This page contains the original text of the Harvard Business Review article, with links out added so you can easily click to see what the article talks about.  Want to contribute to make this better? Follow the links at the start of each section to the editable version on this wiki.

 

[You can edit content from the section below here: Power of UCS]

 

Earlier this year, I spent an intense half-day closeted in a room with the top 70 executives at Intuit. Our aim was to come up with ways that people outside the company could volunteer their time, energy, and expertise to make life better for our customers. Sound odd? Well, if you’re not conducting an exercise like that at your organization, you risk missing the boat on a sea change that’s transforming business.

 

Every day, millions of people make all kinds of voluntary contributions to companies – from informed opinions to computing resources – that create tremendous value for those firms’ customers and, consequently, for their shareholders. When I first encountered this idea, several years ago, it struck me as unfathomable: Volunteerism was for charities, not for red-blooded, profit-making firms.

 

That was just my first surprise. I also began to see that user contributions are fueling some of the world’s fastest-growing and most competitively advantaged organizations – in some cases revolutionizing the economics of entire industries by radically shrinking their cost structures. Think of eBay, which opened as an online store with no inventory, leaving it up to customers to fill its “shelves” with goods to sell. Or Wikipedia, which gutted the value proposition of 230-year old Encyclopaedia Britannica by offering a free encyclopedia written and updated frequently by unpaid amateurs.

 

In other cases, the contribution is not as obvious but just as central to the value proposition. Skype incurs almost no capital costs because its internet-based phone system is built on the unused processing capacity of its customers’ personal computers. Google, too, is built on user contributions: Its search engine relies on the algorithmic aggregation of links created by others between websites, and its ad placement system relies on data from people’s click behavior.

 

OK, I’m not saying you can or should transform your company into a Google or a Skype whose business model is primarily based on user contributions. But you should understand the power of the phenomenon and, as I have, learn from the growing number of companies in traditional industries – firms like Honda, Procter & Gamble, Best Buy, and Hyatt – that are tapping user contributions to improve products, better serve customers, generate new business, reduce costs, boost employee performance, and more. Contribution-driven results like those are achievable for pretty much any business.

 

The concept of user contribution isn’t new. But the companies I’ve just mentioned – both the internet highfliers and the old-economy behemoths – have actively created something I call a user contribution system. That is, they’ve created methods for aggregating and leveraging people’s contributions or behaviors in ways that are useful to other people.

 

The users can be customers, employees, sales prospects – or even people with no previous connection to the company. Their contributions can be active (work, expertise, or information) or passive and even unknowing (behavioral data that is gathered automatically during a transaction or an activity). The system is the method, usually internet-based, by which contributions are aggregated and automatically converted into something useful to others. Although the company retains control of the system and may choose to modify its design, the system converts inputs into useful outputs in real time with little or no intervention by the company.

 

Such a system creates value for a business as a consequence of the value it delivers to users – personalized purchase recommendations, connections between buyers and sellers of hard-to-find items, new personal or business relationships, lower prices, membership in a community, entertainment, information of all kinds.

 

fig.1 [view the expanded wiki version, which you can edit]

 

The challenge for executives is twofold: First, you must learn how to spot opportunities for creating value from user contributions. Second – and here’s the difficult part – in acting on these opportunities, you must overcome natural organizational resistance to the idea of relinquishing significant control to people outside the company. The advice I offer here is based on my personal experience at Intuit – the successes and failures, the moments of exhilaration and the times when I had to conquer my own fear of putting so much power in the hands of users.

 

section2 [edit content below on Potential of UCS]

Revolutionary Potential, Debilitating Myths

 

Though I didn’t know it at the time, my interest in user contribution systems began in the early 1990s with a series of slim red books. The Zagat guides offered reviews with quantitative ratings based on sustained performance rather than on a single visit or two by one reviewer. And those recommendations originated not with paid experts but with regular diners like me. It was a decade, though, before I recognized the significance of the method to my own company. That “aha” came from watching the winners on the web.

 

The success of the leading internet firms has admittedly been touted ad nauseam by the media and business experts. Yet for better and for worse, the internet is a reflection of society and the preferences of hundreds of millions of people around the world. Like book best-seller lists, rankings of the most popular websites reflect what’s winning the battle for people’s attention.

 

The companies joining the list of most popular websites in recent years include Wikipedia, YouTube, Facebook, Craigslist, and MySpace. They have joined such older sites as Amazon, eBay, and Google. At first glance, these sites seem to have little in common, targeting unrelated areas of human endeavor: the cataloguing of information, video entertainment, social interaction, classified advertising, retail shopping, internet search. Some of the sites charge users; others are free. One’s a nonprofit; another has one of the highest profit margins among public companies.

	sidebar Why Contributors Contribute   Most contribution systems offer no financial compensation to contributors. In fact, payment can destroy participation by undermining a sense of collaboration and trust. Rather, they rely on motivations intrinsic to humanity – or involve contributions that require no motivation at all, because the user contributes without realizing it.    I’m contributing? Some systems collect participants’ resources or data as a by-product of things people are doing for other purposes. As shoppers buy from Amazon, they automatically contribute to its recommendation engine, which suggests products based on the ratings and purchase decisions of other customers.    Practical solutions In some systems, participants contribute in order to get reasonably immediate rewards. For example, the site del.icio.us enables users to organize their bookmarks of websites. A byproduct of this activity is that, when aggregated, the bookmarks produce an index to the web that is valuable to others.    Social reward Many systems provide the benefits of interaction with others: being part of a community with a common interest, generating business prospects, getting a date – the drivers behind social networks like Facebook and LinkedIn.   Reputation Contribution can be sparked by a desire for public recognition, like Amazon’s badge for a “top 1,000 reviewer,” or for the admiration of peers: Wikipedia articles carry no authorship credit, yet authors earn the respect of other contributors.    Self-expression Many user contribution systems thrive on individuals’ desire to air their thoughts, opinions, or creative expression, with the possibility of real-time feedback from users – witness the six million videos on YouTube.    Altruism Why would a person write a glowing online review of a restaurant – when it may become harder to get a table if others act on the opinion? Some people want to help local diners or reward superb restaurant owners. Others simply want the truth to be heard.    [You can edit this content here: Why contributors contribute]

 

Despite their differences, all these winning sites rely on – or are themselves – user contribution systems. Much of their success flows from inherent characteristics of contribution systems that create advantages, detailed here, of a magnitude rarely known in traditional business.

 

Cost advantage

What does Wikipedia pay the authors and editors of its articles? What does Facebook or MySpace pay those who painstakingly fill in and update the personal profiles that make the site so valuable? Nothing. These sites enjoy free “raw materials,” as users perform gratis work that companies typically have to pay for. People contribute for various reasons, some of them self-serving but all of them sufficient to make formal payment unnecessary. 

 

Scalability advantage

Inexpensive does not mean incomplete. Quite the opposite: The contributions of countless people can be aggregated into vast compilations that surpass traditional offerings. Wikipedia has 10 times as many articles as Encyclopaedia Britannica. Craigslist’s free classified advertising sites feature more than 30 million new offerings every month, and eBay’s virtual shelves feature 120 million items, many times more than any other store on the planet can offer. Such scale doesn’t require broad or deep contribution: Only a small percentage of users may contribute (about one user in 1,000 for Wikipedia) and active contributions may require little effort (as with Flickr, the photo-sharing site). 

 

Competitive advantage

Some contribution systems give companies a structural advantage over rivals because of network effects. That is, the more people who contribute to the system, the more useful it becomes, creating an upward spiral in which increasingly more people choose to use and contribute to it. Network effects once drove the winner-take-all market-share gains of Microsoft’s Windows; today, they propel the success of sites like Wikipedia and Facebook.

 

section3 [You can edit this content here: User contribution system myths]

 

Contribution systems won’t displace most traditional products or businesses: I’m not expecting Wiki-Milk to displace real milk or the dairy industry. Still, given the power of user contributions, too many business leaders are failing to look for opportunities to leverage these systems in their industries. I think that’s partly because of the novelty of the phenomenon, but it’s also because of beliefs rooted in the past. All too often, executives mistakenly view user contribution as:

 

An unmitigated threat to traditional for-profit businesses

But consider Schibsted, a 170-year-old Norwegian newspaper publisher that, instead of ignoring the online threat savaging much of the newspaper industry, started reinventing itself in the mid-1990s by embracing user contribution and becoming a leading European provider of online classified advertising.

 

Only for tech companies

But consider the Canadian grocery store chain Loblaws, which solicits online customer reviews and incorporates them in the marketing of new products.

 

Unreliable and error-ridden because the contributions come from amateurs

But consider the study in Nature that found volunteer-written Wikipedia to be, in general, about as accurate as expert-written articles in Encyclopaedia Britannica’s online edition.

 

Just another bubble, lacking a strong business case or profit producing potential

But consider LinkedIn, whose social networking site for businesspeople now profits from numerous revenue streams: traditional ones, such as site advertising, upgrades to premium membership with more features, and paid job postings, along with more novel ones, such as tools that corporate HR departments can use to screen job candidates.

 

 

section4 [edit this content here: Where UCS can help your business]

Where Can Contribution Systems Help My Company? 

 

Even without knowing your business, I’d be willing to bet that contribution systems can address one or more of the business challenges you face better than the methods you currently use. To spur your thinking, let’s look at some of the different ways that traditional companies are employing user contribution systems in a wide variety of business activities and functions.

 

Customer Service

 

Troubleshooting is just one way to harness user contributions for service. Hyatt Hotels and Resorts has launched an online concierge service called Yatt’it that aggregates and lets users rate travel tips posted by Hyatt’s customers and concierges. The aim is both to reduce the burden on concierges and to give travelers tailored, extensive city information in advance of their trip – and, if they’ve already arrived, without their having to wait in line.

 

Companies also use contribution systems to serve customers in ways that create a brand-new business. Westlaw, the legal research service, created a B2B contribution system that helps its customer base of law firms address important strategic issues. West PeerMonitor automatically aggregates anonymized financial and operating information from participating law firms. The firms access the database to see how their performance compares with that of peers and how other markets compare with their own – data that may help a firm decide, for example, whether to expand geographically or whether a key practice area is operating efficiently. This customer service is valued so much that Westlaw charges handsomely for it.

 

Marketing

The power of contribution systems is now being tapped by traditional marketing powerhouses, including two of the giants: Procter & Gamble and Unilever.

 

Procter & Gamble has created a website, BeingGirl, aimed at teen and preteen girls – a difficult group to reach in the marketing of its feminine-hygiene products because young girls are often uncomfortable viewing TV ads on the topic in the company of friends or family. The site originally consisted solely of information from experts. But in 2005, P&G borrowed the contribution concept from tech websites, adding forums where girls could interact with one another. Now users can share their questions and personal experiences and get support and advice from other girls. This creation of a community around an important topic promotes engagement with the site – and with the Always and Tampax brands that it discreetly promotes. P&G says that as a marketing tool BeingGirl is now four times as effective as comparably priced television advertising.

 

The website In the Motherhood, cosponsored by Sprint and by Unilever’s Suave line of personal-care products, also offers a community forum where users can share stories and offer tips – in this case on the subject of being a mom. In addition, mothers can submit stories (3,000 of them so far) that serve as potential plotlines for an online comedy series. The community votes on the submissions, and those selected by the users are produced by professional directors and actors and subsequently posted to the site. (Several dozen have been produced so far, and cumulative views have passed the 20 million mark -- it has been picked up for television by ABC.) Unilever research finds that the site increases users’ intent to purchase a Suave product and engenders a feeling in customers that the makers of Suave really understand their lives.

 

Employee support

Most company intranet sites are oneway streets, with management broadcasting the “company line” to employees. Best Buy, the U.S. retail chain, uses the opposite approach in a contribution system dubbed BlueShirt Nation. BlueShirt Nation allows employees to share and discuss their ideas and experiences: what works and what doesn’t in carrying out a particular task or in interacting with customers, for example. The site, launched two years ago by two junior employees with no corporate IT support or funding, today has more than 20,000 registered employee users.

 

Best Buy has discovered that unfiltered information from colleagues can be more effective than memos from HR. For example, Blue Shirt Nation ran a contest in which employees submitted videos they had conceived and produced, with no company oversight, to spur employee adoption of 401(k) plans. The result of the buzz generated by the contest? A 30% increase in plan enrollment.

 

Capital resources

Build a global telecommunications system with almost no capital equipment? Make free, high quality video calls anywhere in the world? Both once were unfathomable. But that’s what Skype has done, thanks to a contribution system.

 

Founded by Swedes and engineered in Estonia, Skype is the marquee example of how a company can reduce the cost of capital equipment to almost nothing by having users contribute the capital goods. Skype’s free software utilizes idle computing power on users’ PCs to manage the calls – as many as 12 million simultaneously – for its 300 million customers. Its costs are so low that the company, which was acquired by eBay in 2006, can deliver high-quality voice and video computer-to-computer calls between subscribers at no charge. And it’s profitable: revenue comes from calls made by Skype users to mobile phones and landlines, as well as from services such as voice mail.

 

Traditional companies, too, get customers to contribute needed capital. In Japan, Honda captures real-time traffic data from GPS systems that Honda owners buy from the company. Speed and location reports from each vehicle contribute to a data stream that Honda aggregates with other traffic data to provide information on traffic jams and other conditions to Honda drivers who subscribe to the company’s InterNavi service. Users benefit from enhanced traffic updates; the company can offer a superior subscription service without having to pay for the capital infrastructure.

 

And there’s more: Honda drivers also contribute reviews of local businesses and points of interest that other drivers can read from their InterNavi-equipped Hondas – an automotive version of a Zagat guide. Honda’s system thus combines three user contributions – capital equipment, data about user location and vehicle speed, and reviews.

 

Design and development

User contribution can tackle creative challenges from the technical to the artistic. The emblematic example of contribution in R&D is open source software, such as the Linux operating system and the Mozilla Foundation’s Firefox web browser, which is created and regularly upgraded by communities of unpaid volunteer developers. (This low-cost model makes Mozilla one of the rare nonprofits that is highly “profitable.”)

 

In the creative arts, Threadless, a company that manufactures T-shirts, relies on a community of volunteer designers and artists to submit designs and a community of customers to select those that will go into production. Both of the user groups, as well as the company, benefit. The designers get free exposure for their work and a chance at monetary compensation: They receive $2,500 plus a percentage of sales if their design is chosen by Threadless customers. The customers get distinctive T-shirt designs that they have collectivelyselected. Threadless gets inexpensive design services and an unusually engaged customer base that snaps up the T-shirts it produces, minimizing stale inventory, price promotions, and other margin-eroding practices.

 

Note that the Threadless user contribution system is subtly different from customer innovation approaches like crowdsourcing, which are used with success by Dell, Starbucks, and other companies. Crowdsourcing is not a user contribution system in the pure sense, because the company stands between the input and the output. For example, it sifts through people’s ideas for new products and services, selects ones to pursue, and then invests the time and expense needed to develop them.

 

Production

In some cases, organizations can “delegate” some or all of the production process to users. Wikipedia delegates all of it. The producers of Fox Television’s American Idol delegate part of the process.

 

The show relies on users (through their votes for performers) to make decisions traditionally reserved for television producers; it relies on amateur performers to offer entertainment usually provided by high-priced stars. The contributing singers benefit from a shot at stardom. Viewers, who contribute their opinions, benefit from compelling entertainment (if the show’s high ratings are any indication) and a strong sense of engagement because their votes determine the show’s content. Fox and its producers benefit from lower costs and fromadvertising revenue driven by the show’s tremendous popularity – which results, in part, from the drama generated by the show’s user-contributed surprises.

 

section5 [edit this content here: Intuit and user contribution systems]

Intuit and user contribution systems

 

As a member of the boards of eBay and Amazon in the late 1990s, I was exposed to user contribution through the work of Jeff Bezos, Pierre Omidyar, and Meg Whitman. But the concept seemed rare and specialized, so I missed seeing its broader application and value. (I once told Jeff Bezos I thought his plan to supplement professional book reviews on Amazon with reviews written by anyone who felt like it was crazy: Even if you got people to take the trouble to contribute, who’d give credence to the opinion of someone they’d never heard of? Wisely, Jeff ignored my advice.)

 

When our customer service team at Intuit began user contribution experiments – online support forums moderated by employee enthusiasts – I, along with others on our leadership team, really didn’t get the significance of what they were up to. Over time, though, I began to see the contribution concept that underpinned these revolutionary successes. Reinforced by Tim O’Reilly – who taught me that user contribution is the most important concept in Web 2.0, the moniker he coined – I knew we had to act.

 

 

Early success

At our annual off-site in 2005, I put this question to the company’s top 300 executives: How might we leverage user contribution at Intuit, both to enhance existing businesses and to create new ones? Two executives in our Plano, Texas, division began to think about how to solve a common problem faced by professional tax preparers – getting answers to obscure questions. The result was a quickly cobbled-together wiki/forum site where tax preparers could contribute both questions and answers for the benefit of other tax preparers. Just 33 days after the executive off-site, TaxAlmanac was launched. Today, it has 170,000 pages, drawing on the collective expertise of thousands of tax professionals, and is used by 400,000 unique visitors – about equal to the number of tax preparers in the country. Tax preparers benefit from expertise that’s free. Intuit benefits when visitors then buy our tax prep software – customer acquisition at almost zero cost.

 

However, despite my evangelizing, the idea of contribution systems wasn’t taking off elsewhere within the organization. TaxAlmanac was a small island in a sea of indifference.

 

A major setback

I then resurrected an idea that had been proposed several years before by an Intuit engineer: a website with user-generated reviews of local businesses to help folks find a good plumber, car dealer, or restaurant, linked to our Quicken financial software products. It seemed like a sure bet, so we put a big team on it, and in late 2005, we launched Zipingo. But the site failed to attract a critical mass of users, and we shuttered it in August 2007.

 

What went wrong? We made mistakes that stemmed from the difference between traditional products and contribution systems. User contribution is first of all about the users and their content. We failed to nurture and encourage early contributors, and we got distracted creating our own content – ancillary information like business addresses for the listings.

 

Zipingo’s failure hurt. I stopped pushing big team efforts to develop new contribution systems at Intuit. But even as I pulled back, small contribution-system projects started sprouting up

 

Gaining traction

One of our engineering leaders conceived the idea of embedding a Q&A community into a product itself – that is, creating a user forum on every page of TurboTax, with questions and answers relevant to the topic of the particular page. Many were wary of the idea, and some were even hostile. I encouraged the group’s efforts, but in an echo of my own skepticism about Amazon’s user reviews years earlier, I wondered silently whether people striving to finish their own taxes would stop to answer some stranger’s questions.

 

Working with the support of his division manager, the engineer’s team of three built the system and tested it in the least popular version of TurboTax Online in January 2007. Just five weeks into the initial test, one-third of the questions posed already had answers. Crucially, our internal tax experts were pleased by the quality of the answers, which seemed to be self-correcting as other users refined them. TurboTax Live Community, as it’s called, was the kind of clear success I’d been seeking. Live Community systems have spread to our other divisions and are inspiring more contribution experiments.

 

Yet wariness persists. This year, when the TurboTax marketing team decided to solicit and post all user reviews, unedited, on a prominent link from the product’s home page, I blanched and took a deep breath. Again a surprise: The vast bulk of reviews are so positive that it looks as if we’ve posted only the good ones (which, I hasten to add, is not the case). Once again, we’re learning from that most reliable of sources – our customers.

 

section6 [edit this content here: Getting your company started with UCS]

Getting your company started with UCS

 

I became convinced of the broad business potential of user contribution systems in 2005. Only now, three years later, has the Intuit organization embraced the idea.

 

I underestimated just how countercultural the whole user contribution paradigm would be. It poses a challenge to long unquestioned beliefs about the role of management, the value of experts, the need for control over the customer experience, and the importance of quality assurance. User contribution seems messy and scary; giving customers a public podium to comment freely about your products and company seems to violate the management canon “Don’t hold me accountable for what I don’t control.”

 

Naturally, adopting these methods is easier when competitors have beaten you to the punch and shown you where user contribution works in your industry. But what if you want to lead your rivals? Here’s my advice for senior managers trying to create contribution systems in their companies.

 

Use personal experience to move mind-set

I’ve found that heads and hearts don’t change until people participate in contribution systems themselves. To overcome wariness in inexperienced executives, ask enthusiasts to share stories of their personal experience with user contribution systems. To build awareness, have people count the user contribution systems found on an Amazon page and classify them by type. (If you look hard, you’ll find 23 separate systems on a single Amazon product page.) Ask inexperienced executives to find and use contribution systems of personal interest to them – that helps develop a visceral feeling for how they work. Get sub-teams of leaders to brainstorm about contribution systems that might solve customer or employee problems and then ask them to sketch out prototypes they can present to a larger group.

 

Nurture small experiments

Encourage unofficial and “guerrilla” experiments. Challenge employees to create contribution systems that they are passionate about, without requiring them to get clearance from management. Experiment with small batches of employees or customers. (At Intuit, we tried one experiment on the TurboTax version that has the smallest sales volume, accounting for less than 1% of customers for that product.) Most of the experiments will fail; tell the organization in advance that this is OK. Communicate the value of the lessons learned from those failed experiments so that other teams benefit.

 

Let enthusiasts and young employees provide ideas and leadership

Expect ideas for contribution systems to emerge from those who use them the most. Often, these will be your youngest employees. Seek them out. Make them your mentors. Ask them to take the lead in creating ways for your company and customers to benefit from user contributions. Have them develop prototypes and show them directly to you; then help them act on some of the ideas that emerge.

 

Set boundaries but guarantee freedom within them

I’m not advocating that you blow up your current business and completely reinvent it around a contribution system. Experiment at the edges of your business. Give experimenters a defined sandbox – spacious, perhaps, but defined – rather than an endless expanse of beach. Within those limits, though, make sure they aren’t distracted by experts and that their experiments aren’t smothered by larger initiatives with broader mandates.

 

Protect experiments from your company’s natural control instincts

Ceding some control of business processes to outsiders, even in a sandbox, will be scary for your organization. Leaders in certain functional areas – marketers and lawyers, for example – will feel especially anxious. (I can identify, having had to swallow hard a few times over things we were about to try at Intuit.) To counter the instinct to preserve control and the status quo, name a godfather or godmother with big-time clout to protect experiments and break through barriers when initiatives meet organizational resistance. (Three people, two division general managers and I, played this role in our early experiments at Intuit.)

 

Use your customer base to jump-start projects

Some new contribution systems face a chicken-or-egg problem – that is, they’re empty and useless until folks begin contributing to them, but few visitors will be attracted to something that is empty and useless. Your company probably has advantages that start-ups can only dream of: existing customers, traffic to your website, accumulated behavioral data, and, sometimes, media that will find your experiments newsworthy.

 

Let users “vote,” early and often

Customers are better than executives at picking winners in this arena, so get experiments into the hands of real customers as quickly as possible. Minimize or eliminate time lost to market research, lengthy analysis, PowerPoint presentations, or frequent reviews by management.(We’ve borrowed an idea from Google by creating a public webpage – intuitlabs.com – that displays our current experiments and gives experimenters a fast, direct path to customers, bypassing normal product-launch procedures.)

 

Seek organizational buy-in only after you’ve had some success

The guerrilla experiments are designed to get around organizational resistance. Ultimately, you want innovation in user contribution to become embedded in the organization’s normal processes, but you’ll most likely struggle to shift mindset until you can point to a successful experiment or two.

 

The meeting earlier this year of Intuit’s top executives to spur action on user contribution systems would have been a wasted effort two years ago. Then, we had only begun to experiment. But with several successful initiatives now in operation, Intuit’s newly promoted CEO, Brad Smith, and I felt the time was right to move the idea into the mainstream and talk about why user contribution is a focus of our evolving company strategy. I can’t say everyone at that meeting bought into the concept. Some undoubtedly saw it as a distraction from their day jobs.

 

Still, there was real energy in the room that day. In the middle of the meeting, I stopped to ask whether folks had questions. Rather than answer them myself, I wrote the questions on the board and asked the entire group to tackle them. As I watched, people provided answers, better than the ones I would have given. (In fact, some of them became content for this article.) As we moved to take a break, I reminded our executives that we all had just experienced user contribution in action.

 

Since that meeting, the activity of teams working on user contribution has increased from a tide to a torrent around the company. And we’ve only just begun.