Introduction

DI in Industry (DIiI)

Andy Weeger

Neu-Ulm University of Applied Sciences

February 26, 2025

Introduction

Relevance

To continually innovate, firms are opening their boundaries to engage external expertise.

Instead of simply collaborating with a select few known external parties, firms are increasingly innovating using crowdsourcing.

A challenge faced by a firm are broadcasted in an open call to individuals with relevant expertise outside the firm to become involved in solving the challenge (instead of asking internal research and development departments to solve the challenge) (Howe et al., 2006)

Definition

Crowdsourcing is a type of participative online activity in which an individual, an institution, a non-profit organization, or company proposes to a group of individuals of varying knowledge, heterogeneity, and number, via a flexible open call [i.e., announcement], the voluntary undertaking of a task.
(Arolas & Ladrón-de-Guevara, 2012, p. 9)

Crowdsourcing can be applied to multiple tasks including innovation (e.g., new products and services or changes to practices and processes)

We define innovation in a crowdsourcing context as the public generation of innovative solutions to a complex problem posed by the company sponsoring the challenge call. (Majchrzak & Malhotra, 2013, p. 258)

Underlying theorem

The theoretical basis for crowdsourcing being generative of innovation is the value of expertise diversity.

• External crowds are more diverse in expertise and experiences than internal research and development units
• This implies the possibility of a greater quantity and variety of ideas
• Ideally, this leads to more innovative ideas

There is empirical evidence that a large diverse crowd of independent strangers performs better on certain types of challenges than a few experts (e.g., sports, stock forecasting) (Brabham, 2013)

Participation architectures

Definition

Participation architectures refer to sociotechnical systems design elements that encourage and integrate contributions made by participants to an open online forum focused on developing innovative solutions, such as open source software or Wikipedia
(Majchrzak & Malhotra, 2013, p. 258).

These architectures vary along multiple dimensions, including:

• Production: the way community conducts its production processes
• Co-creation boundary management: the process by which, through incentives and property rights management, only certain individuals will be encouraged to participate

Production

Crowdsourcing challenges may range from calls for incremental innovation such as improvements in existing product lines (e.g., Lego World Builder) or to calls for radical innovation such as developing entirely new service models (e.g., OpenIDEO) (Majchrzak & Malhotra, 2013, p. 259).

Design choices in the production dimensions include:

• Type of contribution (text, images, etc.)
• Selection-process (e.g., up-voting possibility)
• Nature and type of discussions (e.g., moderated)
• Challenge journey (e.g., state gate journey)

Web-based crowdsourcing architectures usually require participants to submit their ideas in the form of text (as in the IBM Innovation Jam discussion forums) or in the form of product design specifications (as in Lego Mindstorms). Posting the idea opens a discussion thread. Subsequent participants can then either contribute by adding comments to a posted idea, or post their own idea to start a new discussion thread. In the various crowdsourcing experiences, there may be little discussion of an idea (as in Heineken’s Beer Challenge) or there may be many comments and responses (as in Threadless). Because the architectures generally require that an idea be posted to start a discussion (rather than posting facts or some other generative response), the discussion is usually focused on refining a posted idea and rarely on recombining existing posts into new ideas. As a result, ideas are rarely significantly changed by combination and recombination. These discussions can be moderated or not (Majchrzak & Malhotra, 2013, p. 259).

Another variation of the architecture for innovation production in crowdsourcing is the way the crowd votes: In many architectures, the crowd is asked to vote on each idea submitted, which accelarates the cycle times. Without voting on the crowd’s most preferred ideas, it would take a sponsoring organization countless hours to review each idea, while the crowd voting speeds up the evaluation of experimental ideas (Majchrzak & Malhotra, 2013, p. 259).

Co-creation boundary management

Co-creation boundary management refers to the basis by which individuals with certain identities are given preference over others when encouraging participation including incentive structures and intellectual property protections (Jarvenpaa & Lang, 2011).

Majchrzak & Malhotra (2013, p. 259) distinguish between outcome-based crowdsourcing and contribution-based crowdsourcing architectures.

• In outcome-based crowdsourcing the best idea wins and its contributor is awarded with an extrinsic prize. The crowdsourcing effort is then usually referred to as an innovation tournament or innovation contest or idea tournament.

• In contribution-based crowdsourcing, incentives are given for the process by which the crowd participates in the crowdsourcing challenge (e.g., the number of comments on others’ ideas). Depending on the type of production process being promoted, the sponsoring organization may be particularly concerned with encouraging sufficient crowd activity on the crowdsourcing platform. In this case, incentives can be created based on the number of published contributions. These incentives may be for the best contributor in terms of number of posts or number of ideas posted.

In for-profit crowdsourcing projects, both types usually include that the members exchange IP for the opportunity to win a prize.

Participants are often informed that, when the sponsor is a for-profit entity and the crowd is the general public, the sponsoring company owns all intellectual rights. Essentially, members of the crowd are giving up their intellectual property rights in exchange for the opportunity to win the prizes. In contrast, with ‘‘captive’’ or ‘‘closed’’ communities in which individuals have been specially selected to be a member of the community because of their interests and expertise, winners often retain some intellectual property Majchrzak & Malhotra (2013)].

Challenges

Co-creation discussions

Collaborative discourse that leads to generative co-creation is a foundational requirement for innovation.

Generative co-creation is defined as a series of interactions in which different assumptions and perspectives are discussed in order to surface and resolve critical trade offs that were unresolvable previously (Majchrzak & Malhotra, 2013, p. 265).

According to Majchrzak & Malhotra (2013), following tensions need to be addressed:

• Simultaneous encouragement of competition and collaboration
• Idea evolution takes time, but crowd members spend little time
• Creative abrasion requires familiarity with collaborators; yet crowd consists of strangers

Competition vs. collaboration

Options to manage the tension of simultaneously encouraging competition and collaboration include (Majchrzak & Malhotra, 2013):

• Separation of idea generation and idea evolution (e.g., emphasizing re-combination of ideas)
• Offering rewards to participants based both on how well they compete on ideas, and cooperate on contributing to others’ ideas
• Providing multi-valenced rewards (e.g., earning, prizes, career opportunities, self-marketing, appreciation from peers, and appreciation by the sponsoring organization)

Spending enough time

Making not only the idea generation but also the knowledge evolution transparent to the crowd helps increase the time crowd members spend on idea evolution (Majchrzak & Malhotra, 2013):

• Keeping the crowd informed of gaps in knowledge that need to be filled (e.g., allowing for a quick skim to identify recent changes and then jump into a discussion to make the next contribution)
• Keeping the focus on evolving comprehensive solutions, rather than generating more ideas or point solutions
• Increasing the diversity of expertise and the passion for the topic

Needed familiarity

Options for managing the need for familiarity with collaborators for creative abrasion include (Majchrzak & Malhotra, 2013):

• Offering a front stage for minimal confrontation. Here ideas are posted or knowledge evolution is displayed
• Tools specifically geared to discuss disagreements are provided at the back stage

Having front and back stages may help to manage the creative abrasion tension by showing the need for creativity as well as progress on the front stage, while having a back stage where individuals can engage in the creative abrasive process. In this way, participants can be encouraged to engage each other in task-related discussions and deliberations without discouraging others. The creative results are then displayed in the front page section for the crowd to absorb and continue evolving (Majchrzak & Malhotra, 2013, p. 268).

In a Wikipedia context, for example, the article being co-created is in the front stage, where the Talk Page (i.e., dicussion forums) is the back stage.

Q&A

Literature

Arolas, E., & Ladrón-de-Guevara, F. G. (2012). Towards an integrated crowdsourcing definition. Journal of Information Science, 38(2), 189–200.

Brabham, D. C. (2013). Crowdsourcing. Mit Press.

Howe, J. et al. (2006). The rise of crowdsourcing. Wired Magazine, 14(6), 1–4.

Jarvenpaa, S. L., & Lang, K. R. (2011). Boundary management in online communities: Case studies of the nine inch nails and ccMixter music remix sites. Long Range Planning, 44(5-6), 440–457.

Majchrzak, A., & Malhotra, A. (2013). Towards an information systems perspective and research agenda on crowdsourcing for innovation. The Journal of Strategic Information Systems, 22(4), 257–268.