Firm governance in the age of disruption

16.06.2017

Illustrating challenges and promises with a crowdsourcing example

Along the path of digital transformation, a firm must navigate through the numerous innovative technology options that could greatly enrich their business model. Managers and decision-makers may feel the pressure to quickly adopt these digital tools, considering the caveats arising from stories of failing industries and businesses that were too slow to capitalize on, adapt to and integrate disruptive technologies.

However, adopting some technologies introduces organizational challenges that require specialized skill and foresight to overcome. Additionally, the unsympathetic pace of digital disruption provides no clemency to those tasked with reconciling the fact that significant challenges come bundled with these opportunities. The result is often a paradoxical hype vs. usage scenario in which the buzz surrounding a breakthrough technology does not correlate to the equivalent level of usage. Their sharp, swift rise in popularity reveals the eagerness of some to be early adopters of breakthrough technologies. However, the lack of corollary usage signals trepidation.

Crowdsourcing - hype versus usage paradox

Crowdsourcing offers a relevant example of the hype vs. usage paradox firm decision-makers face. Crowdsourcing - the pooling of services, information, ideas and content from a large group of contributors (the crowd) via online platforms - is an area of convergence for many of the social, business management, and technological dynamics of our time. Utilized both internally and externally to reap the greatest benefit for a firm's agenda, crowdsourcing is not only a product of our digital transformation, but a key component in shaping the continued journey towards full digitization. The potential to reduce costs and tap into the knowledge, creativity and innovation that lies outside the firm’s boundaries contributes to the widespread popularity of this innovative tool. The generated hype may entice some managers to impetuously adopt the tool, only to face insurmountable challenges.

Recognizing crowdsourcing’s hype vs. usage paradox and the impact its disruptive nature can have on a firm’s internal structure and practices, Digital Disruption of Industry Research Consortium members, Gail Maunula, Titiana Ertiö and Kirsimarja Blomqvist, researched the topic to explore the roots of the hype/usage dichotomy.

The goal of the research was to identify the source of trepidation by firms considering utilizing crowdsourcing to accomplish their goals, and offer ways to balance the heightened publicity with measured steps to ensure successful adoption. Their research, “Paradoxes in Crowdsourcing: Balancing the pressure to adopt amidst the hurdles of implementation,” can be found in a recently published book entitled, Governance of Digitalization: The Role of Boards of Directors and Top Management Teams in Digital Value Creation (2017, Haupt Berne). The book is comprised of twelve chapters that aim to provide direction, control outcomes and promote the culture of digitalization and, in the case of their contribution, adapt digital approaches to the context of the firm.

Ambidexterity a key trait 

Maunula, Ertiö and Blomqvist take a look below the surface of this hype/usage dichotomy to uncover the governance challenges that may contribute to the incongruous usage rate. They note that the first step to successful crowdsourcing demands management teams take an introspective look at internal structures and processes. The firm culture must possess and promote particular traits to avoid the pitfalls of being caught up in the hype surrounding breakthrough technologies. Ambidexterity is a key trait. Having an ambidextrous approach and firm culture allows for rapid adaptation to new technologies. Ambidexterity implies that managers are capable of integrating the new digital strategies, while properly rebalancing existing strategies and practices.

The chapter continues by exploring several, necessary managerial contemplations that lie beneath the surface of crowdsourcing’s publicized benefits. The importance of understanding the unique nature of the “digital crowd” and the skills they possess cannot be stressed enough. The task structure, or the type and possible modularity of a task, greatly influences the selection from an ever-growing number of options to populate the crowd space. Early consideration of these elements is a vital step that allows a clearer picture of benefits and application to emerge, and ensures positive attitudes and acceptance among current employees.

While the chapter focuses on crowdsourcing, their call for greater managerial contemplation applies to many of the difficulties of managing paradoxical scenarios in the digitally driven society. Managers and decision makers are tasked with ushering their firms through the digital transformation, towards successful implementation and encouraging a culture prepared to explore the benefits of the digital shift. Buying into the hype from an eagerness to rapidly adopt tools may only achieve a pyrrhic victory that ultimately stresses the firm, offers an ill-fitting solution and thwarts the willingness to explore digitally transformative possibilities in the future. Acknowledging that these tools, crowdsourcing among them, are incredibly useful, yet managerially challenging, is an important initial step.