03/05/2013 11:11 pm ET Updated May 05, 2013

Crowdsourcing: The Missing Link in Manufacturing Innovation

Crowdsourcing is a popular concept. After all, tapping into the wisdom of the masses to generate new ideas sounds like a reasonable way to save costs while spurring creative, out-of-the-box solutions. Consumer-oriented companies, such as Quirky, have successfully built businesses leveraging other people's ideas. In B2B, there are a few high-profile examples, including Dell and Proctor & Gamble.

Let's look at manufacturing specifically. While this industry isn't typically perceived as cutting-edge, U.S. manufacturers perform more than two thirds of all private-sector research and development in the nation. Yet as the total number of manufacturing plants and jobs in the U.S. continues to slide, the industry faces a number of challenges, including accelerating R&D to introduce novel, profitable solutions to the market.

Will these product ideas originate in a lab or boardroom brainstorming session? Possibly, though I have my doubts. The answer is crowdsourcing, a process that streamlines development to ensure that new products actually fill a need, thus driving sales.

In 2010 my company, Madison Electric Products, introduced the Sparks Innovation Center, our industry's first crowdsourced approach to product development. From the ideas submitted thus far, we've launched six signature products and have three more slated to hit the market in 2013. As a result, Madison's sales are up 30 percent, driven by an increase in new products sales of more than double our sales growth. Crowdsourcing works for the manufacturing industry because it supports four key development pillars.

1. Close the R&D Gap

Justin Rattner, Intel's chief technology officer, recently explained that his company identified a gap between the research and development departments. Their solution was to bring the teams together, sometimes for as long as two years. "The researchers and developers have a new appreciation for one another's strengths and weaknesses," he noted in January's Fast Company.

If you have the resources and time to physically bring teams together, that can work; however, in manufacturing, many of us need quicker solutions. With crowdsourcing, the researchers become the developers. People working in the field every day are our best researchers, possessing a deep understanding of the challenges and of opportunities to save time and money. But they're also our best developers. Many of them have already rigged together a solution to get the job done better and faster. It's field-tested and electrician-approved. What more could you want from an R&D team?

2. Shorten the Development Lifecycle

Last year the Pentagon embraced crowdsourcing when it announced plans to gather, share and test design ideas for a new military vehicle. The system would provide a way for multiple solo inventors and small teams to collaborate on a complex vehicle design (through the online portal, each could submit various components of the vehicle and virtually test whether or not they would work with the rest of the system) and predict problems earlier in the product development process. If successful, the system could cut the design-to-production cycle for military vehicles from 10 to 20 years down to two to four years.

There are a variety of approaches to product development in the manufacturing industry, ranging from large companies that develop hundreds of products each year with the hope of a few catching on, to small entities that introduce a handful of well-researched and tested products. Then there are the mid-sized companies that aim to position themselves in the middle of that spectrum. In all three situations, similar challenges emerge: How can companies introduce innovative products and processes without breaking the bank through research and development? How can they maximize the efficiency of their efforts and shorten the time from concept to completion? A well-executed crowdsourcing campaign mitigates these challenges.

3. Eliminate Risk

Entrepreneurship is hard. It's risky. And it can be cost-prohibitive. As a result, many laborers, including electricians, are left on the outside looking in. They aren't in a position to incur such an influx in expenses and debt as they hope their idea evolves from a prototype to the industry's next big thing.

By submitting an idea through a crowdsourcing program, such as the Sparks Innovation Center, the risk becomes virtually nonexistent. Truth be told, the company backing the program gladly inherits that risk. Looking at our own situation, Madison Electric initiated the Sparks Innovation Center to build relationships with emerging entrepreneurs who introduce us to transformative product ideas. We provide electricians-turned-inventors with the foundation to test product development because it's good for business. And when a product hits the market, we gladly share the profits with the inventor.

4. Merge Creativity and Business Acumen

Silos exist in business. For example, the creatives rarely interact with the accountants. This silo approach has stifled manufacturing's ability to develop products that are both imaginative and applicable in the field.

The reduction of silos is a lasting benefit of a crowdsourced approach to product development. When you combine creativity, hands-on knowledge and business-industry acumen, you discover potentially game-changing solutions. Start by inviting people in the field to contribute their ideas. At Madison we then assess each idea's merit before presenting the most promising ones to an advisory panel. Based on their feedback and a financial analysis, we can determine which products should come to fruition.

American manufacturing will grow again when new products emerge as our key differentiator and competitive edge. To achieve this, we need products dreamt up by people in the field, people who know the pain points and opportunities firsthand. Crowdsourcing may be the key to the rebirth of American manufacturing.