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Value Creation in Innovations Crowdsourcing. Example of Creative Agencies

Article in Organizations and Markets in Emerging Economies · May 2013

DOI: 10.15388/omee.2013.4.1.14260

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ISSN 2029-4581. ORGANIZATIONS AND MARKETS IN EMERGING ECONOMIES, 2013, VOL. 4, No. 1(7)

VALUE CREATION
IN INNOVATIONS CROWDSOURCING.
EXAMPLE OF CREATIVE AGENCIES
Andrius Agafonovas*
Social Dynamics International, Lithuania

Raimonda Alonderienė**
ISM University of Management and Economics, Lithuania

Abstract. Innovations are crucial for most of the companies to survive. However, the concept of inno-
vation has become broader, including new forms of open innovation, such as crowdsourcing. The aim
of this paper is to define the business model of a crowdsourcing-driven organization to create value.
Empirical research consists of case studies on current crowdsourcing platforms, focus groups
with potential crowd members and in-depth interviews with potential customers of creative agencies.
Best practices were combined with solutions for closing the most significant gaps in order to create a
successful business model.
The developed model suggests separating the crowd into free users and an empowered core team
and enabling collaboration. Moreover, an innovative motivational model is introduced. Due to a
three-step sequence of solution/idea generation, superior value is proposed to the customer. Another
competitive advantage should be flexibility and adaptability to the customer’s needs.
The paper is original since extended analysis of all crowdsourcing stakeholders is delivered. It also
has practical value proposing a business model for creative agencies.
Key words: crowdsourcing, innovations, creative agency, business model, value creation

Introduction
Innovations are crucial for most of the companies to survive. Despite several attempts
to search for innovations in public, almost all companies are stuck with the first-mover
advantage. However, Lee, Olson and Trimi (2012) state that the understanding of inno-
vation has become broader. In 2003 Henry Chesbrough came up with a concept of open
innovation, which states that by sharing their internal knowledge companies could benefit
not only financially, but also boost their knowledge base and accelerate development of

* Corresponding author. Social Dynamics International, Aguonu st. 10, LT-03213 Vilnius, Lithuania. E-mail:
andrius@sdint.org
** ISM University of Management and Economics, E.Ozeskienes st. 18, LT-44254 Kaunas, Lithuania. E-mail:
raimonda.alonderiene@ism.lt

72
own products. Lee et al. (2012) also promote the next level of innovations: “co-innovation
is a platform where new ideas or approaches from various internal and external sources are
applied differently to create new value or experience for all stakeholders, including con-
sumers” (Von Hippel et al., 2011 as quoted by Lee et al., 2012, 824 p.).
In 2006, Jeff Howe came up with the term “crowdsourcing” by combining outsourcing
and the crowd. It means outsourcing of the work to the crowd, who would volunteer to
perform it in exchange for compensation. Crowdsourcing is a narrower term compared
to open innovation or co-innovation, as the latter two encompass any inflows or
outflows of innovation in any way, crowdsourcing focuses more on inflows from efforts
of single individuals or small groups. In combination with Web 2.0 technology, which
enables information to be transferred both ways among many individuals or small
groups, crowdsourcing may have cost efficient practical implications.
Even though crowdsourcing has its niche in contemporary industries, it is not very
popular due to several reasons. First, crowdsourcing has erroneous perceptions: as cut-
of-costs activity – even if it is true in some cases, it is not the main focus of creativity
aimed crowdsourcing (discussed further in the paper); or as public relationship (PR)
campaign – absolutely vital among participants from developing markets, for which it is
a brand new phenomenon. Second, it is not equally easy to implement crowdsourcing
for an unknown small to medium sized enterprise (SME) or even a larger company
acting in emerging economies compared to a well-known large, usually western,
corporation. And third, crowdsourcing does not have a well developed model which
could create the highest value to all parties involved. Moreover, creative agencies tend
to ignore crowdsourcing or, even worse, see it as a threat, not as an alternative to their
current business model.
The problem of this paper is how to create the value by crowdsourcing innovations AIM
for the customers. Therefore, the aim is to define a business model of a crowdsourcing-
driven organization to create value.
Literature sources focus on the development and forms of innovations (Lee et
al., 2012; Duarte & Sarkar, 2011; Russo-Spena & Mele, 2012), and motivation to be
involved in open innovation communities (Antikainen, Makipaa & Ahonen, 2010).
Since the field of open innovation, co-innovation, crowdsourcing is still fresh, there is
little of empirical research conducted. Some examples involve a survey of innovation
intermediaries in France, Netherlands and Finland (Antikainen et al., 2010), or
European companies adopting open innovation (Schrol & Mild, 2011). However,
there is a lack of research involving all the stakeholders of open innovation, namely
crowdsourcing, lack of focus on creative agencies in the field of value creation for
customers. This paper is unique in providing a business model for a crowdsourcing-
driven organization. The intended business model is one of the first attempts to suggest
a multi-directional value flow depiction in crowdsourcing initiative run by a dedicated
company by combining literature suggestions, best practices and unmet expectations of
stakeholders. The model (or part of it) is expected to be defined quantitatively before its
application in an actual venture.

73
 Emerging economies usually lack funding for innovations, therefore conventional
forms of innovation and development struggle. There is a need to implement new
innovation harnessing techniques as addition to conventional ones, but not as their
replacement. As an example, a few decades ago South Korea was the best on reverse
engineering and now its products sometimes surpass western analogues. Bearing in
mind Eastern European (including Lithuanian) experience, diverse thinking patterns
and educational background, crowdsourcing may become another success story. On
the other hand, due to modest quantity of possible crowd members, crowdsourcing
would be more efficient if it was concentrated and managed by few dedicated entities.

Literature review
Literature overview consists of crowdsourcing related issues raised by various authors.
Those issues are later on combined into one pattern used to evaluate crowdsourcing
based platforms currently available in the market (see Chapter 3).

Open Innovations and Crowdsourcing

Innovation is usually perceived as a positive change in the organizational status quo, there-
fore improving one or more of its strategic elements (e.g., Luecke & Katz, 2003; Baregheh,
Rowley & Sambrook, 2009). Believing that current innovation strategy goes down in its
power, Chesbrough came to the concept of open innovation in 2003 (as cited in McKay,
2010). According to Chesbrough, the main reason of open innovation to be employed is
that not all innovators work in the company, therefore external R&D might bring addi-
tional value to the company and new ways of harvesting it should be sought.
According to Lee et al. (2012), “innovation is directly tied to value creation” (818 p.)
for the organization and its stakeholders, including customers (Gupta & Govindarajan,
2003 as cited in Lee et al., 2012; Russo-Spena & Mele, 2012).
In 2006, Jeff Howe came up with the so called buzzword “crowdsourcing”, a type of
open innovation. He defines it as “the act of taking a job traditionally performed by a
designated agent and outsourcing it to an undefined, generally large group of people in
the form of an ‘’open call” or simply as “application of Open Source principles to fields
outside of software” (Howe, 2006).
Study on crowdsourcing success by Sharma (2010) gives five critical factors to
attract participation in crowdsourcing initiative, which are shown in Figure 1.
According to Sharma’s (2010) model, the success of crowdsourcing depends on
motivation of the crowd. Motivation is built by five factors:
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collaboration (including other users/contest participants and administrators of
the contest);

74
 FIGURE 1. Critical factors for crowdsourcing success
Source: Sharma (2010).

FIGURE 2. Interaction among potential crowdsourcing participants

Source: created by the authors.

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influenced by the involved parties.
The success itself also works as an additional factor to increase the motivation of the
crowd.
Figure 2 represents the parties which could be involved in crowdsourcing. Only
two participants are necessary for crowdsourcing – the crowd and the customer (or a
purchaser of the crowd’s knowledge). However, some individuals could be separated
from the crowd due to their specific abilities to form a closed core team. The customer
also has a possibility to choose whether to engage in crowdsourcing activities or

75
outsource it to a subsidiary/external company. Thus, the maximum number of effective
crowdsourcing participants is equal to four.
Despite the number of involved parties, there are several issues to be assessed while
running a crowdsourcing initiative. Among those are:
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Crowdsourcing from the Perspective of the Crowd

Participation of the crowd (and the core team, if applicable) is essential for
crowdsourcing, but it should also meet three main requirements to become an effective
tool (Trends E-magazine, 2009):
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Ensuring diversity
The success of crowdsourcing depends on successful attraction of the critical mass of
diverse participants. The crowd may be formed of groups, usually according to their
attitudes towards or relationships with the purchaser of the solution (Palumbo, 2009).
However, collaboration in a form of discussion is encouraged among these groups. To
measure the possible value of group collaboration, Metcalfe’s Law could be used, which
states that the value of a network increases exponentially for every n-node added to the
network (Shapiro & Varian, 1999, p.184).

Making ideas handling easy

The most valuable crowdsourcing feature is ability to transcend geographic, political,
economic barriers (Sharma, 2010). This enables creation of cross-functional teams
in a broad scope of problems. However, diverse cultural backgrounds lead to longer
time needed for the final decision to be taken (Way, Ottenbacher & Harrington,
2011). Therefore, platform’s infrastructure should work as a tool for the crowd for
retrieval, submission and aggregation of information to compensate the time used for
taking decisions. “Rules of the game”, including submission guidelines and intellectual
property protection, should also be presented clearly (Drummond, 2011).

Incentivizing participation
Motivation and incentives for the crowd’s participation should be considered very
carefully. The crowd should be perceived as a partner, therefore strong connection

76
between the crowd members and those who conceptualize suggested ideas should
be built (Sharma, 2010). Motive alignment study of participants in the SAPiens
Ideas Competition (Leimeister, Huber, Bretschneider & Krcmar, 2009) resulted in a
comprehensive categorization of motives and incentives for the crowd (Table 1).

TABLE 1. Motives and incentives of the SAPiens Ideas Competition

Motives Incentives
Learning Access to the knowledge of experts, mentors and peers
Direct compensation Prizes and career options
Self marketing Profiling options
Social motives Appreciation by organizer and peers
Source: Leimeister, Huber, Bretschneider &Krcmar (2009)

Antikainen et al. (2010) also raise an issue of rewarding for groups versus individuals,
since until lately the major focus was put on the latter.

Crowdsourcing from the Perspective of the Company

Companies could engage in crowdsourcing due to various reasons. To check whether
crowdsourcing exists among the necessities the company should answer the following
questions ( Jouret, 2009):
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probably would have “Yes, but…” element. Then Jouret (2009) suggests another
set of questions to determine whether to engage in direct crowdsourcing, or
outsource it:
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What could be offered as an incentive for the participants?
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handling of submissions? Is the company ready to take risk of possible copyright
infringements?
Only few companies acting in the emerging market could answer positively to the
questions above. This leads to a clear need of an intermediary where crowdsourcing
activities could be outsourced to.

77
Crowdsourcing from the perspective of the creative agency
as an intermediary
The creative agency may be defined as an organization which creates intellectual
property (IP) for profit. Due to human resources limitations, creative agencies
usually focus on a specific industry: e.g., Marketing/Communications, Web Design/
Development, Multimedia. However, the creative agency could also be perceived
as an organization with a main goal of creating new knowledge by using knowledge
management principles. To accomplish such transformation, creative agencies should
change attitudes towards crowdsourcing, focus on sustainability and fulfil certain
obligations for a business model. In that way, crowdsourcing is expected to become
more professional with business-like outlook between the customer and the crowd
(Parpis, 2009).
Growing popularity of crowdsourcing is seen as a threat for current creative agencies,
because crowdsourcing practices are developed the best in the same industries creative
agencies are working in (Winsor, 2009). However, John Winsor (2009), as CEO of an
advertisement agency based on crowdsourcing principles, believes that all professionals
should employ crowdsourcing as a tool which pushes creative agencies to transform
current and develop new business models. Moreover, usage of crowdsourcing is a
desired feature of the customers who would like to take part in strategy formation of
their beloved companies (Noam Buchalter as cited in Murphy, 2009).

Methodology of the empirical research

Research Problem Definition

Since the main problem with crowdsourcing is disability to create value in the way it
could be main revenue stream for the company and become a regular way in the market
for obtaining innovations, the research is aimed at creation of the business model for
a crowdsourcing-based company to create value by combining best practices and
addressing unmet expectations from all the parties involved.

Selection of the Model Framework

The paper is based on the business model canvas suggested by Osterwalder, Pigneur,
Smith, and 470 other practitioners (2010). It is worth mentioning that the business
model itself is neither questioned as a concept in this paper, nor is it intended to
present the selected as the most appropriate one. Alignment of the critical factors of
crowdsourcing success proposed by Sharma (2010) (Figure 1), with the business
model canvas by Osterwalder et al. (2010) provides a foothold for our research model
(see this combination in Figure 3).
The essence of the combination is that human capital is treated as partners, and
activities are held to build the trust. Infrastructure is the platform itself, which is also

78
Key Partners Key Activities Value Customer Customer
Propositions Relationships Segments
Linkages
& Trust External
Environment
Human Vision
capital Key Resources & Strategy Channels

Infrastructure Infrastructure

Cost Structure Revenue Streams

Crowdsourcing Success

FIGURE 3. Business model canvas with aligned success factors

Source: Osterwalder, Pigneur & Smith (2010) [Edited by the authors].

treated as a resource and the main collaboration channel. Vision and Strategy reflects the
value proposition for both: the users and the purchasers of the solution. The difference
of cost and revenue streams, to be more specific, the difference between positive and
negative cash flow could be defined as success of crowdsourcing.

Human Capital
Human resources consist of in-house employees and the crowd. On the other hand, in
crowdsourcing it is critical that the crowd is visualized as a partner. Since the crowd has
diverse skills, abilities and the current level of professionalism, it could be split into two
or more levels, where different roles of users are authorized to use different features of
the platform. The possibility to collaborate between levels or among teams, if these are
applicable, should be evaluated in terms of effectiveness as well.

Linkages and trust

Crowdsourcing should be a fair game. Clear information about odds of winning,
selection criteria should be stated. Another very important issue is intellectual property
protection. Rights and ownership of work after the submission and after the end of
contest should be clearly defined.
Support of well-known corporate stakeholders gives more trust to the users.
Government is perceived as stability warranty. Any association with or support from
governmental institutions is more likely to add trust. Previous success stories or
testimonials also add some trust elements.

Infrastructure
The organization of ideas is represented by the platform. The major focus shall be
allocated to presentation of primary material, which is used by crowd for elaboration

79
on ideas. In general, the platform should be user-friendly and capable to process and
evaluate submitted ideas. From the perspective of the purchaser of ideas, additional
capabilities, like an environment for an iterative approach to service innovation, are
also important.

Vision and Strategy

The best disclosure of value proposition is mission, vision and objectives statement.
However, here comes value for two parties, the crowd and purchasers of the end-
product. The community requires an incentive as a reason to participate. This includes
needs, aspirations, motivation and must remain the most important consideration
while developing the crowdsourcing initiative.
Value proposition for companies concerns newness and customization, design
advantages and cost reduction, and convenience. The main idea is to provide a low-
friction, cost-effective environment for collaboration.

External environment (purchasers)

The purchasers are concerned about external ideas incorporation into the strategic
planning process. However, Make/Buy/Partner decision is made by evaluating internal
capabilities to exploit crowdsourcing: lack of in-house professional team for ideas
supply or any network with suppliers, vendors, competitors or inventors minimize the
likelihood of Make decision; the scope of crowdsourcing usage and that the company
offers in exchange for ideas (cash, workplace, long term partnership) usually determines
either Buy or Partner decision.

Success
The success of crowdsourcing depends on participants and their willingness to share
ideas. The essence of the business model, however, is to get the maximum for the
concept from the purchaser and to pay as little as possible to the crowd. The main cost
lines of the platform include cash incentives, platform acquisition and the company’s
maintenance costs.
There is no possibility to find out exactly how much the platform owners get from
the project. But it is possible to identify the revenue model like one-time customer
payments or recurring transactions due to post-purchase customer support, or both.
These details could be used to determine pricing strategy, whether it is value driven or
offers only cost-saving possibilities.

Methodological Approach
The nature of the research object determined qualitative empirical research. Deductive
approach is conducted first to match the pattern suggested by literature review with
that currently available in the market. Later, the importance of retrieved best practices

80
is tested with direct stakeholders of crowdsourcing initiative. Moreover, the parties
involved are surveyed to extract either already satisfied or still open needs and
expectations of potential customers (Table 2).

TABLE 2. Research design

Method Sample Expected results

Case Six crowdsourcing platforms with Extraction of key crowdsourcing
studies different capabilities and target audience practices currently used in the market
and their gaps with literature
Focus Three focus groups of similar Ranking of known crowdsourcing
groups respondents within the group, but practices in terms of relevance and
different environment for each group discovery of unmet expectations
In-depth Three representatives of companies/ Definition of current and potential
interviews organizational bodies, which vary in size uses of crowdsourcing, identification
and are from different industries of collaboration with intermediary
possibilities
Source: created by the authors

Case Studies
Case studies are conducted in order to compare the pattern of activities obtained from
the literature review with the ones currently used by crowdsourcing platforms. The aim
of this research part is to extract current best crowdsourcing practices and to identify
areas for improvements.
The crowdsourcing platforms selected for case studies have different approach and
different target audience:
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defined research questions matrix (see Table 3) which is prepared according to
the selected business model framework (see Figure 3) and insights of Antikainen
et al. (2010), Drummond (2011), Leimeister et al. (2009), Marketing Week
magazine (2009), Schmitt (2009), Shapiro and Varian (1999), Sharma (2010),
Sullivan (2010) and others.

81
TABLE 3. Topics association of the business model areas in case studies

Research object
HC1.1 Number of participants
HC1.2 Metcalfe’s law application [n(n − 1)/2]
Quantities HC1.3 Number of internal employees
HC1.4 Employee/participant ratio
Human HC1.5 Existence of useless mindflow (average percentage)
capital HC2.1 Access restrictions
HC2.2 Level of professionalism
Diversification HC2.3 Existence of divisions
HC2.4 Target audience
HC2.5 Possibility to team up
LT1.1 Competition rules & policy
General info LT1.2 Selection of winners policy
LT1.3 End customers (purchasers of the idea) are/are not public
LT2.1 Explanation of legal protection
LT2.2 Publicity of individual submissions
Intellectual
LT2.3 Announcement classification - public/non-public (patent issues)
property (IP)
Linkages LT2.4 IP holder after announcement
& trust LT2.5 Legal safeguards for the platform
LT3.1 Adequate challenges (in terms of reward)
Respect LT3.2 Deadlines (tight or adjustable)
LT3.3 Responses (responses for all or just for selected ones)
LT4.1 Support from the Government
Ext. support LT4.2 Previous examples (success stories)
LT4.3 Buzz on the platform in public
IN1.1 Languages available for choice
Accessibility IN1.2 Adaptation for the disabled
IN1.3 Mobile access
IN2.1 Ease of use
IN2.2 Possible functions (accumulate ideas, test feasibility, trial in the
Infra-
Capabilities market, etc.)
structure
IN2.3 Presentation of primary material
IN2.4 Possibility to link ideas to each other
IN3.1 Dimensions for evaluation (newness, market potential,
Evaluation customer value)
IN3.2 Ranking types (voting, comments)
VS1.1 Access to knowledge sources (experts, DB, etc.)
VS1.2 Availability of mentors/help
Learning VS1.3 Working as an incubator of ideas
VS1.4 Feedback from peers (comments, private messages)
VS1.5 Feedback from professionals (after evaluation part)
Vision & VS2.1 Monetary prizes
Direct
Strategy VS2.2 Prizes by products/services
compensation
VS2.3 Career opportunities
VS3.1 Appreciation by the host
Appreciation
VS3.2 Appreciation by peers
& Self-
VS3.3 Profiling options
marketing
VS3.4 Networking possibilities

82
 Research object
SC1.1 Cost/Value driven
SC1.2 Average prize in cash
Costs
SC1.3 Average value of non/monetary prizes
Success SC1.4 Complexity of the platform (cost of IT support)
SC2.1 Project/Brokerage Revenue
Revenue SC2.2 Single/continuous support purchase
SC2.3 Additional revenue models
Source: created by the authors.

Focus groups
Focus groups are aimed to rank practices extracted from literature and case studies
(therefore are conducted afterwards); to discover needs and unmet expectations of
possible platform users. Time and access limitations led to the selection of convenience
sampling to form the groups:
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operations; 12 in total addressed with an invitation, 4 responded; the main aim
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by the initiative manager as most suitable for the focus group; the main aim was
to clarify the needs of platform users for solving NGO’s problems and acquirers
of NGO tailored solutions.
Participants are provided with suggested topics, the objective, and the structure of
the discussion. Questions were raised (see Table 4) to reflect the key business model
framework areas which were not disclosed to participants.

TABLE 4. Topics association to the business model areas in the focus group surveys

Topic/Question Addressed Area(-s) of the Business Model

Attraction to participate Value Propositions and Key Activities
Direct & other incentives Value Propositions and Cost Structure
“Fair game” concept Key Activities, Key Partners and Channels
IP issues Value Propositions and Key Activities
Handling of ideas Key Resources, Channels, Value Propositions
and Revenue streams
Collaboration & Communication with other users Human capital and Key Resources
Source: created by the authors.

83
In-depth interviews
In-depth interviews are performed to identify current and potential uses of
crowdsourcing in different companies/organizational bodies as well as determine
possible ways of collaboration, to discover their needs and expectations. Convenience
sampling is used for the selection of respondents. However, different companies in
terms of their size and activities were selected:
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research and analysis company, for which innovations were the way to ensure
their market share, but these are shared globally;
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governmental institution, for whom improvements and consultations with
society were a duty.
In-depth interviews questions were designed to address Customer Relationships
and Customer Segments elements of the business model framework mostly, as these
were not assessed in previous research steps. Suggested topics (Table 5), the objective,
and structure of the discussion were provided in advance.

TABLE 5. Topics association to the business model areas in in-depth interviews surveys

Topic/Question Addressed Area(-s) of the Business Model

Innovative spirit level Customer Segments
Outlook to external knowledge Customer Segments, Channels
Purposes of innovation Customer Segments, Value Propositions
Compensation suggested Revenue Streams
Expectations from collaboration with intermediary Customer Relationships, Value Propositions
Work routine with intermediary Customer Relationships, Channels
Source: created by the authors.

The findings of the research

Results of the Platforms Case Studies
Platforms case studies were held in order to compare the pattern of current activities
with the one obtained from literature review, to disclose existing gaps. The results (see
summary in Table 6) are presented in the same logic as the questions were ordered in
the questions matrix (see Table 3).

Human Capital
Well known platforms are capable to attract thousands of users (HC1.1 – see categories
in Table 3), but in most cases these fail to make them collaborate. Metcalfe’s law states

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that potential of collaboration grows exponentially with every additional node, but
with limited interaction between nodes it becomes useless (HC1.2). On the other
hand, this emphasizes quantity rather than quality, because lots of participants create
huge amount of information, and simultaneously a problem of processing it effectively.
Another problem is useless mindflow (HC1.5) in the platforms due to lack of
proper user and submission tracking. Some platforms are very easy to join, like Dell’s
IdeaStorm, which creates overload of users and information.

Linkages and Trust

In all cases except Dell’s IdeaStorm, participants try to meet the demand from the
customer, not to supply ideas despite the demand (LT1.1). As it is shown by example
of InnoCentive or TopCoder, the more complex the challenge is, the better criteria
of selecting the winner are described (LT1.2). All the examined platforms act only as
a medium for collaboration between the solution purchaser and the crowd and give
almost no efforts in creating any other value by them.
All platforms propose quite adequate direct rewards for the solved challenges
(LT3.1). And the last thing causing trust in the platform is participation of governmental
and non-governmental organizations (NGO) as customers of the project (LT4.1).

Infrastructure
Ease of use correlates with the number of possible functions and primary material pres-
entation capabilities (IN2.1, IN2.2, IN2.3). However, there were some well- balanced
examples like CrowdSPRING or InnoCentive, and some imbalances, like IdeaBounty.
Presentation of primary material is mostly based on “text only” principle, only part of plat-
forms has capabilities for attachments or presentation of visual content (IN2.3). Crowd-
SPRING simply gives a pre-defined template according to challenge type for the custom-
er to fill in and posts it without edition. Evaluation is put outside the platform (IN3.2),
therefore it makes participants guess the real dimensions of the evaluation (IN3.1) and
also wastes resources of human capital, especially when mindflow is intensive.

Vision and Strategy

While talking about platforms as a source of experience (VS1.1), IdeaStorm or
Victors&Spoils have some practices in place. Mentors, if available, guide towards a
particular way, unfortunately, they do not help with individual feedback (VS1.2). And
there is no feedback from peers (VS1.4), except Dell’s example. Having very limited
feedback, it is hard to say that platforms are acting as incubators (VS1.3), where good
ideas can grow.
Monetary prizes are attractive enough (VS2.1). In most cases the winner is a single
person or a group. Non-monetary prizes are also available (VS2.2), but, in the same
way as career opportunities (VS2.3), are rarely used in practice. Still, Victors&Spoils
platform suggests the model of making a career within the platform.

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Success
All platforms present themselves as value driven (SV1.1) and propose an award
according to value-in-use pricing. E.g., IdeaBounty insists that it is working on a free
market principle, that the more significant the award is, the better are ideas to choose
from. The cost of mediation depends on the platform (SC2.1), varying from fixed rate
plus 15% of the award to 100% of the award. Victors&Spoils employs an option where
the project is owned by the intermediary and only part of the money for winning ideas is
shared with the crowd. None of the platforms provide post purchase support (SC2.2).

Aggregation of the results of the case studies

To sum up, even though platforms are orientated to different target audience, the
means they are employing do not differ a lot. Users are treated as individuals, not as
an integral source of knowledge, therefore their collaboration is minimal. Incentive
models do not vary much, either, and lack of trust building activities usually lowers the
effect of motivational options applied. Although capabilities of platforms are different
and represent offered services quite neatly, they have a common drawback – knowledge
submitted by the users is not processed by an intelligent creature. Figure 4 shows
generic knowledge exchange model currently available in the market. The elements
distinguished by dashed lines are seldom used.

FIGURE 4. Generic knowledge exchange model

Source: created by the authors.

The major downside of the current business model observable in the market is
that knowledge which goes through it is not enhanced in any other way than useless
information filtering. This means that the intermediary acts only as a collector of
individual thoughts of the crowd members, which are passed to the customer “as is”.
Nothing is done inside the platform to aggregate, summarize or evaluate this knowledge,

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the knowledge is not even attempted to be transformed to the commercial product
which could be sold to the customer afterwards. Table 6 summarizes the key findings of
case studies and identifies the observed gaps from literature suggestions.

Focus Group Research Results

The aim of this research part is to evaluate the significance of practices extracted from
literature and case studies, and discover real needs and unmet expectations of possible
platform users. The results (Table 7) are presented by pre-defined categories: first
goes motivation, the second one is risks and obstacles which decrease the motivation,
then expected “rules of the game” are presented, and the last one is required technical
capabilities of the platform.

Motivation
The main motivational issue was that youth values experience (including feedback
and career opportunities), older people are satisfied with acknowledgement, but money
retains relevancy as well (Group 3). First of all, any commercial implementation of the
idea is expected to be rewarded with cash or any other direct and tangible benefit. Direct
motivation could also be given in a form of salary, if the user submits a certain number
of ideas for a pre-determined period of time (Group 2). The other motivation option is
freely gained experience. It could be expressed in several ways: sharing of perspectives
through the eyes of a worker from another industry (Group 3), a possibility to use the
skills one has, and a possibility to implement the idea with professionals.
Feedback from experts is perceived as necessity, especially for students (Group 1).
Feedback from peers, however, might be very subjective, but some kind of discussion
would be valuable.

Risks and Obstacles

The most common problem in crowdsourcing is willingness to own ideas even if
one does not have any possibility to implement them. The risk of ideas theft or loss
prevents people to share ideas publicly or even privately with a potential investor. One
of the possible solutions how to deal with the IP concerns is to make the contest in
several levels (Group 1). As the first step, all ideas could go public, but those are just
raw material for real projects. In the second step submissions could be private and all
participants should get some symbolic appreciation from the host of the idea sharing
platform (Group 2).
Since people are participating on a voluntarily basis, lack of responsibility is always
present. Without proper motivation, crowdsourcing may be perceived as a cheap way
for companies to get ideas (Group 1).
To ensure capabilities for assignment, the platform should have a clear segmentation.
Only people with expertise make the discussion effective. However, fresh ideas are

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 TABLE 6. Aggregation of the results of the platforms case studies

88
Human Capital Linkages & Trust Infrastructure Vision & Strategy Success
Key - Large number of - Submissions are not public - Ranking & comments - Adequate direct - Not a tool, just a space for
Practices participants but in most cases are not very common (monetary) award direct purchaser-solver
low (or none) - Separated levels of - Balance on functions - Risk of possible split communication
collaboration different contests and ease of use not of monetary prize if - Demand goes first, or contest
- Access limits for some - Segmentation, but not always achieved several winners are based approach
challenges prevention from entrance - Text based primary selected - Sharing of contacts allows to
- Complicated or non- - Transfer of IP may be material - Career is not usually bypass the platform
existing team-up required even in private - Preparation of primary an award option - Value driven, but saves cost
possibilities contests material usually done - Lack of self marketing because only the selected
- Existence of useless - Criteria are not always (in active or passive & networking idea is purchased
mindflow (multiple clear, selection depends on manner) by the capabilities, portfolio - Revenue per project from
users & submissions) customer platform options 15% to 100%, fixed fee (e.g.,
- Influence to final - “General release” of - Two submissions - Previous winners are listing fee) may exist
product by mentors platform in terms of methods: web based shown - Intermediaries responsibility
- Non-representative liability fields to fill and - Profiles give statistic for the project is limited,
group’s influence on - Response to the file upload (or a only or there is even except V&S case
customers participant is vague combination of both) no public profile - No post purchase support
- Applicable to - Voice of the customer - Evaluation is an outside - Low involvement, enabled via the platform
technical solution - Almost no empowerment evaluation low level of primary - Expectations on the final
search as well - Involvement of NGOs - Lack of accessibility knowledge sharing product are assumed from
builds trust and interest options (especially - Limited or no the platform image in public
mobile access) feedback on - No direct advertising
improvement in platforms, featured
- No access to challenges only
extensive knowledge - Participants involvement in
databases, only the platform development is
generic tips for not very common
success
 Human Capital Linkages & Trust Infrastructure Vision & Strategy Success
Gaps - Collaboration gives - Effective Business Model - Enables the companies’ - To be an - Absorptive capacity is not
Compared more intelligence versus First Mover internal & external unconventional job used in the platform, only by
with (synergy effect) advantage collaboration solution the customer
Literature - Workload of internal - Cross industries - Provides cost effective - Good ideas cost - Use as a tool for innovations,
employees should be innovations environment much not communication only -
low - Customers & suppliers - Employs various - Value to customers leave it to forums
- Low entrance barriers integration in R&D other than innovation created outside - Empowerment cuts off costs
usually equal low - Diversity of the crowd is functions & inside the - Dynamic business model
quality required - Clear primary intermediary acting according to
- Technical challenges - Aggregation of ideas, how material, more raw - Provision of career expectations of participants
should be left for and by who? data to get a solution possibilities, skills & customers all the time
professionals - Proper vision to attract from unexpected improvement - Viral effect of contest should
NGOs perspectives - Previous success be communicated to the
- Compatible with - Ranking possibility stories to build the customer
international business in several dimensions trust
norms (originality, usability, - Self marketing &
- Long term partnership etc.) profiling to enable
orientation - Handling of unused networking
- Transcend barriers with ideas after the contest - Flexible deadlines
collaboration ends (what kind of whenever possible
- More accountability to system should be used) - Trainings are
crowd members - Ideas of the person/ possible, but may
- Clear rules of the game team should be influence the final
- Individual responses with organized, portfolio product
explanations possibilities - Adequate and often
- Imply as much of legal individual feedback is
protection of submission better than trainings
as possible
Source: created by the authors.

89
always relevant, thus students may be employed. From the platform’s perspective, the
customer should give clear criteria to the intermediary (the platform owner), who on
his own behalf should prepare a task for the crowd (Group 2).

“Rules of the game”

First of all, challenges should be separated according to the expected final result. Crowd
is more interested in creative, not technical challenges – the technical ones should be
left for the experts of the field (Group 1).
Users are about to be separated to segments (Group 1). Access limitations should be
applied by splitting the contest into several stages (Group 2). To prevent premature loss
of interest, access to the first stage of challenges should be granted for all, and different
ways to get to the second stage (as a short-term incentive) should be ensured.

Technical capabilities
The platform itself should be easy to use and easy to join. On the other hand, access
restrictions should be employed to prevent anybody and everybody from entering and
ruining the competition (Group 3).
The task should be presented in a clear structure to save time and prevent
misinterpretations. If the task is good, the answers/solutions will be good as well
(Group 1). The company’s capabilities to implement the final product should be stated
to avoid unreal suggestions (Group 3), and needless efforts.
As an additional revenue model, traditional approach of ideas bank should not be
discarded. Companies may be paying for the access to that knowledge base as well
(Group 2).

Aggregation of the results of the focus group surveys

To sum up, cash is still a really relevant motivational option for the users of the platform.
Other options of incentives are barely addressed in the current market: experience
gaining in the way of feedback, knowledge transfer, mentorship and acknowledgement.
Having this in mind, the desired value flow among the users of the platform is shown
in Figure 5. This chart completely represents the element of Value Propositions of the
business model for the users of the platform.
The value flow was designed by making assumptions that users from different levels
are collaborating between each other and provide mutual value. Due to collaboration
among peers of the same level, value is created and shared within this level as well. The
intermediary’s activities towards its users are aimed in the way that all value goes to the
users in exchange for fresh ideas. The core team gets more value to become a desirable
target for the crowd’s members to pursue.

90
 FIGURE 5. Desired value flow between user and intermediary
Source: created by the authors

In-depth interviews results

The main objective of the interviews was identification of current and potential uses
of crowdsourcing in represented companies/organizational bodies and discovery of
possible ways for collaboration. The results are presented by categories in a particular
structure (see Table 5).

Value of Innovations
Small companies acting in niches or by a non-conventional business model usually
live from innovation or are innovations themselves (Interview 1). Approach of large
companies towards open innovations is problematic. R&D departments do not tend to
share any part of their knowledge with outsiders due to theft possibility or underlying
games by competitors (Interview 1).
Innovations and improvements in governmental solutions are driven by expectations
of the society. Various committees are formed by members originally working in
consulting or similar business, public associations, etc. Members are selected according
to the purpose of the commission and are working on a voluntarily basis; they get no
other than emotional compensation, e.g., acknowledgement (Interview 3).

Current Uses of Innovation Sources

Small to medium sized companies are really good at sharing information inside
the company, because it is crucial for them and it is easier with a smaller number of
employees. A forum-like on-line discussion place is perfectly suitable for such type of a
company. However, such companies use secondary data and rarely are involved in any
public request for primary material, designed specially for them (Interview 1).

91
 TABLE 7. Aggregation of the results of the focus groups research

92
Motivation & Costs Risks & Obstacles Rules of the Game Infrastructure & Revenue Model
Key - Awards for all participants - Quite Proprietary outlook to - Limitation of user number, but - Well prepared primary material
Findings - Paying salary own ideas balanced access rights - Presentation by the company’s
- Cash from commercial gain is - Own implementation - Primary selection of the users representatives
expected attempts instead of sharing should be advanced - Moderation of challenge, clear
- Working on your own feeling - IP ownership depends on - Contest is divided into steps, communication
- Creating image of platform time spent on the solution natural selection is applied - Submission efforts should be
- Involvement leads to experience - awards should be perceived - Clear differentiation of equal to awards
- Feedback is given more often as adequate challenges - Ranking by peers
- Evaluation from aside - Prevention of overlapping - Team-ups evolve from - Ability to buy raw ideas
- Sharing of perspectives solutions to avoid future discussion - Ideas bank approach
- Doing something right (NGO conflicts - Involvement of students
case) - Team-ups should be effective - Elaboration trail of own idea
- Self marketing & social - Possibility to discard the should be seen
networking contract for the customer - Image of honesty - clear
- Ability to propose your own - Lack or responsibility & documentation
motivation measures empowerment
Conflicts - Increased awards equal - Publicity and retention of IP - Restricted access to the - Additional work to the customer
to be increased costs are hard to implement platform leads to loss of - In some cases links to home page
Addressed - Final result/implementation - Develop search engine to particular segments of the company (customer) are
phase not shown to the author prevent overlapping - Limited access in terms of enough
- Feedback from peers may be - Prevent free riding in teams experience - Do not prevent free development
insulting - Not to raise costs too much - Premature loss of interest of ideas
- Experience is free for user but - Who and how selects the winner? - Peers evaluation should be only a
costs for intermediary - Make the same users participate part of the total evaluation
- Strict moderation may lead to in different challenges - Loss of motivational benefits
rigid guidance - Participation of the author is - Handling of unused ideas
- Measurement of productivity not always welcome - Possible disclosure of confidential
- not to become another social - Not to become ‘’students information
network only’’ portal - Language barrier, different wording,
- Moderation of legal conflicts - Honesty may stop some users other communication issues
Source: created by the authors.
 The most common application of crowdsourcing in large companies is the usage of
small groups of selected people, usually customers, to get some ideas or test the market
options. As a platform, social networks like Facebook or tiny applications in own site,
are used. From the company’s perspective – one cannot create a suitable final product
without knowing enough internal information which is confidential.
There are three key sources for suggestions on new legislative projects: individual
expertise of a regular employee, various committees and boards, and collective
knowledge from society (Interview 3).
Partnership Possibilities
For small companies outsourcing means significant cost savings, because they give
away considerable part of their internal labour force (Interview 1). Large companies
are also keen on outsourcing when it is more effective than having an in-house special-
ist (Interview 2).
To become a partner of for-profit corporations, crowdsourcing intermediary should
have a clearly defined market in terms of industry and target audience to: (1) have
highly skilled insiders (or outsiders) that are able to prepare the final product for the
customer, (2) be able to propose real innovations and gain trust of the customers R&D
department (Interview 1).
Aggregation of the results of the interviews
Figure 6 presents a generic pattern for the desired value flow between the intermediary
and its customer. Despite higher amount of value streams from the intermediary to the
customer, there is only one intentional – Fresh and Professional ideas. Others come
from the nature of crowdsourcing unconsciously. On the other hand, it is not always
all three inbound value streams coming to the intermediary. Intermediary-crowd value
exchange is shown in Figure 5.

FIGURE 6. Desired value flow between intermediary and its customers

Source: created by the authors

93
TABLE 8. Summary of the results of the in-depth interviews

Large for Profit

Small Companies Governments & NGOs
Companies
Value of - Living innovation, crucial - Keep the market share - Direct purpose of
Innovation to survive - Increase efficiency in IT existence
- Should be constant, part and HR sectors mostly - Required by law,
of the business model - Collect feedback from international conventions
- Niche players, suppliers and customers & bodies
expectations from the - Public relationship - Expected by community
customers campaign
Current - Development of non- - Innovation moves - Publication of projects
Uses of conventional solutions vertically, both up and for public awareness
Innovation - Monitoring the market down reasons
(including competitors) - Responsibility lies on - Public consultations to
by all employees managers, employees find the best solution
- Use of secondary data, are only encouraged to - Purchased feasibility
primary are perceived as innovate studies
costly - Division of work creates - Various commissions
barriers, therefore & boards formed of
internal measures are not independent experts
effective
Possibil- - Possibility to sell - Platform for horizontal - Place to post legislation
ity to Col- application or place for collaboration projects and collect
laborate & internal use only - Occasional requests for feedback simultaneously
Revenue - Outsourcing of creative external innovations - Platform for public
(Inter- department (sell creative - Possibility to find consultations, summaries
mediary’s services) partners & aggregation of
Perspec- - Occasional requests for - Collecting feedback from information
tive) primary data collection suppliers & customers - Requests for feasibility
from participants studies
- Engagements in joint - On-line collaboration
ventures with the solution for experts
platform or a partner - Test of reaction of society
- Barter market is possible to a particular project
Source: created by the authors.

As the presentation of the results show, the needs differ in all the three segments;
therefore Table 8 gives rather a summary of the interviews findings than an aggregation.

Discussions
The research results show clearly that the expectations of users and customers are far
from being met by the existing platforms. These also fail to implement significant part of
tweaks proposed by scholars in literature. The major gaps not closed yet are as follows:
1. collaboration among the users of the platform and constructive feedback;
2. value creation in the intermediary internally to create a professional and
complete final product;

94
 3. empowerment of certain level users, thus giving them additional motivation;
4. involvement of the idea author in further development of the idea;
5. growth of users’ competence and career possibilities;
6. facilitation of governmental duties to build the trust;
7. honesty and clearance of the “rules of the game”;
8. low quality of primary material given for the crowd;
9. missing general capabilities to evaluate idea inside the platform;
10. profiling and networking possibilities;
11. usage of other than regular WWW channels to increase time spent on the
platform;
12. usage of all media (not text only) for communication;
13. dynamic proposals for customers to meet their needs;
14. supply first approach is not considered as additional service;
15. other than cash incentives are under-evaluated;
16. barter market with customers, especially not-for-profit ones.
As it is shown by the Generic Knowledge Exchange Model (see Figure. 4), all existing
platforms of crowdsourcing are basically a space where the purchaser meets a solver,
which makes them simply a next generation of web forums, but not a real innovation
tool. To create a successful business model for the crowdsourcing intermediary,
aforementioned 16 open gaps are mapped on the business model framework (see
Figure 7). Therefore the business model for the crowdsourcing aimed creative agency
is created (see Table 9) in brief; a comprehensive model is provided in Appendix A.

Key Partners Key Activities Value Customer Customer

Propositions Relationships Segments

Key Resources Channels

Cost Structure Revenue Streams

FIGURE 7. Gaps mapped on the business model framework.

Source: created by the authors.

The model accompanied with key resources (the platform and internal employees,
further referred to as internal HR) is capable to provide superior value for both – the
customers of the intermediary and the users of the platform, or the crowd. However,

95
 TABLE 9. A Brief Business Model

96
Key Partners – users Key Activities – building Value Propositions – Customer Relationships Customer Segments –
that provide knowledge the trust of users to users & customers – Building trust & according to the value created
General features: Long term relationship Users get: convenience for for them
Self marketing - profiling orientation: fun; customers Both demand first and supply
options & portfolio; Technical IP protection; experience; Performance management; first approaches. Occasional
No trainings on particular Legal help for users; career inside the Responsibility for the customers;
contest; Honesty - clearly explained platform; product; Interested in ideas flow;
Author follows own idea; rules; insider status; Interim reviews; Dedicated “branded” space;
Different level users: No cheating; knowledge resources; Possibility to drop the Niche players;
1st level – anyone and everyone; Ensure responses; empowerment; project; Integrators of customers &
2nd level – core team (selected). Give testimonials. involvement; Post purchase support; suppliers in internal R&D;
profiling & Target managers; Primary data seekers;
1st level users: networking. Dynamic propositions. Partners who outsource their
Public submissions; Key Resources – Channels – information creative department;
All collaboration options; platform & internal HR For customers: & knowledge transfer Efficiency leaders.
Self moderated comments; Internal HR: wide range to choose Conventional
More competitors – more Prepares primary material; of; communication; Government for:
diversity; Guides the core team; “fresh” ideas; Video/audio material; Publication & feedback on
Various ways to get to the core Creates the final product. cost savings; Video/audio conferences; legislation projects;
team. no useless mindflow; Interactive media, e.g., Feasibility studies;
The platform ensures: professional and simulations; External committees.
Core team: on-line game like users’ roles; complete solutions; Mobile access (incl. SMS/
Trial period; no collaboration barriers; inter-industries MMS). NGOs for:
Empowerment; enhanced primary material; innovations; Free or cheap expert knowledge;
Team-ups; rankings of posts in different viral effect Awareness.
Fair team evaluation. dimensions, comments.
Cost Structure Cost added: Revenue Streams
Cost cut: Initial investment in platform & its Value-in-use pricing. Extras cost extra.
Dynamic model of external maintenance; Fine and kept advance payment for dropping the project
HR; Internal HR salaries; Direct advertising on the 1st level of contests.
Freelancers in the core team; Lawyers in case of conflict; Fees for “branded” space, and browsing through ideas bank & portfolios.
Empowerment. Sales & marketing of the platform. Barter market (especially with NGOs)
Source: created by the authors
the main challenge is not only to develop the platform and find appropriate employees,
but also educate the customers so that crowdsourcing might create a satisfying final
product, equal to the product outsourced from any other company or even better.
Further in this chapter, each part of the model is described in detail.

Key Partners
First of all, users should not be treated as a resource as it is common currently. Users
provide the most valuable resource for the company, therefore they should be considered
as key partners. To provide a better organization of users, they should be separated into
two groups – free users, or first level users – anyone who joins the platform; and the
core team or the second level users, who are carefully selected from the first level users
by internal HR to help in elaboration of primary ideas to the final product. Therefore,
each product goes through two stages – brainstorming among the first level users and
elaboration of the selected ideas in the core team. The final product is generated by
internal HR using suggestions of the ideas selected by the core team.
While first level users ensure diversity of the crowd, second level users perform
higher quality work. More capabilities should be given to the core team members:
1) empowerment: they are acting as moderators and mentors simultaneously;
2) possibility to team-up with other members.

Key Resources
Two types of property are considered as key resources – its internal HR and the platform
itself. Internal HR is really valuable, therefore an expensive resource. First, internal
HR is responsible for preparation of the primary material for the first stage of the idea
generation process as well as guidelines for the core team in the second stage. Another
responsibility of internal HR is to finalize the product for the customer, if necessary.
The platform itself does not cost much while in use, but initial investment is quite
significant here. The platform should clearly define the users’ roles and responsibilities.
It should also provide different ways of primary material presentation as well as
transcendence of collaboration barriers.

Key Activities
Very basic requirement for trust is insurance of IP protection. First it should be done
technically by preventing theft and regulating work of the search engines’ bots. Another
means is to prepare legislative agreements of juridical power.
Another requirement for building the trust is honesty. That one obliges clarity of
the“game” rules. Conventional terms of use should go together with a simple explanation
how the platform works and how submissions are handled in terms of IP.

97
Value Propositions
Ability to choose is a motivation itself. Therefore, each user should be capable to rank
his motivational options in the profile. Possible motivation options should be different
for free users and the core team.
Customers, on the other hand, also have some motivation options, which stimulate
their choice of the company as an external service provider. They get not only a lower
costs product, but the possibility to choose from a wide range of “fresh” ideas.
For better understanding of value flows, a joint model of those desired by potential
users (Figure 5) and desired by customers of the crowdsourcing intermediary (Figure 6)
is presented in Figure 8. Moreover, since advertising in the first stage of competitions is
approved, additional revenue stream from third parties is marked with dotted arrows.
The success of business model could be very simply explained by looking at this value flow
chart: the company will make profit as long as inbound value flows exceed outbound
flows in terms of cash, and this difference is higher than the costs of the company
maintenance.

FIGURE 8. Flow of value among the subjects in the developed business model
Source: created by the authors

Customer Relationships
As mentioned previously, the final product given for the customer is comprehensive
and professional. Interim reviews, where the customer participates in the selection of
ideas at the first or second stage, could be held upon request of the customer.
Another virtue of the platform owner is to make dynamic value propositions
according to the needs of the customer. To enable it, the platform itself should have
customization capabilities. One tough task is to promote the crowdsourcing industry
itself. Despite current crowdsourcing approaches, companies still tend to create value
internally only.

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Customer Segments
Due to dynamic propositions, the intermediary should be able to serve various
segments of customers: from occasional users with the need of very basic service to
governmental institutions with large set of regulations and other requirements to be
fulfilled. Another group of customers is small companies which are looking for non-
conventional solutions. Such companies may look for primary data instead of secondary
data they usually base their strategy upon. The last significant segment is governmental
institutions and NGOs.

Channels
In addition to a conventional text based on-line communication, audio and video
media could be used. Moreover, interactive media, e.g., simulations, could be used in
order to let “touch the model”, but not disclose the commercial secrets. Different access
capabilities, like smartphone applications accompanied by mobile internet access
would increase the time spent on the platform as well as the number of active users.

Cost Structure
Main costs of the intermediary consist of acquisition and maintenance of key resources.
First, development of the platform itself would be a major part of initial investment.
Also maintenance of the platform would be a part of variable costs. The biggest part
in variable costs would be for internal HR salaries and other incentives. On the other
hand, dynamic nature of external human resources (the crowd) allows cutting the costs
significantly, as it is relatively easy to adjust its size to existing demand. However, cash
compensation to the core team should be considered anyway.

Revenue Streams
Value-in-use pricing approach would be used in the model, still keeping the space for
cut of costs. Besides a regular challenge price, the customer could be charged for extra
services where some part of work should be outsourced by the intermediary.
The government could be charged exclusively for feasibility studies and building of
external committees. NGOs most probably could engage in barter market – services for
them could be provided in exchange of internal knowledge, which is used later to build
internal knowledge base or for the advertising space of the platform.
In order to diversify revenue streams, both demand (purchaser asks) and supply
(crowd offers) based crowdsourcing approaches are employed (see Figure 9). Moreover,
companies are encouraged to share internal knowledge in exchange for discount or
similar benefit. By using this knowledge, internal knowledge base is supposed to be
developed and used as incentive for the users of the platform in that way saving costs
on cash incentives. Compared to forum-like knowledge exchange model (see Figure 4),
the developed business model is a way more stable than these currently available in the
market.

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 FIGURE 9. Flow of knowledge among the subjects in the developed business model
Source: created by the authors.

Conclusions, Limitations, Further Research Topics

and Practical Implications
Crowdsourcing gained popularity due to favourable circumstances present in the
market. Global cut-of-costs policies, reached limits of traditional business models
and demand for non-conventional solutions led companies to search for alternatives.
Due to the nature of crowdsourcing, not all companies are capable to engage in direct
application of it, so crowdsourcing intermediaries jumped in the market. However,
these are struggling with further development due to absence of a business model which
would enable value creation, while innovations are crowdsourced by intermediaries
for their customers. This laid back approach of crowdsourcing intermediaries not
only leads to under-use of crowdsourcing in western business environment, but also
is the reason why the word crowdsourcing itself needs additional explanation for most
entrepreneurs in emerging markets.
The results of empirical research have shown the major gaps with expectations and
best practices of current crowdsourcing intermediaries. By combining the research
results, the best current practices and those suggested by literature, a comprehensive
business model for the innovations-aimed crowdsourcing-driven creative agency is
developed. Since the aim of the paper was to create a successful business model, the
success is defined by the ability to capture more value in terms of cash than it costs to
maintain the company. In other words, the difference between inbound value flows and
outbound value flows should exceed the total costs of the creative agency.
The main limitations of the paper exist due to the type of the survey. Therefore
since in-depth interviews were held with only one individual from a separate segment,

100
generalization of the results should be made with caution. On the other hand, qualitative
research serves as a foundation for further quantitative research to obtain certain values
or measures of variables included in the model. These could encompass compensation
issues, human capital required as well as proper distribution of incentives to attract
the crowd, but simultaneously keep the intermediary healthy having in mind that
crowdsourcing success is not guaranteed in each and all cases.

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 Appendix A. Comprehensive business model

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Key Partners – users that provide Key Activities – building the trust of users Value Propositions – to Customer Relationships – Customer Segments –
knowledge Ensure technical IP protection. users & customers Building trust & according to value created
Different level users: Despite “general release”, legal help is always For users: convenience for customers to them
! 1st level – anyone and everyone; offered (presuming that the user is more ! Fun, place to express Process statistics of users to define Occasional customers (want
! 2nd level – core team (selected). vulnerable than the customer). themselves; capabilities of the platform. to try).
Full collaboration in the 1st level, team-ups Honesty - clearly explained rules. ! Experience from the core team Ability to provide the final Interested in ideas flow,
in the 2nd level. Compatibility with business ethics. to users and from internal HR product and be fully responsible and able to process these
Empowerment to the core team (transfer of Long-term relationship orientation. to the core team; for it. internally.
responsibility): the core team gives feedback Transfer more responsibility to the crowd. ! Career inside the platform; Interim reviews to guide Dedicated “branded” space
and evaluates the 1st level users. Ensure responses: ! Status of being insider for the generation of the final product to seekers for communication
Self marketing by enabling good profiling ! From the core team to 1st level users; core team; a more suitable one. with supercustomers.
options & possibility to create portfolio ! From internal HR to the core team. ! Knowledge base for the core Possibility to drop the project. Niche players searching for
from unused ideas/solutions. Announce previous success stories. team; Post purchase support. non-conventional solutions.
No trainings concerning the field before the Never do anything that could be perceived as ! Possibility to evaluate others; Target managers. Integrators of customers &
contest in order to lower the influence and cheating. ! Involvement by making users Dynamic propositions – may vary suppliers in internal R&D.
diversify the crowd. interested; according to the demand of the Primary data (instead of
Higher number of competitors lowers ! Profiling & networking customer. secondary data) seekers.
the risk of particular groups influence on possibilities. Elaborate the outlook of “proudly Partners who outsource their
customer’s market decisions. Users should be able to rank found elsewhere”. creative department.
The author of winning solution is included motivational options in their Efficiency leaders who would
in further development of the idea (within Key Resources – platform & internal HR Channels – information
Internal HR for: profiles. & knowledge transfer outsource everything if it
the intermediary) to the final product. For customers: saves cost.
Feedback is moderated by the user: he/she ! Preparation of primary material; Conventional on-line text based
! Guidance of the core team; ! Wide range to choose from; communication. Government for:
is able to hide inappropriate comments. ! Value of “fresh” ideas; ! Publication & feedback on
Team efforts are evaluated: ! Aggregation of knowledge to the final product. Video/audio material.
Platform for: ! Cost savings; Interactive media, e.g., legislation projects;
! 1/3 equally; ! Elimination of useless ! Feasibility studies;
! 1/3 by peers; ! Definition of users’ roles & responsibilities simulations, which let “touch
(on-line game like); mindflow; the model”, but not disclose the ! External committees.
! 1/3 by leader. ! Value created by external NGOs for:
nd
Ways to get to the 2 level: ! Transcendence of collaboration barriers; commercial secrets.
! Various ways of presenting primary knowledge sources is Video/audio conferences for the ! Free or cheap expert
! Winning the 1st level; professional and complete; knowledge;
! Invitation to team from a core team material; core team to facilitate discussions.
! Rankings of posts in different dimensions, ! Inter-industries innovation Mobile access to increase time ! Awareness.
member; possibilities; Both demand first and supply
! Taking tests. comments; spent on the platform.
! Digital verifications (signatures). ! Viral effect on the project. first approaches.
Trial period is present in the core team.
Cost Structure Revenue Streams
Dynamic model of external HR – easy to control costs by controlling amount of external HR. Value-in-use pricing – good & complete solutions cost much.
Initial investment in the platform & its maintenance. Challenge price – price for the final product. Extras cost extra: featured project listing price, urgent
Internal HR salaries for preparation of primary material & aggregation of the final product. solution, highly complex solution (platform is not capable to do it by itself) fees, feasibility studies fee.
Other services, like design, animation, copywrite could be taken cheaply from freelancers in Fine and kept advance payment for dropping the project (instead of requirement to pay full amount).
the core team. Direct advertising in 1st level of contests.
Compensation for the core team. Empowerment of the core team cuts costs on Fee for “branded” space. Fee for building external committees.
compensation for 1st level users. Fee for browsing through ideas bank & portfolios
Lawyers who could help in case of conflict (outsourced or kept as barter exchange result). Barter market (especially with NGOs) – services provided in exchange of internal knowledge (which
Sales & marketing of the platform. is used to build knowledge base for the core team) and advertising of the platform.

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Source: created by the authors.