A Fascinating Model for the Auto Industry

When you hear the word ‘crowdsourcing’, what comes to mind? Most people list ideas, tee-shirts, logos and advertisements. If you are familiar with InnoCentive, the world’s largest open innovation platform, you would know product development, design projects and campaigns can be crowdsourced too.

It was at the Business Innovation Factory conference earlier this week I first heard of a ‘crowdsourced’ car. Jay Rogers, the founder of Local Motors, amazed the audience with his story of launching a unique automotive business that taps into a community to design and develop cars through regular competitions.

Running Colspark LLC, a company that crowdsources for ideas and solutions, I certainly found this concept bizarre. A few questions sprung up. What is the community made of? How are the winners selected and rewarded? In what way are Local Motors cars different from regular cars?

Rogers explained that the Local Motors community consists of over 3,000 designers, engineers and car enthusiasts. Local Motors organizes monthly competitions focusing on making car designs ‘local’. These competitions can focus on either the exterior or the interior of a vehicle. Community members pick up competition briefs along with engineering guidelines to create their designs. Submitted designs are critiqued and selected by the community, which keeps in mind which designs will fit best in which region.

Once a design gains enough popularity, Local Motors, after determining that it is ‘manufacturable’ and takes them to the next phase of development. The community is kept involved in every step of the developmental process.

Local Motors is, hence, dedicated to COOL – Community, Open, Ownership and Local. Its cars are built in regional micro-factories which are also picked by the community. Once design and engineering has been completed, members of the community are able to go to a micro-factory of their choice to build their own vehicle. With the possibility of such customization, Local Motors customers are able to develop cars with higher horsepower, greater fuel efficiency and have other advantages over regular cars.

The open innovation model has numerous benefits for companies that adopt it. The most apparent one is the output it helps create, in terms of both quality and quantity. In just a few years, Local Motors has built a repository of thousands of original car designs.

Another less apparent benefit pertains to marketing. By leveraging car enthusiasts, Local Motors effectively addresses the disconnectedness there tends to be between the automotive manufacturing industry and their consumers. In this day and age of consumer sovereignty, it is important to involve consumers in decisions that have a direct impact on them. The power of a community lies in its dedication to a brand, a concept or a company. Local Motors has benefited vastly from the word-of-mouth awareness generated by its community.

Being a huge believer and practitioner of crowdsourcing, I definitely see Local Motors going far. It has revolutionized the age-old car manufacturing process and sets an example of others in the industry.

A marketing professional turned entrepreneur, Vyoma avidly supports and practices open innovation. Earlier this year, she founded Colspark LLC (www.colspark.com), a crowdsourcing platform to help companies tap into student talent for ideas and solutions.