Crowd Sourcing for an Effective Way for Funding -myassignmenthelp

Question: Discuss about theCrowd Sourcing for an Effective Way for Funding. Answer: Introduction Crowdsourcing is very popular phenomenon through which organizations take help from public to help in achieving activities that are commonly performed by the employees/ contractors (Bayus, 2013). Crowdfunding can be defined as the process where the individuals appeal for contributions from public by making use of online platform, and it is turning out to be a powerful way for raising funds for new entrepreneurial ventures as well as projects. According to Massolution, a crowdsourcing firm specialising in research and advisory indicated that during 2012 there was seen a growth of 81 percent in the crowdfunding platforms and together they raised US$ 2.7 billion (Sally, 2013).Crowdsourcing can act as a tool with multiple benefits if it is leveraged in successful manner. This report will thus introduce the contemporary issues of crowdsourcing by putting forward supporting facts from literature reviews available. Further theoretical entrepreneurship frameworks will be applied to develop t he concept of crowdsourcing. Finally the report will also provide few effective applications as well as judgements so that advanced knowledge about crowdsourcing can be developed. Crowdsourcing A Concept of Funding There are many ways of financing the start-ups ( Bellefalmme, Lambert SChweinbacher 2011) and crowdsourcing is one of them in which crowd is being used to develop a profit-oriented activities of an organization. Crowdfunding is a part of crowdsourcing and both the phenomenon is different from each other. The term crowdsourcing was firstly coined by Jeff Howe in June 2006. The term has been defined as the cat of organisation or firm taking up the function that was earlier performed by employees and outsourcing to the undefined network of people in form of an open call (2). Crowdsourcing is different from other functions like open sourcing; user generated content (UGC), collective intelligence as well as outsourcing (Lehdonvirta Bright, 2015). Crowdsourcing cannot be considered as a silver bullet for economy, but it does provide various approaches that help the enterprises to operate in a successful and efficient manner in on-going changes in policies, technology skills as wells fluidity seen in the world economy. Businesses as well as various organizations believe that crowd can help them in dealing with various challenges ranging from simple rote tasks for example raising money / voting, image labelling to handling complex issues like designing of new products or services , strategic planning or brainstorming ideas. Crowdfunding is a form of crowdsourcing and it is related to outsourcing. Thus it means transferring task of one organization to another, thus crowdsourcing means outsourcing to crowd that is large group of individuals mainly through Internet. Companies use crowdsourcing like, involving customers in the innovation process of the company (Leimeister et al, 2009). Advantages of Crowdsourcing Although many people criticize crowdsourcing because companies treat it as a way for maximising their profits simply by outsourcing their functions which are traditionally conducted by employees to the public. This helps the companies to achieve huge savings in cost. This is the main reason why companys crowdsource, however there are various other reasons due to which organisations adopt crowdsourcing. First advantage of crowdsourcing is the huge size of the crowd itself which acts as a benefit. Whereas most of the companies have less than 10,000 employees and if the contrast is being considered then the potential size of the crowd that also relies on the activity that is crowdsourced. For example 65,000 mew videos were uploaded on YouTube when it was acquired by Google in 2006 (4). Thus it was because of the crowd only that is millions of YouTube users that so many videos were uploaded. It would have been tough even to imagine doing so for 50 odd employees at YouTube. The second adv antage of crowd is being geographically distributed (Luz, Silva, Novais, 2015) . The third advantage of crowdsourcing is diversity present in the crowd. It has been found that diverse group is able to outperform group of experts while solving problem. For example some big corporations cast their scientific issues which even their RD experts cannot resolve to the website known as InnoCentive. Currently InnoCentive users have successfully resolved more than half of the challenges or problems posted (Cheung, 2012). The last and fourth advantage of crowdsourcing is that it reduces the cost of utilising the crowd in order to perform the task. Leveraging Business through Crowdsourcing Crowdsourcing acts as a tool that can be used for boosting efficiency as well as creativity and helps in creating better and positive customer experience. It can help in filling up the labour gaps in efficient manner for basic tasks or short-term projects. Like Amazon Mechanical Turk helps the companies in outsourcing tasks like transcription, verification , photo moderation etc. which needs human intelligence. In the field of creativity it helps in website deigning to logo overhaul. Thus crowdsourcing acts as a cost effective method for the businesses to access custom design work. Design Hill / 99Deisgns are the crowdsourcing platforms which help businesses in crowdsourcing design options related to marketing collateral , branding , websites as well as advertisements (Canarelli, 2017). Crowdsourcing is also a form of crowdsourcing. There are platforms like Fundable , ANgelList and Kickstarter which help the businesses , artists and entrepreneurs in raising money without taking help from traditional funding channels like venture capital or business loans . Thus crowdfunding is a tool which helps in attracting start-ups and it is not just for the new ventures only. Even well established businesses can use crowdfunding for expansion of their services, launch of new products as well as for the fund programs which aim at giving back to the community (Canarelli, 2017). Crowdsourcing to Crowdfunding When a company is started the entrepreneurs in the field of technology face several challenges for example limited funds, lack of resources and wide range of technical issues. Accessing the local funding is very tough as well as restrictive. On top of that searching for resources within a limited budget is a challenging task. In such cases crowdsourcing acts as a compelling idea which tackles all these issues by creating connections with resources as well as talented people all across the globe. These connections act as opportunities for entrepreneurs so that they can grow the community by adding talent form the target crowd, creating solutions for technical issues as well as by finding the desired resources (Smith, Manesh, Alshiakh, 2013). Thus crowd funding acts as a very fresh and recent method for funding the start-ups and it is gaining lot of popularity too. It is just like taking a loan, contribution / investments or pre-order from more than one person and that too at the same time. Crowdfunding works in a way where an entrepreneur puts a detailed description of the business on a crowdfunding platform. The main aims of the business will also be mentioned along with the plans for deriving profits from business, the amount of funding required and the reason why funds are required etc. Then the customers read all the information about the business and then decide to help with money if they find the idea genuine one. The people who give money make online pledge, while promising that they will pre-buy the product or give a donation. Anyone can make monetary contributions to help the business in which they believe(Michel, Gil, Hauder, 2015) . Crowdfunding is a good option for start-ups to raise funds simply because it can generate interest and thus helps the business in marketing the product along with arranging for finances. It also acts as a boon for the business in case one is not sure about the demand of the product being thought of. The process of crowdfunding cuts the professional brokers as well as investors as the funding is fully in the hands of common people. It can also attract venture-capital investment in case the company has a successful campaign. Crowdfunding however, is very competitive place to get funds, is gaining the attention of average customers just with the help of description or images online is very tough. Some of the well knows crowdfunding websites in US include: RocketHub, Onevest, GoFundMe, DreamFunded and Kickstarter (ProfitBooks, 2017). Start-ups and Crowdfunding Crowdsourcings very well-known model is the Open Collaboration (OC) Model where the problems or the opportunities made available are being posted by the organisation to the public with the help of IT systems . The crowds voluntarily engage in these ventures without any expectation of monetary compensations (Mergel, 2015). Some examples of OC crowdsourcing include starting an enterprise like Wiki or making use of online as well as social media communities for gaining contributions (Leimeister et al, 2009). The crowds level of engagement is related to several factors for example efficacy of the open call, the crowd capital of company and reach as well as engagement of the platform that is being used (Prpi? Shukla, 2013). For example as of May, 2015 Twitter quoted it has more than 500 million users and out of all these users more than 310 million are found to be active on monthly basis.. Thus it does not convert into significant engagement from users potential pool on platform. Tourna ment Crowdsourcing (TC) is another form of crowdsourcing where the organisations post their issues on specialised IT platforms like Eyeka or Kaggle or on in-house platforms like Challenge.gov (Zhang, Gu, Song, Pan, Dawy, Han, 2015) . Thus with the help of a platform mediated by IT organisers create a competition with set rules and rewards for competition. These TC platforms mostly attract as well as maintain special crowds who show liking towards special platforms(Brabham, 2013) . Another kind of crowdsourcing is Virtual Labour Markets (VLM) whish is also an IT-mediated markets in which the individuals render online services to be carried out anywhere, offered by the firms mainly with the help of micro-tasks thus indicating the production model of crowd sourcing in exchange of monetary compensation (Luz, Silva, Novais, 2015). Conclusion The above analysis indicates that crowdsourcing is a tool which makes use of IT mediated platform to engage the crowd for the purpose of task completion , production , generation of ideas or for problem solving , where the dispersed skills as well as knowledge of groups or individuals are leveraged with a mixture of innovative crowd derived inputs as well as processes that have top-down set goals as well as organisation initiatives. Crowdsourcing is an emerging field which is evolving. It encompasses various platforms like virtual labour markets (VLMs), Tournament crowdsourcing (TC) as well as Open collaboration (OC). Crowdfunding is a form of crowdsourcing and acts as a tool for financing for start-ups and is current and popular method. The financing gap that emerges in the start-ups can be easily bridged with the help of crowdfunding. Thus crowdfunding acts as a tool for raising funds for start-ups during the first financing rounds. AS far as the start-ups are capable of showing so me value to the crowds, crowd fund will be automatically being considered as financing option by entrepreneurs. Bibliography Bayus, B. (2013). Crowdsourcing new product ideas over time: An analysis of the Dell IdeaStorm community. Management science, 226-244. Brabham, D. (2013). Using Crowdsourcing in Government. IBM Center for The Business of Govt. Canarelli, M. (2017, Feb 22). Harness the Power of Crowdsourcing to Improve Your Business. Retrieved Oct 11, 2017, from Startupnation.com: https://startupnation.com/start-your-business/crowdsourcing-improve-business/ Cheung, S. (2012). How Companies Can Leverage Crowdsourcing. Composite Information Systems Laboratory (CISL). Lehdonvirta, V., Bright, J. (2015). Crowdsourcing for public policy and government. Policy Internet, 263-267. Leimeister, J., et al. (2009). Leveraging crowdsourcing: Activation-Supporting components for IT-based ideas competition. J. Manage. Inform. Syst., 197-224. 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