While a combination of my job and a bit of intellectual curiosity leads me to devour a lot of content on the web, there is precisely one publication that I pay to have delivered to my house each week – The Economist. It’s always a special treat when one of their articles focuses on one of our regular research areas, which is just what happened last week with Following the Crowd. While much of the article covers some of the “unusual quarters” where crowdsourcing is popping up, the final few paragraphs focus on the perceived limitations and/or challenges.

I want to particularly focus on the last one, which is in relation to Cambrian House (CH). Following a brief discussion about why crowdsourcing and commerce “make uneasy bedfellows”, the article leads into the CH story with “And even those companies that do try to share the proceeds from commercial crowdsourcing are not safe.” Noting that the CH model of encouraging people to send in ideas for new software products, have the community evaluate them, and fund the winners sounded like a good idea, the article then mentions that the chief executive acknowledged that the business model failed.

I assume they’re referring to the comment that CEO Michael Sikorsky made on this TechCrunch article about CH’s failure in May. If you look at his explanation, Michael brings up one particularly interesting reason for the problems CH – “… most of the heavy lifting kept falling back on us, or a few select members of the community. A vicious cycle was created leading all of us to get more and more diffuse… Hence: the wisdom of the crowds worked well in the model, but it was our participation of crowds aspect which broke down.”

But here’s the thing – if you look back on the history of crowdsourcing models, the heavy lifting almost always falls back on a “few select members of the community”. We’ve seen this with Digg, Wikipedia, and a myriad of others – some sort of hierarchy is almost certain to emerge in a crowdsourcing platform, and within this hierarchy a relatively small group of people will do most of the heavy lifting.

In turn, what I’m saying here is that CH shouldn’t have been surprised by this, nor should they have seen it as a business model failure. That was what history indicated would happen. Moreover, as companies start blending crowdsourcing with commerce (i.e. bringing in direct financial incentives), one would expect that it would amplify the effect – and the strategy for the company should have been designed accordingly. This would indicate the Economist’s tongue in cheek final sentence might have some merit – “Perhaps it should have crowdsourced the management of the company, too?”

That’s not to say it would have neccesarily worked, however. This challenge of blending crowdsourcing with commerce is still in it’s infancy, and there is a lot of collective learning to be done – history also tells us that failure is an important part of the innovation process. I think it will be one of our more interesting research topics over the next little while. Right now, I’d agree with the Economist that they’re uncomfortable bedfellows, but somebody is going to figure it out sometime – and might that somebody be VenCorps, who acquired the CH assets in May?