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Assignment 2
Crowdsourcing for Innovation

For the course Innovation Management 2014
Handing in your assignment

This assignment regarding the InnoCentive.com case should be delivered through the Assignment Section on Blackboard before Sunday, April 27, 2014, 23:59 hours. Be sure to use internet explorer when uploading your assignment!

Delivery after this date and time will be rejected. If you have any problems or questions about this assignment or the delivery process, please send an email to: im-iba@rsm.nl

Naming the file you hand in

The name of the file to hand in through the Assignment Section should be in the following format:

Student number- surname- first name-Assignment2-IM2014

Answering the Assignment Questions

You are asked to answer the assignment questions in a copy of this document.
Please use the answering boxes in the assignment. Please provide answers in the following format: Times New Roman, size 10, and single spaced. There is absolutely no necessity to use more space than given in the box (in fact correct answers can easily be given in about half the space in the box).

In the assignment, yellow boxes are reserved for grading purposes. Please do NOT use these for the answers to the questions.

In total you can earn 100 points for this assignment. 10 points are given for grammar and clarity of communication. 30 are given per sub-question.

Notice that there are 4 pages in this document including 3 questions!

Student number:

Surname:

First name:

International BA (IBA) or
Dutch BA (DBA)
Assignment Question 1:

The articles by Nishikawa et al. (2013) and Boudreau and Lakhani (2013), and the InnoCentive.com case provide examples of how crowdsourcing is currently used by organizations. a) Based on the articles and the case, describe the most important reasons why the crowd engages in innovative activities for companies through crowdsourcing platforms? b) Consider the cases of Muji (Nishikawa et al., 2013) and InnoCentive.com. i. Which crowd involvement form do they take? ii. What are the main differences between Muji’s “Sit Down Life” and InnoCentive’s “Dual-Use Off-Grid Illumination Device” challenges in terms of the nature of the crowd (i.e., the members of the crowd) and crowd contribution (i.e., the input crowd provides)?

a) Crowd is extrinsically motivated by the offered rewards, and also intrinsically motivated by satisfaction to solve problems – engage in the process. Also, vaguely mentioned in the case is intrinsic motivation of contributing to the society’s development.

b) i) They are both using crowd contest form, as they are offering rewards to the best ideas made by individuals from the crowd.

ii) In Muji’s ‘Sit down Life’ most of the crowd are consumers of the products, who provide additional ideas by approaching improvable quality of the furniture (i.e., smaller armchair for smaller rooms). Less sophisticated knowledge is needed.

InnoCentive’s ‘Dual-Use Off-Grid Illumination Device’ is a technical product and is mainly aimed at professionals in different scientific fields. The problems are solved by using their specific scientifical knowledge and different point of view.
Assignment Question 2:

In their article, Nishikawa et al. (2013) compare performance of user-generated ideas with internally-generated ideas.

a) Based on the articles and InnoCentive.com case, please explain the main reasons why user-generated ideas might be better than internally generated ideas. b) Based on the findings of Nishikawa et al. (2013), on what performance metrics are user-generated (i.e., crowdsourced) products likely to be superior to internally-generated products? c) Nishikawa et al. (2013) discuss some circumstances under which crowdsourcing might not work. Please provide these circumstances and explain how they might undermine the usefulness of crowdsourcing.

a) First of all, the idea pool is larger. Instead of providing ten ideas, they receive hundreds of ideas.

Secondly, the knowledge pool is larger. The customers use user knowledge and find solutions to the real-life problems experienced in everyday use. They outperform internal specialists in understanding the customer needs.

Additionally, in InnoCentive.com case Solvers are field professionals (for instance, physics or biology), who use their expert specific knowledge. They outperform internal specialists by having more diverse knowledge.

b) On all measured metrics in Nishikawa et al. (2013) crowdsourced products were superior.

- Unit sales were twice as good.
- Sales were more than three times better.
- Gross margin was four times higher.
- Novelty and strategic impact on future products were significantly higher.

Depending on the specific case, above mentioned performance metrics are more likely to be better for outsourced products.

c) Crowdsourcing may not work in the case when there is low (or no) engagement with the customers.

Especially important it is for complex cases (i.e., cars), where leading-edge users need to be engaged, as expertise and additional knowledge is needed.

Otherwise, crowdsourcing will not generate enough implementable ideas and the internally-generated ideas will perform better.

Assignment Question 3:

a) As discussed by Boudreau and Lakhani (2013) involvement of a crowd may be in a competitive or collaborative manner (i.e., crowd members can compete or collaborate with each other). Both have their pros and cons. i. Please describe crowd contests and crowd collaboration communities briefly and explain under what circumstances each form works best. ii. What are the main differences between the two in terms of the output they generate? b) Imagine that you are working in InnoCentive and preparing a report for the CEO about whether or not introduce “collaboration” in InnoCentive. Based on Boudreau and Lakhani (2013) and the discussion in InnoCentive.com case: i. What could be the arguments for pursuing collaboration in InnoCentive? ii. What could be the arguments for not pursuing collaboration in InnoCentive?

a) i. Crowd contest is a crowdsourcing approach which entails competition between the crowd members for the reward published by the company. They produce a large variety of diverse, individual experiments.

Crowd collaboration communities is a crowdsourcing approach, which combines skilful, diverse and competent users to develop the coherent product by adding individual improvements. For instance, in Wikipedia the community adds and approves articles by themselves.

ii) Crowd contests generate ideas that can be implemented only separately. Also, the output usually gives main benefit to the Seeker.

Collaboration communities work together on each others work and can build the single product together – therefore it evolves in more developed product. Also, the output usually is mostly beneficial to the society as a whole.

b) i. 1)It is possible to create better ideas, when more people can exchange and approve the ideas. 2) It gets more engaging and performs additional social functions. It makes higher community feeling. 3) By offering new service options and being more user-friendly InnoCentive.com can foster the popularity and growth.

ii. 1) It is harder to manage intellectual property. 2) InnoCentive.com business model needs to be adjusted,so it would be more suitable to managing groups. Also, it has threat to stuck in between the crowd contest and crowd collaboration, because people can lose part of the intrinsic crowd contest motivation, but not gain the feeling for working for crowd collaborations greater goal, as there will be a lot of different teams. 3) The role of the solver changes more to managerial roles, which can reduce the InnoCentive.com ‘spirit’.

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