You can boost your organization’s innovation capacity by turning problems into contests, and inviting outsiders to pitch their solutions. “Solve our problem”, the concept goes, “and we’ll give you a ton of cash!” That’s crowdsourcing, or collaborative innovation.

The practice isn’t new, but recently it has regained some serious attention. Following the success of the Ansari X PRIZE and the Neflix Prize, the concept is becoming increasing popular, with companies like Innocentive, Ninesigma, or Kaggle—among many others—offering such services to organizations. Some of the competitions are setup by nonprofits, others by the government, and others still by corporations. But all are a variation of the same concept: they propose problems and offer a reward—anywhere up to 7-digit figures—to whomever solve them. And the practice is getting bigger: in 2009, McKinsey reported it at as $1Bn to $2Bn market.

Each organizer has their own system. For instance, Kaggle allows participants to see how advanced their competitors are, probably as a way to further motivate them.

And there are limitations as well. For one, you can’t really submit confidential problems. And it takes significant effort to setup and administer the competition. Also, as Jeremie Averous points out, while these services allow you to improve your innovation, they are still not ideal because they don’t allow collaboration between participants.Indeed, if done only at this level, collaborative innovation becomes a large-scale brainstorming contest. Good, but not great, considering the documented limitations of brainstorming. A better approach would allow people to incorporate others’ ideas and build on them—a digital Delphi method workspace, if you’d like. Software applications like BrightIdea’s allow this type of cooperation on a larger scale.The renewed interest in enlisting large numbers of freelancers to solve problems suggests that there is a growing consensus on the value of diversity, a critical component in effective problem solving.

Recent developments make it easier than ever to engage large, diverse populations to help you solve your problems. They all have their different flavors, allowing you to find one that fits your requirements vis-à-vis confidentiality, management engagement, ability to build on previous iterations, or budget. So if you’re serious about innovation, the point becomes less and less about whether to engage in crowdsourcing but, rather, which form to utilize.