel, “How Internal Crowdsourcing Will Transform the Way We Do Business,” March 11, 2016, www.business2community.com; and H. Balmaekers, “The Crowd Within — Crowdsourced Innovation Inside Companies,” March 23, 2016, www.intrapreneurshipconference.com.

4. A. Majchrzak and A. Malhotra, “Towards an Information Systems Perspective and Research Agenda on Crowdsourcing for Innovation,” Journal of Strategic Information Systems 22, no. 4 (December 2013): 257-268; and A. Malhotra and A. Majchrzak, “Managing Crowds in Innovation Challenges,” California Management Review 56, no. 4 (summer 2014): 103-123.

5. M. Lieberstein and A. Tucker, “Crowdsourcing and Intellectual Property Issues,” Association of Corporate Counsel, Aug. 29, 2012, www.acc.com.

6. S.G. Scott and R.A. Bruce, “Determinants of Innovative Behavior: A Path Model of Individual Innovation in the Workplace,” Academy of Management Journal 37, no. 3 (June 1994): 580-607.

7. J. Baldoni, “Employee Engagement Does More Than Boost Productivity,” Harvard Business Review, July 4, 2013, hbr.org.

8. D.C. Brabham, “Moving the Crowd at iStockphoto: The Composition of the Crowd and Motivations for Participation in a Crowdsourcing Application,” First Monday 13, no. 6 (June 2, 2008).

9. M. Baer and M. Frese, “Innovation Is Not Enough: Climates for Initiative and Psychological Safety, Process Innovations, and Firm Performance,” Journal of Organizational Behavior 24, no. 1 (February 2003): 45-68; M.A. West and W.M.M. Altink, “Innovation at Work: Individual, Group, Organizational, and Socio-Historical Perspectives,” European Journal of Work and Organizational Psychology 5, no. 1 (1996): 3-11; and F. Yuan and R.W. Woodman, “Innovative Behavior in the Workplace: The Role of Performance and Image Outcome Expectations,” Academy of Management Journal 53, no. 2 (April 2010): 323-342.

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Comment (1)
Enrique Ayuso
Internal crowdsourcing is a very powerfull tool for innovation and digital transformation.
Allowing employees to participate with their ideas is a quick and secure way to improve processes, customer journey, products and services... and to better know where to improve or digitalise, at the time they increase their engagement and brand identification.
In ideas4all Innovation: www.ideas4allinnovation.com you can find how Grupo Santander, Banc Sabadell, KPMG, Repsol... among others, practice Internal Crowdsourcing with success using ideas4all Innovation Agora Platform.