Fronteer Strategy, an Amsterdam-based management strategy consulting firm, has published a short (6-page) paper on co-creation, in which they argue that there are four types of co-creation and five guiding principles to any successful Co-creation venture:

The four types of co-creation

• Club of experts: A very specific challenge is needing expertise and breakthrough ideas. Contributors are found through a selection process. Quality of input is what counts (e.g. Nokia)
• Crowd of people: Also known as Crowdsourcing. For any given challenge, there might be a person out there having a genial idea that should be given a podium. It’s the Rule of the big numbers (e.g.Threadless)
• Coalition of parties: In complex situations parties team up to share ideas and investments. Technical breakthroughs and standards often happen when multiple parties collaborate (e.g. IBM)
• Community of kindred spirits: When developing something for the greater good, a group of people with similar interests and goals can come together and create (e.g. Linux)

The five guiding principles in co-creation

• Inspire participation: Trigger people to join your challenge: open up and show what’s in it for them (e.g. P&G Connect & Develop)
• Select the very best: You need the best ideas and the best people to deal with today’s complex issues (e.g. Innocentive)
• Connect creative minds: You have to enable bright people to build on each others ideas, both on- and off-line (e.g. Lego)
• Share results: Giving back to people – and finding the right way to do it – is crucial (e.g. Apple iPhone App store)
• Continue development: Co-creation is a longer-term engagement, in- and outside your company. Only then it will deliver results (e.g. Dell Ideastorm)

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By STEVEN JOHNSON

In the year following the 2004 tsunami, the Indonesian city of Meulaboh received eight neonatal incubators from international relief organizations. Several years later, when an MIT fellow named Timothy Prestero visited the local hospital, all eight were out of order, the victim of power surges and tropical humidity, along with the hospital staff's inability to read the English repair manual.

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nerdbots.net

Nerdbots are assembled from found objects. Like ideas, they're random pieces connected to create something new.

Mr. Prestero and the organization he cofounded, Design That Matters, had been working for several years on a more reliable, and less expensive, incubator for the developing world. In 2008, they introduced a prototype called the NeoNurture. It looked like a streamlined modern incubator, but its guts were automotive. Sealed-beam headlights supplied the crucial warmth; dashboard fans provided filtered air circulation; door chimes sounded alarms. You could power the device with an adapted cigarette lighter or a standard-issue motorcycle battery. Building the NeoNurture out of car parts was doubly efficient, because it tapped both the local supply of parts and the local knowledge of automobile repair. You didn't have to be a trained medical technician to fix the NeoNurture; you just needed to know how to replace a broken headlight.

For the Wall Street Journal's 10th annual Tech Innovation Awards, Taiwan's Industrial Technology Research Institute received the Gold award for its technology to make paper-thin computer screens with a twist. The company beat out nearly 600 entries for its top ranking, along with Silver-award-winner Zoom Focus and Bronze-winner Counsyl of Silicon Valley.

The NeoNurture incubator is a fitting metaphor for the way that good ideas usually come into the world. They are, inevitably, constrained by the parts and skills that surround them. We have a natural tendency to romanticize breakthrough innovations, imagining momentous ideas transcending their surroundings, a gifted mind somehow seeing over the detritus of old ideas and ossified tradition.

But ideas are works of bricolage. They are, almost inevitably, networks of other ideas. We take the ideas we've inherited or stumbled across, and we jigger them together into some new shape. We like to think of our ideas as a $40,000 incubator, shipped direct from the factory, but in reality they've been cobbled together with spare parts that happened to be sitting in the garage.

The Genius of the Tinkerer

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Graver

As a tribute to human ingenuity, the evolutionary biologist Stephen Jay Gould maintained an odd collection of sandals made from recycled automobile tires, purchased during his travels through the developing world. But he also saw them as a metaphor for the patterns of innovation in the biological world. Nature's innovations, too, rely on spare parts.

Evolution advances by taking available resources and cobbling them together to create new uses. The evolutionary theorist Francois Jacob captured this in his concept of evolution as a "tinkerer," not an engineer; our bodies are also works of bricolage, old parts strung together to form something radically new. "The tires-to-sandals principle works at all scales and times," Mr. Gould wrote, "permitting odd and unpredictable initiatives at any moment—to make nature as inventive as the cleverest person who ever pondered the potential of a junkyard in Nairobi."

You can see this process at work in the primordial innovation of life itself. Before life emerged on Earth, the planet was dominated by a handful of basic molecules: ammonia, methane, water, carbon dioxide, a smattering of amino acids and other simple organic compounds. Each of these molecules was capable of a finite series of transformations and exchanges with other molecules in the primordial soup: methane and oxygen recombining to form formaldehyde and water, for instance.

Think of all those initial molecules, and then imagine all the potential new combinations that they could form spontaneously, simply by colliding with each other (or perhaps prodded along by the extra energy of a propitious lightning strike). If you could play God and trigger all those combinations, you would end up with most of the building blocks of life: the proteins that form the boundaries of cells; sugar molecules crucial to the nucleic acids of our DNA. But you would not be able to trigger chemical reactions that would build a mosquito, or a sunflower, or a human brain. Formaldehyde is a first-order combination: You can create it directly from the molecules in the primordial soup. Creating a sunflower, however, relies on a whole series of subsequent innovations: chloroplasts to capture the sun's energy, vascular tissues to circulate resources through the plant, DNA molecules to pass on instructions to the next generation.

INSPIRATION POINT

Big new ideas more often result from recycling and combining old ideas than from eureka moments. Consider the origins of some familiar innovations.

Double-entry accounting

One of the essential instruments of modern capitalism appears to have been developed collectively in Renaissance Italy. Now the cornerstone of bookkeeping, double-entry's innovation of recording every financial event in two ledgers (one for debit, one for credit) allowed merchants to accurately track the health of their businesses. It was first codified by the Franciscan friar Luca Pacioli in 1494, but it had been used for at least two centuries by Italian bankers and merchants.

Gutenberg press

The printing press is a classic combinatorial innovation. Each of its key elements—the movable type, the ink, the paper and the press itself—had been developed separately well before Johannes Gutenberg printed his first Bible in the 15th century. Movable type, for instance, had been independently conceived by a Chinese blacksmith named Pi Sheng four centuries earlier. The press itself was adapted from a screw press that was being used in Germany for the mass production of wine.

Air conditioning

AC counts as a rare instance of innovation through sheer individual insight. After summer heat waves in 1900 and 1901, the owners of a printing company asked the heating-systems specialist Buffalo Forge Co. for a way to make the air in its press rooms less humid. The project fell to a 25-year-old electrical engineer named Willis Carrier, who built a system that cooled the air to a temperature that would produce 55% humidity. His idea ultimately rearranged the social and political map of America.

The scientist Stuart Kauffman has a suggestive name for the set of all those first-order combinations: "the adjacent possible." The phrase captures both the limits and the creative potential of change and innovation. In the case of prebiotic chemistry, the adjacent possible defines all those molecular reactions that were directly achievable in the primordial soup. Sunflowers and mosquitoes and brains exist outside that circle of possibility. The adjacent possible is a kind of shadow future, hovering on the edges of the present state of things, a map of all the ways in which the present can reinvent itself.

The strange and beautiful truth about the adjacent possible is that its boundaries grow as you explore them. Each new combination opens up the possibility of other new combinations. Think of it as a house that magically expands with each door you open. You begin in a room with four doors, each leading to a new room that you haven't visited yet. Once you open one of those doors and stroll into that room, three new doors appear, each leading to a brand-new room that you couldn't have reached from your original starting point. Keep opening new doors and eventually you'll have built a palace.

Basic fatty acids will naturally self-organize into spheres lined with a dual layer of molecules, very similar to the membranes that define the boundaries of modern cells. Once the fatty acids combine to form those bounded spheres, a new wing of the adjacent possible opens up, because those molecules implicitly create a fundamental division between the inside and outside of the sphere. This division is the very essence of a cell. Once you have an "inside," you can put things there: food, organelles, genetic code.

The march of cultural innovation follows the same combinatorial pattern: Johannes Gutenberg, for instance, took the older technology of the screw press, designed originally for making wine, and reconfigured it with metal type to invent the printing press.

More recently, a graduate student named Brent Constantz, working on a Ph.D. that explored the techniques that coral polyps use to build amazingly durable reefs, realized that those same techniques could be harnessed to heal human bones. Several IPOs later, the cements that Mr. Constantz created are employed in most orthopedic operating rooms throughout the U.S. and Europe.

Mr. Constantz's cements point to something particularly inspiring in Mr. Kauffman's notion of the adjacent possible: the continuum between natural and man-made systems. Four billion years ago, if you were a carbon atom, there were a few hundred molecular configurations you could stumble into. Today that same carbon atom can help build a sperm whale or a giant redwood or an H1N1 virus, along with every single object on the planet made of plastic.

The premise that innovation prospers when ideas can serendipitously connect and recombine with other ideas may seem logical enough, but the strange fact is that a great deal of the past two centuries of legal and folk wisdom about innovation has pursued the exact opposite argument, building walls between ideas. Ironically, those walls have been erected with the explicit aim of encouraging innovation. They go by many names: intellectual property, trade secrets, proprietary technology, top-secret R&D labs. But they share a founding assumption: that in the long run, innovation will increase if you put restrictions on the spread of new ideas, because those restrictions will allow the creators to collect large financial rewards from their inventions. And those rewards will then attract other innovators to follow in their path.

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Circa 1450, Johannes Gutenberg (1400 - 1468) inventor of printing examines a page from his first printing press. (Photo by Rischgitz/Getty Images)

The problem with these closed environments is that they make it more difficult to explore the adjacent possible, because they reduce the overall network of minds that can potentially engage with a problem, and they reduce the unplanned collisions between ideas originating in different fields. This is why a growing number of large organizations—businesses, nonprofits, schools, government agencies—have begun experimenting with more open models of idea exchange.

Organizations like IBM and Procter & Gamble, who have a long history of profiting from patented, closed-door innovations, have embraced open innovation platforms over the past decade, sharing their leading-edge research with universities, partners, suppliers and customers. Modeled on the success of services like Twitter and Flickr, new Web startups now routinely make their software accessible to programmers who are not on their payroll, allowing these outsiders to expand on and remix the core product in surprising new ways.

Earlier this year, Nike announced a new Web-based marketplace it calls the GreenXchange, where it has publicly released more than 400 of its patents that involve environmentally friendly materials or technologies. The marketplace is a kind of hybrid of commercial self-interest and civic good. This makes it possible for outside firms to improve on those innovations, creating new value that Nike might ultimately be able to put to use itself in its own products.

In a sense, Nike is widening the network of minds who are actively thinking about how to make its ideas more useful, without adding any more employees. But some of its innovations might well turn out to be advantageous to industries or markets in which it has no competitive involvement whatsoever. By keeping its eco-friendly ideas behind a veil of secrecy, Nike was holding back ideas that might, in another context, contribute to a sustainable future—without any real commercial justification.

A hypothetical scenario invoked by the company at the launch of the GreenXchange would have warmed the heart of Stephen Jay Gould: perhaps an environmentally-sound rubber originally invented for use in running shoes could be adapted by a mountain bike company to create more sustainable tires. Apparently, Gould's tires-to-sandals principle works both ways. Sometimes you make footwear by putting tires to new use, and sometimes you make tires by putting footwear to new use.

There is a famous moment in the story of the near-catastrophic Apollo 13 mission—wonderfully captured in the Ron Howard film—in which the mission control engineers realize they need to create an improvised carbon dioxide filter, or the astronauts will poison the lunar module atmosphere with their own exhalations before they return to Earth. The astronauts have plenty of carbon "scrubbers" onboard, but these filters were designed for the original, damaged spacecraft and don't fit the ventilation system of the lunar module they are using as a lifeboat to return home. Mission control quickly assembles a "tiger team" of engineers to hack their way through the problem.

In the movie, Deke Slayton, head of flight crew operations, tosses a jumbled pile of gear on a conference table: hoses, canisters, stowage bags, duct tape and other assorted gadgets. He holds up the carbon scrubbers. "We gotta find a way to make this fit into a hole for this," he says, and then points to the spare parts on the table, "using nothing but that."

The space gear on the table defines the adjacent possible for the problem of building a working carbon scrubber on a lunar module. (The device they eventually concocted, dubbed the "mailbox," performed beautifully.) The canisters and nozzles are like the ammonia and methane molecules of the early Earth, or those Toyota parts heating an incubator: They are the building blocks that create—and limit—the space of possibility for a specific problem. The trick to having good ideas is not to sit around in glorious isolation and try to think big thoughts. The trick is to get more parts on the table.

—Steven Johnson is the author of seven books, including "The Invention of Air." This essay is adapted from "Where Good Ideas Come From: The Natural History of Innovation" by Steven Johnson, to be published by Riverhead Hardcover on Oct. 5. Copyright © by Steven Johnson.

There is a multitude of tools and techniques used to involve users in the design process. Following Stappers and Sanders (2008) we understand co-design to refer to the creativity of designers and people not trained in design working together in the design development process. Co-creation and co-design are often used as synonyms. Co-creation however, is also used to refer to collective creativity in other fields than product and service design. Other concepts partially overlapping with co-creation are ‘user driven innovation’ and ‘open innovation’.

Tools and techniques for co-creation are tools and techniques that help people express their feelings, experiences and knowledge with a view to innovative development in a community setting.  Tools and techniques for co-creation / co-design enable users to take on the role of ‘expert of their experiences’ (Sleeswijk Visser et al 2005), this allows users to become part of a design team. In co-designing, the researcher (who may be a designer) takes on the role of a facilitator.

Pros for this method: 

get grip on and understand user needs and desires

creative idea generation in reference framework of users

Cons for this method: 

data analysis of output of co-creation tools/techniques can be time-intensive

designer has to take on role of facilitator: experience in doing this is needed

challenge for company to give up existing power structures

Applicability of the method

Development phase: 

Discovering user needs

Developing concepts together with users

Designing prototypes together with users

Designing end-products together with users

Evaluating concepts with users

Type of research question: 

You want to observe changes in user behaviour over time

You want to get a detailed insight in a user's past experiences

You want to get a detailed insight in a user's current practices in real life

Related methods: 

Technology probe

Contextmapping

Techniques involved: 

Think-aloud

Storytelling

Diary study

Survey

Cultural probes

Crowd-sourcing

Generative techniques

Personas

Focus groups

Generative prototyping / tinkering

Scenario building

Data

Manner of data collection: 

Experience sampling

Survey

Interviews

Other

Remarks 

in co-creation data collection can be done in a variety of ways: often tools and techniques for co-creation make use of some form of creative data-collection such as making collages, making photographs, making diagrams illustrating daly activities etcetera.

References

Living labs that use this method: 

Reference(s): 

Liz Sanders - Make tools, 2009

E. Sanders and P.J. Stappers, 2008. Co-creation and the new landscapes of design. CoDesign, Volume 4, Number 1, March 2008 , pp. 5-18(14). Taylor and Francis Ltd.

Sleeswijk Visser et al 2005. Contextmapping, experiences from practice. Codesign, Volume 1, Issue 2 April 2005 , pages 119 - 149

Suggested principles of Living Lab co-creation

Towards a manifesto of Living-Lab co-creation - proceedings of Interact 2009 workshop.

Overview

• Social Computing Lab

  • »People
  • »Research areas
  • »Results

The Social Computing Lab focuses on methods for harvesting the collective intelligence of groups of people in order to realize greater value from the interaction between users and information.

Our research includes collective intelligence (“wisdom of the crowd”), incentive design for accessing resources, social networks and their implications for information dissemination and collective attention.

We are creating new information services that dynamically respond to fluid content creation and consumption.

SCL is the birthplace of HP Gloe, a service that allows you to find and recommend local Web content on mobile devices. It can be found on the Android market or on the Web

SCL is also the place where CloudPrint, a service that allows you to print, store and share documents using your mobile telephone, was invented. It is now integrated with the RIM BlackBerry platform.

Director: Bernardo A. Huberman

 

That evening, I watched it putter around my apartment, sweeping and inhaling dust bunnies. When it gamely bumbled around bulky pieces of furniture, I dashed about, too, lifting the obstacles out of its way. After the Roomba finished its chaotic dance, I put it back into its case and patted the sweet little machine good night. The next morning, I returned it to its rightful owner.

The Roomba was mine for only 24 hours. I had rented it through a service called SnapGoods, which allows people to lend out their surplus gadgetry and various gear for a daily fee.

SnapGoods is one of the latest start-ups that bases its business model around allowing people to share, exchange and rent goods in a local setting. Among others are NeighborGoods and ShareSomeSugar. Other commercial services are springing up, too, including group-buying sites like Groupon, the peer-to-peer travel site Airbnb and Kickstarter, which allows people to invest small sums in creative ventures.

The common thread of all these sites is that access trumps ownership; consumers are offered ways to share goods instead of having to buy them.

Ron J. Williams, co-founder of SnapGoods, based in New York, describes the phenomenon as the “access economy.”

“There may always be certain products that you do need to buy,” says Mr. Williams. “But there is also a growing cultural awareness that you don’t always get enjoyment out of hyperconsumption. The notion of ownership as the barrier between you and what you need is outdated.”

The most obvious reason for all of this is financial. Recession-battered shoppers can test pricey new devices before deciding whether to take the plunge or wait until the next upgrade. (Roombas, for example, can retail for as much as $600 for the newer models. I borrowed mine for a much more palatable $10.)

For all the promise of these new marketplaces, analysts say they aren’t likely to overtake more traditional models anytime soon.

“The holy grails of consumerism are convenience and choice,” says Rachel Botsman, co-author of the forthcoming book, “What’s Mine Is Yours: The Rise of Collaborative Consumption.” “This is not the end of the old consumer way. But they could sit side by side. Peer-to-peer could become the default way to share.”

There’s much evidence that this is already happening. Do-it-yourself home improvers can borrow tools for a weekend project, and hobbyist campers can rent equipment per trip, rather than splurge on all-new gear. Travelers looking for inexpensive accommodations can spend the night in someone’s spare bedroom for a fraction of the cost of a hotel room. For people who lend their stuff, it’s a way to make extra money on possessions that are gathering dust.

“My Roomba is on track to pay for itself,” says Luke Tucker, 31, a software engineer who rented me his robotic vacuum cleaner through SnapGoods.

But some experts think that there may be something bigger than thriftiness at play. These services may be gaining popularity because they reinforce a sense of community.

“It turns out to actually be a good way to meet my neighbors,” says Mr. Tucker, who also lists a jigsaw, a digital camera and a wireless keyboard for rent on SnapGoods.

Charlis Floyd, a 22-year-old student, and Nema Williams, a 30-year-old comedian, who rent out their spare bedroom in Brooklyn on Airbnb, say that while the extra income helps — as any little bit does these days — they’re much more interested in the revolving cast of characters they meet.

“We had a couple from England teach us how to make red curry,” says Ms. Floyd.

“Another guy, an artist, promised to paint a mural in our kitchen,” adds Mr. Williams.

Of course, that doesn’t mean it always goes off without a hitch.“Sometimes people can be weird,” says Ms. Floyd. “One girl drank all our milk and another person broke our toilet handle.”

Even so, Ms. Floyd and Mr. Williams still like being in the rental business.

“It’s a win-win situation,” says Ms. Floyd. “You make some extra money and make new friends.”

For entrepreneurs, there’s a payoff in such commerce. Groupon, for example, says it’s on track to generate $500 million in revenue this year; Airbnb has said it is profitable, though it does not provide exact numbers.

Paul J. Zak, director of the Center for Neuroeconomics Studies at Claremont Graduate University in California, says that participating in a community like SnapGoods, Kickstarter, Groupon or Airbnb can ease social isolation and flesh out our network of friends.

“There is an underlying notion that if I rent my things in my house, I get to meet my neighbor, and if I’m walking the goods over, I get to meet them in person,” he says. “We’re drawing on a desire in a fast-paced world to still have real connections to a community.”

Mr. Zak says he conducted a preliminary experiment indicating that posting messages on Twitter caused the release of oxytocin, a neurotransmitter that evokes feelings of contentment and is thought to help induce a sense of positive social bonding. He is now testing those ideas in research on a group of 40 people.

The social interaction “reduces stress hormones, even through the Web,” he says. “You’re feeling a real physiological relationship to that person, even if they are online.”

MR. ZAK says Web commerce is moving beyond transactions by individuals and companies and embracing models that encourage social contact and interaction — a hallmark of the already robust social media phenomenon and a throwback to the good old days when people actually spent time socializing at local markets.

“The Web is bringing businesses back down to the individual as the average company becomes smaller, more niche and specialized,” he says. “Paradoxically, the Web is moving us back to a human-centric business model.”

Trust is a big factor in all of this. Otherwise, how can you be sure that someone won’t just rip you off?

Marketplaces like eBay have long relied on ratings and user reviews to weed out unreliable participants. But in addition to safeguards like preauthorizing the price of rentals through PayPal, the latest wave of peer-to-peer systems make use of social networks like Facebook and Twitter to engender trust.

If someone wants to rent your iPad or crash on your couch, the person’s online profile leaves a trail of digital bread crumbs that makes it harder to pull off a scam, giving potential lenders and hosts reason to breathe easier.

“This new economy,” says Ms. Botsman, “is going to be driven entirely by reputation, which is part of a new cultural shift — seeing how our behavior in one community affects what we can access in another.”

Do you "Facebook-like" Starbucks, or just like them?

Earlier this week, a lot was made of the fact that Starbucks became the first brand to reach ten million fans on Facebook (check out Fame Count to see how other brands are faring). How did they amass such a following? Having a rabid offline fanbase certainly helps. As does freebie giveaways. But as we know, offering free product to entice people to be your fan on Facebook tends to attract fans of free giveaways more than it attracts fans of a brand. You can ask TGI Friday’s all about taking the “here, have some free stuff” route.

So yes, Starbucks has a massive community and of course if you look at their Facebook wall at times it can look more like an Amazonian jungle than the gardens at Versaille. That’s no fault of theirs, it would be a task not unlike cleaning the Augean Stables to keep that wall clean. At this point you’re expecting me to take Starbucks to task for creating a monster they can’t control, but in the case of a brand like Starbucks I think an argument can be made for developing a large quantity of low level engagement with millions of consumers. Here’s my argument:

With a product such as that offered by Starbucks, a mere mention rippling through Facebook can be enough to trigger a purchase. When I look at my feed and see that a friend “just earned a free mochacino double decaf soy latte” it’s enough for me to think, “yeah, a quick trip downstairs to Starbucks would be nice treat today.”  Compare that to a brand like, say, Louis Vuitton or Cadillac. It’s much harder to imagine a single (or even several) Facebook updates are going to get me to buy a $1,500 suit or luxury sedan.

When your product has a relatively low cost, can be a repeat purchase and you’re on every street corner, consumers may need just a gentle nudge.  The task for durable goods or luxury products is much harder – or maybe just different. Having a great relationship with Louis Vuitton might not drive me to a purchase, but when I am making a purchase in that category I’ll probably be more likely to go Vuitton or say, Hugo Boss, who I don’t have a relationship with. Now we’re talking about the importance of brand affinity and Social Media can certainly play a role in that.

• 

The Problem with Facebook’s “Places”

Here’s the thing about Facebook that really gets under my skin: They are slowly incorporating the features from every other independent web application on the internet. This is not inherently a problem—companies get bigger and they begin to have the resources to widen their feature set—the issue is that Facebook doesn’t do these features any better. They win simply due to how many users they have. It feels like mass-produced mediocrity.

When Facebook launched Photos, they immediately became the largest photo-sharing site on the internet, eclipsing Flickr nearly overnight. The problem is Facebook’s Photos functionality isn’t nearly as nice as Flickr. They became the largest photo-sharing site immediately because they already had those users who, by and large, spend more time on their site than anywhere else. These users aren’t going to venture out to Flickr if they can just dump their SD cards into Facebook.

The same thing goes for Videos (sub-par compared to Vimeo and even YouTube). Vimeo is one of the best video-sharing applications in the world but it will never have nearly as many users as Facebook, so most people use Facebook instead.

And, most recently, Facebook launched Places, competing with Foursquare and Gowalla (my favorite). Places launched and 20 minutes later nearly everyone in my Facebook friends list had already checked in. It’s not that Facebook’s Places feature is bad, it’s just that it’s boring. It’s nothing special. They didn’t do it better than anyone else.

That’s the problem with Facebook. They are slowly destroying independent web applications with boring versions that immediately win due to Facebook’s population (which at this point is the 3rd largest country on earth). There’s no demand for excellence.

FROM all appearances, Trek Light Gear is a substantial operation. The company sells many products, like its signature lightweight hammock, backpacks, tarps and apparel. It operates a flagship store in Boulder, Colo., distributes products online and sells at festivals and events all over the country.

But Trek Light has a full-time staff of one: Seth Haber, the founder. “I’m always trying to seem bigger,” he said.

For example, when it comes to product development, branding and market research, he has felt the pinch of being a small operation. So last year, he turned to crowdsourcing for help.

Through a local company called Napkin Labs, Mr. Haber gained access to a large pool of consumers for feedback on how the company was presenting itself and where it should be going. The process began with a brainstorming session with the principals of Napkin Labs, Riley Gibson and Warren Ng.

They filled a white board with diagrams and notes, clarified Mr. Haber’s goals for his business and identified his crucial branding question: Should he focus his efforts on the company’s hammock or expand into related areas, like products for campers?

To get an answer, a series of exploratory questions was posted to the Napkin Labs crowd members, asking them about their camping experiences and what frustrations they might have endured. Additionally, they were asked for feedback on the brand itself.

After a few weeks, Napkin Labs tallied up the responses and delivered the crowd’s verdict: expand the business. “It really confirmed my decision not to pigeonhole the business around the lightweight hammock,” Mr. Haber said.

Napkin Labs later delivered a more detailed report and is now deploying its crowd to work with Mr. Haber on new product ideas. Although compensation varies by project, the crowd is paid based on a point system that evaluates the frequency of participation, quality of ideas and influence on the outcome. Mr. Haber’s project was treated as a test case, but Napkin Labs typically charges $10,000 and up for a project that involves both crowdsourcing and consulting.

The process of crowdsourcing involves turning to resources outside your company. But instead of outsourcing a specific task or business function to a single company, crowdsourcing — also known as expert-sourcing and open innovation — makes a public, or semipublic, invitation to a community at large to provide input or work.

Thousands of crowdsourcing providers have emerged offering things like product development, logo design, fund-raising and sales-lead generation. What follows are suggestions based on the experiences of other small-business owners.

DEFINE THE JOB For the Rosen Law Firm in Raleigh, N.C., the task was improving the pay-per-click text ads it uses to generate business online. The process of strategically apportioning the monthly $6,000 budget among 80 to 100 keywords seemed an arduous task for his limited staff, said Lee Rosen, president of the firm, which specializes in divorce cases.

The company had been updating keyword campaigns based on how they performed, a time-consuming process with inconsistent results. “We were on overload,” he said, “and the bottom line is we didn’t know how well it was working.”

The firm tried automated keyword buying, but, Mr. Rosen said, found the computers failed to position the business and capture the market it wanted. Selecting keywords, Mr. Rosen concluded, is more art than science: “We needed a human being.” Or, perhaps, many human beings.

Then, Mr. Rosen heard a podcast by Niel Robertson, chief executive of Trada, a crowdsourcing firm based in Boulder that specializes in pay-per-click advertising. Trada’s more than 500 pay-per-click experts compete for their advertising clients’ business and take home the difference between what the advertisers are willing to pay for a click and what the experts actually spend to generate it.

In consultation with Trada executives, Mr. Rosen broke his $6,000 monthly budget into a daily amount and determined a maximum rate he would spend on each click and where he wanted to advertise. Trada then posted the campaign to its crowd of experts, who set about creating ads and a list of keywords. If the campaigns come in under budget, the experts pocket the difference.

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This article has been revised to reflect the following correction:

Correction: August 6, 2010

An article on the Small Business page on Thursday about using crowd-sourcing to guide business development misidentified the source of a cash investment received by Trada, a crowd-sourcing firm in Boulder, Colo. Trada received $5.75 million in an investment round led by Google; it did not receive that much from Google itself. (Google invested $4.5 million of its own money; the rest came from another company.)

This post originally appeared on the American Express OPEN Forum, where Mashable regularly contributes articles about leveraging social media and technology in small business.

Foursquare is blowing up with megabrands like Starbucks and Jimmy Choo, but smaller businesses can find a niche with smaller location-based services, as well.

Working with location-based apps will help prepare your business for the day when checkin apps are mainstream — and given that Facebook has rolled out its own checkin features, that day could be sooner than you think.

Location-based apps help you reach out to consumers in your neighborhood. They let you offer timed and targeted special offers to the people who are best-suited to respond to them. And when conducted at a small scale as part of a larger marketing mix, location-based campaigns can offer valuable insights and even some decent ROI for the bottom line-minded small business owner.

Check out these five location-based applications, and be sure to let us know in the comments about other apps you use or that you’ve noticed. We’d also love to hear how your small or medium-sized business has integrated location-based marketing.

1. Whrrl

Tagline: Are you in? Check in, unlock Societies, unleash your Footstream.

The Drill-Down: Whrrl’s main feature is Societies, real-world groups that revolve around specific passions or interests. There are Societies for gourmands, bicycle enthusiasts, parents — just about anything you can imagine. Users make recommendations to one another, and they earn points when other members take their suggestions. The more points a users earns, the more influential he or she is, and the more likely he or she is to win rewards.

Whrrl also uses checkins, but as noted, these aren’t the main part of the application.

How Businesses Can Play: Because of Whrrl’s system of recommendations and influence, word-of-mouth marketing and real-world activation of special offers are already baked into this app. Brands can offer promotions called “Society Rewards.” Essentially, these rewards constitute a loyalty program that starts with online interactions with likely fans and ends in real-world physical presence at your business.

Society owners can set up prizes and a time frame for the program’s duration. For example, if you own a restaurant and a related Society, you can set up a prize of dinner for two to be awarded by the end of the week. Users then check in to get a chance at winning the prize.

2. Brightkite

Tagline: The simple way to keep up with friends and places.

The Drill-Down: Brightkite lets users check in and post comments from just about any location. It also gives its users access to a wide range of features including photo-posting, messaging, comments, tips, tiered rewards, and group chat capabilities. It’s a perfect choice for users who want a more interactive, social experience than Foursquare.

This app’s broader set of features also makes for an interesting gamut of possibilities for creative-minded marketers.

How Businesses Can Play: No stranger to business and brand partnerships, Brightkite specializes in highly targeted, relevant, and effective media placement.

The app can target consumers by precise geography, by behavior and within a given time frame. You can choose to find people in your city or within a given radius of your business. You can choose to reach out to people in a type of location, such as a bar or a hair salon. You can target consumers who are hanging out in groups of two or more, who belong to a certain age group or who speak a certain language. And you can limit your campaign to a given week, weekend, day or even time of day. In other words, you can drill down to reach the exact people you want to find based on just about any variable Brightkite has.

The company can also help you reach out to your friends and neighbors locally, letting nearby Brightkite users know about special deals and promotions.

3. Gowalla

Tagline: Discover, capture and share places and events with your friends.

The Drill-Down: Gowalla is a checkin app that lets users leave tips and complete multi-stop trips to earn virtual items. The app has a travel/adventure theme and features passport stamps as its main currency. Some of the app’s virtual goods can be redeemed for real-world items.

This app started gaining traction around SXSW 2010 and is considered to be one of the top contenders up against Foursquare.

How Businesses Can Play: Creating Gowalla trips in your neighborhood or city is a great way to start using Gowalla and encourage interaction from local users. Many brands have also worked with Gowalla to create in-game virtual items.

For example, Missouri’s Springfield Regional Arts Council created trips around local theaters and art galleries; users earned special items by completing them. Vail Resorts in Colorado has created several trips; one highlights local attractions, and another points out specific points of interest and fun things to do at the resort. The Washington Post has made several local trips and tours around their readers’ interests, such as dancing or burgers.

A Gowalla trip or branded virtual good could be a fun way to bring more Gowalla users into your store or restaurant, especially if your business is linked to other local businesses. You can also contact Gowalla to arrange for a special promotion for your business.

4. Loopt

Tagline: Go places. Find friends. Get stuff.

The Drill-Down: Loopt actually encompasses a suite of applications, including Loopt, Loopt Mix, Loopt Pulse for the iPad, and Loopt Star, a Facebook game with special rewards and achievement perks. It uses a checkin mechanism that shares a user’s location, and helps friends connect and discover new locations. It also integrates with many other web apps and information services, including Zagat, Citysearch, Bing, TastingTable, Zvents, Metromix and SonicLiving, to give its users a really broad array of functions and features.

How Businesses Can Play: Through Loopt Star, you can create customizable rewards, both virtual and real-world. Your promos can range from free products, coupons, and upgrades to virtual goods that still help to create more foot traffic to your business. Loopt also gives businesses access to highly targeted advertising opportunities with special offers that can be directed at specific locations or venues.

5. SCVNGR

Tagline: SCVNGR is a game about doing challenges at places.

The Drill-Down: SCVNGR is a location-based social game. Users earn badges and points for checkins. Each location in SCVNGR contains a list of “challenges” and associated points: check in, snap a photo and leave a comment are among some of the most common challenges. Additionally, owners of a location or “regulars” at that location can also create their own challenges and pursuant points.

In addition to points, users earn rewards for checkins, challenge completions, and other actions.

How Businesses Can Play: This app’s rewards program is sophisticated and will help you reward customers based on progressive actions. You get to decide how many rewards to offer at your business location or locations, how many points your customers will need to earn to unlock a reward, and whether or not that reward can be redeemed more than once. You can also set expiration dates on rewards.

In addition to challenges and rewards, you can also build “treks” to connect multiple places; an example would be the Minnesota Vikings’ promo trek to get fans pumped during off-season training.

These five apps are great options for small business owners looking to explore location-based marketing. Which apps would you add to the list? Let us know in the comments below, and include some details about how small businesses can get involved.

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