Crowdsourcing Often Sparks New Business Ideas
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How are companies expanding idea sources beyond R&D?
Here's your money briefing. I'm J.R. Whalen at The Wall Street Journal in New York. The next great idea for your company might not come from the research and development group. It might come from the person sitting in one of the cubicles. In a moment, we'll explain how big companies recognize that and are getting employees involved. First, these money and market stories you should know. So far, so good when it comes to inflation. The producer price index, that's the prices that businesses get for their goods and services by other companies, was up just 0.1% in May compared to April. Declining prices for energy and gasoline as well as food helped to keep those numbers in check, but medical care and transportation costs did go up.
And home flipping is popular again. A new real estate sector report indicates about 49,000 homes were flipped in the first quarter of 2019. That is, the owners bought low and sold at a higher price, or they bought a home needing repairs and then sold it for a profit. The 49,000 flipped home count makes up 7.2% of all nationwide home sales in the first quarter. That's the highest rate since the first quarter of 2010. And this year, the homes flipped sold for a median price of $215,000. And with the median purchase price standing at $155,000, the gross flipping profit was $60,000. But that's down $8,000 from a year ago to a three-year low.
A company's success can turn on what projects are funded and pursued, but oftentimes those decisions are made by a few people at a company. And more companies are now tapping into the knowledge of rank-and-file employees to chart the future. And Wall Street Journal news editor Henry Williams is here with some details. So, Henry, this process is modeled a bit after Kickstarter.
Yeah, so with Kickstarter, companies come along with new ideas that aren't necessarily ready for the market, and they look for engagement from people in the real world. This is kind of similar.
What early market signals and economic context frame this briefing?
It works with staff. They come up with these ideas that aren't necessarily polished, that won't necessarily get the budget from the company, and they put it out to the staff.
And so companies are realizing that as talented as the staff is in their research and development departments, they might not have a complete pulse on what new products might be successful?
Yeah, I think the idea is that the people working at the coalface, the people working with clients, selling the products, understand it better than the R&D department.
So somebody on the front lines might have a better idea as to the needs of the current and potential customer base.
Yeah, they're the subject matter experts. So the idea with this sort of crowdsourcing and crowdfunding idea is that those ideas, maybe on a small scale, might be better than what the R&D department can put together.
And this is not just small companies doing this. The drug company AstraZeneca is a company that's tapped into its knowledge of its staff.
Yeah, so they're not necessarily looking to come up with new drugs or anything like that, but they're looking to improve process and the way that they approach trials, you know, drug trials. So one of the winning pitches at AstraZeneca was actually a very boring topic. It's not something that they had thought about before in doing project ideation. And that was to do with the sending of letters to trial participants, you know, with safety letters. And this came up again and again in their crowdsourcing. How can we automate this process? And they did. They've got the funding. People were really interested in making this process automatic. So now that process is an automated one. They can capture the feedback from the trial participants.
And this can be a good process for employees who feel they have a hand in the direction of a company. But at the same time, going this route can help to improve the spirit and ecology of the staff. And in a tight labor market, it can also help in staff retention. You spotlight IBM in your story.
So IBM built a crowdfunding platform they call iFundit.
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