State of the Art in Crowdsourcing

* Article: Enabled Innovation: Instruments and Methods of Internet-based Collaborative Innovation. Katarina Stanoevska-Slabeva.

URL = http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf

Paper on crowdsourcing enabled innovation prepared for the 1st Berlin Symposium on Internet and Society, Oct. 25–27, 2011

Abstract

"Crowdsourcing has become a widely applied practice in the context of innovation and problem solving. The paper provides first an overvierw of the stste-of-the-art in crowdsourcing in terms of definitions used, application areas, players involved as well as processes and tools. Than potential future forms of crowdsourcing are discussed. Finally, based on the results of the first two parts future research questions are extracted."

Contents

"One major change happened in the relationship of companies to customers.

Terms as prosumers, open innovation, crowdsourcing denote the changing relationships of companies to their customers and the participatory users on the web. From passive consumers of defined products, customers are becoming increasingly part of innovation processes in companies. The Internet as a communication medium is the basis for new tools and platforms that are enabling efficient collaboration as well as collection and sharing of contributions from a large number of customers and users on a global scale. With the help of such platforms companies are increasingly involving customers and users into their innovation processes. The form and intensity of this involvement varies; staring from crowdsourcing of ideas, for example for new products, over rating of such ideas, to collective implementation of such ideas. Global Internet-based collaborative innovation processes contribute increasingly to innovation processes in companies.

The goal of this article is to provide an overview of the available body of knowledge related to Internet-enabled innovation and concentrates on three aspects:

1. To provide an overview of the state-of-the-art in Internet-based innovation in terms of used definitions in literature, as well as published concept, approaches and tools.

2. To illustrate potential future trends in crowdsourcing on the example of user initiated crowdsourcing as well as crowdsourcing practices in the media industry.

3. To identify and summarize potential future trends and future research directions in Internet-based collaborative innovation.

In accordance with the article's goals, its content is structured as follows:

Chapter 2 provides an overview of definitions and relates different terms denoting user innovation. In the remaining chapters, the paper focuses on crowdsourcing.

Chapter 3 provides a comprehensive state-of-the art overview of literature related to user innovation in crowdsourcing.

Chapter 4 illustrates potential future trends on two examples.

Chapter 5 includes a discussion of results and concludes the paper with a proposal for future research directions."

Excerpts

Definitions

Prosumers

Katarina Stanoevska-Slabeva:

"Most of the concepts for Internet-based innovation are based on or draw from the concept of active customers that are at the same time producers. i.e. prosumers. The vision to involve customers in the production process has a long tradition and goes back to Alvin Toffler (cited in Klein & Totz 2004), who introduced the idea to involve consumers as co-producers, i.e. prosumers, into the value chains of companies in 1972. Under the pressure of increasing price competition in the 90s, and enabled by the Internet, companies started to involve customer through digitalized processes to voluntarily take over part of the value generation. A well known example are banks, which based on e-banking involved the customers in services such as cash collection through automated teller machines, self-processing of payments and similar." (http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)

Lead-User Innovation

Katarina Stanoevska-Slabeva:

"In order to denote the involvement of customers in the innovation process, von Hippel (1978, 1986) described the important role of the user in innovation and introduced the term lead-user innovation. According to him (von Hippel 2005) leadusers have the following two characteristics: “… they are ahead of the majority of users in their populations with respect to an important market trend, and they expect to gain relatively high benefits from a solution to the needs they have encountered there.” (von Hippel 2005). Thus, lead-user innovation is related to available products, and is based on the experience of the user with the product and his background. Other concepts related to Internet-based innovation that require active users and customers are crowdsourcing, open innovation, open source software development and user innovation communities." (http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)

Crowdsourcing

Katarina Stanoevska-Slabeva:

"The term crowdsourcing was introduced by Howe (2006) in order to denote the new phenomena of outsourcing to the crowd. Howe (2006) provided also the very first definition of crowdsourcing as follows: “… crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined and generally large network of people in the form of an open call. This can take the form of peer production when the job is performed collaboratively, but is also often undertaken by sole individuals. The crucial prerequisite is the use of the open call format in the wide network of potential laborers.”

More recently in his blog, Howe (2008, 2009) consolidated the definition in the following form:

· “The white paper version: crowdsourcing is the act of taking a job traditionally performed by a designed agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”

· “The sound bite version: The application of open source principals to fields outside of software.”

Based on the original definition of Howe (2006) other authors provide extended definitions that concretize the generic terms used by Howe. For example, (Gassmann et. al. 2010), specify the tasks that are sourced from the crowd as being mostly knowledge generating and problem-solving tasks, but also repetitive tasks. They furthermore, concretize that the open call is supported through a Website.

Both definitions point to the distinguishing features of crowdsourcing:

· It is initiated and coordinated by a company that outsources an existing task or has a problem that needs a solution.

· It is directed to the crowd and not to companies and individual users.

· The usual way to initiate crowdsourcing is through an open call over the Internet.

According to Surowiecki (2005), a crowd can be defined as a large set of anonymous individuals. Implicit in this definition is the idea that a firm cannot build its own crowd. The strength of the crowd is the possibility to choose from the contribution of many contributors with different backgrounds, qualifications and talents." (http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf) '

Open Innovation

Katarina Stanoevska-Slabeva:

"According to Chesbrough, Vanhaverbeke & West (2006) “[…] open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation respectively.”

With this definition the authors imply two types of open innovation knowledge flows:

1) inside-out or outbound knowledge flows involve knowledge developed within the firm and made accessible to other firms;

2) outside-in or inbound flows refer to knowledge developed in the environment and being integrated by the firm." (http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)

Open Source Software Communities

Katarina Stanoevska-Slabeva:

"While crowdsourcing and open innovation are initiated by companies other forms of Internet-based innovation can be completely initiated and carried out by users.

One of the earlier phenomena of user-initiated Internet-based innovation is open source software communities. They emerged in the late 80s, but spread more intensively after the broad diffusion of Internet. According to (von Hippel and von Krogh, 2009), “Open source software is software that is made freely available to all. Open source software development projects are Internet-based communities of software developers who voluntarily collaborate to develop software that they or their organizations need … Well-known examples of open source software having many users are the GNU/Linux computer operating systems, Apache server software and the Perl programming language.”

The characteristics of open source software communities can be summarized as follows (see also von Hippel & von Krogh 2009):

· They are initiated by one or several users that need certain software for intellectual, personal or business reasons. Thus, open source software communities have no connections to companies.

· The users participate voluntarily and for free in the software development process.

· The functioning of open source software communities is enabled by online platforms providing specific functionalities for cooperative development of software.

· During their existence, open source software development communities create certain organizational and communication structures that enable an efficient and successful coordination of all development activities as well as management of the various software releases.

· The final product is a specific software that can be further developed and used for free not only by members of the development community, but also by any user and company." (http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)

User Innovation Communities

Katarina Stanoevska-Slabeva:

"The concept of user innovation communities was introduced by (von Hippel 2001, 2005). He introduced the term to denote user innovation communities that function according to similar principles as open source software communities, but are not restricted only to software or information products, but can also incorporate user development of physical products. Thus, user innovation communities refer to a broader phenomenon compared to open source software communities. According to (Von Hippel 2005), user innovation communities are defined “… as meaning nodes consisting of individuals or firms interconnected by information transfer links which may involve face-to-face, electronic, or other communication. These can, but need not, exist within the boundaries of a membership group. They often do, but need not, incorporate the qualities of communities for participants, where ‘communities’ is defined as meaning networks of interpersonal ties that provide sociability, support, information, a sense of belonging, and social identity …”

von Hippel (2001) furthermore defines the basic preconditions necessary to be in place for a user community to be possible:

1) at least some users have sufficient incentive to innovate;

2) at least some users have an incentive to voluntarily reveal their innovations and the means to do so; and

3) user-led diffusion of innovation can compete with commercial production and distribution." (http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)

Discussion

Relationship among Different Concepts of Internet-based collaborative Innovation

Katarina Stanoevska-Slabeva:

"The phenomena of an active customer, i.e. prosumer, and the active Internet user as the main member of the crowd as well as a participatory culture are the basic prerequisites for Internet-based collaborative innovation. All types of Internetbased innovation imply an opening up of the innovation processes of companies towards contributions from outside the company. Even though the phenomena denoted by terms related to Internet-based innovation have many similarities and are often used in literature interchangeably, they also have differentiating features.

One basic difference is given by applying the criterion of who is initiating the innovation process.

While open innovation is mainly company-initiated, open source software development and user innovation communities are purely user-initiated innovation processes.

Crowdsourcing is mainly initiated by companies as well, but can also be initiated by users. There are also some differentiating features among the concepts within these categories of Internet-based innovation.

The differences among open innovation and crowdsourcing, as mainly company initiated approaches can be summarized as follows: The first is that open innovation is applied within innovation processes, while crowdsourcing is applied also within other processes in companies as for example marketing (see for example Whitla, 2009). The second difference is that open innovation also implies knowledge flows between firms while crowdsourcing refers to links between a firm and the crowd as a large set of anonymous contributors.

According to (Schenk and Guittard, 2011) crowdsourcing can be considered “… as a way to implement outside in knowledge flows with the crowd as a particular knowledge provider.” Thus, it can be considered as a subset of open innovation. The third distinguishing feature is the intensity of dependence on information and communication (ICT) technologies. While certain forms of open innovation are based on conventional means of communication, crowdsourcing is more dependent on ICT as a necessary mean for attracting and hosting the activities of the crowd and for coordinating and aggregating the contributions of a large number of users." (http://berlinsymposium.org/sites/berlinsymposium.org/files/crowdsourcingenabledinnovation.pdf)