Could Crowdfunding be the Future of New Project Development?

Reading this article reminds us that the jump from concepting and ideation to actual production is something that can be very difficult. Could crowdfunding be a possible solution to this more difficult problem of funding ideas?

Traditionally, design companies show new product development workflow as something like this.

With design concepting and ideation on the left progressively working towards a proof of concept and prototype, then finally flowing through to production and distribution. All very simple when you know how. Of course this is the idealized view of product development and it requires time and effort, not to mention money to make this process work.

The reality is as the article suggests more like this.

Where the concepting and ideation are can be quick and full of possibilities then the reality of having to make and distribute and getting investors involved can change the new products possibility of surviving in the marketplace. Ultimately you have to get to a point in the product development where considerations about marketing and product placement occur. To get people to buy your product thoughts on differentiation from competition and potential rivals has to occur. Most likely you will need some kind of advertising and marketing effort to make that happen. When should these have been considered? Probably quite early on in the product life-cycle. Then the questions of manufacturing and shipping to consumers has to discussed and solved. Apple hasn't just been innovative in their products but also in the infrastructures that support the making and shipping of these items. Innovation si more than a good idea and great product.

So this leads onto the focus of the article, for the majority of start ups and small businesses that have lower budgets and not the reach and resources for these systems to be put in place, how can they solve these issues without help? Could a form of crowdsourcing that involves investments from a crowd, called crowdfunding help?

Firstly there are 2 important questions to ask yourself.

1. Do I have the time to make this commitment?
2. Do I want to develop this publicly

These questions of course have huge impacts on whether you should begin a crowdfunded project.

Certainly crowdfunding has been shown to work in gathering money for projects\ that seem worthwhile. One attempt at this that has proven successful has been the work by Grameen bank, an attempt at helping the third World at getting micro financial help for individual projects that can help those in extreme poverty.

So how might this fit into the building of an idea at what stage should you seek funding from other people. The website suggests getting people involved at the proof of concept stage, of course this makes sense that people want to see at least something working in action rather than pure speculation. Then the idea has already started to prove at least it can be made. The speculation of course might still be in the interest of the public at large and it's possibility of future growth and success. But then that is what investment is all about, speculation on future growth.

There are already many sites forming on this concept such as kickstarter and IndieGoGo, they are proving out the model and already have many projects looking for crowd funding. Time will tell how successful these become. but already signs are looking positive for this new venture into funding. Kickstarter has already as of 2010, had 319 successful projects and raised over $9.1 Million in funding these efforts. Top catagories seem to be towards film and music efforts with design making a growth sector in third. The reason suggested is that designer primarily spend their time working on projects for others and are not as used to pitching their ideas for themselves.

Noted reasons for Kickstarters crowdsourcing success are suggested to be:

1. They filter which projects get posted to the crowd -
makes them interesting and worthwhile

2. You only get funding if you meet the threshold of prior to launching your project
keeps projects realistic and encourages crowd participation in promotion as projects get close to reaching their goals

3. Easy to find and promote projects
Easy is always good in these efforts, as it makes it easier for anyone to get involved.

4. Its success has made it more successful
As Malcolm Gladwell would suggest reaching a tipping point in success will only lead to more interest by others.

5. It's not about the money
Like most crowdsourcing efforts the crowd is most motivated by personal pet projects and interests.

You can find out more information about crowdsourcing in a previous post here.

Questions for Innovation

Sarah Krasley along with Bill O'Connor recent put forward 6 questions that can lead to innovation at an article found here.

These six innovation questions are:

• What could I look at in a new way? (Steve Jobs looked at the computer in a new way, leading to the Mac and the personal computer revolution.)
• What could I use in a new way? (Paleolithic humans turned fire from a scourge into a means of cooking, heat, light, and protection.)
• What could I recontextualize in space or time? (The Sumerians moved language from spoken to written form, expanding its power and reach.)
• What could I connect in a new way? (Thomas Edison connected the light bulb to the electrical grid, leading to electrified cities.)
• What could I change, in terms of design or performance? (Nearly 3 million years ago, the world’s first “innovator” transformed a simple rock into a stone hand-axe.)
• What could I create that is truly new? (In 1776, American colonists created the first “intentional” nation, based on specific abstract principles.)

Gamification of the crowd

I recent article I read highlights some of the power of crowds and mixes in some gaming concepts to make a novel use of crowdsourcing to help scientific progress. The amazing claim is that the power of the crowd actually came up with an enzyme that was better than anything the scientists working in the field had come up with on their own. The new crowd produced enzyme is 18 times more effective than it was before the crowd got involved.

The crowd playing this game are logged into a system called FoldIt, that basically requires folding proteins to form a correct solution. It is like a biological version of Rubik's cube. It has rules and systems, that can be learnt and lend themselves to crowdsourcing. The power of the crowd is the ability to tackle these complex objects in bite sized pieces and problems. One of the fascinating things is that the crowd are not all experts in protein folding and in fact do not need to be to play. The rules of gene folding are like the rules of a game that can be learnt and played with.

The lesson to be learnt here is that by creating a compelling game that has easy rules and ability to experiment without consequence has not only grown a large interested group of game players, but has actually enabled time and effort playing the game to be turned into something practical in the real world. This fails nicely inline with the whole concept of innovation and working on bite sized problems, using a growth mindset and playing in safe environments. Nice confirmation of some of those concepts.

You can read some more about some of my crowdsourcing discoveries here and here.

Little bets

Just finished reading Little Bets, by author Peter Sims. A very nice book about the process of innovating through making small investments in time and effort towards large goals. The book is an easy read and I found it quite inspiring with it's examples from companies like Google and Pixar. I liked some of the nuggets of information about entrepreneurial thinking and how these personality types think and take risk. I also liked the stories of how Pixar took risks early on and didn't even start out as a film production company but actually produced hardware. The animated shorts were originally used to sell the hardware and software they produced. If it wasn't for little bets and the ambitions of the Pixar team to keep pushing for full length animated films then who knows what might never have been. Of course equally Steve Jobs' investment in Pixar was a little bet by him in the domain of 3D graphics, and that certainly turned out well. The rest of course is history.

There are some nice references to the work by Carol Dweck on growth mindset versus fixed minds, that was encouraging and insightful about how your mind affects how you perform, I have written a brief post on this already here that I recommend checking out. What is clear from the book is that making little investments towards anything is going to eventually with enough time and focus in the right direction yield results. I think the book is nicely written and makes you want to find ways to apply it to your daily life. I have always liked the quote from Louis Pasteur, that opportunity favors the prepared mind, well this adds an little twist to that concept that good ideas favor little bets.

Design Thinking

Design thinking is an alternative way of thinking about problem solving and idea generation. It could well be one of the most important new ways of structuring new business teams and creating environments for future workers that has been put forward in recent years. The concept is not really anything new, and certainly many historical figures like Edison, Leonardo Da Vinci, and Tesla, would be in my mind classed as design thinkers. Really the newest step forward is the more formal acceptance of the process of design thinking as promoted by companies such as IDEO that produces reproducible successful results. Most people in the realm of invention and idea creation really have been practicing design thinking for centuries.

Design thinking is a really a process in approaching a problem. The basic four steps of design thinking are: 

Define the problem

Create and consider possibilities

Refine and dissect results

Repeat(optional)

Execute most successful outcome

Within each of these steps are tools and methods that help get the most out of the process. 

Defining the problem, involves a discovery phase with analysis of the problem space. At this point in the process it is critical to immerse oneself in the problem, existing solutions (if any), and the all the available resources and literature. It may also require observation of people and processes already in place. Only after a full discovery would it be worth moving onto a creation phase. At this point in the process it is worth considering tools like brainstorming on smaller parts of the problem, grouping and ideating ideas together to be evaluated as worth pursuing. Which leads nicely into to a complimentary part of the phase of creating prototypes of various levels of fidelity. To test out concepts and encourage team engagement at the early production stage. This is when things begin to really stand out as feasible and worthwhile solutions or not. Then, comes the refine and dissection of those ideas that seem most worthy. Further prototyping, and maybe some usability tests can help refine the results. repeating earlier stages may also prove advantageous. After things seem to funneling into a particular result it then becomes time to execute the most successful outcome into the final product or service.

That in a nutshell is design thinking. Again nothing completely new but really people's acceptance and corporate push for innovation has brought these now more well defined steps into new consideration. They are effective and powerful ways to generate ideas and produce prototypes that lead to more successful end products and services, when done correctly.

Other breakdowns of the steps include.

Discover, Analysis, Ideation, Prototype and Evaluate.

Define, Research, Ideate, Prototype, Choose, Implement, Learn.

In each instance you can see the common form of four basic steps.

I have some further reading here for design thinking.

You can read some more of my thoughts on prototyping here.

And some ideas on idea generation here.