When John Fluevog Shoes needs new ideas for its footwear and ad campaigns, it doesn't rely purely on inspiration from fashion shows and professional ad agencies. The Vancouver, British Columbia-based company has opened its creative process to the internet. That has led to 14 new shoe styles and more than 40 creative ads--all from online contests and crowdsourcing. "Inspiration comes from all over," says marketing director Stephen Bailey, "and our customers aren't always looking for something that's going to be on a trend report."

Crowdsourced competitions like Fluevog's are partly marketing gimmicks, meant to engage customers and boost a company's social media following. But after the success of businesses like Threadless and Quirky, which design their products through collaboration with the crowd, more companies are looking to crowdsourcing as a viable way to develop new products.

Fluevog, which has about 200 employees and more than $10 million in annual sales, was a pioneer in this area. It began crowdsourcing in 2004 because customers kept handing shoe sketches to founder John Fluevog when he visited retail stores. He decided to let people submit--and vote on--sketches online. If the in-house design team used a sketch, Fluevog would give the winner naming rights, a bio on its website, and a free pair of shoes. The contest was such a hit that Fluevog launched one for ad campaigns in 2010. Today, about half of all Fluevog ads come from contest winners.

The design contests not only create marketing buzz but also provide customer insight, says Bailey. "You get a sense of where customers are and what they're looking for," he says. Some ideas even have big payoffs. Take the Elizabeth, a shoe modeled after the legs of 18th-century furniture and submitted by graphic designer Jody Elizabeth. Fluevog modified her design, but the final shoe, which retails for $329, was so popular that the company brought it back for a second season.

These contests aren't without risks. There may be intellectual property disputes, particularly if you fail to make clear who will own the rights--or if another company sues because a design is derivative. Some critics also warn that contests sometimes yield designs that aren't up to a brand's normal standards. "Often companies have to bring in a professional to clean it up," says James Archer, chief creative officer of design firm Crowd Favorite, who has blogged about the perils of competitions.

That's not to say amateurs can't rev up a company's creative juices. In October, Sock It to Me, a Portland, Oregon-based sock manufacturer, received some 4,600 submissions for its annual design-a-sock contest. Although the company, which has about $7.5 million in yearly sales, employs an in-house design team, sometimes the most imaginative ideas come from regular people. Last year, one of the winning socks featured an ostrich's neck stretching up the leg. It's something the in-house team would never have thought of, says founder Carrie Atkinson. "But it was so well-liked by fans that we went forward with it," she says. It's a good thing, too: The ostrich sock was among the company's top-selling items last year.

From the February 2015 issue of Inc. magazine