Crowdsourcing is breaking traditional business models

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Julie May 11:06 p.m. CDT April 23, 2015

Local Motors encourages people from all over the world to engage in rapid co-creation. Among its current projects: soliciting designs for a new helmet for NASCAR driver Ben Kennedy.(Photo: Getty Images)

I was reminded of Thomas Friedman’s book, “The World Is Flat,” earlier this month when attending Inc. magazine’s GrowCo conference in Nashville. In his book, Friedman discusses decentralized, collaborative, bottom-up development, where all competitors have an equal opportunity. After hearing from speakers at GrowCo, I realized that technology really has created a level playing field for global entry, collaboration and competition in all industries.

One of the best ways to prove this is how easy crowdsourcing is, thanks to the Internet. In short, crowdsourcing is the “American Idol” of the Internet. It provides anyone with a good idea the opportunity to be discovered. Here are a few examples of risk-takers breaking from conventional industry norms:

Local Motors’s global and local crowdsourcing

Local Motors encourages people from all over the world (aka global crowdsourcing) to engage in rapid co-creation. For example, they have professional and amateur designers who aren’t already associated with Local Motors submit digital prototype automobile designs over the Internet.

Local Motors also engages in prosuming, meaning they find out what their customers like, then build it. Take a look their website, where you can explore design submissions or add your own and get real time feedback.

They follow a production model similar to W. Edwards Deming’s just-in-time model, producing inventory only once there is demand. Local Motors builds selected prototypes in local microfactories — mini factories located near urban markets — therefore creating local jobs, decreasing waste, increasing recycling and providing quick turnaround to the local market. Recently, their 3D printed, fully functional car, the Strati, made headlines for taking just 44 hours to “print.”

Relode’s recruitment crowdsourcing

In my opinion, the recruiting model has been in dire need of a revolution for years. The recruiting and staffing business has long been termed a “body shop business” for locating possible matches. The accuracy of interviewing, background checking and personality testing varies greatly by recruiter and is largely dependent on a solid vetting process to find a position that is mutually beneficial to the employee and employer. A perceived match can cost an employer an average of 25 percent of the base salary. A $60,000 per year employee can generate a recruiter fee of $12,000 to $18,000 — and that does not take into consideration the onboarding and opportunity costs that impact the business’s profit margin.

Wouldn’t it be nice not to have to pay a recruiting firm to locate talent, assess skill sets and determine the compensation needs of resources your business needs?

Imagine instead an “online marketplace” of recruiters with no geographical boundaries, each of which has a core skill set and the experience to know how to vet a certain type of talent that will fit a specific industry and business environment. Enter Relode, a local Nashville start-up from Matt Tant.

The cost? Well, it depends on which of the three levels of help you choose from, but it’s based on a fee per candidate they bring you, starting at $15 per candidate. My sample search provided me with 10 options in technology for $15 to $100 per candidate — a total recruiter fee of $150 to $1,000. If the recruiter doesn’t do a good job, Relode has a money back guarantee and I’d be able to find another recruiter from their pool. No harm, no foul. If I hire the candidate they select for me, I saved $11,000 to $17,000 by not using the standard recruiter system. Hey Matt, I think you’re on to something.

The bottom line is that things such as computers, software and the Internet create a level playing field locally and globally through crowdsourcing. Leveraging crowdsourcing as a viable out-of-the-box solution allows us to expand our horizons and boundaries to heights that create new opportunities for today and the future.

Julie May is CEO of bytes of knowledge (b:ok), a full service provider of technology solutions for small to medium-sized businesses and corporations. Visit bytes of knowledge online at www.bytesofknowledge.com.

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