Tag Archives: organization

On the relationship between orgs and crowdsourcing

The model shows institutions and market as a p...

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Good post at Warren Ng’s blog:

Corporations exist for a reason. That reason most likely is attributed to the power of many, yet corporations break down when executives make bad decisions and the remainder of the company suffers. Promotions and bonuses are put on hold or worse jobs are lost. Seems that corporations haven’t figured out how to utilize the man power effectively.

My reply:

You’re making some important points here (and adding some much-needed balance to the breathless claims that crowdsourcing will replace the corporation). The reason for traditional organizations to exist is largely based in Coase’s theory of the firm: the transaction costs of using a market are minimized or eliminated when performed internally by a firm. Crowdsourcing shifts some of those activities out of the firm by providing lower transaction costs than the firm, something difficult or impossible prior to social media technology.

Savvy entrepreneurs in the crowdsourcing space are beginning at the point of determining which organizational processes lend themselves to being performed outside of the firm, whether they are viewing their value proposition that broadly or not (incidentally, outsourcing and offshoring were both precursors in the attempt to seek lower transaction costs). There are some processes that will probably always stay within the firm–primarily those administrative activities that cause a firm to cohere. This is currently exemplified by the tendency of most new commercially-focused crowdsourcing ventures to form a company first, then sell the results to another company. At present it is more efficient for a company to seek funding, hire staff, and build platforms within a traditional company structure. That may not always be the case.

It’s interesting to contemplate the evolution of organizational forms as technology enables new arrangements. It challenges a great many of our assumptions. That said, I should probably leave it there lest this comment become a post of its own.

Too late.

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King revisits econ-soc paper

Brayden King of orgtheory.net excerpts a 20-year-old paper and seeks guesses about who wrote it:

In the modern world, individuals encounter institutional constraints principally in organizations. They encounter the state in schools, the army, the agencies of taxation, and so on. They encounter the economy as employees of firms or as seekers of jobs located in firms or as the purchasers of services offered by firms. Many efforts at social reform take as their targets these intermediary organizations….Challenges to prevailing institutional arrangements also typically occur in organizations. Often, contending groups create protest organizations to make the challenge. Often times, the challenges are made in existing organizations. In either case, organizations serve as a vehicle for expressing preferences of individuals and for instigating change in the larger system (emphasis mine).

No coherent guesses here.  I really like Brayden’s work and look forward to where he takes this.

Differences between organization, mass collaboration, and crowds

Denis Hancock at Wikinomics makes an important point almost as an aside and as an introduction to a post about something else:

For most of the last year there’s been one major point in relation to wikinomics that I’ve been trying to make more than any other – that while it’s often seen as synonymous with the “wisdom of crowds“, more often than not wikinomics-enabled strategies focus on finding (and leveraging) “uniquely qualified minds“. This is a subtle but important difference that is most obvious in the first story presented in the book – GoldCorp. Rather than being a tale of how a crowd of people came together to “mass collaborate” and create value, it was an excellent example of using transparency and the web to find those few uniquely gifted individuals that know how to find gold.

For the uninitiated, Wikinomics is…  hmmm…  how to describe it?  It’s a book and web site about mass collaboration.  It’s more than that, of course–as most mass collaboration is–but that’s a start.

Hancock’s point is important because it makes a clear distinction between collaborative activities, which have an aim, and crowds, which are about individuals’ aggregated behaviors that rarely lead to an intentional outcome.  Sociologists, psychologists, anthropologists, economists, law enforcement officials, and many others will have quibbles with that comparison, but I think it get close enough to this point:  collaborative efforts have goals; crowds don’t.

This goal-oriented behavior filters out the randomness of crowds.  People in organizations and mass collaborations work together toward goals; people in crowds are individually focused.  Being good at something should increase an individual’s value in a way that less focused crowds would not.

Yet another distinction is that people in organizations and mass collaborations chose to be together, which also has the benefit of selection.  That’s where I see “uniquely qualified minds” being identified.

I’m including organizations in the definition of “collaborative efforts”, but there are further distinctions to be made between formal organizations and mass collaboration in the Wikinomics sense.  The point for the moment is to note that intention matters.

The wisdom of crowds is not the same thing as mass collaboration, mass collaboration is not the same as organization, and none of them replaces either of the others.  There may be instances in which one is better equipped to handle a particular activity, but crowds aren’t going to replace companies, government agencies, and other organization.  What they can be is complementary.

This distinction needs some clarity as we get into fun but misleading terms like “crowdsourcing”.  Knowing the difference helps make choices about them better informed.  A lot of stuff is happening with people doing things together.

What I’m trying to do is make obvious that there are names and distinctions.  While James Surowiecki wrote an interesting book, the subtitle, “Why the many are smarter than the few”, really clouds the matter.  Crowds aren’t always smarter than organizations and mass collaboration–just in specific circumstances.  Don’t believe the hype.

Now that we’ve cleared that up, let’s get back to the news.