When crowdsourcing backfires

Crowdsourcing has been touted by some as a revolution.

Popularized by Web 2.0 and the concept of "the wisdom of crowds," the idea that businesses and organizations can leverage a "crowd" (often for free or at minimal cost) to perform all sorts of tasks that would have otherwise been done by employees or contractors is one that is naturally appealing.

From upstarts like Threadless - an online clothing retailer that lets consumers design t-shirts and then produces the ones the "community" likes most - to major corporations like Colgate-Palmolive, which has used crowdsourcing to solve tricky problems its R&D staff couldn't, there is no doubt that real value can be derived from crowdsourcing.

But like almost everything, crowdsourcing has its limits.

For instance, I recently noted that when "going global," crowdsourcing your localization efforts often results in less-than-satisfactory translations and advised that a qualified entity with experience and expertise be hired to perform this task.

Perhaps one of the more cogent examples of the fact that crowdsourcing isn't always a good option for businesses and organizations came recently when the DataPortability Project decided to crowdsource the creation of a new logo.

Previously, the project had to scrap its logo when Red Hat sent a cease and desist notice claiming that it was confusingly similar to its own.

To design a new one, the DataPortability Project enlisted the help of the community. It called for logo submissions from the public and decided that the next logo would be chosen by the community in a contest format.

A new logo was recently selected as part of this contest.

Not weeks later, the DataPortability Project found itself on the receiving end of another legal notice, this time from Vivendi Mobile Entertainment's trademark counsel.

And sure enough, the logo trademarked by Vivendi Mobile Entertainment looked eerily similar to the new DataPortability logo.

Chris Saad, the man behind the DataPortability Project, apparently plans to "tweak [the logo] slightly and move on." Assuming, of course, that his "tweak" satisfies Vivendi Mobile Entertainment enough to let him move on.

Given that the process of choosing a new logo took about two months, the DataPortability Project's crowdsourcing experience highlights the fact that sometimes the crowdsourcing process is inefficient and less-effective than completing a task in-house or outsourcing it to a contractor.

In the case of the DataPortability Project, which I have criticized for presenting itself as a non-profit, tax-exempt organization when it isn't, the crowdsourcing mishap has resulted in a legal problem, however small, that distracts it from more important matters (like becoming a legal entity).

For a relatively small amount of money, the DataPortability Project could have hired an experienced designer to create a logo that effectively conveys the message of the DataPortability "brand."

This would have taken far less time and it also would have mitigated the legal risks from trademark issues, as a good work-for-hire agreement would have included intellectual property representations from the designer as well as indemnification clauses.

In other words, the DataPortability Project really had no compelling business rationale to crowdsource the creation of its logo; its logo contest was little more than a feel-good marketing ploy.

Companies and organizations considering the use of crowdsourcing should ask themselves the following:

Does crowdsourcing provide a tangible time/money advantage? That is, can crowdsourcing provide a viable solution more quickly and/or cost-effectively than we can achieve in-house or through outsourcing?
Are there any risks to crowdsourcing? What are the possible implications and consequences if a solution derived from crowdsourcing is later discovered to be defective or is found to violate the intellectual property rights of another party?
Can we realistically achieve a better solution from crowdsourcing? For instance, are we crowdsourcing a solution to a problem that we know we have been unable to solve on our own or can we leverage the expertise we have internally or through a contractor to get a satisfactory solution?

At the end of the day, I think crowdsourcing can be a valuable business tool when used properly but crowdsourcing for crowdsourcing's sake is a poor business decision and smart businesses and organizations will keep that in mind.

Hopefully for the DataPortability Project, the third time is the charm and not a strikeout.