Is it possible to use the crowd for Business Model Innovation?

On November 15, 2015, Digikala, one of the largest online stores in the Middle East, launched its first-ever #crowdsourcing contest called “A glance at tomorrow.” What distinguishes this contest from common crowd-based initiatives is that it was aimed at #Business_Model_Innovation (BMI) rather than product and process innovation. Although using the crowd has proven to be an effective way for firms to boost their product and process innovation, its use for BMI is challenging. Before looking at the outcome of Digikala’s crowd-powered BMI, let us first look at some background information.

Our era is characterized by increasingly pervasive digital technologies, which penetrate every aspect of our lives and have dramatically shifted the very nature of innovation processes. The flexibility and affordability of #digital_technology have led to the emergence of distributed innovations and to the democratization of the innovation process. The advance of technology over the past decade has made it much easier for companies to work with the crowd for problem solving. Crowdsourcing is an example of an open innovation practice in which companies tap into the collective intelligence of individuals outside their organization to provide input to their innovation activities. Under the right conditions, crowdsourcing can be a way of opening up a company’s business model towards external partners, and act as a source for problem solving.

Prior research on crowdsourcing almost entirely explores firms’ use of open calls to obtain solutions to their product or process-related technical problems. The crowdsourcing literature has mostly focused on the design of contests, the maximization of social welfare, the incentives of participants, prizes and their amount, entry criteria, the size of the pool of solution providers, the distribution of participation in online creation communities and the determinants of solvers performance.

While there is an abundance of research on crowdsourcing, crowd-powered BMI is an unchartered territory. In an exploratory research, my colleagues and I investigate whether it is possible to engage the crowd in BMI and how companies could make the best use of crowd-powered solutions to improve their BM. We use the case of Digikala and the data of its crowdsourcing contest to address this research question.

Our case-study shows that crowd could indeed contribute to BMI, at least by producing a considerable number of novel and creative ideas. We point to a new form of “division of innovation labor” in BMI, where crowd contribution is more likely to aim at #Value_Proposition and #Value_Delivery as two building blocks of the BM canvas. Firms could complement crowd input by generating in-house solutions for the two other building blocks of the BM canvas, namely #Value_Capture and #Value_Creation. We conclude that companies may need to consider designing and implementing customized crowd-based initiatives to better support their BMI process.

Proposed ideas mapped on a #Business_Model_Canvas

We also look at the effects of the characteristics (age, education, motivation etc.) of crowd-contributors on the quality of proposals for BMI. The results show that the characteristics of the crowd affect the quality of proposals. For instance, those participants aged between 21 and 40 had a significantly higher probability to propose high quality ideas. The education level and academic major played a significant role in the quality of proposals. While participants with high quality proposals were energized primarily by intrinsic motivations, the probability of submitting an innovative proposal was significantly lower for those motivated by the chance of winning the prize. Participants with no prior shopping experience with Digikala had a significantly lower probability of submitting an innovative proposal.

We believe that this case study represents an initial effort toward understanding the value of openness in developing new and innovative business models. It also provides insights for companies on how to actually work with the crowd for BMI.

If you are interested in using crowd for Business Model Innovation, please read our research paper which has been recently published in #R&D_Management. I definitely welcome your feedback, comments and suggestions. 

#Digikala #Business_Model_Innovation #Crowdsourcing #Open_Innovation #Value_Capture #Value_Creation #Value_Delivery #Value_Proposition #Innovation #Business_Model_Canvas #Innovation #Digital_technology