ABSTRACT
In today’s connected world, the reach of the Internet and collaborative social media tools have opened up new opportunities for individuals, regardless of their location, to share their knowledge, expertise, and creativity with others. These tools have also opened up opportunities for organizations to connect with new sources of innovation to supplement or replace current practices. Reaching out to new sources of productivity, knowledge, and creativity via social media is commonly referred to as “crowdsourcing.” Each day, organizations are turning to the crowd to complete a wide variety of tasks. However, we currently know little about the motivations of these organizations, the types of tasks that are completed, the characteristics of the crowd that may be best suited to complete different tasks, and the organizational challenges and risks that such outreach creates.
Using grounded theory methods and qualitative data from literature and case studies, the goal in this research was to build a clearer understanding of the uses of crowdsourcing by established organizations with respect to innovation. This research contributes to theory in three key ways. First, it defines four common organizational uses of crowdsourcing, specifically: 1) Marketing/Branding, 2) Cost Reduction/Productivity 3) Product/Service Innovation, and 4) Knowledge Capture. This finding extends theory by building contextual understanding that links common uses or the crowd to specific organizational goals and desired outcomes. Second, the explanatory theoretical framework that was developed directly ties key characteristics of the crowd and organizational impacts to specific uses. As such, it establishes that different organizational needs necessitate the completion of different tasks that in turn require different skills and knowledge. Furthermore, different uses bring with them unique challenges and potential value. As such, the explanatory theory advances our theoretical understanding of the dynamics that present themselves when organizations attempt to integrate new resources into current business practices. Moreover, it builds a foundation from which researchers can expand theory related to this new phenomenon. With regard to its contributions to practice, the theory provides guidance to practitioners on which crowds, challenges, impacts, and values are associated with specific uses of crowdsourcing by established organizations. Such understanding may prove critical to organizations attempting to extract value from their crowdsourcing initiatives. Third, the Internal-Crowdsourcing Acceptance Model (ICAM) proposed here advances our theoretical understanding of the use of internal crowds for Product/Service Innovation and the critical role that proactive executive leaders play in reducing barriers to use and acceptance. ICAM theorizes internal-crowdsourcing for Product/Service Innovation as a disruptive business practice that has implications for organizational culture, internal processes, and structure. As such, it extends our current theoretical understanding of the role leadership plays in facilitating this new business practice. Additionally, it provides guidance to practitioners on how to address specific challenges and barriers to use and acceptance, thereby increasing opportunities to extract value from such initiatives.
Chapter 1
INTRODUCTION
The proliferation of collaborative social media tools combined with the reach of the Internet has opened up the possibility for individuals around the world to share their knowledge, express their creativity, and make their voices heard in ways never before possible
(Parameswaran, 2007). Additionally, the availability of inexpensive consumer technologies (i.e., equipment, software, and hardware) enables individuals to more easily design, create, and sell their own products and services. This increased connectivity, combined with an individual’s “do it myself” attitude, is shifting the economic landscape and altering the role of the consumer in today’s society. Those with access have the potential to become more empowered consumers
(Harrison, Waite, & Hunter, 2006), as well as to generate new sources of income (Brabham,
2008, 2009a; Felstiner, 2010).
As the same time, changes in the competitive landscape along with recent economic and market pressures are increasing the need for organizations to reduce costs, improve margins, generate new sources of revenue, and bring product/service offerings to market faster (IBM Global Business Services, 2006; Prandelli, Sawhney, & Verona, 2008). To remain competitive in today’s fast-paced global economy, organizations must rethink current business models and management practices (Birkinshaw, Bouquet, & Barsoux, 2011). As such, organizations are looking for new sources of innovation, knowledge, and productivity.
Leveraging social media tools and the reach of the Internet to connect with new empowered consumers may be one area where organizations can increase their innovative potential and competitive advantage (Howe, 2008; Malone et al., 2003; McAfee, 2009). In fact, the true power of social media may be in the creation of new disruptive business models and practices (Warlock, 2007). As such, an organization’s ability to harness social media tools to connect with new sources of knowledge and creativity may be key to its ability to remain competitive (Malone, Laubacher, & Morton, 2003; Prahalad & Ramaswamy, 2003; Sawhney, Verona, & Prandelli, 2005). A growing number of organizations are looking to the “crowd” as a new potential source of innovation, knowledge, creativity, and productivity. Commonly referred to as “crowdsourcing,” this new business practice leverages online technologies to connect organizations with individual contributors and new workforces around the world. First coined in
2006, crowdsourcing is defined as:
“…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 [sic]. The crucial prerequisite is the use of the open call format and the large network of potential laborers” (Howe, 2006a, para. 4).
Crowdsourcing is currently being used across a range of different industries for a variety of different purposes (Andriole, 2010; Bonabeau, 2009; Howe, 2008; McAfee, 2009). Tasks include tagging images or documents (Barrington, et. al., 2009), collecting distributed data (Sullivan et al., 2009), sharing of knowledge and expertise (Jana, 2009), and designing and developing evolutionary and revolutionary products (Jeppesen & Frederiksen, 2006). For example, Dell Inc. a U.S. based multinational computer technology corporation, solicits ideas from customers to extend and enhance current product offerings (Di Gangi & Wasko, 2009). Cornell Lab of Ornithology and the National Audubon Society rely on volunteer bird watchers across North America to upload data on sightings of specific birds to monitor endangered species (Sullivan et al., 2009). P&G, one of the world’s most prestigious research and development
(R&D) companies, leverages the crowd to solve complex manufacturing problems that internal R&D teams have been unable to solve. Additionally, Quirky.com has created a new business that leverages the crowd to generate ideas, designs, product specifications, and marketing campaigns for new products. While each of these organizations face different organizational needs, each is leveraging crowdsourcing as a way of getting work done.
1.1 PROBLEM STATEMENT
We are only just beginning to understand the theoretical and practical implications of this emerging phenomenon. The growing numbers of descriptive case studies found in the literature provide evidence that many organizations are experimenting with crowdsourcing (Allen et al., 2008; Brabham, 2008a, 2009a; Chilton, 2009; Howe, 2008; Jouret, 2009). Each day, new examples illustrate the wide variety of uses and contexts. Early theoretical work has been helpful in beginning to identify key dimensions of crowdsourcing, as well as exploring the relationship of crowdsourcing to other theories (Bonabeau, 2009; Lakhani, Jeppesen, Lohse, & Panetta, 2007; Malone, Laubacher, & Dellarocas, 2009; Schenk & Guittard, 2009). However, many questions still remain. How best do researchers compare and contrast findings across the wide variety of uses? How do practitioners make strategic decisions regarding how and when to leverage the crowd and for what purposes? What impact does crowdsourcing have on organizational structure, processes, and culture?
A manifestation of the current research gap can be seen in the variety of different outcomes as reported in descriptive cases. Specifically, while organizations have reported both tangible and intangible benefits from their efforts (Allen et al., 2008; Huston & Sakkab, 2006;
Jana, 2009), others report less positive or uncertain outcomes (Jouret, 2009; Knuden & Morteusen, 2011). Still others report impacts on management practices and organizational structures (Bughin, Manyika, & Miller, 2008). Each of these cases represent different uses of crowdsourcing to meet different organizational needs within different contexts. While some organizations are leveraging the crowd for ideation, others are using crowdsourcing for data collection, and still others are attempting to increase competitive advantage by increasing innovative potential. Currently it is unclear if there are unique attributes of crowdsourcing that are best suited to generating desired outcomes in specific contexts and for specific organizational needs.
Another manifestation of this research gap can be seen in the current body of theoretical work. Specifically, current theoretical models proposed for categorizing crowdsourcing vary in terms of the dimensions that are viewed as most relevant to understanding this phenomenon. Additionally, across those models that share similar dimensions, definitions and attributes often vary greatly. Similarly, theoretical papers that explore crowdsourcing’s relationship to other theories, such as theories of innovation, community, and motivation, also employ different contexts and characteristics to define crowdsourcing. This results in findings that may be applicable to a wide range of uses or specific only to one context and type of crowdsourcing. In short, researchers and practitioners run the risk of comparing “apples to oranges.” Furthermore, there is no evidence that success with crowdsourcing in one context would generate success within a different context. Such uncertainly may lead to an over-generalization of findings and/or a misapplication of findings from one context to another.
Moving forward, it is critical to develop a clearer understanding of the differences and similarities of this new business practice with regards to the types of tasks the crowd is asked to perform. To advance the field of crowdsourcing a holistic theoretical framework is needed; one that links the different uses of crowdsourcing to key characteristics and provides in-context understanding of how these characteristics may impact an organization’s ability to extract value.
Additionally, such a framework would help to clarify which types of organizational needs may be addressed by crowdsourcing, as well as which characteristics of the crowd and which conditions may create different risks and benefits.
1.2 MOTIVATION FOR THE RESEARCH
The goal in this research is to expand our current understanding of how crowdsourcing is being used by established organizations to supplement or replace current innovation practices. This study seeks to identify the motivation behind organizational use of crowdsourcing, the facilitators of and risks associated with these uses, and the potential value such initiatives may provide.
The introduction of the Internet and new social media technologies are having a significant impact on how businesses interact with their customers, as well as on their innovative capacity. Crowdsourcing is a new potential business model that may allow organizations to leverage the crowd for productivity, creativity, and knowledge. As organizations continue to experiment with this new business practice, theoretical foundations are necessary for making more informed decisions regarding the potential value of crowdsourcing to organizations. The development of a theoretical framework of crowdsourcing within the context of established organizations has the potential to begin to explain which crowd may be most desired and under which specific contexts crowdsourcing may add value.
1.3 SUMMARY OF RESEARCH CONTRIBUTIONS
Based on document analysis of literature focusing on crowdsourcing, as well as case studies with practitioners currently using crowdsourcing, this study addresses gaps in our theoretical knowledge of crowdsourcing. Using grounded theory methods, evidence is provided that shows that different organizational needs necessitate the completion of different tasks. These tasks require different crowds that in turn bring with them different value. This work advances our theoretical understanding of why and how organizations are leveraging this new business practice and makes three key contributions. First, it presents unifying theoretical framework that identifies specific uses of crowdsourcing by established organizations, specifically: 1)
Marketing/Branding, 2) Cost Reduction/Productivity, 3) Product/Service Innovation, and 4) Knowledge Capture. Second, it matches each identified organizational use to four key characteristics: 1) ideal crowd knowledge/skills, 2) preferred crowd location, 3) organizational challenges, and 4) primary value. The theoretical framework begins to clarify which organizational needs necessitate which types of crowds and how organizations may begin to make strategic decisions regarding the potential value the crowd may bring. Additionally, it provides a theoretical basis from which researchers can begin to examine similarities and differences between common organizational uses of the crowd.
Finally, the work expands our understanding of the unique challenges organizations face when leveraging internal crowds (i.e., employees) for ideation related to product and service offerings. Findings show that crowdsourcing for Product/Service Innovation represents a new disruptive business practice that requires a shift in traditional organizational perceptions of value and organizational practices. A theoretical model is presented that outlines key organizational dynamics related to the use and acceptance of internal-crowdsourcing. The model outlines implications of such initiatives on organizational culture, internal processes, and organizational structure. The theoretical model provides a deeper in-context theoretical understanding of a specific use of the crowd by established organizations. Additionally, it begins to provide guidance to practitioners wishing to implement similar internal-crowdsourcing initiatives.
1.4 ORGANIZATION OF DISSERTATION
This dissertation is organized into six chapters. Following this introductory chapter, Chapter 2 provides a comprehensive review of current literature on the phenomenon of crowdsourcing. This includes a review of descriptive case studies and detailed examples of the current use of crowdsourcing, a discussion of theoretical models for categorizing crowdsourcing, and a summary of research that applies existing theories to the study of crowdsourcing. Chapter 3 documents the research methodology used including a description of methods, data collection, and data analysis. Chapter 4 provides details on the six case studies conducted as part of this research. Additionally, a discussion and summation of key themes across cases is provided. The chapter ends with the presentation of a theoretical model that outlines unique challenges associated with internal-crowdsourcing for Product/Service Innovation. Chapter 5 details the progress of theory building and the emergence of the explanatory theoretical framework of crowdsourcing by established organizations. As discussed, this framework identifies four common uses of crowdsourcing by established organizations and links key crowd characteristics, as well as challenges, to each use. Finally, Chapter 6 provides a summary of findings, contributions, a discussion of limitations, and several suggestions for future work.
HANGING WITH THE RIGHT CROWD: CROWDSOURCING AS A NEW BUSINESS PRACTICE FOR INNOVATION, PRODUCTIVITY, KNOWLEDGE CAPTURE, AND MARKETING