Crowdsourcing. Essential Factors for successful Crowdsourcing in Product Innovation in Web 2.0

Bachelor Thesis, 2014

72 Pages, Grade: 1,3






1.1 Introduction to the Problem
1.2 Purpose
1.3 Methodological Construction

2.1 What is Crowdsourcing?
2.1.1 Definition
2.1.2 Benefits of Crowdsourcing
2.1.3 Correlation with Open Innovation, Open Source and Outsourcing
2.1.4 The requirement of Web 2.0
2.2 Types of Crowdsourcing
2.2.1 Crowd Innovation Crowd Contest & Challenge Crowd Collaborative Communities Crowd Complementors
2.2.2 Crowd Creativity
2.2.3 Crowd Funding
2.2.4 Crowd Collective Knowledge
2.2.5 Microworking
2.2.6 Crowd Voting
2.3 Hosting Platforms of Crowdsourcing
2.3.1 Intermediate Platforms R & D Platforms Marketing & Design Freelance Platform Idea - Platform
2.3.2 In-House platforms
2.3.3 Free solution-seeking communities
2.3.4 Idea trading platforms
2.4 The Crowdsourcing - Process
2.4.1 Phase 1: Preparation
2.4.2 Phase 2: Initiation
2.4.3 Phase 3: Execution
2.4.4 Phase 4: Analysis
2.4.5 Phase 5: Application
2.5 Product Innovation in the context
2.6 Factor of success

3.1 - Participate. Have a say. Shape
3.1.1 Basic Information
3.1.2 Clustered Breakdown
3.2 McDonald’s “My Burger - from you, for you“
3.2.1 Basic Information
3.2.2 Clustered Breakdown
3.3 The Netflix Prize
3.3.1 Basic Information
3.3.2 Clustered Breakdown
3.4 Sun Night Solar via InnoCentive
3.4.1 Basic Information
3.4.2 Clustered Breakdown
3.5 Determination of Essential Factors for Success
3.5.1 Concept related decisions & Objective
3.5.2 Motivators & Drivers
3.5.3 Interaction with the Crowd
3.5.4 Communication with Crowd
3.5.5 Transparency of the activity
3.6 “Do's” & “Don'ts” in Crowdsourcing product innovation




List of Abbreviations

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List of Figures

Figure 1: Crowdsourcing Classification Scheme

Figure 2: Cutting Point Crowd Innovation

Figure 3: Collaborative Community Process

Figure 4: Standardized Crowdsourcing Process

Figure 5: Requirements for Designers

Figure 6: RMSE explanation

Figure 7: Leaderboard Netflix

Figure 8: InnoCentive Premium Challenge

List of Tables

Table 1: Decision overview - Recommendations

Table 2: Risk and measurement matrix

Table 3: Overview Concept Part 1

Table 4: Overview Concept Part 2

Table 5: Overview Motivators

Table 6: Overview Target Group

Table 7: Overview Transparency

1 Introduction

1.1 Introduction to the Problem

At large, innovation is a key factor for the success and persistence of organizations in today’s business . Traditionally, innovation finding and development has been per- formed by an organization’s internal expert team or outsourced to professionals in the field, encapsulated by stakeholders (Chesbrough, 2006, p. 3). According to Diener and Piller (2011), in order to develop successful innovation, information of two kinds is needed: information based on customers’ and the market’s needs, as well as information on how to transform the gained knowledge into corresponding products. The paradigm of Crowdsourcing can be applied to obtain both kinds of essential information enabled through direct interaction with customers and takers, providing an enhanced inflow of intelligence. Furthermore, the prevailing competitive pressure due to the extended time needed for product development despite shortened innovation cycles (Weiber and Koll- mann et al., 2006, p.88) and the pressure to achieve successful innovations (Gassmann and Sutter, 2013, p. 113) make Crowdsourcing even more attractive. However, cooper- ating with a crowd is different from closed innovation and requires conformed working conditions.

The work at hand deals with Crowdsourcing and particularly crowd-based product in- novation. Crowdsourcing is a relatively new conceptualized paradigm, which is why the literature does not offer countless research papers on the topic and the market is not overloaded with companies applying the concept, although the theory is very promising. Nonetheless, not all companies who have ventured the step towards Crowdsourcing have experienced positive outcomes; on the contrary, some encountered rants from the crowd, as well as image losses (Papsdorf and Vo ß , 2009). The source of this problem originates from two issues.

The first such issue concerns the foundation of a Crowdsourcing activity. When plan- ning and arranging a Crowdsourcing activity, a variety of decisions have to be made that set the framework of the project. A major failure would result if organizations did not adjust their base according to their specific goals. Each decision can significantly contribute towards a success or flop of the project, adding a high amount of pressure on the initiating team.

The second issue relates to the cooperation with a crowd. While running the activity, the crowdsourcer has to deal with individual and hardly precalculable variables such as the dynamics of Social Networking in Web 2.0, hackers trying to manipulate the project or the perception of the project from the crowd. The contact with a crowd and the handling of upcoming problems are very critical and pivotal for the outcome of the activity. The responsible team has to avoid a disgruntled or annoyed crowd, because this would not only diminish promising results but also harm the company (Gassmann, 2013). Hence, misconducted communication or crude actions taken by the team should be averted.

Both issues deliver many factors that come into consideration and forecast. The more steps to consider and the more erratic the variables, the higher the potential of poor managerial judgment or failed translation of the company’s intention. This calls for basic rules, which are deviated from already-implemented and successfully running or completed Crowdsourcing activities and allow followers to prevent fatal errors or rather state essential factors to incorporate for a successful project with satisfactory results.

1.2 Purpose

The first purpose of this work is to illustrate how broad the term Crowdsourcing is and what opportunities it offers for businesses by providing an overview of the common forms. A further purpose is to depict where, in what form and how those activities take place. The cornerstones for a successful outcome are already set at the beginning of a project, whereby this paper describes single decisions to make along a Crowdsourcing process and their influence on the project’s course, in order to understand how and why each decision during the process can be determining, thus marking a third purpose. The focus of this third purpose is on Crowd Innovation leading to the primarily purpose, namely to identify and name essential factors for the success of a crowd product innova- tion project in Web 2.0. These factors will demonstrate which steps and rules have to be followed by a company to implement prosperous Crowdsourcing activities in this field.

1.3 Methodological Construction

The first part of the work at hand deals with the theoretical explanation of the term Crowdsourcing (CS), its forms, the platforms, the CS process and their associated bene- fits. Jeff Howe (2006) first coined the term Crowdsourcing in 2006, pointing out four natures: Crowd Wisdom, Crowd Voting, Crowd Funding and Creation. However, since then, the market has developed and more characteristics have emerged, leaving Howe’s classifications overly broad . In later years, several authors such as Christian Papsdorf and Paul Whitla have written books with a focus on CS, yet subdivided occurring forms of CS according to various criteria (Hammon, 2013, pp. 120-123), leading to overlapping and not clearly compatible classifications. Therefore, I alluded myself to several authors in order to capture the whole field with main classifications.

In general, there are four different types of CS platforms. Depending on the CS model used, the organization has the opportunity to choose the most appropriate and fitting to the task platform fulfilling the purpose. Furthermore, the five phases of a standardized CS process are described, showing how to plan and lead a project. In this segment, I have chosen to largely orient myself towards Prof. Dr. Oliver Gassmann, who officiates in the field of innovation management and has written several publications dedicated to Crowdsourcing.

The second body of this paper deals with the analysis of four particularly successful Crowdsourcing projects resulting in product innovations. Each example will be broken down systematically to the essential decisions after an overview of events, in order to point out which decision have been made, what effects they had and citing the critical factors leading to success. The resulting variables will be evaluated critically and gener- alized. The final findings of the analysis will enter a list of Do’s and Don’ts, represent- ing the “Basic Rules” to follow. Initially, I intended to identify factors of success by a comparison between the best projects on the crowdsourcing landscape called “Best in Practice” and failed ones - “Bad Practice”. However, no activities were expressly rated as failed or bad practice in terms of CS for product innovation. Therefore, I followed the functional benchmarking approach of choosing the best application of different indus- tries on the market with the common function of Crowdsourcing product innovation (Pepels, 2010, p. 226). The verification of the essential factors for success will be given through the presence of different branches in four different projects.

2 Principles of Crowdsourcing

2.1 What is Crowdsourcing?

The best person to do a job is the one who most wants to do that job ” - Jeff Howe Today’s market changes, develops and advances in rapid cycles, due to the rapid chang- ing requirements and needs of customers. Therefore, innovation in products and ser- vices is essential for businesses to survive (Gassmann and Sutter, 2013, p. 113). Crowdsourcing offers an alternative method to internal sourcing (Rusko, 2014, p. 387) and an opportunity to include stakeholders in normally internal company processes.


In 2006, Jeff Howe coined the term Crowdsourcing - originating from a collocation of “Outsourcing” and “Crowd” (Grabs and Bannour, 2012, p.479) - and described it as “the act of taking a job traditionally performed by a designated agent (usually an em- ployee) and outsourcing it to an undefined, generally large group of people in the form of an open call” (Howe, 2010). An academic definition1 for Crowdsourcing is stated by Oliver Gassmann: “Crowdsourcing is a strategy, which externalizes the generation of knowledge and problem solving to external stakeholders through a public appeal to a large group. Typically problem solving and idea generation are in focus, but there are also repetitive tasks possible. In general, this call is realized by a website (Gassmann 2013, p. 6) ” 2. The Crowd is defined by Brabham (2008a) as “the collective of users who participate in the problem-solving process”. The theory of Crowdsourcing is based on the assumption that a diverse group of people with different opinions who make in- dependent decisions can lead to better results than those achieved by experts. According to Surowiecki (2004), this wisdom arises from various, diverse and independent percep- tions of a problem (given in a crowd) and not compromises (group decision). Crowdsourcing activities largely take place on the Internet, although there are sporadi- cally Crowdsourcing events whereby people come together physically and brainstorm in a common location. Crowdsourcing is not to be confused with Open Innovation. These are different models of Innovation Management, despite similarities in the cores and the overlapping area of Crowd Innovation (Estell é s, 2012). The correlation will be clarified in the course of this work.

Benefits of Crowdsourcing

Enterprises have different intentions and interests in CS. The majority chooses the crowd as partners for financial reasons, whereas others do so to win over and tie cus- tomers (Toyota), as a feedback service (Chrysler), as a marketing tool, to generate PR (Abrahamson and Ryder et al., 2013, p. 15) and for image reasons (Papsdorf and Vo ß , 2009, pp. 52-56). However, the higher objective behind all these motives is to transfer fresh ideas, know-how and innovative capacity into the business (Gassmann and Sutter, 2013, p. 181) . Not only profit-oriented organizations but also NGOs and government institutions have discovered the uses of CS; for example, the USAID has crowdsourced designs for applications able to help agricultural development in Africa (Silversmith and Tulchin, 2013, p. 1).

Generally speaking, CS’s benefits are spread widely. Involving a huge number of peo- ple in a company’s internal affairs opens a door to an enormous pool of potential viral workers with a wide range of skills and expertise who are willing to help and support a project (Whitla, 2009, p. 16-25). The byproduct of involving a crowd in company pro- cesses is gaining an insight into what people are looking for, where the trend goes and what is not asked for, e.g. primary market research data, which can be used for the iden- tification of market needs at early stages. Moreover, when upgrading or improving products, consulting the crowd entails the advantage of crowd experience. Most of the people participating in a CS project actually have experience of using the product and can provide helpful impulses for development. Even if an organization is clear about which innovation path to pursue, applying CS can be beneficial (Gassmann and Sutter, 2013, p. 114). Publishing a brief concept of the planned project online and evaluating the crowd’s reactions can prevent flops and unwanted or unsatisfactory product devel- opment (Grabs and Bannour, 2012, p. 486). Looking in the other direction, internally conceived yet ultimately discarded ideas might return to the table through the confirma- tion of need, desire or trend delivered by the crowd in the direct exchange. More, radical ideas that may have crossed some creative internal’s mind but remained unspoken due to feared reactions can be represented among the crowd’s solutions and become more arguable. Opening up the company culture to externals indicates the company’s open- ness and appreciation of followers’ involvement, which will have a positive influence on the company’s perceived image and customer loyalty (Hammon, 2013, p. 130). Moreover, the created perception will motivate users to share ideas and boost participa- tion. Additionally, if the innovation sourced from the crowd goes out for sale, partici- pants are more likely to buy due to having been a part of it or because the sourced de- velopment was something they really waited for. CS can be very valuable when facing a vexing and sheer unsolvable obstacle. When the company intern teams are stuck and cannot think of a way out, the crowd’s creativity and different angle of perspective can deliver previously unconsidered approaches, leading to unexpected and exceeding re- sults (Gassmann, 2013). Furthermore, the crowd acts like an online human resource to which an organization can reach out in particular situations when needed. In addition to gaining new impulses and input, CS enables a company to identify new talents on the market and try to win them over for the internal team if desired (Abrahamson and Ryder et al., 2013, p. 15).

Correlation with Open Innovation, Open Source and Outsourcing

The term Open Innovation (OI) is commonly used in connection with CS; indeed, sometimes the terms are used interchangeably, whereas on other occasions OI is stated as the superior category of CS or hybrid types of both are created (Estell é s, 2012). This section serves to briefly delimit and clarify the relation between OI and CS. In this context, the Open Source and Outsourcing will also be briefly discussed.

Open Innovation: Open Innovation is a paradigm promoted and defined by Henry Chesbrough as “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively” (Chesbrough, 2006, p. 1). The core of Open Innovation consists of the idea that innova- tion developed in the laboratory behind closed doors takes longer and carries a greater risk of failure than development in which stakeholders are involved. This approach has revolutionized the infrastructure of development in businesses (Cabiddu and Castriotta et al., 2013, pp. 143-144). The approaches of CS and OI overlap in their basic concepts, although there are some differences: OI does not necessarily involve an undefined and public crowd; rather, the reach can be limited as desired. It is mostly about the opening of the company's internal innovation process to the outside (Chesbrough, 2006, pp. 1- 12), targeting innovative capacity (Chard and Knoll et al., 2010, p. 58). CS bears sever- al forms, not all of which hold the characteristic of innovation, such as Microworking or Crowd Funding, whereas Crowd Creativity does (Hammon, 2013, p. 107), albeit not as implied in the paradigm of OI. The overlapping areas of the concepts OI and CS lie in crowd powered innovation generating and can be called Crowd Innovation, upon which the focus of this work lies.

Open Source: In short, open source is the interactive service provision in the field of software development. Attributes of Open Source Software are that they can be used and distributed by everyone and everyone can add minor modifications and innovations if skilled and able to. It is an ongoing collab- oration between a company and independent and spatially distributed collaborators (Mar- tin and Lessmann et al., 2008, p. 1256).

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Figure 1: Crowdsourcing Classification Scheme (referring to Martin and Lessmann et al., ibid.)

Outsourcing: Outsourcing implies the removal of a defined task to a third party business or institution, in contrast to Crowdsourcing, where an undefined and thus unknown number of people are sourced (Chard and Knoll et al., 2010, p. 58).

The requirement of Web 2.0

An essential part of Crowdsourcing is Web 2.0, the base upon which CS takes part. The evolution of the original static Internet to a dynamic environment enabling crowd inter- action has made viral sourcing possible. Web 2.0 does not have advanced technology against the first generation of the worldwide web. It mainly differs from Web 1.0 through new participation attributes, providing users with the means of social network- ing. The features of “2.0” allow users to contribute and share contents, as well as col- laborating (Portmann and Hutter, 2011, p.37). Without this cyber structure, crowdsourcing could not take place in its present dimensions. Active and communica- tive participation is a key aspect in crowdsourced innovation and development. Moreo- ver, without the social networking opportunities given in Web 2.0, the awareness level and the degree of distribution of CS projects would be exponentially diminished (Ham- mon, 2013, pp. 48, 49).

2.2 Types of Crowdsourcing

CS is a generic term summarizing strategies that source a large group of people with an open call (Geiger and Schulze et al., 2011, pp. 3796-3805). Such strategies can be sub- divided into different sections according to their specific characteristics. Six basic forms can be identified: Crowd Innovation, Crowd Creativity, Crowd Funding, Crowd Voting, Crowd Collective Knowledge and Microworking. Crowd Creativity and Innovation to- gether can be expressed as Crowd Creation, which is the most commonly applied form, next to Collective Knowledge (Leimeister and Zogaj, 2013, p. 26). The platforms on which the different types of CS take place are discussed under 2.3 Concepts of CS.

Crowd Innovation

The first classification to describe is Crowd Innovation, the cutting point of CS and OI. It comprises any kind of integration of external input with the goal of generating and developing new ideas (Picot and Hopf, 2013, p. 10). West and Gallagher (2006, p. 82) assume that Crowd Innovation as a model of OI offers the promise of greater return on innovative activities and their resulting intellectual property, whereas

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Figure 2 : Cutting Point Crowd Innovation (amend- Diener and Piller ( 2009 ) broadly describe

ed from Picot and Hopf, 2013, p. 10) it as an increase in a company’s innova- tive capacity . This is due to the direct interaction between developer and customer, which enhances the understanding of the market’s and customers’ needs for develop- ment (Gassmann and Sutter, 2013, p. 114). Enabled through this and the byproduct of acquired market research data, products fit to the market can be developed and launched faster than the competition, thus gaining a comparative business advantage. Researching and developing new ideas and possible innovations takes a long time and involves many resources, leading to high costs while the market is developing quickly and product life cycles abbreviate. Outsourcing to the crowd not only reduces a huge amount of expens- es due to saved investment in terms of money but also time, which allows rapid adapta- tion to the market and therefore higher profit margins and cost advantages without loses in the product’s quality (Brabham, 2008b, p. 79). Additionally, collaborating with the crowd can bring forth unexpected and surprisingly good results that are new to the mar- ket (Gassmann, 2013, p. 82), thus procuring the benefits of being the first on the mar- ket. Crowd Innovation takes place in three different styles: Crowd Contest, Crowd Col- laborative Communities and Crowd Complementors. Each of these options will be spe- cifically described in the following (Boudreau and Lakhani, 2013, pp. 64-65). Crowd Contest & Challenge

-In Crowd Contests, the relevant issue is written to an open competition in order to at- tract interest and appeal to a broad and undefined group of Internet users to pass on ide- as concerning the issue. The contributions will be validated and assessed either by a company’s internal decision or the crowd itself (see p. 13), or a combination of both. Some challenge can run over several rounds and years (see, p. 32), while others are lim- ited to 2-3 months. The best solution to a problem receives a reward and the property rights will typically be transferred to the initiator (Papsdorf and Vo ß , 2009, pp. 52-56). The idea of resolving a problem through voluntary competitors in a challenge is not new, as the often-cited story of the longitude determination in the 18th century testifies. According to K.R. Lakhani and K. J. Boudreau (2013), a contest fits and works the best “when it’s not obvious what combination of skills or which technical approach will lead to the best solution ” . Moreover, they are highly recommended for greatly complex, challenging, unfamiliar or creative problem solving (Boudreau and Lakhani, 2013, pp. 64-65). The open competition will deliver a high amount of verified solutions for one problem, creating a high value approach . Crowd Competitions take place in every branch; for example, in medicine/chemistry (, the automobile indus- try ( and national institutes ( Iceland crowdsourced a new constitution thanks to a mix of Crowd Contest and Collaboration. Merck, a pharmaceutical company, organized a CS project via and the re- sult was most astonishing. It searched for a way to identify promising molecules for new drugs, given that the state of the art methods were very slow and cost-intense. The best software was designed by computer scientists, adapting technology from their field to life science and introducing unknown possibilities with it (Markoff, 2012). Crowd Collaborative Communities

Engaging Collaborative Communities - large communities working together by using a company’s assets to develop and innovate the company’s specific product - in the pro- cess of CS brings the advantages of high specialization and diversity. Unlike Crowd Competitions, the Collaborative Community’s Crowd does not compete against each other for the best solution on one problem but rather works together on a shared prob- lem to achieve the best final product. Initiators of Collaborative Communities usually remain in the background and leave the reins to the crowd. The most satisfactory work results when the crowd can communicate freely with each other. The community usual- ly has plenty of experience with the organization’s product and has vast knowledge about it and its attributes. Since these communities have many members, many different problems and innovations can be tackled at once; each by the very particular person who knows the source and solution the best. The subsequent goal is to put the separate pieces of development together and aggregate it into a whole. Therefore, clarification about what the company is looking for is crucial. The diversity of people and their knowledge is derived from worldwide participation, marking its strength. However, every collaborator has his own interests and reasons for working with the community, making it hard and difficult to control the crowd. The collaborative work with the crowd depends on standardized routines, ex- tensive task modularization and coor- dination technology and best suits software and information products (Boudreau and Lakhani, 2013). A re- cent example of a Collaborative Com- munity is by demonstrated by Face- book Inc. Members of the social net- work platform translated the system of Facebook into different languages and dialects in collaboration with the ad- ministrators, making it accessible and understandable worldwide. The col- laboration continues with regular

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Figure 3 : Collaborative Community Process (referring to Kittur and Nickerson et al.2013) maintenance and updates (Papsdorf, 2009, p. 10). Crowd Complementors

The final introduced method of how a crowd can be involved in the innovation process of an organization is Crowd Complementors. If opted for Crowd Innovation via Crowd Complementors, a base around an organization’s core product or competence will be installed, whereby complementary services or goods will be provided by independent suppliers - the crowd. Access to the needed information is granted through hooks, tech- nological interfaces or applications designed through third-party developers. Creating an online complementary platform is very attractive for a company, because innovators worldwide can steadily add improvements to the core product/competence without an innovation in the core. The extent of the number of participants signifies the amount of possible innovative complementaries, implying the enormous pool of potential of Crowd Complementors. When the Crowd works effectively, increasing the functionality of the core, the value of the product or service will rise and with it the desire to use it. More purchasing customers will draw more crowd suppliers to contribute new or devel- oped designs for the core, thus generating network effects. The company benefits from revenues made through sales of the core, transactions and licensing. The Crowd profits in three ways: gaining revenues from the sales; having the possibility to use the good/service with the additional function they wanted; and gaining a positive reputation as a contributor (Boudreau and Lakhani, 2013, pp. 66-68). An excellent example of how this model works and what benefits it can have is Apple’s App Store. Thanks to the in- dividual and broad variety of applications available, Apple managed to outpace Black- Berry in a very short time (He, 2012, pp. 48-49).

Crowd Creativity

Crowd Creativity’s purpose is to create originary contents by talented people and it is usually utilized in the fields of music, photography, fashion, design, advertising, media and productions (Picot and Hopf, 2013, pp. 10). Originary content may also result through a combination of a template and part individualization. For example, a compa- ny looks for new T-Shirt designs where the form of the shirt is fixed and the design in- dividualized by the crowd (Threadless). Some platforms allow users to edit a template free without any limitations, whereas others restrict allowed tools and patterns (Papsdorf, 2009, p. 58). Crowdsourcing creativity mostly takes place as Crowd Contests via Intermediate Platforms or In-House platforms (see p. 14 ff.). Drawing the line be- tween Crowd Innovation and Crowd Creativity is difficult. While both forms are typi- cally summarized under the umbrella of Crowd Creation, there is nonetheless a differ- ence: Crowd Innovation is focused on creating output new to the market - like a new technology how to pack products, whereas the results of Crowd Creativity are focused on primary content, that does not have to have innovative characteristics; for instance, changing the design of a package it (Grabs and Bannour, 2012, p. 505).

Crowd Funding

As a form of Crowdsourcing, Crowd Funding allows small businesses, entrepreneurs and individuals to finance their enterprises and projects of all kinds by raising (small)3 contributions from various investors who believe in their ideas. In return, investors are usually given silent partnerships and named as supporters (Picot and Hopf, 2013, p. 11). Crowd Funding can also be used by larger establishments to mobilize capital from stakeholders in favor of tangible or intangible rewards (Jagoda and Maheshwari et al. 2013, pp. 397-398). Looking very specifically into Crowd Funding, four sub-groups can be identified: Crowdsponsoring, -investing, -lending and -donating (Leimeister and Zogaj, 2013, p. 25).

Crowd Collective Knowledge

Collective knowledge refers to gathering, sharing and cooperating individual knowledge in an online community, forum, website, etc. Thus, the Crowd’s Collaborative Commu- nities fall under the concept of collective knowledge (Bucheler and Sieg et at., 2010). However, distinction must be made between collaborative communities as a sub-item of crowd innovation, which refers to a form of community that has an innovative charac- ter, and those that are associated with an organization, company or specific product. Collective knowledge also includes communities without innovative character or prod- uct/company specialization, such as customer support or wikis. The contents of the communities are mostly created by independent and individuals distributed worldwide. Experiences and knowledge are shared and gathered to help each other out and provide information, whereby interior reasons such as reputation, learning or identification with a topic serve as motivation (Pilz and Gewald, 2013, p. 581).


Microworking is the distribution of small task units, as a part of a large project, to the Crowd via online market places. These small tasks called “Microjobs” are usually tasks that can be solved better, more effectively and easily by persons than by a computer, whose successful completion can be evaluated objectively, do not require any special skills or are too small/infrequent to fill a job description. Microjobs are goal-oriented and the complexity factor of the tasks can range from very easy to quite complex (Adda and Mariani et al., 2013, pp. 305). Typical Microjobs are search engine optimization, audio transcription and user surveys for products (Hirth and Ho ß feld et al., 2011, p. 322). Games with a purpose (GWAPS) like PHYLO | DNA Puzzles also fall under the term of Microworking (Harris, n.d.).

Crowd Voting

Crowd Voting rests upon the approach of the wisdom provided by a crowd. It invites a crowd to give their opinion on something by voting, rating or recommending online (in some cases via also offline) in a matter (Leimeister, 2012, p. 388) via corresponding platforms . Crowd Voting is often used in combination with Crowd Creativity or Crowd Innovation as a tool to determine the best solution. It is also highly valued by the crowd, because it indicates the transparency of processes and shows how seriously CS initiators take the crowd’s input. The advantage for companies lies in the fact that people voting for a particular contribution indicates that they agree with the idea and consider it to be the best, which signalizes the trend of customer needs or desire to an organization. Thus, Crowd Voting not only reduces the efforts needed for internal analysis but also generates primary market research data. On the negative side, by placing the voting en- tirely into the hands of externals, the best voted for solution may be not be consistent with what the organization was looking for (Hammon, 2013, p. 97). Furthermore, the dynamics of Web 2.0 are difficult to foresee and a CS project with serious intentions can be turned into a joke competition, whereby the crowd votes for unrealistic or ridicu- lous ideas for fun. Additionally, allowing the crowd to choose the winning approach is risky because contestants are able to acquire friends and family to vote for them, even though they might not like or agree with it being the best approach. Therefore, in prac- tice, a combination of both can be found (Leimeister and Zogaj, 2013, p. 22).

2.3 Hosting Platforms of Crowdsourcing

Besides the different types of CS, there are also different types of online hosting platforms upon which CS projects take place. The past years have witnessed a rapid growth in the demand for external creativity in very diverse fields. Due to this steady increase, an accurate distinction of different types of hosting platforms for CS is difficult. Nonetheless, four main categories can be identified to differentiate and subdivide. Platforms and Applications helping to manage CS projects and their associated tasks are sometimes referred to as Crowd Tools (Picot and Hopf, 2013, p. 10).

Intermediate Platforms

Intermediate Platforms (InP) are connecting bridges between seeker and solver, e.g. acting as a marker bringing the two opposite parties - crowdsourcer and user - together and enabling them to cooperate on outlined terms (Gassmann, 2013, 14-17). The instal- lation of all four listed InP are essentially the same. Here, companies and organizations have the opportunity to present their most difficult or vexing challenges on the platform to solvers and invite them to identify a solution. These solvers are usually registered members of intermediate platforms, volunteering their talent, skills and knowledge to- wards the enquirers looking for participation in their problem-solving. Commonly, the best approach meeting the company’s requirements or the best idea chosen by the crowd, jury or a combination of both will be rewarded in monetary and/or sometimes non-monetary terms in exchange for the rights to the concept’s intellectual property. To summarize, InPs provide a pre-existing labor crowd available on demand, a format for the project and transfer possibilities for associated formalities over the globe (Boudreau and Lakhani, 2013, p. 65). This concept is very attractive to both factions, because plat- forms enable participants to receive professional recognition and financial awards for solving challenges, while it simultaneously enables companies to tap into the pool of global specialized community for innovative solutions (Brabham 2008). Moreover dur-

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Figure 4: Standardized Crowdsourcing Process (referring to Leimeister, 2012, p. 391) ing a CS project, hundreds of ideas and solution statements are submitted, which is very laborious to analyze. Some InPs offer managerial facilitations such as idea clustering, whereby similar ideas are collected and separated in clusters, thus easing the fourth phase of analysis of a CS project for a company. Besides these benefits, InP also offers anonymity (, 2013b). If a company is unsure whether CS itself or the project is the right thing to do, is afraid of a possible image loss or simply does not want to be named, this feature can be crucial. Currently, the field of intermediate platforms can be described in four major divisions as R&D, Marketing & Design, General Ideas and Freelance (Gassmann, 2013, p. 15). R & D Platforms

Intermediate Platforms specializing in R&D grant companies access to a vast interna- tional network of diversified professionals, scientist and ambitioned spare-time re- searchers. This model is especially attractive for companies operating with high- complex contents that demand continuous and swift innovations; for instance, in the drug industry or engineering. The interactions predominantly take place in the form of Crowd Contests. Most of the sizable companies’ R&D teams are very specialized in their field and represent core competences. When facing challenges, the experts ap- proach overcoming obstacles through their acquired knowledge and expertise, but fail to look into problem causing parameters and solving methods in other related or similar scientific fields due to a lack of information. Moreover, R&D processes are very cost intense and time consuming, particularly if the company faces a problem without a con- crete vision concerning how to deal with it (Back and Gronau et al., 2012, p. 77). Therefore, a comprehensive R&D network comprises experts with different foci of di- verging faculties is a huge opportunity for companies to gain new insights, approaches and know-how and overcome the local search bias4. The case of Colgate-Palmolive underlines this statement. The packaged goods company had problems with injecting a chemical into a toothpaste tube without any of it scattering in the air. The solving idea came from a physician, reflecting a field of knowledge lacked by the internal employees (Howe, 2006). Aside from the incentive of the desirable money award, professionals are also allured by the opportunity to display their additional skills, for which there is no space at work and they can use it as an outlet of creativity. Posting a very good draft can also arouse the attention of employers and lead to job offers, which is also a great op- portunity for HR to discover gifted minds (Boudreau and Lakhani, 2013, p. 66).

4 The tendency of internal teams to try solving problems or approaching new ways based on existing experience and information, with which they are geographically, technologically or disciplinary familiar with (Reichwald and Piller et al., 2006, p. 67) Marketing & Design

The difference between R&D and Marketing & Design networks relates to the type of assigned tasks. M&D platforms usually offer professional logo design, web design, in- dustrial design, fashion design, naming, advertising blitz, campaign drafts and commer- cial creations. Referring to the linked pool of talents, the variety of submissions due to diverse individuals, the cost-savings and the contests, both intermediate platforms pro- vide similar concepts and advantages that are consistent with the general benefits of InPs . Additionally, marketing experts working closely with a brand/product find it diffi- cult to create new ideas without fresh and unbiased input. In M&D product develop- ment or innovation, the customer’s input should be considered since they have an ex- pert’s status, spending much time with the product and using it extensively. This gives them another perspective and delivers a different perspective, which can lead to previ- ously unthought-of conclusions (Grabs and Bannour, 2012, p. 484; Back and Gronau et al., 2012, p. 75). Freelance Platform

Freelance platforms are marketplaces that bring together an online work force and com- panies, to which the crowd labor sells their services. The services sought are rather small tasks, but can involve specific and demanding skills and know-how. Freelance Platforms match skills to tasks. A huge advantage for businesses is that instead of hiring an employee to do a job, many different persons can be hired for exact the task in which their particular and expert skill is needed. It is especially useful when the amount of work is not high enough to fill a regular job. The range of jobs can vary from non- recurring to long-term tasks, which finish the working relationship with the end of the task, thus providing companies with high flexibility. Freelancing can take place in Crowd Innovation, Creativity and Microworking and occur in many ways; for example, a company can put out a tender, a competition or choose a worker via applications. The platforms provide good reputation and skill evaluations (Boudreau and Lakhani, 2013, pp. 68-69). CS offered on freelance platforms can be a very good opportunity to earn small money, gain experience and close gaps in the CV while studying, for women tak- ing a break from work for their family’s sake, those who are unemployed or simply out of joy or to kill time when retired.


1 Until today, approx. 40 different definition have been composed, all consistent in the core (Estell é sArolas and Gonz á lez-Ladr ó n-De-Guevara, 2012, pp. 189-201).

2 Personal translation from German

3 Crowdfunding in very small - small contributions is called Microfunding.

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Crowdsourcing. Essential Factors for successful Crowdsourcing in Product Innovation in Web 2.0
Westfälische Hochschule Gelsenkirchen, Bocholt, Recklinghausen
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Crowdsourcing, Crowd Innovation, Crowd Creativity, Product Innovation, Web 2.0, Microworking, Crowdsourcing Platforms, Tchibo ideas, The Netflix Price, Sun Night Solar, InnoCentive, McDonalds My Burger
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Sultan Özge Yaldiz (Author), 2014, Crowdsourcing. Essential Factors for successful Crowdsourcing in Product Innovation in Web 2.0, Munich, GRIN Verlag,


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