Brazil's most popular automaker, Fiat, sought a design for its 2009 concept vehicle, the Fiat Mio. Rather than turning inward to its core team of designers and engineers to come up with the new look, the company turned outward­—and let the world decide how the car would look, feel, and drive. By crowdsourcing the design of the car through its website, fueled by a viral marketing campaign, the Fiat Mio became the world's first fully-crowdsourced vehicle, debuting at the Sao Paulo International Automobile Show to rave reviews. All in all, the car's design took into account some 10,000 suggestions from people in more than 160 countries.

"A good designer tries to realize the wishes of everyone, and with this concept car we were truly working on everybody's behalf," said Peter Fassbender, manager of Fiat's design center, Centro Estilo, in a release. "The group of designers working in the Fiat Mio house were totally open. There was transparency about every decision, which were all communicated online and commented on. This is completely different to the usual design process, which is entirely hidden and secretive."

The Fiat Mio illustrates a prime example of just what can be accomplished by crowdsouring your firm's research and development, says Carl Esposti, the founder of Rather than relying on the ideas and abilities of a limited staff of employees (especially in small start-ups), crowdsourcing enables companies to circumvent the restrictions of limited resources, and think outside the box—literally.

"You may have an R&D department, but there are an awful lot of people that think about this differently or are better qualified," he says. "Tapping them as resources means that your company can come with up better ideas—and have more insight into how to exploit those ideas, test their viability, and put them into production."

Crowdsourcing, predicts Esposti, will "take the lid off the ideas and options and possibilities relative to the ability for a broader community to be able to think about how to move a business forward." Here's a look at how your firm can learn learn to innovate using the wisdom of the crowd.

First, Define Your Use of the "Crowd"

Like "social media" or "cloud computing," crowdsourcing is a term that gets thrown around in a variety of contexts. Jeff Howe, a journalism professor at Northwestern University, who was one of the first professionals to use the word, defines it as "the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call."

Carl Esposti of has broken down the term even further, creating five categories of crowdsourcing. They are:

  • Crowdfunding: Sites such as Kickstarter that allow an individual or enterprise to receive funding.
  • Distributed knowledge: The aggregation of data and information from a variety of sources.
  • Cloud labor: Leveraging a virtual labor pool.
  • Collective creativity: Tapping "creative" communities for user-generated art, media or content.
  • Open innovation: The use of outside resources to generate new ideas and company processes.

Before you begin applying crowdsourcing to your company's product research and development, consider which of the uses best suits your purposes. Are you trying to survey customers on their desires? Are you asking for creative or technical input. Once your goal is defined, you can begin to ask your audience for their help.

Crowdsourcing Your R&D: Leverage the Concept of Open Innovation

Henry Chesbrough, a management professor at the Hass School of Business at the University of California-Berkeley, coined the term "open innovation," and is largely credited with exploring the process in which organizations can leverage the wisdom the of the crowd to innovate within an enterprise. Chesbrough defines open innovation as "the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and to expand the markets for external use of innovation, respectively."

In other words, Chesbrough is encouraging managers to rethink their internal process of innovation on two levels: first, to acknowledge there is knowledge to be tapped from the general public, and second, a company should strive to offer that innovation back to the world.

The concepts may seem like theoretical jargon, but in recent years, the practice has become fairly common, and has attracted attention from hundreds of corporations looking for new ideas—and new ways to cut costs. Nokia, for instance, earlier this year launched "Invent with Nokia," a program that invites would-be inventors to submit ideas for new technology inventions. If Nokia likes the idea, it will prototype it—and pay the inventor.

A number of young start-ups also have popped up in recent years to provide platforms for small businesses to essentially take their internal struggles to a broader stage, and let the world have a crack at solving them. If your company isn't equipped to target customers or a broad audience of creative thinkers on its, own, you might consider working with a crowdsourcing expert or start-up to best tap the crowd. The cost of doing so varies tremendously. It's just pennies to ask a Mechanical Turk to answer a question, but can be tens of thousands of dollars to work with a larger open-innovation firm.

One of the newer start-ups breaking into the crowdsourcing ideas field is Ideaken. Founded in India by Jayesh Badani, the site is essentially a software platform that allows both enterprises and individuals to collaborate. The three-step process is simple:

  • Companies can submit a challenge
  • The company can collaborate with a network of "solvers"
  • The problem-solver gets paid for his or her work

"In both open innovation and co-creation—you are fundamentally trying to leverage resources which are not traditional ones, not necessarily on your payroll, on your approved list of vendor, or certified by someone, and not designated to execute your innovation solution," Badani says.

"In both cases you are trying to tap into the long-tail phenomenon. Your success rate is not 10 out of 10, but your cost is lower and you are keen to stumble upon value, which otherwise could remain hidden or be eventually found at your competition's camp."

Another start-up, Whinot, founded by Kyle Hawke in 2010, offers small-business owners advice and project help from a community of reputable experts. It's one of the first fully crowdsourced consulting firms.

"The problem we're solving is that small business owners work with who they know and trust, but when they don't know someone personally who can help them, they end up doing it by themselves or settling for sub-par expertise," Hawke says.

For example, Hawke explains how one of the site's customers, Spot Trot, a company that makes apps for musicians like Dave Matthews, was researching how the company could pitch its app-building service to an entirely new market: professional sports teams. Spot Trot tapped into Whinot's community of experts, finding a team of industry consultants with backgrounds in sports marketing and technology who knew and understood the marketplace.

"We focus on connecting the client with the right expert, and making the process of them working together as seamless as possible," adds Hawke.

So how can your company begin to use open innovation? A quick way is to tap into social networks, such as Facebook and Twitter, says Esposti. Faster than using software platforms like Whinot and Ideaken, polling customers through an already-engaged fan base may be the quickest way to generate new ideas for your company.

Crowdsourcing Your R&D: Empower and Inspire Your Users to Create

Designing a new product can be expensive, especially if it involves building a prototype. A few innovative firms have discovered that crowdsourcing design can be effective way to understand customer preferences—before the expense of actually developing the product.

Threadless, a T-shirt company based in Chicago, is perhaps one of the most well-known start-ups to use crowdsourcing to its advantage. Each week, the company accepts thousands of designs from amateur artists, and lets the crowd decide which shirts get made. StyleFactory, which is based in New York, lets young designers upload their designs for household items—everything from chairs, tabletops, to clocks. Then, site users vote on each product, and once the product hits the critical amount of "Likes," the product goes into production.

And lastly, Esposti's favoritve: Local Motors, which bills itself as a "next generation American car company."

Local Motors lets amateur designers submit designs for new cars, and will actually build micro-factories in regions where demand is highest—once a vote on designs is tallied. Cars are then built and sold from the micro-factories on a just-in-time basis. Last month, the company announced the design of the world's first "co-created" military vehicle, which is being built for combat reconnaissance and combat delivery and evacuation.

"We both see the future of product creation based upon an open process where we gain wisdom from the masses in order to deliver truly relevant products," said Jay Rogers, CEO of Local Motors, which is based in Chandler, Arizona, in a release. "We could not have achieved the same outcome on this project without their intuitive design and collaboration tools and support."

You don't necessarily need to build a software platform on your site to crowdsource design, either. A simple bootstrap approach to crowdsourcing your company's product design is to hold user-generated contests or competitions. For instance, if your company is looking for a new logo, you engage your company's community.

"In the simplest capacity, a company can crowdsource its logo and branding," says Carl Esposti. "But at the more extensive end, crowdsourcing is being used as integral part of the R&D process."