Don't Let Crowd 'Wisdom' Do All Your Thinking
For some time now, various thought leaders have been extolling the virtues of crowds as engines of decision.
A decade ago, The Wisdom of Crowds became a bestseller. The Harvard Business Review's site weighed in with a post "Why You Should Crowd-Source Your Toughest Investment Decisions."
At the same time, entrepreneurs are routinely told to follow their own path. They are praised for not following the crowd or listening to what the multitudes say.
While some efforts to harness group action for business models have run into trouble (think Groupon), people can’t quite shake the idea of using group power in a business model.
Based on results, it appears that crowds are effectively funding art, community and business projects over at sites such as Kickstarter and Indigogo. Gilt Groupe has turned the Groupon concept into a working model. OpiaTalk is mining gold and outlandish conversion rates by using real-time, in-site crowd discounts to motivate buyers. Sites like GoEnnounce are helping students share and crowdfund their college expenses. And if you think about it, Yelp is really a crowd-sourced decision engine for just about everything.
The people at Quirky are crowdsourcing entrepreneurship and innovation decisions. Or a cynic may say they're doing free market testing of potential products before the company really invests in production.
Whether you're a cynic or believer in the idea, probably you would agree that getting people to do a task for free that other companies normally pay for is pretty smart.
Does that mean entrepreneurs should crowdsource their entrepreneurship decisions? Does that mean if someone is an inventor with a great idea, he or she should post the innovation on Facebook and count the number of “likes?”
I don’t suggest quite that. Plus entrepreneurs would do well to distinguish between the marketplace of potential customers (whom founders might want to listen to closely) and the crowds of people around the business owner (friends, family, colleagues and co-workers and even random individuals).
For entrepreneurs, there’s real value to leadership and authenticity. And the hardest decisions are often best made by following their gut or heart.
That doesn’t mean they should shut everyone out and make every decision by themselves. There's value in expert advice.
But trying to start a business or design a good product through group decision making is difficult and ineffective. The expression “a camel is a horse designed by committee” is uttered for a reason.
So entrepreneurs should pay close attention not only to whom they are receiving input from but also to where they are in the product-development arc. Crowd feedback is more important the closer they are to arriving at a finished product and has less value closer to the starting gate -- at the design phase. Unless they are in the business of camel sales.
Entrepreneurs are not always going to make the right call. But when it comes to making those early decisions, they are often better off without a crowd or committee. It’s once those initial decisions are made and navigated, however, that it’s time to get some group input -- to take the idea or product to market.
Business owners will get plenty of crowd feedback once they show up at the market with a new product. Today, customers vote with their credit cards. And if an entrepreneur intends to stay in business, that’s wisdom to heed.