The Community Driven business model, or “Crowdsourcing,” is a relatively new, web-based model that harnesses the creative solutions of a distributed network of individuals. One of the benefits of web 2.0. This idea was first proposed by Jeff Howe and Mark Robinson in the June 2006 issue of Wired magazine:
Simply defined, crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call. This can take the form of peer-production (when the job is performed collaboratively), but is also often undertaken by sole individuals. The crucial prerequisite is the use of the open call format and the large network of potential laborers. (2006a: 5)
Not only does this method harness crowd intelligence to create innovation, but it also creates unprecedented levels of loyalty. The sense of pride and participation mobilizes the base of users to generate multi-pronged benefits including innovation and marketing advantages. It also provides the firm with an alternative to the market research problem at relatively low costs. This “wisdom of crowds” was coined by James Surowiecki (2004), in his book "The Wisdom of Crowds":
“Under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them’. This ‘wisdom of crowds’ is derived not from averaging solutions, but from aggregating them.”
The advent of the internet provided us with a perfect platform to aggregate millions of disparate ideas into hugely successful enterprises. This is exactly what Threadless was able to accomplish. It harnessed the power of the crowd, resulting in reduced costs and increased loyalty. In addition, other “web 2.0” solutions exploit the same power of crowds that has proven itself in Wikipedia, delicious, YouTube, and Flickr. Information markets, corporate social networks, automated document discovery, touch and gesture interfaces, and other tools are reinventing enterprise knowledge management.
Another example of crowdsourcing is LEGO. Beginning in the late 1990s, the company embarked on a challenge to achieve greater scale without adding infrastructure or changing its core culture. LEGO reached out before the launch of the MINDSTORMS robot kit, asking leading users to help design the product. The end product was quite successful, both because of user involvement and the word of mouth generated among a loyal community. Similar examples include iStockphoto and InnoCentive. Simply, crowdsourcing provides for a problem-solving model that can be generalized and applied to a variety of industries to solve both mundane and highly complex tasks.
For design selection, Threadless makes use of the community driven project, asking the visitors to their website to decide which of the designs on display are popular. With this voting system in place, the company is in a strong position to determine which designs are popular and worth pursuing. Another brilliant move by Threadless is to ask the voters to check a box if they plan to purchase the shirt if it is selected for production.
We would continue with the same process for selecting the winning design for two main reasons. First, the competition has proven successful in creating a feeling of participation and loyalty among the voters. Second, it creates a feeling of accomplishment and establishes “bragging rights” among regular visitors to the site. Retaining this sense of community involvement is the critical.
We would suggest adding the capability to identify common factors or trends on successful designs. This is important to consider because the current contributor base must be computer savvy and have knowledge of design and graphics. Use of this statistical data could help Threadless expand its customer base to those segments which are less computer literate.
The proposal from large retailers' to carry Threadless products does provide the opportunity to increase short term profits and exposure to a broader audience, but may backfire within its core community of loyal contributors that the company is dependent upon. The move may be perceived as a deviation from the original philosophy of Threadless and a move away from creativity. If this occurs, a large portion of contributions could disappear and erode the creative base that has been built over the years. This creative base is the primary barrier to entry in an otherwise lower barrier industry.
By this logic, Threadless should not accept the offer to merchandise products in nationwide retail locations. It would require changes to the basic operating model of the company and may generate a sense of betrayal in the community. In addition, the Porter's Five Forces Model suggests such a move would provide the retailers the ability to exert considerable influence on the designs and thus would negate their creativity. This could in turn threaten the ideology Threadless operates upon leading to a sharp downturn in the company’s future prospects.