HELSINKI SCHOOL OF ECONOMICS (HSE) Department of Marketing and Management

THE FLIRT MODEL OF CROWDSOURCING Planning and Executing Collective Customer Collaboration

Marketing Master´s thesis Sami Viitamäki Spring 2008

Approved by the Council of the Department ____ / ____ 20____ and awarded the grade_______________________________________________________ ______________________________________________________________

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ABSTRACT
Innovative businesses worldwide are increasingly engaging customer collectives and integrating their customers closely to their operations and decision-making processes through crowdsourcing, soliciting an open invitation to participate in business activities. I set out in my master’s thesis build a framework for open collaboration with digital customer communities – recently termed crowdsourcing – and as a result, the FLIRT model was built. The model is proposed as a functional framework for identifying and understanding the key elements for engaging digital customer communities for company goals. The current thesis is building on previous discussion on collaboration in business by recognized authors such as James Surowiecki and Chris Anderson illuminating the wider phenomenon around digitalization of consumption and the culture of participation that this encourages. Quite naturally, I am also tapping firmly to the academic discourse surrounding modern, open customer collaboration as conducted by e.g. Füller et al., Ogawa and Piller, von Hippel, Jeppesen, Prahalad and Ramaswamy, Lakhani, Nambisan, Bouras and many others. The current thesis aims ultimately to act as a unifying theory for researchers, but one that has solid practical applicability as a comprehensive handbook for marketing managers and executives at large traditional companies but also entrepreneurs and actors working with web native startups that are born directly to global competition and also global customer collaboration. The empirical part of the thesis consists primarily of netnography gathered from public online discussions by industry experts, consultants, researchers and entrepreneurs, and secondly of thematic, illustrative case examples drawn from the most talked about crowdsourcing companies at present. The results show that the FLIRT model indeed is a relevant, valid and timely way of approaching the challenges posed by wide-audience customer collaboration utilizing digital channels – or crowdsourcing – as it is now commonly known.

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TIIVISTELMÄ
Innovatiiviset yritykset kautta maailman ovat kääntäneet katseensa tiukasti asiakkaiden entistä laajempaan, täysin avoimeen osallistamiseen niin operatiivisessa toiminnassa kuin päätöksenteossakin digitaalisten yhteisöjen ja yhteisönkaltaisten palvelujen kautta. Päätin Pro Gradu -tutkielmassani keskittyä rakentamaan viitekehyksen avoimelle asiakasyhteisöjen osallistamiselle (kansainvälisesti tunnettu nimellä crowdsourcing) ja tämän työn tuloksena FLIRT-mallini syntyi. FLIRT-malli tunnistaa ja auttaa ymmärtämään avainelementit, joita hyödyntämällä digitaalisten asiakasyhteisöjen osallistamisen perusedellytykset on mahdollista ymmärtää. Tämä tutkielma rakentaa aiemman ymmärryksen päälle nojautuen laajemman, kulutuksen digitalisoitumisen ja osallistumisen kulttuurin valottamisessa tunnustettujen kirjailijoiden, kuten James Surowiecki ja Chris Anderson, töihin. Luonnollisesti pohjaan vahvasti myös modernia, avointa asiakasosallistumista tutkivaan akateemiseen kirjallisuuteen sellaisten tutkijoiden kuten Füller, Ogawa, Piller, von Hippel, Jeppesen, Prahalad ja Ramaswamy, Lakhani, Nambisan, ja Bouras töiden kautta. Tämä tutkielma tähtää lopulta olemaan eräänlainen kokoava teoria, jolla on kuitenkin erittäin vahva sovellettavuus käytännön toimintaan. Pääkohdeyleisönä ovat alan tutkijoiden lisäksi markkinointipäälliköt ja johtajat perinteisissä, suurissa yrityksissä, mutta myös yrittäjät ja muut toimijat pienissä mutta jo globaaleissa web-natiiveissa yrityksissä saavat siitä hyödyllisen käsikirjan. Tutkielman empiirinen osa koostuu pääasiassa netnografiasta joka on toteutettu alan asiantuntijoiden käymien julkisten online keskustelujen tutkimuksella ja toissijaisesti käytäntöä valottavilla case-esimerkeillä joilla selvitetään spesifimpiä haasteita ja miten alan tämän hetken johtavat yritykset niihin vastaavat. Tulokset osoittavat, että FLIRT-malli kokonaisuudessaan on relevantti ja

ajankohtainen tapa lähestyä modernia, laajaa ja avointa asiakasosallistamista ja sen mukanaan tuomia haasteita.

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LIST OF TABLES AND FIGURES
TABLES Table 1. The Benefits of Virtual Customer Research (Dahan & Hauser, 2002) Table 2. Summary of customer participation in driving company action Table 3. The foundation works of the FLIRT Model and their respective areas of contribution Table 4. Alternatives for collective customer commitment (Ogawa and Piller 2006) Table 5. Summary of the FLIRT model – FOCUS Table 6. Summary of the FLIRT model – LANGUAGE Table 7. Summary of the FLIRT model – INCENTIVES Table 8. Summary of the FLIRT model – RULES Table 9. Summary of the FLIRT model – TOOLS Table 10. Trust hierarchy and social media (Avenue A Razorfish, 2007) Table 11. Types of revenue in crowdsourcing projects. Table 12. Sales targets and channels in different crowdsourcing communities Table 13. Different kinds of organizational challenges recognized in the FLIRT model Table 14. The different scopes of crowdsourcing Table 15. Community and time orientation in crowdsourcing Table 16. Some intrinsic incentives in the FLIRT model Table 17. Some extrinsic subjective incentives in the FLIRT model Table 18. Some extrinsic objective incentives in the FLIRT model Table 19. Four ways to manipulate the crowd (Wired 2007) Table 20. The realization of propositions – FOCUS Table 21. The realization of propositions – LANGUAGE Table 22. Realizations of propositions – INCENTIVES Table 23. Realizations of propositions – RULES Table 24. Realizations of propositions – TOOLS Table 25. Previous academic work and the Focus element of the FLIRT model Table 26. Previous academic work and the Language element of the FLIRT model Table 27. Previous academic work and the Incentives element of the FLIRT model Table 28. Previous academic work and the Rules element of the FLIRT model Table 29. Previous academic work and the Tools element of the FLIRT model FIGURES Figure 1. Categorization of communities (Orava & Perttula, 2005) Figure 2. Traffic development of Wikipedia.org (Alexa) Figure 3. Traffic development of the once popular subservient chicken marketing site (Alexa) Figure 4. Consumer creation on select Web 2.0 services (Hitwise 2007) Figure 5. Cross-examining Scope with the constraining attributes Figure 6. Ringside startup’s initiative failed because the scale of activities to undertake was too large Figure 7. Kathy Sierra’s description of the declining benefit of increasing customer control V 19 41 42 78 83 84 85 10 25 30 40 59 59 60 60 61 70 72 73 77 81 90 104 106 108 117 132 133 134 135 136 153 155 156 158 159

Figure 8. Cross-examining Scale with the constraining attributes Figure 9. Cross-examining Depth with the constraining attributes Figure 10. Naked & Angry front page Figure 11. Gene Smith’s model of types of social interaction on the web Figure 12. Sonera’s Itekki Tekisin -campaign with the fictional board of judges Figure 13. A LinkedIn page with the profile completedness bar on upper right Figure 14. List of quality standards on iStockphoto’s site Figure 15. Basic walkthrough at iStockphoto Figure 16. Instructions and tips on iStockphoto Figure 17. List of decline reasons of Threadless Figure 18. Dein Design’s design contest hosted on Flickr Figure 19. Threadless’ proprietary service Figure 20. Svenskafans video contest as a hybrid service Figure 21. Amazon’s visual bookshelf on Facebook Figure 22. Dell’s ideastorm Figure 23. Lego Digital Designer Figure 24. Red Bull’s Art of the Can happens online but the sculptures are real Figure 25. The FLIRT elements according to their strategic level Figure 26. The FLIRT elements and sub elements in the FLIRT framework

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TABLE OF CONTENTS
Abstract ....................................................................................................................... I Tiivistelmä ................................................................................................................ III List of tables and figures ........................................................................................... V Table of contents.....................................................................................................VII 1. Introduction ........................................................................................................1 1.1. Background....................................................................................................1 1.2. Objectives of the study ..................................................................................2 1.3. Research Design ............................................................................................3 1.4. Key concepts..................................................................................................4 1.5. Structure of the Study ....................................................................................5 2. Customer Participation, Open Collaboration and Co-creation .....................6 2.1. Traditional Market Research and its Shortcomings.......................................6 2.2. Lead users ......................................................................................................8 2.2.1. Lead User Performance ...........................................................................9 2.2.2. Innovation Toolkits .................................................................................9 2.3. Modern Research Methods ..........................................................................10 2.4. Towards an Open Collaboration and Co-Creation Paradigm ......................11 2.4.1. Digitalization of consumption and the Long Tail..................................11 2.4.2. The Wisdom of Crowds.........................................................................12 2.4.3. Digital Communities and Social Networks ...........................................15 2.4.4. Crowdsourcing ......................................................................................20 2.5. Founding collaboration and co-creation concepts behind the FLIRT model21 2.6. Summary: Customer Participation and Collaboration .................................24 3. The FLIRT Model of Crowdsourcing.............................................................26 3.1. Introduction to the FLIRT model.................................................................26 3.2. Focus............................................................................................................31 3.2.1. The Constraining Attributes ..................................................................31 3.2.2. The Defining Attributes.........................................................................38 3.3. Language......................................................................................................43 3.3.1. Social Objects........................................................................................44 3.3.2. Social interaction ...................................................................................45 3.3.3. Organization presence ...........................................................................46 3.4. Incentives .....................................................................................................47 3.4.1. Intrinsic incentives.................................................................................48 3.4.2. Extrinsic subjective incentives ..............................................................49 3.4.3. Extrinsic objective incentives................................................................51 3.5. Rules ............................................................................................................52 3.5.1. Rules of access and initiation ................................................................52 3.5.2. Rules of interaction and conduct ...........................................................53 3.5.3. IP transfer & legal issues.......................................................................54 3.6. Tools ............................................................................................................55 3.6.1. Platform .................................................................................................56 3.6.2. Tools of creation....................................................................................57 3.6.3. Tools of monitoring and action .............................................................58 3.7. Summary of the FLIRT model.....................................................................59 4. Methodology......................................................................................................62 4.1. Research Methodology ................................................................................62 4.1.1. Illustrative Case Examples ....................................................................62 4.1.2. Netnography ..........................................................................................64 VII

4.1.3. Netnography in the current thesis..........................................................65 Findings .............................................................................................................68 5.1. Focus............................................................................................................68 5.1.1. Business Needs......................................................................................70 5.1.2. Customer Participants............................................................................73 5.1.3. Organization capabilities .......................................................................75 5.1.4. Scope .....................................................................................................77 5.1.5. Scale ......................................................................................................82 5.1.6. Depth .....................................................................................................87 5.2. Language......................................................................................................92 5.2.1. Social Objects........................................................................................92 5.2.2. Social Interaction...................................................................................95 5.2.3. Company presence.................................................................................97 5.3. Incentives ...................................................................................................101 5.3.1. Intrinsic Incentives ..............................................................................103 5.3.2. Extrinsic Subjective Incentives ...........................................................104 5.3.3. Extrinsic Objective Incentives.............................................................106 5.4. Rules ..........................................................................................................108 5.4.1. Rules of access and initiation ..............................................................108 5.4.2. Rules of interaction and conduct .........................................................111 5.4.3. Intellectual property and legal issues ..................................................117 5.5. Tools ..........................................................................................................118 5.5.1. Platform ...............................................................................................118 5.5.2. Tools for creation and contribution .....................................................121 5.5.3. Tools for the company.........................................................................126 6. Discussion and Conclusions ...........................................................................130 6.1. Theoretical Contribution............................................................................131 6.2. Managerial Implications ............................................................................138 6.3. Limitations and Ideas for Future Research ................................................140 References ...............................................................................................................142 Books, Articles & Research Reports ...................................................................142 Online Articles.....................................................................................................150 Empirical Material – Blogs, Presentations, Videos, White Papers, etc. URLs ...152 Appendices ..............................................................................................................153 Appendix 1. Previous literature and the FLIRT model .......................................153 5.

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INTRODUCTION

“The secret to getting ahead in the 21st century is capitalizing on people doing what they want to do, rather than trying to get them to do what you want to do” - Glenn Reynolds

1.1. Background
Consumers are increasingly taking part in the processes that used to be the domain of companies and professionals (Anderson 2006). This is in large part facilitated by cheap and fast access to information, production tools as well as distribution and communications channels – predominantly the internet – but also other important changes in consumer behavior, such as the rise of amateurism (Howe 2008, Leadbeater and Miller 2004), are essential to the phenomenon as well. It is thus more than merely the coming of age of the TCP/IP protocol that drives paradigm shift. Instead, the informational economy is at its roots not about the internet but about the basic structures of companies and labor markets and production – developments that have been happening for couple of decades now and constitute a culture fundamentally very different from the industrial economy as Himanen (2004, 422) describes: enterprises are developing into informational enterprises in which R&D and other symbol creation (e.g. marketing) are increasing in importance; labor markets are becoming informational and the role of information processing is increasing; growth is based on innovation (as opposed to based on the internet) As a source of innovation, means of marketing communications and/or creators and traders of content, customers and consumers in general are growing in importance and drawing increasing interest from companies. One of the latest attempts in harnessing the power of masses to company ends is called crowdsourcing. Since the term ‘crowdsourcing’ has emerged only during 2006 and also poses a concept genuinely different from previous well-defined customer-involving frameworks, such as the lead-user theory (e.g. Hippel 2005), academic literature on crowdsourcing specifically is scarce. Also, as many of the recent papers written on crowdsourcing and co-creation focus on explaining certain areas, forms and ways of using it, or solely its effects and benefits, there is a research gap that constitutes

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constructing a comprehensive step-by-step guide for companies being aware of the phenomenon and possessing the required will and mindset to engage in crowdsourcing activities but lacking the information and know-how on where to focus, what initial steps to take and how to execute them. Constructing this kind of normative guide is my primary concern with the current thesis.

1.2. Objectives of the study
The aim of this thesis is, through solid theory building in the first phase and industry expert insight gained through extensive netnography in the second phase and reinforced with illustrative case examples, to construct a common vocabulary, framework and method for systematically approaching commercial efforts in the area of crowdsourcing to be utilized by the academia as well as the executives and management in R&D, marketing and business development. As customers are at present increasingly overwhelmed by invitations to get engaged by companies (McAlexander et al. 2002) worldwide, it is more important than ever to focus such efforts carefully and effectively throughout the whole company-customer end-to-end process in order to enable collaboration with customer communities and avoid decisions that lead to the initiative not gaining lift, defection from the community or conflict with it. For this reason, I decided to set out to build a comprehensive model for crowdsourcing activity starting from the initial decisions made by the company and ending with selecting and setting up the appropriate (online) tools for desired action. Main Research Problem: What are the key characteristics of widely known and apparently successful crowdsourcing efforts? Secondary Research Problem 1: Based on the main research problem, what are the key initial planning steps for companies considering crowdsourcing activities? Secondary Research Problem 2: Based on the main research problem and the secondary research problem 1, what are the steps in executing the planned activities? The current thesis places strong emphasis on community engaging and sociality emphasizing modes of crowdsourcing. I have chosen this, in contrast to

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crowdsourcing projects that focus on outsourcing miniscule tasks to people without facilitating any kind of community (such as projects on Amazon’s mturk or ‘gold diggers’ in World of Warcraft’s virtual game world), since community facilitation enables building deeper relationships with and among customers and thus is better suited to the needs of marketing than simply utilizing the crowds for the execution of routine tasks that are trivial and driven only by small monetary incentives.

1.3. Research Design
I set out in my study to research the topic of crowdsourcing very broadly and wholeheartedly, starting up on a strategic level, continuing on with tactical decisions such as message design and ending up with technical issues. As the concept is quite fresh and still shaping, I felt the need to grasp the whole of the topic from a certain viewpoint instead of focusing deeply into one narrow area. As a detailed quantitative work is out of the question given the breadth of the subject, I will concentrate on conceptual work and defining key issues in enough detail so that separate areas can later be further researched and validated using more rigorous methods. The research conducted in the current study is qualitative but I nevertheless aim to construct a set of normative guidelines to follow when setting up crowdsourcing operations. As regards the empirical study, I took the freedom to utilize my personal experience in working with the subject along with the main empirical material, namely the online discussions, presentations and articles as well as illustrative case examples. In the empirical part, my propositions will be examined through observing whether or not industry experts discussing the topic online find relevant the same key factors that I present in my propositions, and whether or not the manifestations of my propositions are apparent in the activities of the companies selected to provide the illustrative case examples. A majority of my empirical material is produced through a form of netnography conducted among industry professionals and leading thinkers. By utilizing numerous blogs as source of input to my research, focusing more on the most voiced and recognized contemporary thinkers on the blogosphere – and also including other

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sources than blog posts, such as videos, slide presentations and podcasts – I have gathered a solid body of evidence on how this current phenomenon is being slowly given form through collaborative observation, discussions and research. In order to further detail my research, I also utilized illustrative case examples of selected pioneering companies to sharpen the image I have drawn. For this I utilized companies that are widely considered as exemplary in many ways when it comes to customer collaboration and open working models.

1.4. Key concepts
Crowdsourcing Crowdsourcing is a business model where the company outsources to its customers or other non-professionals specific parts of its activities that are traditionally executed by the company itself or professional outsourcing partners. In the current study I focus specifically on crowdsourcing activities that utilize communal and social activity to at least some extent. In the context of this thesis I use also the terms ‘wide audience enduser engagement’ – deriving from Antikainen’s (2007) Wide Audience End-User Requirements Elicitation) – or ‘collective customer collaboration’ – expanding from Ogawa and Piller’s (2006) Collective Customer Commitment – synonymously with the term crowdsourcing, since the mentioned works discuss essentially the same phenomenon. Collaboration and Co-creation Despite the etymological relation to the term outsourcing, crowdsourcing usually, and especially in the B2C area, focuses on building something together with customers instead of simply outsourcing tasks to them, thus aiming to strengthen their ownership and loyalty for the company/brand in question. This is why I use the terms collaboration and co-creation constantly with and in place of the term crowdsourcing. The Wisdom of Crowds A concept according to which an open and diverse participant group will always, given certain preconditions, outperform a closed and limited group in activities that

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require some form of problem solving. Crowdsourcing relies largely on this premise in justifying the opening up of business functions to the public. Social Media Social media is a collective term for all media that facilitate active participation, commentary and collaboration in contrast to passive consumption. Most forms of social media are present in the internet but in a broad sense this covers also participation encouraging media formats also in traditional media. Social media is the main medium through which crowdsourcing is executed. Most prominent manifestations of social media at present are blogs (e.g. Wordpress and Blogger) and microblogs (e.g. Twitter and Jaiku), social networks (e.g. Facebook and MySpace) and more recently social activity aggregators (e.g. Friendfeed). It is important to note that also social services set up by companies in the sole purpose of engaging their customers – from participative campaign sites to full-fledged social networks – belong to the domain of social media. At the time of finalizing this thesis in the Spring of 2008, interest in especially social search and social shopping is on the rise.

1.5. Structure of the Study
The current study runs through in four main phases. First I will take a look into the broader arena of customer participation and co-creation through digital channels in Chapter Two. After this, I will in Chapter Three build my FLIRT model in its basic form in the theoretical part. After describing the research methodology and empirical material in Chapter Four, I will then use the material gathered to strengthen my propositions and enrich the model, building the FLIRT model to its final form in Chapter Five.

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2.

CUSTOMER PARTICIPATION, OPEN COLLABORATION AND CO-CREATION

Companies strive to develop and produce exactly what customers want and when they want it - with no risk of overstocks. Such a situation is difficult to reach and even more difficult to maintain, given the heterogeneity of customers needs, the micro segmentation of product categories and quickly changing preferences. Customer participation in business activities is hardly a novel phenomenon. However, the mode of interacting directly and openly with a wide customer base has recently come to the reach of most companies and is now utilizable with more customer segments. This is because digital media has become a mainstream – or, for the people born in the 1980’s and after, even a primary – medium, web access in the developed world is becoming ubiquitous and new services based on user participation (falling under and promoted as social media or ‘Web 2.0’ services) are gaining widespread acceptance among the consumers. Also, the unique group-forming ability of the internet adds value to online networks over previous communication networks, such as the phone network. For quite some time companies have sought to solve how to best include the customers to their innovation cycle, from traditional market research techniques to involving groups of advanced user-consultants. Wide audience end-user empowerment and the central role of digital channels in the fields of new product development, content creation, marketing activities, etc. – at present most widely known as crowdsourcing (Howe 2006) in business literature – is the latest development in the field of fully user-engaged customer experiences. The following review sheds light on history of customer participation and explores the premises for as well as forms and effects of the latest large-scale shift to open collaboration in the fields of innovation, marketing and content creation.

2.1. Traditional Market Research and its Shortcomings
The traditional form of involving customers to enhance naturally include marketing research that was pioneered by Arthur Nielsen already at the very beginning of the 20th century. This technique in its simplest form offers the company the tools to

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survey its customers for their preferences regarding different alternatives before committing resources to a given decision. While a useful tool for choosing between certain specific alternatives, the common argument against traditional market research and in favor of more advanced and participative techniques of gaining customer insight is that user insight into new product needs and solutions are constrained by their real world experience and thus radical, paradigm-shifting product concepts addressing new and unfamiliar needs are unlikely to emerge. This is demonstrated by e.g. Luchin’s (1942) research on how subjects familiar with complex problem solving strategies cannot use common sense where appropriate. Also subjects who are used to use a device in a familiar way are strongly blocked from using it in a novel way (Dunckner 1945, Birch & Rabinowitz 1951, Adamson 1952). Also success of a group in solving problems is dependent on whether solutions it has used in the past will fit the new problem (Allen & Marquis 1964). The constraint of users to the familiar pertains even in more sophisticated marketing research techniques such as multi-attribute mappings of product perceptions and preferences (Silk & Urban 1978). Also focus groups, although low in cost and providing results relatively quickly while at the same time increasing effectiveness by larger sample size through talking with several people at once (Marshall and Rossman 1999), lack realism because they often rely only on verbal descriptions, underestimate true benefits of truly unique products (how many viral successes on YouTube would have passed a traditional screening test?), and do not measure real buying behavior but instead only attitudes. Test marketing as a research method is on its behalf expensive, time-consuming and subject to noise from competitors' activities (Ogawa & Piller 2006). Because of these drawbacks with traditional market research, many consumer goods companies do not regularly survey their potential customers when introducing new products. As a result of the challenges associated with eliciting customer behavior intentions, many companies merely revise their existing product line, which makes it easier to predict sales, but can lead to missing important emerging trends in the marketplace. Moreover, it hampers the company's ability to surprise its customers with truly innovative products. (Ogawa & Piller 2006)

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2.2. Lead users
Eric Von Hippel outlines in his numerous works the concept of lead users. These are an advanced and enthusiastic group of customers and users of the company’s products whose needs and wants are predicted to dilute into the market place years or months in the future. Furthermore these lead users expect to benefit significantly by obtaining a solution to those needs. While lead users are easily related to high tech products and tech-savvy engineer-users, also in low tech products utilizing users with little technical training, the lead user method has proven to be as much as twice as cost effective while at the same time achieving the results in half the time compared with conventional methods (Herstatt and von Hippel 1992). One of the underlying assumptions behind lead user theory is that using market research to unearth the needs and wants of the largest user group, early and late adopters is insufficient, since these large groups do not possess the expertise to express their needs on a sufficient level of explicitness (von Hippel 1986). Thus market research should be targeted on these lead users, who can, in their urge to themselves fill their unmet needs, provide also product concept and design insight on the side. Besides their value in development, lead users also are known to being helpful in adoption and diffusion of new technology, products and services (Schreier, Oberhauser and Prügl 2007). However, full screenings of user populations can be a costly approach to identifying innovating lead users. Networking is possible if likely innovators in the population are known among many others in that population. Furthermore, a small number of these known lead users can be asked to name likely candidates and ‘snowballing’ can thus be used to identify the lead users relevant to the task at hand (Morrison, Roberts and von Hippel 2000). It needs to be noted that lead user innovation is not solely a business-to-consumer phenomenon. This shift to customer initiated innovation has been happening on an ever larger scale also in the B2B environment, because 1) market segments in all industries are shrinking, 2) both the producers and the customers need iterations before a solution is reached as customers no longer settle for standard solutions, and 3) high quality computer simulations and rapid prototyping tools & computer-

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adjustable production processes enable manufacturing custom products (Thomke and von Hippel 2002; Franke and Reisinger 2002). Also in B2B environment, it is essential that manufacturers can identify and acquire the generally useful improvements made by the lead users and apply them among the general population. 2.2.1. Lead User Performance

Lilien et al. (2002) found in their study on performance assessment on the lead user idea generation process, that ideas generated by lead user processes have forecast sales up to 8 times higher than ideas generated by traditional processes. Also, the rate of introduction of products forecast to grow into a major new product line was significantly higher with lead user methods. Furthermore, lead user methods generated ideas with as good a fit to existing divisional goals and competencies as did traditional methods and intellectual property protection level was as high with both approaches. In conclusion, they state that lead user projects can and do fail, but not more than do traditional projects. Despite the benefits derived from the lead-user approach, it is recognized that while an innovation may have some initial advanced users that can greatly help shaping the product, these lead users might not well represent the potential later users, nor share their perspectives, aspirations and orientation for the product (Haddon 2002). Partly for this reason, methods for elicitation of actual end-user requirements (Tuunanen 2005) were devised. 2.2.2. Innovation Toolkits

From the perspective of modern crowdsourcing, an important concept related to lead users is that of Innovation Toolkits (von Hippel 1998; von Hippel and Katz 2002; Franke and von Hippel 2003). These innovation toolkits do not have to be developed by the company; parts of the innovation kits can also be developed by the userinnovators (von Hippel 1998). Modifying and creating new products via toolkits is nevertheless not a costless activity, and users will employ innovation toolkits only to the extent where their benefits exceed their costs, which include obtaining and learning to use the toolkit, as well as designing and implementing own innovations. This is one important assumption also in engaging wider crowds beyond lead users

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with such tools, as is the case with crowdsourcing. It is essential to note that it typically takes less effort to deploy an innovation by another user than it takes to develop an equal innovation de novo (Franke and von Hippel 2003). It has been shown that users modifying their software are more satisfied than noninnovating users (Franke and von Hippel 2003). Thus, the user must have a need for something different that is strong enough to offset the costs of putting a toolkit to use. When such a need exists, first mover advantages with respect to setting a standard for design language that has a good change of being generally adopted by the user community in that marketplace exist (von Hippel and Katz 2002).

2.3. Modern Research Methods
The latest communication and information technologies are adding new capabilities for rapid and inexpensive active customer input to all stages of the product development and marketing processes. Examples of these new kinds of methods are ranging from more traditional market research methods to full-fledged co-creation schemes. Of these methods, Dahan and Hauser (2002) describe in detail information pump, fast polyhedral adaptive conjoint estimation, web-based conjoint analysis, user design, virtual concept testing and securities trading of concepts (Dahan & Hauser 2002) that utilize the capabilities of web communication as illustrated in Table 1. The web offers to the researchers and marketers solutions to issues in communication (through real-time contact), concepting (through multi-sensory experiences) and computation (through flexible and adaptive research design).
Table 1. The Benefits of Virtual Customer Research (Dahan & Hauser, 2002)
Capability challenges Slow, sequential communication Verbal descriptions Fixed design COMMUNICATION CONCEPTS COMPUTATION Web capabilities Fast, simultaneous communication Rich media Adaptive Response

Also Tuunanen (2005) defines in his dissertation six categories of techniques for elicitation of wide audience end-user requirements that are enabled or enhanced by utilizing digital tools: traditional techniques, prototyping, group elicitation techniques, contextual techniques, cognitive techniques, and model-driven techniques. Also in a B2B setting, engineers nowadays consider internet-based collaborative product development (CPD) systems to be imperative for effective collaboration with

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geographically distributed partners and they are especially emphasizing the need for capturing and distributing relevant knowledge in real time (Rodriguez & Al-Ashaab 2005).

2.4. Towards an Open Collaboration and Co-Creation Paradigm
Even before crowdsourcing, there have been various kinds of business models and strategic concepts focusing specifically on opening up a company’s processes for enhanced effectiveness in innovation, marketing and so forth. 2.4.1. Digitalization of consumption and the Long Tail

On YouTube, 75% of top 20 videos were user-generated on November 15, 2006 (Wang 2006), which tells a story about consumer action beyond simply (illegally) sharing professionally created content. Chris Anderson discusses in his critically acclaimed 2006 book ‘The Long Tail – Why The Future of Business is Selling Less of More’ the factors that underlie the exploding increase in selection of goods and services available through digitalization of the things we consume and their buying and selling. Anderson’s argument goes that there are three ‘long tail’ forces especially at play in today’s world that facilitate the fragmentation of tastes and consumption habits (Anderson 2006, 54-57): democratization of tools of production (e.g. the personal computer); democratization of distribution (e.g. the internet) and more effective connection of supply and demand (e.g. search engines). These same forces are also helping companies rely more on their customers on given challenges: The tools of production available to people in the developed world approach professional grade tools at lower price points, enabling ‘prosumers’ (Tapscott 1996), hobbyists who have the skills and tools to create e.g. professional quality video content. The democratization of distribution allow people to distribute the created goods to each other, but also to companies that might utilize them, for low or no monetary costs. This lowers the customers’ perceived cost of participating in an activity. The more effective search tools, and especially peer recommendations made in interest communities and networks gathering people interested in similar topics, help

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people find participatory projects set forth by companies, be they marketing campaigns set up for entertainment or serious scientific collaboration offerings. Fletcher (2006) hints to the long tail phenomenon, stating that as the consumers' universe is growing more and more fragmented each moment, virtually all brands and products become minority brands and products, and even when global super brands won’t go away anytime soon, minorities matter more in the future. Franke and von Hippel (2003) also talk about the Long Tail when stating that segment variation in user needs and unserved willingness to pay represents the ‘dark matter’ of market need. This dark matter is often significant in amount, but is not currently served by traditional marketing. Charron, Favier and Li (2002) also talk about the mentioned long tail forces, focusing on two areas of change, technology and social behavior. As computing power migrates to the edges of the network, with cheaper hardware and software, the mainstream is granted access into technology’s full power. This eliminates drag in the spreading of social phenomena, and also aging people are joining tech users to support communication with younger kin in the increasingly global society. All these factors raise the potential participant base of crowdsourcing projects and thus make it more appealing an alternative for companies. Howe (2008) still adds to the equation the increase leisure hours for certain groups of people, the dramatic rise in the share of highly educated people within the population, an intellectual and economic framework (open-source software) to draw working models from, the tools available for people to act as autonomous workforces, self-organizing and self-allocating resources. 2.4.2. The Wisdom of Crowds

Why should a company be interested in engaging its customers in the first place then? Isn’t it already paying its employees to answer to the challenges it might encounter? Decentralized network forms are at present out-competing more traditional vertical hierarchies thanks to their speed, adaptability and flexibility afforded by new information technologies. According to Juris (2004), cultural logic of networking orients actors towards building horizontal ties and connections among diverse autonomous elements, free and open circulation of information, collaboration through decentralized coordination and directly democratic decision making and self-directed or self-managed networking. 12

The value of such network systems, according to Surowiecki (2004), lies in the collective wisdom of the crowds. According to his argument, a diverse and large networked community, with smart and dumb members alike with varying skill levels, will in certain setting inevitably the wisdom of crowds is one of most critical concepts underlying modern crowdsourcing. It has been contradicted that a large group of people engaging in groupthink and consensus thinking is bound to perform more poorly than they would as individuals. However, the logic behind Surowiecki’s wisdom of crowds stems not from a consensus decision formed by the group, but from the aggregation and collective evaluation of the ideas/thoughts/decisions of each individual in the group. It could be said that, paradoxically, the wisdom of crowds emerges from each member in the crowd thinking and acting as independently as possible. As he writes in his book: "Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise. Surowiecki lists three kinds of problems that can be solved with methods employing the wisdom of the crowds: Cognition: Market judgment is an example of a faster and more reliable method of deciding on the value of things than the deliberations of experts or expert committees. Coordination: Optimizing the utilization of a popular bar and not colliding in moving traffic flows are examples of coordination issues solved by the crowd wisdom. Cooperation: How groups of people can form networks of trust without a central system controlling their behavior or directly enforcing their compliance is an example of how cooperation problems can be solved through the wisdom of crowds.

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As stated, Surowiecki’s intelligent crowd, especially when confronted with cognition (market) problems, does not ask its members to modify their positions in order to let the group reach a decision everyone can be happy with. Instead, it uses mechanisms – such as market prices or intelligent voting systems – to aggregate and produce collective judgments that represent not what any one person in the group thinks, but rather, in some sense, what they all think. For the first time in history, these judgments; consumption patterns, inclinations, and tastes of an entire market can be measured in real time (Anderson 2006, 106). These are important assumptions and benefits regarding also most cases of crowdsourcing. In Surowiecki’s view, there are four key qualities that make a crowd smart and should thus be addressed when planning crowdsourcing activities, especially when defining the target group: Diversity of opinion: Each person should have private information even if it's just an eccentric interpretation of the known facts. Independence: People's opinions aren't determined by the opinions of those around them, so that they pay attention mostly to their own information, and do not worry about what everyone around them thinks. Decentralization: people are able to specialize and draw on local knowledge. This has also been noted by Lüthje, Herstatt and von Hippel (2005) with lead users, as they suggest in their study that local information affects the functionality of the innovations the user develops. Aggregation: Some mechanism exists for turning private judgments into a collective decision. In the web service era these kinds of systems are technically ever easier to set up or buy from outside. The wisdom of crowds -ideology is not far from the concept of swarm intelligence (Beni and Wang, 1989) applied to business settings, as described by Bonapeau and Meyer (2001). Utilizing swarm intelligence emphasizes flexibility (adaptability to a changing environment), robustness (even when one or more individuals fail, the group can still perform its tasks) and self-organization (activities are neither centrally controlled nor locally supervised). Through self-organization, the behavior of such

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group emerges from the collective interactions of all the individuals. In Bonapeau’s and Meyer’s view, swarm intelligence is best used in logistics as well as complexity and information science and is tangent to the wisdom of crowds –ideology in that it emphasizes the independence of individuals and systems made up of these individuals self-selecting the best ideas. However it doesn’t emphasize the aggregation of decisions, but focuses on global behavior emerging automatically from the decisions of individuals. Swarm intelligence could thus be thought of as being contained within wisdom of crowds. The strength in these kinds of self-directing networks, both with wisdom of crowds and swarm intelligence, lies in their flexibility, adaptability, scalability, self-configuring capacity and survivability (Castells 2004, 5-6). 2.4.3. Digital Communities and Social Networks

Consumers are nowadays openly revealing their wants and needs and motivations on the internet for everybody interested to explore. A completed Facebook profile, with the owner’s photo gallery and status stream, information on the various groups he/she belongs to, already provide masses of information in many ways exceeding data requirements for traditional segmentation and profiling needs. Companies now have an opportunity to listen directly to consumers while striving to create compelling brands, products and messages to meet their needs. The most fruitful insight for companies to gather from these new channels include, according to Nail (2006), those related to category drivers, feature hierarchies and brand perceptions. Previously unparalleled as it is, it's not alone the incredible amount of information available on the web that will tread the principles of traditional institutions, but in fact the social, global and mobile (real-time, contextual and location-aware) aspects of it. Nowadays, practically anyone with a computer or a mobile device and an internet connection is ready to start broadcasting to the entire online world for free. The early 21st century is in addition characterized by explosion of portable machines that provide ubiquitous wireless communication and computing capacity. Such abundant communication technology relates to the heart of the specificity of the human species: conscious, meaningful communication (Castells 2004, 6-7).

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Definition of a community The concept of a community is historically defined as interacting people with common interest living in a particular area. Other more detailed characteristics are e.g. common history, a common policy, being embedded in larger society as well as shared professional, economic or political interests. (Merriam-Webster Online Dictionary) For the purpose of this thesis, it is necessary to separate between two types of communities, the traditional and digital. In fact, the terms refer to the channels used within the communities, but in common language they have come to mean their existing forms in general. (Orava & Perttula 2005). Cova (1997) identified the evolution of a community as a social link in people’s lives that has dramatically changed over the course of history. Traditionally, the social link was something that tied the freedom-seeking individual to the enslaving “bad community”, of which members more often than not all shared the same inevitable fate. Modernity opposed the notion of this contract as a voluntary and reversible choice made by an individual to rationally associate with others in a specified and limited framework. Other definitions of community include Sarason’s (1976, see Antikainen, 2007), which defines the psychological sense of community as a sense of mutual responsibility and purpose; Tajfel (1981, see Antikainen 2007) defined social identity as that part of the individual's self-concept, which derives from his knowledge of his membership in a social group, together with the value and the emotional significance of that relationship; community according to Schlichter, Koch and Chengmao, (1998, see Antikainen 2007) comprises a social grouping with shared spatial relations, social conversations, sense of membership and boundaries, and an ongoing rhythm of social interaction. Indeed, according to recent research, digital social networks (a closely related concept to digital communities) such as Facebook, show a startlingly steady heartbeat-like pattern for social interaction happening online (Golder et al. 2006). Digital Communities Constant expanding and familiarization of the internet has created the necessary preconditions for online communities to become a widely adapted form of communication. The digital community and social network services abound in the 16

internet bring together people around similar interests, hobbies, professions and worldviews regardless of geographical constraints or class boundaries at present span anything from a text-based forum for beagle owners to fully immersive 3D multi-user spaces with fully customizable avatars and virtually unbounded interaction with the surroundings, such as Second Life (Bouras et al. 2005). Digital communities and social networks also play an increasingly important role in people’s lives in the developed world, relationships in digital communities being already held as important as even real life relationships (McKenna, Green and Gleason 2002). Furthermore, social media enables instant, multi-node peer-to-peer communication and through this, rapid generation, development and deployment of ideas. It is this characteristic that makes empowering customers through digital channels and tapping the ‘wisdom of the crowds’. One of the best known definitions of online communities is probably made by Rheingold (1993, 2000; see Antikainen 2007) who argues that "virtual communities are social aggregations that emerge from the net when enough people carry on those public discussions long enough, with sufficient human feeling, to form webs of personal relationships in cyberspace". Rheingold thus emphasizes meaningful relationships between people taking part in such communities. It needs to be noted that personally I consciously avoid the term ‘virtual’ community even when speaking of online communities and networks. Since these communities and networks consist of real people interacting with each other, I argue that the pastime of the people spending time with these services is indeed a lot more ‘real’ than that of their predecessors – the TV-generation consuming fabricated and scripted realities via a passive, one-way medium. As Castells (2004, 30) put it: “everything that is a collective mental experience is virtual, but this virtuality is a fundamental dimension of everybody’s reality”. The web-based community is relieved from the constraints of both space and time (Orava & Perttula 2005). The digital community can be said to reside in a common place – the web – but the members of such community can participate from any physical location in the world with an internet connection. Furthermore, internet technology enables participants to review, comment and contribute to the workings of a community at any time regardless of the other participants’ availability at that given 17

moment. It thus makes both global real-time operation as well as off-sync operation in “un-real” time possible (Himanen 2004). Asynchronous communication thus facilitates temporal flexibility (Hampton 2004). It is also worth noting that even though a virtual community does not have to have a physical counterpart in real life, the internet also supports “glocalization”, the use of global technologies for local use, and thus can strengthen also traditional communities (Hampton 2004). Blogs can also be thought of as communities revolving around shared objects of interest for they allow people to connect to and make friends with people with these mutual interests. Most blogs are records that increase people's ability to share ideas exponentially and on a worldwide scale, allow persons to publish and share information, and allow commenting, for which reason they are more a conversation than a library (Dearstyne 2005). In the factors explaining the ‘friendships’ within the blogosphere, location still accounts for 20% while interests account for 16%, while location and interest combined explain 22% (Kumar et al. 2004). However, the nature of “friend”-ship in social networks and online communities is problematic. As discussed by Golder and Wilkinson (2007), people add friend links for a variety of reasons, not always for reasons that imply the pair are friends in the conventional sense, that they interact socially on a regular basis and share a mutually important connection of trust, affection, shared interests, and so on. Brand communities Some modern crowdsourcing communities closely resemble online brand communities; communities formed around ritualistic consumption of certain brands. Essential brand community relationships consist of (McAlexander, Schouten and Koenig 2002) those between the customer and 1) brand, 2) firm, 3) product in use, and 4) fellow customers (peers in computertalk). Brand communities are largely imagined communities and, as opposed to lifestyle segments or consumption constellations, about one brand, not many (Muniz and O’Guinn 2001). It can be said that modern consumer culture, which has been accused of destroying traditional communities, is now ironically creating new communities.

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Classifications of Digital Communities The digital communities that the users are being involved in vary widely according to their purpose and originator. Piller (2005) divides online communities into two fundamentally different categories: business communities and socially oriented communities. Rizova (2006) has identified and studied four main categories: Instrumental networks, in which work-related content is exchanged, expressive networks, that offer friendship and social support to their members, technical advice networks, used mainly by scientists and engineers, and finally organizational advice networks, which can also be non-work related recommendations networks on who to turn to on a given matter. From another viewpoint, Orava and Perttula (2005), present a more comprehensive categorization of different types of communities. They classify communities in three distinct levels, the first of which comprises the social and interest communities, the second of which defines member-created and commercial communities, and finally breaking the two second-level categories to smaller pieces, as illustrated in Figure 1.

Figure 1. Categorization of communities (Orava & Perttula, 2005)

Plagemann et al. (2006) make a distinction between Content Distribution Networks (CDN) that focus on automated management, delivery and availability of content and Content Networks (CN) that in contrast emphasize creation, modification and active placement of content at appropriate locations in the network to be shared among all other participants. This describes well the difference between the old informationintensive internet and the new, social one.

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Social networks Although closely related, social networks are strictly speaking not exactly same as digital communities. Ross Mayfield, a long-time startup executive and a prominent blogger and speaker has written that whereas traditional online communities are topdown, (online) place-centric, moderator-controlled, topic driven, centralized and architected, social networks tend to be more bottom-up, people-centric, usercontrolled, decentralized, context-driven and self-organizing (Mayfield 2004). In the past five years, social networking sites have rocketed from a niche activity into a phenomenon that engages tens of millions of internet users. More than half (55%) of all online American youths ages 12-17 use online social networking sites, according to a national survey of teenagers conducted by the Pew Internet & American Life Project (Lenhart and Madden 2007). A social networking site is an online place where a user can create a profile and build a personal network that connects him or her to other users. Differentiating social networks from traditional online communities is the fact that social networks emphasize navigation, exploration and discovery by people and their personal relationships and mutual interests, tastes and views whereas in more traditional online communities navigating through the service is more based on category, issue or topic in itself. While mediated (e.g. social networks) and unmediated publics (e.g. physical public spaces) play similar roles in people's lives, the mediated publics have four properties that are unique to them: persistence (What people say sticks around); searchability (by content but nowadays also by status and location); replicability (as digital information can be easily copied); and invisible audiences (as lurkers in social networks are invisible both in presence at the time of the communication but also after that in time) (Boyd 2007). 2.4.4. Crowdsourcing

One of the latest developments aiming to harness the masses is called crowdsourcing. Crowdsourcing outlines a business model similar to outsourcing, but instead of relying upon salaried professional workforce, crowdsourcing companies use low-paid or unpaid amateurs who use their spare time to e.g. create content, solve problems, or

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engage in corporate R&D (Boutin 2006a). Crowdsourcing companies attempt “to partly or fully replace selectively hired, trained and managed workforces with mass volunteer participation” (Wikipedia, a crowdsourced encyclopedia, on Crowdsourcing). It nevertheless needs to be noted that a large share of customerengaging methods are more forms of co-creation and not about simple transfer or outsourcing of activities to customers (Prahalad and Ramaswamy 2004a, 16). In contrast to bottom-up ad-hoc communities, such as those engaged in many open source projects where independent actors combine their powers to create a common good for no profit, people participating in crowdsourcing willingly and knowingly give up their ideas to companies for these to commercialize and sell (Boutin 2006a). It thus relies on the customers’ willingness to give up their ideas relatively cheaply or for free for the benefit of seeing them going into production or being distributed on a wide scale Although not a completely new idea (P&G, for example, has worked with crowdsourced innovation methods for more than ten years), crowdsourcing is now becoming a widely recognized phenomenon and gaining global scale as advances in technology allow also non-technical people to participate in online projects as already discussed in Chapter2.5.1. In particular, the recent technological, social and business models collectively labeled Web 2.0 are enabling faster, easier, richer and more immersive participation in online activities. Technological advances in other areas too, from product design software to digital video cameras are breaking down the cost barriers that once separated amateurs from professionals (Howe 2006). Technology and social changes are creating a potent mix of forces that will transform the way all businesses - not just media firms - operate, create products, and relate to customers (Charron, Favier and Li 2002).

2.5. Founding collaboration and co-creation concepts behind the FLIRT model
Previous literature describes numerous ways with which to engage customers and customer communities in co-creation and presents several models and checklists for different customer collaboration efforts. Some of these have had great influence in the building of my FLIRT model of crowdsourcing.

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Open Innovation Chesbrough (2003) calls for open innovation to enhance processes for creating new technology. In his view, companies are better off opening up their innovation processes and getting external input for their offerings in their current market as well as gathering the courage to move into new businesses and markets with novel offerings should they not be compatible with existing strategy. Also, he advocates the need to ‘let go’ of innovations that the company can’t market monetize to be used by other companies. The rationale for opening up despite increased risk in Chesbrough’s view is to identify, understand, select from and connect to the wealth of external knowledge, fill in the missing pieces of knowledge not being externally developed, integrate internal and external knowledge to form more complex combinations of knowledge, and generate additional revenues and profits from selling research outputs to other firms for use in their own systems. DART Model of Co-creation Prahalad and Ramaswamy (2004b) outline in their work the DART model for customer co-creation and explore some issues with collaboration and strategy. Starting with Dialogue, the writers emphasize interactivity, engagement, and a propensity to act on both sides. DART model’s dialogue is more than simply listening to the customer as it implies shared learning and communication between two equal problem solvers, creating and maintaining loyalty. Access is the second element in the DART model and begins with information and tools. For example, Taiwan Semiconductor Manufacturing Company has given its customers access to data on its manufacturing processes, design and fabrication libraries and quality processes, granting also smaller players the access to a large knowledge base and reducing the investment needed to participate effectively in the semiconductor business. Risk Assessment is third in line and deals with analyzing risk incurred by the company from increased exposure to but also risk of a liability for the consumer for participating in collaboration. The final element of the DART model Transparency, referring to the fact that in the increasingly networked world, companies can’t rely on secrecy any more but must respect their audience by being open and honest about their activities.

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Virtual Customer Communities Nambisan (2002) identifies three core challenges for companies in utilizing customers as a source for new product ideas: firstly the right participants need to be selected and ties with them need to be established.; the second challenge is the creation of appropriate incentives to foster customer willingness to contribute new product ideas; thirdly, customer knowledge need to be effectively captured. The operational challenges of collaboration in Nambisan’s work deal with increased project uncertainty, higher level of information required by the customers and their integration with the company’s internal teams. To tackle these challenges, Nambisan deals in his work on Parameters for Virtual Customer Communities with four themes specifically: interaction, knowledge creation, customer motivation and finally integration. Web-based Virtual Collaboration Bouras, Igglesis, Kapoulas and Tsiatsos (2005) define five basic requirements for the development of web-based virtual collaboration communities and further explains ways to enhance their strength and cohesiveness. In his view, factors critical to collaboration in digital environments include common purpose, common cultural context, physical or virtual co-location, voluntary participation, and multiple, shifting and overlapping membership and participation. Community Based Innovation Füller, Bartl, Ernst and Mühlbacher (2006) answer in their four key questions on Community Based Innovation: determination of user indicators defines which attributes the consumers should have to be able to support the innovating company in the development task; community identification answers the question of within which online community these consumers can most probably be found; interaction design seeks to assist designing the interaction efficiently regarding the particular development task and the individuality of the selected online community; finally, user access and participation needs to be communicated and encouraged in the right manner.

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Communities of Co-design Piller, Schubert, Koch and Möslein (2005) already talk about modern crowdsourcing as they write about Mass Confusion in customer co-design. They see that co-design poses three major challenges to companies and customers: 1) burden of choice as excess variety may result in an external complexity and users might be overwhelmed by the number of options; 2) matching needs with product specifications as customers often simply lack the knowledge and skills to make a "fitting" selection, i.e., to transfer their personal needs and desires into a concrete product specification; and 3) information gap regarding the behavior of the manufacturer as there is uncertainty as to whether the company will actually respond to its customers’ activity. To overcome these challenges Piller et al. propose communities of co-design, which reduce mass confusion by 1) generation of customer knowledge to provide a better starting (pre-) configuration; 2) support of collaborative co-design fostering joint creativity and problem solving; and 3) building of trust and the reduction of the perception of risk. Ogawa and Piller (2006) later write about reducing business risk with collective customer commitment.

2.6. Summary: Customer Participation and Collaboration
In sum, we could say that the practice of gaining customer insight started with sampling the average customer opinion through traditional market and marketing research where the company dictated the language and topics and customers were seen as passive providers of answers to company-determined questions. This approach has been later supplemented with lead-user thinking where advanced lead users are hand-picked and while these lead-users could at best have a very active role and substantial influence on the decisions of companies that are utilizing them, they are costly to find, are limited to small numbers and are usually visible only to the company’s internal teams. Modern web-mediated marketing research methods allow for larger populations to participate and more active adaptation and configuration of the research methods according to the respondent. The dialogue is however still dictated by the company and results are usually visible only to the company. Now the interest is again turning to the whole customer base, while companies are realizing that the greatest value lies in interacting with – and letting the customers interact with each other in – a diverse customer community with active lead users and more passive 24

average customers alike, with each group having their own role to fill in the continuous marketing conversation. In this conversation customers are treated as equal partners, the ways they can influence decisions are designed to be open-ended to allow unexpected results, and their contribution is open and public in real time. These developments are summarized in Table 2.
Table 2. Summary of customer participation in driving company action
Participant base Traditional marketing research Lead Users Modern marketing research Limited sample Small elite group Potentially wide Nature of discourse Company dictates Lead users can have substantial freedom in driving discussion Allows for personalization and adaptation according to respondent but still company dictated Customers drive discussion within given guidance Visibility of contribution Only for the company Only for the company and the group of lead users Only for the company Role of Customers Passive respondents Active participants More active cocreators of knowledge

Open collaboration and crowdsourcing

Open

Open and public

Active and equal participants

One fundamental difference between traditional market research and new methods of interacting with the customers is that before the web, companies needed to use a sample of customers to represent the whole population and they needed to rely on their explicit answers (or observed behavior often in a non-authentic setting). At the moment, companies can utilize fully open environments to engage significantly larger crowds for research, or indeed measure the actual behavior of their whole customer base in real time on the web.

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3.

THE FLIRT MODEL OF CROWDSOURCING

In the following I will construct the FLIRT framework of crowdsourcing and collective customer collaboration. This model is in many ways a fusion of the collaboration models summarized in the previous chapter, supplemented and further detailed with yet other academic works. The need for this kind of model arises, since none of the previous models really tackle the problem from a start-to-finish, strategyto-execution perspective, but instead focus only on a few issues at a time. The FLIRT model is a comprehensive, step-by-step problem-solving tool for companies and addresses issues from strategy to tactics as well as technical issues.

3.1. Introduction to the FLIRT model
The FLIRT model views the phenomenon from the perspective of a company considering closer collaboration with customers and online customer communities. It suggests a set of five main elements – Focus, Language, Incentives, Rules and Tools – that need to be considered and established in order to inspire desired action in the customers. Focus deals with strategic level questions and seeks answers to three main questions: why, who and with which organizational resources and capabilities, through answering these issues, the scope, scale and depth of the collaboration are defined on a high level. The why refers to business needs of the company that the crowdsourcing effort should answer and derives primarily from the rationale for open innovation (Chesbrough 2003), and Piller et al.’s (2005) reasons for fostering communities of codesign. The who part needs to be addressed in order to determine who the company primarily wants to engage and is founded on the other hand on Füller et al.’s (2006) determinants of desired user features and on the other Surowiecki’s (2004) requirement of diversity in the participant base as well as Piller et al.’s calling for open participation reduce mass confusion. The resources and capabilities question relates to the organizations capabilities and resources. It has been noted by Füller et al. (2006) that succeeding in collaboration requires dedicated resources and effort and ensuring these is also one of Prahalad and Ramaswamy’s key challenges. Also Nambisan (2002) writes that the company needs to be able to cope with the added

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uncertainty and risk and also that the cognitive compatibility of the firm’s internal team with the external participants is necessary. The three abovementioned questions, why, who and with which resources and capabilities, can be thought of as constraining attributes since they set boundaries to how the crowdsourcing effort should be defined. The next three attributes are the scope, scale and depth of the crowdsourcing effort, and these attributes can be defined as the defining attributes, since they determine the visible actions to be taken. The scope of the crowdsourcing effort deals with where in its business does the company want to utilize crowdsourcing. Practically all the previous collaboration frameworks consider this aspect to some extent, as they deal with different areas and alternatives for benefiting from collaboration. The scale refers to both the extent to which the crowdsourcing activity spreads within the company from its core locus, but also the collaborative venture’s time scale and temporal structure (Nambisan 2002). Depth is the final sub element of Focus and is seen as important as Nambisan (2002) as well as Prahalad and Ramaswamy all consider degree of user access and control a critical issue, because of which also risk assessment (Prahalad and Ramaswamy 2004a) of growing uncertainty is necessary. Language issues arise after the questions what, who and with which resources have been answered. I use ‘language’ in a broad sense here, since language in its basic meaning is naturally quite easily determined by country and target market in question. Language issues in the FLIRT model are based on Prahalad and Ramaswamy’s (2004a, b) call for active and interactive dialogue that goes beyond simply listening and involves also acting. Transparency is also one Prahalad and Ramaswamy’s crucial requirements when it comes the mindset of the company initiating the dialogue. Also the common purpose and common cultural context binding the participants together as presented by Bouras et al. (2005) and communication of the collaborative offering through marketing communications or peer recommendations are part of the Language element. Incentives arise from the need to motivate customers or other participants. Nambisan (2002) argued that these motivations have to do with product-, community-, and medium-related benefits. However, in the Incentives part of this chapter we are taking

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a bit broader view here and dividing incentives differently to achieve a more comprehensive view on incentives. Rules in the FLIRT model are inspired by and founded on e.g. Nambisan’s (2002) Nature of customer identity, nature of coupling the community with the company’s inner workings and role/process transparency therefore also being the explicit fulfillment of Prahalad and Ramaswamy’s (2004a, b) promises of transparency made in the Language phase. Rules also deal with rules of (voluntary) participation (Bouras et al. 2005), setting the requirements for entering the community and can also help realize the requirement of independence of opinion among the participants, a necessary requirement for Surowiecki’s (2004) wisdom of crowds to emerge. Rules thus spell out the guidelines with which the participants – both the company and its customers – need to abide. Tools are the last stage to address in the FLIRT model and deals with setting up the environment for implementing crowdsourcing activities. Tools of the FLIRT model comprise the (physical or, in the majority of the cases,) virtual co-location (Bouras 2005) of the participants and company representatives, i.e. the platform for collaboration. Be it noted that in addition to building the platform by itself, the company can opt to join already existing communities for collaboration, in which case community identification (Füller 2006) in order to find relevant participants comes into question. Especially in today’s world where consumers are joining many kinds of digital communities and networks for different needs and purposes, the question of multiple, shifting and overlapping membership and participation becomes relevant, and the so-called social portability, to which other communities can the customer take the planned crowdsourcing community with her. In addition to the platform itself, issues of interaction design for the tools of creation (Füller et al. 2006) need to be addressed. Furthermore, tools also include the means to aggregate created knowledge (Surowiecki 2004, Nambisan 2002) and convert it into meaningful action within the company (Nambisan 2002). I have with the previous discussion laid a foundation for the FLIRT model utilizing a few key works as the basic building blocks. Table 3 summarizes the founding building blocks of the FLIRT model as they were discussed above. In the following, I

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will make an extended effort to further elaborate and justify the different parts of the FLIRT model.

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Table 3. The founding works of the FLIRT Model and their respective areas of contribution
Open Innovation (Chesbrough 2003) DART (Prahalad and Ramaswamy 2004a, b) Focus - Rationale for open collaboration - Sufficient access for the customers - What it takes from the company to collaborate - Risk assessment - Temporal structure - Interaction orientation - Degree of user control - Cognitive compatibility - Ability to cope with added risk Language Incentives Rules Tools

- Active and interactive dialogue

- Transparency in the company’s actions

Virtual Customer Community (Nambisan 2002)

- Productrelated benefits Communityrelated benefits Medium-related benefits

- Nature of customer identity - Nature and degree of coupling - Role/process transparency - Voluntary participation

- Knowledge acquisition and conversion support

Web-based Virtual Collaboration (Bouras et al. 2005)

- Common purpose - Common cultural context

Community Based Innovation (Füller et al. 2006) Communities of Co-design (Piller et al. 2005)

- Determination of user indicators - Dedication of resources and effort - Generation of customer knowledge - Fostering joint creativity and problem solving - Building of trust and reduction of perception of risk - Requirement of diversity in the participant base

- Communication of collaborative offering through marketing communications or peer recommendations - Everybody needs to be able to participate

- Physical or virtual colocation - Multiple, shifting and overlapping membership and participation - Community identification Interaction design

The Wisdom of Crowds (2004)

- Requirement of independence of opinion of the participants

- Requirement of the aggregation of contributions - Requirement of the decentralization of organization of labor

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3.2. Focus
Before we can even start to answer the question How, we need to establish what we want to do and why do we need to do it. Focus is the first of the five principal FLIRT elements. As already discussed, it is broken down into six attributes. The three defining attributes are 1) Scope, 2) Scale and 3) Depth. In addition to the defining attributes, there are three key considerations that impose constraints to conducting crowdsourcing and might require additional development before advancing further. These constraining attributes are 1) Why to collaborate, which can be translated to shorter form Business needs, 2) Who to engage, which essentially deals with Customer participants and 3) With which resources and capabilities will this be made happen, which leads us to the attribute Organizational Capabilities. We will next be going through both the defining and constraining attributes of the Focus element in more detail, starting from the constraining elements. 3.2.1. The Constraining Attributes

From Prahalad and Ramaswamy’s (2004a, 197-199) five key questions to managers, two strike me as essential in this first planning phase; why to collaborate and what does it take (from the organization) to succeed in collaboration. In addition, collaboration and co-creation in the form of crowdsourcing (and in its other forms as well) is never a unilateral endeavor but instead highly reliant on customer capabilities (Afuah, A. 2000, Lengnick-Hall 1996). Founding on these principles, I feel the need to steer focus in these matters already at this the earliest phase of planning crowdsourcing activities. I thus introduce the constraining elements of the Focus elements as being 1) Business Needs, 2) Organization Capabilities and 3) Customer Participants, which are covered next. Business needs Crowdsourcing being a mode of conducting business, all crowdsourcing activity needs to arise from sound business needs, i.e. why it would be beneficial for the company to engage in crowdsourcing. Chesbrough’s (2003) rationale for open

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innovation applies here as discussed in Chapter2, but we will here further elaborate the different reasons for why a company should be interested in crowdsourcing. The literature has long identified the need to recognize successful innovation process as a bottom-up process, driven by relatively low-level technical inventors and market innovators (Day 1994; Colarelli O’Connor & Rice 2001), rather than being planned and administered from the top. For this reason, the leading companies strive to create and nurture an innovation-fostering organizational culture. Nevertheless, out of every 10 R&D projects, five are complete flops, three are abandoned, and only two ultimately become commercial successes (Braun 1992, Ogawa & Piller 2006). In the constant quest for superior ideas, lower costs and better risk management, companies are increasingly turning their attention to the average customer, or indeed their whole customer base, potential or realized, to perform autonomous and self-managed functions on behalf of and guided by the company. Roughly, the benefits gained from customer-engaging activities fall into three categories: direct revenue from customers, direct revenue from 3rd parties (advertising funded, partnering, etc.) or indirect revenue (gaining customer insight and strengthening relationships) (Orava and Perttula 2005). There is a vast body of literature exploring the topic of why to collaborate with customers, and in the following we will look into these reasons. The first and nowadays very much touted reason has to do with the changing marketing environment. Where customers are nowadays hyperconnected in real time, marketers simply can’t afford to be left out of the loop. The effects of this shift in communication methods and style results among other things in eroding brand loyalty, as customers are readier than ever to switch brands should their expectations be left unmet (Charron et al. 2002, Schum C, Gould R. 2007). In addition, consumers’ trust in advertising via traditional channels is falling, as the internet is now the only form of media with trust in the channel on the rise (Charron et al. 2002) as it offers them a way to directly interact with other customers and either validate or invalidate marketing information (Beelen 2006). Contemporary consumers equipped with random access to any kind of information are more independent, more self-reliant and self-sustaining (and in effect less dependent on institutions, professionals and experts) in their decision-making (Charron et al. 2002, Pitt et al. 2002). However, in contrast 32

to many predictions about the death of branding, it is suggested that in the modern marketing environment, importance of branding is indeed increasing (Chen S. 2001, Hong-Youl 2004). Branding simply requires new tools and methods in modern business-to-consumer-to-consumer networks. A brand nowadays can act as an effective facilitator and platform for valuable online customer-to-customer interactions that also create unique value for the marketing organization (Gruen et al. 2005). For example, sharing hedonistic experiences in an online community enhances customers’ enjoyment of these shared experiences (Ragunathan and Corfman 2006) resulting also in positive brand experience. A multiway experience exchange can also help the company learn faster with its customers (Gruen et al. 2005). A brand can also work as an enabler of customer-to-customer support and information sharing; customer-to-customer interactions means longer lasting interaction and more credibility (Rosenbaum and Massiah 2007, Bickart and Schindler 2001, Charron et al. 2002) – also for the facilitating brand. According to Bagozzi & Dholakia (2002), C2C exchanges can be of economic value (sharing ideas - reduced costs / increased profits), social value (sharing stories or good times), or personal value (providing encouragement). Utilizing communities as a method for branding can thus act as an image enhancer (Füller et al. 2006). As the discontinuities in the marketing environment destroy boundaries of how businesses and consumers relate to each other, there is increased opportunity as well as demand for experimentation. Co-creation with customers is one important way of de-risking these experimentations (Ogawa and Piller 2006, Prahalad and Ramaswamy 2004a) as customer interaction has a positive impact on new product and service performance (Alam 2004, Füller et al. 2006). Engaging large customer crowds also helps in evoking interest creating buzz for new products and thus fast scaling of successful experiments and rapid expanding the market becomes easier (Füller et al. 2006, McAfee 2006, Anderson 2006, Prahalad and Ramaswamy 2004a, 72). Lowering costs is one key reason for outsourcing and so it is also for crowdsourcing. Sensing the market in real time enables spotting emerging trends early on and produces less waste through ‘failing cheap’ early on (Cothrel 2000, Füller et al. 2006, Charron et al. 2002). Research shows that savings in cost and time are largest with collaboration in the fuzzy front end (Reid and Brentani 2004) but also at later stages 33

through decreased number of prototypes and lower expenses on marketing research (Füller et al. 2006, Charron et al. 2002), speeding up the whole development cycle (Füller et al. 2006, Prahalad and Ramaswamy 2004a). Customer to customer support also work to lowering costs through reducing the required staff for the same task (Cothrel 2000). Facilitating access to intellectual resources and knowledge previously inaccessible to the company allows recognizing and adopting innovations (Jeppesen and Fredriksen 2006) and finding novel and unconventional solutions to existing challenges (Prahalad and Ramaswamy 2004a, Lakhani and Jeppesen 2007) or simply gives the company the opportunity to tap into idle customer resources for more routine tasks (Cothrel 2000). Establishing deeper customer relationships and strengthening these relations, thus increasing customer retention (Füller et al. 2006, Muniz and O’Guinn 2001) is one key area where benefits through collaboration are sought. Through more effective feedback (Cothrel 2000) deeper relations also the company’s understanding of its customers, their motivations and their behavior is enhanced (Füller et al. 2006, Cothrel 2000). As consumer tastes splinter and fragment, the internet ever more effectively enables matching the ‘market of one’ with a ‘product of one’. The emergence of ‘smart’ markets made up of demanding customers with widely differing tastes will require the development of information-intensive strategies and "smart" products, i.e., product and service offerings that adapt or respond to changes in their environment as they interact with consumers (Berthon, Hulbert, Pitt, and Leyland 1999). When a large body of customers is utilized to extract information of making better products for each one customer, and the customers themselves play an active part in the process, creating favorite lists, writing reviews and making recommendations, we can already talk of crowdsourcing in a modern sense. Ultimately of course, engagement with customer communities through collaboration and co-creation always targets at increased revenue for the company but this can result also directly from collaboration activities (Cothrel 2000, Antikainen 2007,

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Charron et al. 2002), as e.g. existing customer base can be expanded through social media potentially faster than with traditional forms of communications. Proposition 1a: Business needs are a key consideration in planning crowdsourcing activities Customer Participants The proponents of modern customer collaboration often emphasize utilizing as wide a customer base as possible. While Nambisan (2002) underlines in his work the selection of customer innovators, he acknowledges the need for ensuring involvement of a diverse set of customers. Piller (2005) proposes that the fact that all or almost all customers are able to participate in communities of co-creation is a key prerequisite in reducing mass confusion – burden of choice, matching needs with specifications and information asymmetry – resulting from co-creation situations. In Piller’s communities for co-design the focus of the collaborative design tasks is geared towards creation of trust, sharing experiences, and often fosters aesthetic creativity instead of joint solving of technical problems. These communities reduce the customers’ confusion by a) generating customer knowledge to provide a better starting point for the company’s activities; b) fostering joint creativity and problem solving; and c) building trust and reducing customers' perception of risk. On a similar note, Prahalad and Ramaswamy (2004a, 10) also talk of a new value creation space in co-creating with customers: personalized co-creation experiences developed through purposeful interactions between the consumer and a network of companies and consumer communities. The value in this lies in the co-creation experience of a given consumer. Prahalad and Ramaswamy also state that collaborative experience environments need to accommodate customer communities consisting of heterogeneous groups of consumers and recognize also passive consuming (Prahalad & Ramaswamy 2004a, 54). One of Füller et al’s (2006) key questions in the community based innovation method is, which attributes should consumers have to be able to support the innovating company in the development task? This argument also shows the importance of participant orientation in the Focus defining phase. While single consumer contributions may not always fit the needs of the target market (Füller et al 2006), a broad take on customer participation is emphasized also in 35

Surowiecki’s (2004) argumentation on the Wisdom of Crowds. Surowiecki’s argumentation is that a crowd functions best when there are experienced and inexperienced, skilled and unskilled participants alike as the wisdom rises from the interaction and friction between them. One of Lakhani’s and Jeppesen’s (2004) key ingredients for successful problem solving with online communities is that problems should be broadcast to people in various fields, because innovation often happens at the intersections of disciplines and interests, this encouraging an open and broad approach. In other words, it is not enough to lure into the crowdsourcing community only advanced lead users, for other groups with differing roles are also required (as I outlined in the C4 section). This must be taken into account already at the Focus phase when thinking about whom to engage with collaboration and whether or not these groups are present and up for the task. In the light of the above it is reasonable to argue that maximizing the size of the participant base maximizes also the ability of the said group to deal with increasing scale of the collaborative offer, as more and more capable people join the group. Even in a completely open call for the public to act, the selection of primary target segments to engage is a key issue, as focusing on set target characteristics will help tailoring the next two FLIRT elements, Language and Incentives for the said target groups. In addition, community identification – knowing where the right customers are – is key in engaging communities (Füller et al. 2006), and can’t happen if primary target groups are not selected. Furthermore, different stages of e.g. product development require different characteristics that may not be found in the same group of people all the time. In addition, there might be wisdom in also intentionally limiting the participant base, for exclusivity can also act as a source of value for the customers who are functioning in an environment increasingly cluttered by invitations to fully open social networks offering little relevance or opportunities for identification. Proposition 1b: Targeting a diverse set of customer participants is a key factor in planning crowdsourcing activities

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Organizational Capabilities Business needs and customer environment are not enough to define the Focus for the activity. As opening up business operations to the public is never a trivial decision, also the capabilities of the organization need to be addressed already when defining Focus. Prahalad and Ramaswamy are emphasizing this when they state that one of the key issues in defining strategy for collaboration is to ask what it takes from the company to collaborate (Prahalad & Ramaswamy 2004a, 54). If this is not done, it may be that the limits of the organization are reached while execution should be underway. Organization capabilities are key also in considering to what extent crowdsourcing activities can be extended from their core locus. An organization that has trouble in communication and collaboration between internal entities is hardly capable of customer collaboration that spans these very entities. Nambisan (2002) states that as collaboration is introduced to the supply chain, uncertainty increases and the company must find ways to cope with this added risk. Naturally, also competitors have access to open communities and gain access to all the information flowing within them (Füller et al. 2006). Sometimes the company can simply decide that the added risk is too big and that it is not going to open up its operations to the degree planned. Nevertheless, it is important to acknowledge that when used with consideration, collaboration through crowdsourcing can indeed act as a way to reduce risk through sharing it with participants (Ogawa & Piller 2006). Many businesspeople might view crowdsourcing as a way to shift work from the organization to its customers. However, genuinely engaging communities in crowdsourcing activities does require dedicated resources and effort (Füller et al. 2006). Furthermore, new skills are in many occasions necessary that the company might need to acquire by recruiting people from outside or training their internal staff. The people working in new product development might not be used to open collaboration with the clients and this can lead to disturbances in the internal processes (Füller et al. 2006). In the end, creating value in collaboration necessarily means relinquishing control, letting customers co-define the brand (as brands will be defined by the communities 37

they serve), sharing assets (also when it means pointing away from own services to useful 3rd party resources) and responsibilities (through multilayered security policy; prescribing communications policies) (Charron, Favier and Li 2006). It could be summed, that the greater the depth, the greater the potential for commitment and engagement, but at the same time the greater the risk for the company to lose control of its key assets. Proposition 1c: Organization capabilities are a key consideration in planning crowdsourcing activities 3.2.2. The Defining Attributes

Flowers (2008) presents in his work the concept of Outlaw Innovation, the utilization of hacker activity in company context, a concept closely related to crowdsourcing. Flowers argues that outlaw innovation presents a series of challenges to developing an effective framework that will enable companies to draw on the benefits from such activity. A key stage in his view in moving towards framing policy in this area is to develop our understanding of the Scope, Scale and Depth of outlaw innovation in order to identify the key issues. In addition, scope, scale and depth are widely used trio of attributes to define planned activities and so fit well with the purposes of defining also crowdsourcing activity. Thus, these three attributes are my starting point as well for building the FLIRT model. In contrast to Flowers’ work, the Scope, Scale and Depth in the FLIRT model are attributes that the company needs to consider in its own activity before advancing to further FLIRT stages; not attributes of the wider phenomenon to conduct research on. Scope In the context of this work Scope refers to which business function to choose for crowdsourcing and thus also the point in the vertical supply chain where primary focus of the crowdsourcing effort is to be located. Many companies nowadays see crowdsourcing as an opportunity especially in innovation. It has been noted that when utilized properly, consumer communities can serve as multipliers of the company’s R&D efforts (Prahalad and Ramaswamy 2004a, 52-53). On the other hand it has been observed that consumers often orientate 38

themselves on existing product solutions, have problems in articulating and transferring their needs for future products and thus might deliver only ideas for incremental innovations, which makes radical innovation through collaboration problematic (Füller et al. 2006). At present, the “open-source problem solving” paradigm that crowdsourcing relies on has migrated beyond its initial habitat in software to industries as diverse as custom integrated circuits, biotechnology, pharmaceuticals, content production, and music (Lakhani and Jeppesen 2007). Contemporary crowdsourcing is also not about innovation only, but also about e.g. content creation (Boutin 2006a), product development, design, marketing, sales, distribution and risk management (Brabham 2008). Replacing part of traditional market research has also been on focus when it comes to customer-engaging social media services. While response rates in traditional market research surveys have been falling, usage of web 2.0 services and communications have been increasing steeply (Hitwise 2007). This gives rise to the idea that traditional market research could probably be – at least partly – replaced by real-time marketing information and insight – or market sensing – co-created by research partners (respondents in the old model) (Cooke 2006). Cooke further suggests that, in order to discover and keep track of the preferences of present day consumers, “instead of asking them questions, companies should be looking at how consumers tag their photos, what they post and watch on YouTube, what they post to digg.com, what bookmarks they save to del.icio.us, going beyond focus groups and cluster analysis through exploring folksonomies and utilizing virtual communities”. We will in this thesis be looking at different areas to which crowdsourcing can be applied. Trendwatching.com states in their article Customer Made (2006) four different ways of engaging the customer in innovation and marketing: contests, whereby participants engage in product development and design activities as utilized by e.g. Nokia and Threadless; ongoing development, which is employed in exemplary style by P&G above others; creation and sales lets people realize their visions using a company provided dedicated platform, which might range from DIY book publishing service (lulu.com) to full-fledged online t-shirt store for one’s own print designs (Spreadshirt). 39

Viewing the issue from a risk management perspective, Ogawa and Piller (2006) list the alternatives for collective customer commitment as shown in Table 4:
Table 4. Alternatives for collective customer commitment (Ogawa and Piller 2006)
parameter source of new product designs connection with customers preselection of ideas minimum order size Alternatives company ideas cooperate with external existing community company panel predefined: decisions based on development and manufacturing costs of the first production batch monetary: customer pays at moment of preorder none for participating customers determined by conventional planning and forecasting project- or competition-based process supplement the conventional process for developing radical new product concepts customer ideas build a community for cocreation of new products customer competition predefined: decisions based on development and manufacturing costs of the first production batch good practice: customer promises to buy product special preorder prices for early customers and awards for user designers dependent on continuous commitment from community ongoing process Replace the conventional process and serve as the underlying business model for entire company

commitment incentives reorders organization relation to conventional product development and market research

According to Nambisan (2002), customers can be involved in firm new product development through 1) generating ideas, 2) co-creating them with firms, 3) testing finished products and 4) providing end user support. Crowdsourcing is also not for B2C only, as shows the announcement of Reuters to scourge the wisdom of the crowds by launching a social network service for financial analysts and Sermo’s introduction of a social network and decision market for doctors to join and collaborate in and pharmaceutical companies to utilize (Halperin 2007).

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Proposition 1d: Establishing scope is a key element in planning crowdsourcing activities Scale Scale in the FLIRT model is related to the question of how broadly to expand utilizing crowdsourcing within a given function or across functions. Increased scale can naturally bring increased benefits for business in the form of e.g. economies of scale, but too much scale also confuses the customer (Piller 2005) and discourages participation. The extent to which crowdsourcing can be spread from its core locus is dependent also on organization capabilities and the functionality of interorganizational networks (Törrö 2007). As regards the scale of the activity there needs to be some kind of assessment of the costs and benefits of collaborating with online communities, as treated by e.g. Liebowitz (2003). Proposition 1e: Establishing scale is a key element in planning crowdsourcing activities. Scale also has to do with time-scale and temporal structure of the initiative. Crowdsourcing can be conducted on a short-term campaign-basis or longer-term community-building basis. Both have their own uses, but long-term community building leads to better results when seeking deeper, large-scale interaction with the customers. The effects of time orientation can be seen when comparing to participatory services (statistics from www.alexa.com), Wikipedia, a crowdsourced encyclopedia and Subservient Chicken, a participatory campaign site for Burger King, as shown in Figures 2 and 3.:

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Figure 2. Traffic development of Wikipedia.org (Alexa)

Figure 3. Traffic development of the once popular subservient chicken marketing site (Alexa)

Ideacity’s Joel Greenberg, a marketing consultant, illustrates the significance of his observation (http://blog.ideacity.com/2007/01/04/contrasting-community-sites-withmarketing-sites/): ...They clearly illustrate the difference between a media driven website and a community website. The shape of the curve is what’s important. In a media driven site (and I’m using this terminology to include paid media, PR, and viral spread), the interest increases quickly, but also tends to decay over time. This is the opposite of a community site, which builds over time.

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My hypothesis is that in a non-community site, a media company will only be successful as the pour money into ad campaigns to keep the interest up. However, with a community site, the interest is inherent, so people remain engaged. This distinctions are important when planning out campaigns, setting expectations on results, and educating clients about marketing with community. Greenberg’s assertion would seem to call for community oriented sites, should a longer-term commitment be in focus. Proposition 1f: Establishing time-scale is a key element in crowdsourcing activities Depth Thinking about depth in the Focus phase of the FLIRT model requires the company to think about how much control and power they are willing to cede to the customer in crowdsourcing efforts, how the organization can cope with this increased openness and sharing of power and also what should be done if it can’t. While shallow collaboration is naturally risk-free for the company, a certain degree of depth is needed to ensure collaboration significant for the customer and long-term customer loyalty (Collins and Gordon 2005). However, company insiders are always critically important in determining which problems should be broadcast and ultimately selecting which potential solutions are best in terms of company strategy and direction (Lakhani and Jeppesen 2004). Proposition 1g: Establishing depth is a key element in planning crowdsourcing activities

3.3. Language
When dealing with an open crowd – the bunch we would traditionally call consumers – it is quite clear that having a sound business plan that makes sense in terms of profits is not enough to get them interested. The people are not in a business contract with the crowdsourcing company and unless care is taken in presenting the collaborative offer to the public, people may just as well walk away or not engage at all. In addition to establishing Focus, the company needs to find things and themes

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important to the people and present the collaborative offer in a way for them to become interested, involved and invested in the company’s agenda. According to Prahalad and Ramaswamy (2004a, 54), engaging the participants emotionally and intellectually is a key ingredient in crowdsourcing. This can only happen if the company is talking about the right things the right way. I thus argue that Language – through which shared objects and how to approach the participants – has a key role in planning crowdsourcing activities. 3.3.1. Social Objects

What is it really binds the community together? A relevant concept regarding this is the ‘objectualization’ of social relations and object-centered sociality, in which objects progressively displace persons as relationship partners and increasingly mediate human relationships (Knorr-Cetina 1997). More recently this concept has been expanded into the concept of epistemic consumption objects (Zwick, Detlev, Dholakia and Nikhilesh 2006, Zwick 2006) that reveal themselves progressively through interaction, observation, use, examination, and evaluation and demonstrate a propensity to change their “face-in-action” vis-à-vis consumers through the continuous addition or subtraction of properties. The epistemic consumption object is materially elusive and this lack of ontological stability turns the object into a continuous knowledge project for consumers. Via this ongoing cycle of revelation and discovery, consumers become attached to the object in intimate and quasi-social ways. It is important to note that these shared objects might not be neatly defined, bounded objects, such as photos, pets or videos; they may also be ‘messy’ objects, such as medical conditions or life situations that can’t be narrated smoothly from a single location (Law and Singleton, 2005). This represents an interesting departure from traditional views on social networks that center on relationships between people per se. However, in contrast to the object-centered sociality, Suchman (2005) raises questions regarding the premise that object relations have somehow displaced personcentered sociality. Instead he finds in his study the evidence for intensified forms of affiliation (and contest) among persons that arise through common object orientations. However, these social objects are clearly worth examining in the context of how to get people interested in joining the collaborative offering.

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Proposition 2a: Social objects, shared objects of value to the participants, are a key consideration in planning crowdsourcing activities. 3.3.2. Social interaction

Deepening the concept of social objects – what is the thing that brings people together – it is necessary to examine also the nature of interactions around these objects. For the past two decades or so, researchers of interaction via the computer between users who are dispersed in space and/or time have tried to understand how user interactions are shaped by the characteristics of computer mediation. While early studies in the area focused on the lack of physical and social cues of the computer mediated environment, implying impersonal and task-oriented interactions (e.g., Rutter, 1987; Sproull & Kiesler, 1986, 1991), recent studies (DeSanctis & Poole, 1994; Fulk, 1993; Postmes, Spears, & Lea, 1998, 2000; Walther, 1996) have emphasized the social construction that occurs over time in this environment, influencing the nature of user interactions. Both approaches posit that factors such as temporal structure and nature of identity in the environment have profound implications on the nature of interaction. Although some early studies proposed that computer-mediated environment would be significantly de-individuated (Kiesler et al. 1984), more recent results show many different ways of establishing identity online (Myers 1987). In addition to identity, also presence is an interesting subject to investigate in online communities, since recent technologies allow more manifestations of presence than is possible with traditional media of communication (Lombard and Ditton 1997). Hargadon and Bechky (2006) identify four types of social interaction in collective creativity: help seeking, help giving, reflective reframing and reinforcing. Nature of interaction orientation is also found to be a crucial element in designing Nambisan’s (2002) virtual customer communities. As types and nature of social interaction in earlier studies are found to be at least as important as social objects, they will be a key focus area also in my study.

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Proposition 2b: In addition to the social objects, different types of social interaction are a key element in planning crowdsourcing activities. 3.3.3. Organization presence

In the blogosphere, a subject that has gotten people on social media and branding talking a lot during 2006 and 2007 has been the forcible entry of companies and brands into the social media arena through blogs, microblogging tools, virtual communities, social networks and digital worlds. Authenticity for brands in social media is problematic, for to be authentic, they would need to present themselves as they are: inanimate brands and commercial concepts. However, companies have a hard time relying on the attractiveness of their brands alone, driving them to utilize fake blogs, profiles etc. to introduce a human face to them. Social media being at its core human to-human-interaction, the introduction of inanimate brands as conversation opponents has sparked negative response among members and industry experts alike, especially when advertisements are intentionally disguised as customer generated content (Freeman, B. and Chapman, S. 2007). Thus solving the authenticity issue is a key issue to deal with in crowdsourcing through digital communities. Proposition 2c: Authenticity in brand and company presence is a key element in planning crowdsourcing activities. In the age of social media, transparency is yet another key issue within language. Transparency is contrary to conventional practices of product development, but as Ogawa and Piller (2006) state, all collective customer commitment practices must share one important characteristic: full disclosure of the entire process and integration of customers in a truly open practice. Complete role and process transparency are along with cognitive compatibility crucial design parameters related to customers’ integration with internal product development teams also in Nambisan’s (2002) virtual customer community. Proposition 2d: Transparency in roles and processes is a key element in planning crowdsourcing activities

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3.4. Incentives
What motivates people to engage in conversations and collaboration with companies and brands that are inanimate and can’t be added to one’s social capital? As I argued in the Language part, shared purpose and a common social object or objects lay the ground for meaningful interaction, but especially in crowdsourcing activity, where a company explicitly asks its customers to perform tasks for it, more elaborate incentives usually need to be in place. According to Nambisan (2002), creation of appropriate incentives and motivating the customer through is one of three major challenges that arise in using customers as a source of new product ideas and that customer motivation utilizing product-, community- and medium-related benefits are crucial design parameters for virtual customer communities. Von Hippel (2001) notes that incentives and means to voluntarily reveal information need to be in place for free revealing to happen. This means that innovation needs to happen in a context in which everybody innovating on their own would impose huge system-level cost and costs related to the loss of intellectual property as well as costs of diffusion are low. Amateurs however do reveal and contribute regardless of the setting (Harhoff, Henkel and von Hippel, 2003), which is a very important notion, since crowdsourcing very much relies not on professionals but amateurs. Regardless of its name, the growth of various forms of social media is largely based on the desires and aspirations of the individual, rather than the aim for common good. People creating and collaborating through social media are often in pursuit of selfish goals, such as visibility, social status, fame or downright monetary profit as a result of their actions, as Prahalad and Ramaswamy (2004a, 16) also note, describing the new market as a forum organized around individuals and individual-centered value cocreation experiences between consumers and companies. This self-interestedness does not exclude the concept of today’s web as a gift exchange economy, in which millions authors are giving away intellectual property for the sake of developing a sense of community (Lyman 2007), for in giving away intellectual property, one expects to receive information of equal or greater value in exchange, or perhaps social status in the community.

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Both intrinsic and extrinsic incentives (Roberts, Hann, Il-Hom and Slaughter 2004, Hann et al. 2004) are at play in co-creation efforts regardless of area of business. Elaborating further, in the FLIRT model I make a distinction between subjective external incentives (i.e. those whose value can not be directly measured in monetary terms) and objective external incentives (i.e. those which have a direct monetary value). 3.4.1. Intrinsic incentives

The intrinsic incentives are immaterial by nature and concentrate on the benefits a participant creates for oneself through the act itself without obvious external incentives. In the most basic form of intrinsic motivation individuals may contribute because the act results in a sense of efficacy – a sense that they have had some effect on their environment (e.g. Bandura 1995). Making regular and quality contributions can help individuals believe that they have an impact and thus support their own selfimage as an efficacious person (Ahonen, M., Antikainen, M. and Mäkipää, M. 2007). Lakhani and von Hippel (2003) have found that in free user-to-user support in online communities, providers answer questions in order to learn rather than to answer, and indeed have 98% of their efforts rewarded via the learning they gain through thinking about a problem before answering it. Contributors also do it for fun and enjoyment through engagement in the task, and they don’t perceive participation as a cost, but instead an enjoyable benefit (Harhoff, Henkel and von Hippel 2003, von Hippel and von Krogh 2003). Also Lakhani and Jeppesen (2004) argue that concrete prizes are necessary but not sufficient for people to engage in collaboration. Firms must pay for solutions in order to retain the IP rights to them, but the enjoyment of taking on an interesting challenge is a bigger draw. Indeed, the researchers have shown that no significant correlation between the size of the prize and a problem’s likelihood of being solved exists. Proposition 3a. Intrinsic incentives are a key consideration in planning crowdsourcing activities.

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3.4.2.

Extrinsic subjective incentives

Intrinsic private benefits are often of an immediate nature, which means that the contributors may have smaller incentive to stay on project long term (von Hippel and von Krogh 2003). For this reason also extrinsic motivations need to be devised in order to encourage longer-term commitment if such commitment is required. Also Sansone and Smith (2000) suggest that while intrinsic motivations are necessary for stimulating initial participation, extrinsic motivations can boost, regulate and maintain the interest in doing a task. For example, software contributors’ desires to further their careers may enhance their inherent interest in making code contributions because making contributions can also help them to achieve higher status or to obtain better career opportunities. Extrinsic subjective incentives are in relation to an external reference group and reflect the effects generated by participating and belonging to a community or helping out a company or organization, nevertheless excluding the concrete, material benefits. An example is a developer looking to the community for recognition and validation as a motive for contributing rather than contributing because of a personal belief or value. Studies on motivations, participation and performance of open source software developers, it has been found that Intrinsic, extrinsic, and internalized extrinsic motivations do not exclude each other but indeed coexist and are interrelated and that different types of motivations impact contributions differently; while extrinsic motivations and status/opportunity motivations are associated with higher levels of contributions, use value motivations are associated with fewer contributions, and intrinsic motivations do not affect the level of contributions. (Roberts, Hann, Il-Hom and Slaughter 2004) One example of subjective extrinsic incentives derived from participating in the community is simply joy of helping the cause together with like-minded people (von Hippel 2001, Lakhani and von Hippel 2003) and helping to build a community (von Hippel 2001). Furthermore, the community-based innovation system also works on expectation of reciprocity (von Hippel 2001, Lakhani and von Hippel 2003): working within a community provides the participants with resources such as info, assistance, and links to others, thus inducing improvements on own ideas and thinking that act as incentives (Franke and Shah 2003, Harhoff, Henkel and von Hippel, 2003). Naturally, 49

also reputation among a reference group and enhanced career opportunities play a role here (von Hippel 2001, Lakhani and von Hippel 2003). Anderson (2006) also addresses the question of why anyone bothers to create anything of value without a business plan or even a prospect of a paycheck. According to Anderson’s reputation economy concept, much of what populates the long tail does not start with commercial aim. The motives to create are not the same in the head as they are in the tail, where expression, fun, experimentation and the bottom line: reputation, play major roles in motivating the crowds. Reputation is valuable in that it can be converted into things of value: jobs, tenure, audiences, viral resume and lucrative offers of all sorts. (73-74) Given that also without the long tail effect, 98 percent of books are, intentionally or not, non-commercial (commercial failures), it is not totally incomprehensible that people nowadays see online non-profit publishing as, instead of being a profit generator, being an advertisement for the product of value – the author (76). Sansone and Smith (2000) found that an increase in ranking boosts contributors’ subsequent intrinsic and extrinsic motivations. An increase in performance ranking is therefore associated with a subsequent increase in contributors’ status/opportunity motivations to participate. As also Lerner & Tirole (2002) have noted, a promotion in rank enhances a contributor’s status in the developer community and increases incentive motivation. Roberts et al. (2004) found no significant associations between rank increases and intrinsic motivations or use value motivations, which is expected, since rank relates to extrinsic, community related motivation. In conclusion, they make three suggestions to open source communities: 1) welcome commercial efforts, 2) nurture status/opportunity motivations (e.g. by explicitly recognizing distinguished contributors or promoting connection to the labor market) and 3) capture a competence component in the feedback system (e.g. by listing achievements and extraordinary contributions). Von Hippel and von Krogh (2003) also assert that contributors whose identity is known to the community enjoy greater benefits from revealing their innovations than do those who are less integrated. Open source entrepreneurs therefore have an incentive to integrate important users socially, by e.g. listing important developers (as the Dell does with its ‘top contributors’ list in its Ideastorm initiative).

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Proposition 3b. Extrinsic subjective incentives are a key consideration in planning crowdsourcing activities. 3.4.3. Extrinsic objective incentives

The rewards that can be attributed direct monetary value I call extrinsic objective incentives: products and services on the market by the crowdsourcing company or partnering companies, credits that can be used to acquire these products and services, or simply cold hard cash. Although price setting for user-generated services and contributions, such as assistance and info is difficult to set, some concrete rewards are often necessary in order to justify the company benefiting financially from openly revealed information and contributions (Franke and Shah 2003). While this form of incentives is what to many come to mind first when talking about motivating customers for collaboration, it would be a mistake to think that extrinsic objective incentives would be enough to engage people for co-creation or that they would compensate for missing intrinsic or extrinsic subjective incentives. Indeed, intrinsic motivations (challenge, mental stimulation, control, curiosity, fantasy) may even be downplayed by monetary incentives as the shift in motivational orientation from intrinsic to extrinsic can negatively affect interpersonal interactions and creativity (Franke and Shah 2003). The overjustification effect (also called the undermining effect) (Boggiano and Ruble 1979; Wiersma 1992; Shu-Hua, Hall, Wentzel, Lepper 1995) is the effect whereby giving someone an incentive (monetary or otherwise) to do something that they already enjoy doing decreases their intrinsic motivation to do it. As a result of the extrinsic incentive, the person views his or her actions as externally motivated rather than intrinsically appealing. In general, intrinsic motivation decreases in response to tangible but not verbal rewards (praise) for behavior (Deci, Koestner and Ryan, 1999). Ultimately, it is important to note that people, at least in the developed world, do not participate in co-creation efforts to support their living, but instead for gaining knowledge, establishing expertise, building self-esteem, for emotional bonding and trust, as well as pure enjoyment (Prahalad & Ramaswamy 2004a, 21) Proposition 3c. Extrinsic objective incentives are a key consideration in planning crowdsourcing activities.

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3.5. Rules
As all communities, also well functioning crowdsourcing communities rely on clear, shared rules to deliver an experience that is productive, fun, easy to comprehend for all parties involved, as well safe for everybody to engage in. Rules formalize the process of access and initiation in the community, guide intellectual creation and exchange in the collaborative effort as well as work as reference in disputes. It is necessary to establish these rules well ahead to ensure smooth functioning of the community, for if a dispute with e.g. appropriateness of submitted content arises, a point to refer to is necessary to lessen feelings for the customer of being treated unfairly. Rules are especially important in virtual environments because of their inherent characteristics as regards presence of self and other in the virtual space. Physical environments, through socialization of norms, give us critical cues as to what is appropriate in a given environment (Danchin, É., Giraldeau, Luc-Alain, Valone, Thomas J. and Wagner, Richard H. 2004). This is different with digital networks and online communities (Boyd 2007), for which reason it is important to establish explicit rules also for crowdsourcing communities existing in the digital realm. 3.5.1. Rules of access and initiation

Access and initiation into the community are important considerations as nature of customer identity is critical in designing virtual customer communities (Nambisan 2002). Also, as many crowdsourcing efforts are open for all and do not rely on preselected participants, as e.g. lead user methods or modern marketing research techniques do, there might arise the need for some way of curbing or even banning from using the service the ‘human rejects’ (Johnston 1989) that don’t fit in. User Access and participation in general is considered a key question in community-based innovation (Füller et al. 2006). Bouras (2005) relies here on the wisdom of the crowds in emphasizing that two-way voluntary participation (the community chooses who participates in the community and members of the community choose to participate in it) is a mandatory requirement in building collaboration communities. Furthermore, Bouras asserts that one of the key requirements for the development of a web-based virtual collaboration

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community is enabling multiple, shifting and overlapping membership and participation, for people typically participate in more than on community at a time, tend to join and leave the different communities to which they belong, and more communities may share purpose, location, cultural context or membership. This matter will be discussed in more detail in the platform part of the Tools subchapter. Regardless of the voluntary principle, some crowdsourcing and co-creation communities do sometimes pre-select their participants in order to assure the participants fitting in a desired profile; P&G’s Tremor does this as it screens its members by age and even (self-perceived) influence over their peers, so that there are only (young) people with desired profiles participating in a given project. Proposition 4a: Rules of access and initiation are a key consideration in planning crowdsourcing activities. 3.5.2. Rules of interaction and conduct

Once joined to the community, consumers as creators demand a set of rules. They usually can’t be put to sign an NDA before they start creating and exchanging information on the web and they also do not like to read multi-page progression plans on how they should proceed with the co-creation effort. The public as creators requires effectiveness above all, and a quick access to what essentially is expected of them. Guidelines need to be in place to effectively coordinate and guide participants to co-creation. According to Duparcq (2007), the purpose and participants of the community affect the platform, which in turn affects policing – governance, rules and boundaries – in the community. I however argue that rules and policing need to, at least to some degree, be given thought and established before building the platform and tools for the community, for boundaries and constraints will be easier to govern when it is decided beforehand which alternate ways of interaction and exchange to allow and which to discourage in the community. These desired and non-desired alternatives can then be built in or left out of the platform and tools that the community members are to use. Simplified, if a given company needs feedback from its customers on products, but wishes to keep the tone of the conversation positive, it can allow the option of

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voting for an idea, but leave out the option of demoting one. However, the potential members of the community will note this kind of artificial framing and its effect on the community’s credibility and appeal can be significantly negative. With rules also the degree of user control (Nambisan 2002) will be made explicit and reference points will be given as to what degree the crowd “owns” and can influence the collaborative effort. One noted issue with communities of collaboration is that of the so-called freeriders; persons that don’t contribute but nonetheless enjoy the fruits of the collaboration. Communities usually guard against freeriding by incurring penalties, exclusions. An important note on freeriding in crowdsourcing is that the participants’ self-rewarding through private benefits related to intrinsic motivations that are not available to so-called freeriders may diminish contributors’ concerns about freeriders (von Hippel and von Krogh 2003). Moreover, many crowdsourcing efforts are set up as competitions, and naturally one can’t enjoy the benefit of competing and winning without participating. Social integration doesn't prevent withdrawal from project through punishment but perhaps through individual utility derived from a social category, such as a codeveloper status. Therefore, companies building collaboration communities should seek to make this category valuable, rare and membership restricted. This is supported by the findings of Schwartz and Tomz (1997), who suggest that leaders who can choose who is a member of a social category can secure a more talented group and more effective production of goods and services. Proposition 4b: Rules for interaction and conduct are a key consideration in planning crowdsourcing activities. 3.5.3. IP transfer & legal issues

Legal claims for the exploitation of consumer ideas and inventions can be problematic in co-creation (Füller et al. 2006). The fact is that a crowdsourcing community always creates intellectual property. Usually it is desirable that the creators hand over the ownership to the IP they create in the process in exchange for some form of compensation. For this purpose, well prepared IP transfer procedures need to be in place and easily accessible for any one member to explore.

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Proposition 4c: Rules for IP and legal issues are a key consideration in planning crowdsourcing activities.

3.6. Tools
When all the strategic and tactical FLIRT elements, Focus, Language, Incentives and Rules have been carefully thought out and established it is time to focus on technical part of building the platform and the tools for people to use. Multi-media richness, global accessibility and low costs of communication and information processing at present facilitate virtual integration of consumers into diverse company activities (Füller, Bartl, Ernst and Mühlbacher 2006). This last technical aspect to crowdsourcing is however far from a trivial task, as companies face an exploding selection of collaboration tools and platforms. On top of this, consumers today are growing increasingly savvy and quality conscious when it comes to features and user-friendliness of online services designed to lure them in and keep them interested and engaged (Gommans, M., Krishnan, K., Scheefold, K. 2001; Lorenzo, Oblinger and Dziuban 2007). Web services and their building principles methods nowadays are developing fast in terms of possibilities to enhance user experience (Moroney, L. 2006, Open AJAX Alliance 2006) as open source and peerto-peer methods quicken and enhance the development cycle of the so-called web 2.0 applications and services (Benatallah, B., Duma, M. and Sheng, Q. 2004, Floyd, I., Jones, M., Rathi, D. and Twidale, M. 2007, Panke, S., Kohls, C. and Gaiser, B. 2006). While the web has the ability to mimic other medias, it is also a completely new medium (Watson, Pitt, Berthon, Pierre & Zinkhan 2002) enabling ever-diversifying forms of conveying a message together with the possibility of participating in and even co-creating it. Of these forms, Meeker and Joseph (2006) assert that community features, user generated content and personalization are key drivers for businesses in the Web 2.0 era. Common terms related to Web 2.0 are RSS, blog, mashup, community, User Generated Content (UGC), free content and services, long tail, collective intelligence, software as service, as well as collective creation and development (Hintikka 2007).

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New features are added to fastest growing services on a weekly basis. For these reasons, staying aware of technological advancements and capturing opportunities from emerging technologies to enhance user experience is one key aspect in developing environments for co-creation (Prahalad & Ramaswamy 2004a, 54). For managers in charge of developing the tools for the community, a challenge is to keep the cost of development in check with business objectives. Customer contributions can be limited by the high cost of providing facilities or mechanisms to structure and channel those customers’ inputs (Nambisan 2002). 3.6.1. Platform

First and foremost, the members require co-location, a common physical or (more often, in the case of crowdsourcing) virtual space for collaborative activities (Bouras et al. 2005). Secondly, customer co-creators will need to be somehow integrated with internal (New product development, marketing or other) teams (Nambisan 2002). This requires some kind of platform to be built, but not necessarily from scratch, as there are many standards-based alternatives and even free community creation platforms at present on the market. Tools are however not technology alone. Recognizing both the technical & social aspects of co-creation experiences (Prahalad & Ramaswamy 2004a, 54) is paramount as there is, among the web 2.0 hype, a danger to develop snazzy looking services that offer no real added value to the user; the focus on surface can distract resources from actually concentrating on building usable and value-adding services, thus resulting in “glossy but useless” (BBC 2007) websites and services. The social aspects, such as social objects and types of social interaction were already covered in the Language subchapter. Füller et al. (2006) states in his key questions for community based innovation, that once a desired participant profile is defined, is it is important to clarify within which online community these consumers can most probably be found. This thought is important, as companies don’t necessarily need to build a customer community anew; their customers are already members in potentially multiple communities that can be used for collaboration with less cost. However, even when a completely new

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community is facilitated, it is still important to identify the most relevant communities for recruiting customers to this new community. As mentioned in the Rules of Access and initiation the Rules subchapter, people are nowadays participating in social networks and communities according to their changing needs, which calls for facilitating multiple, shifting and overlapping memberships (Bouras 2005). This has implications also for crowdsourcing communities. The current OpenSocial movement (e.g. Mitchell-Wong, Kowalczyk, Roshelova, Joy & Tsai 2007) and other similar initiatives hold promise for the future in removing walls between different social networks and collaboration communities, aiming to make personal and social data portable and utilizable in different contexts regardless of the service provider. Many other forms of communication have shown that this type of shift is ultimately inevitable: e.g. email and instant messaging have through time transferred from being walled gardens that allow communication only within systems to being means of communication where e.g. different instant messaging accounts can be aggregated under comprehensive applications and communication e.g. between different email systems is nowadays taken as a given (The Economist 2008). These issues specifically would seem to call for social portability, the ability to bind the crowdsourcing community to other communities the participant might be involved in, through e.g. widgets and feeds, in future-oriented crowdsourcing efforts. Proposition 5a: The technical platform is a key consideration in planning crowdsourcing activities. 3.6.2. Tools of creation

After platform, the tools of creating the desired contribution must be thought of. At the base level it needs to be kept in mind that customers may need higher levels of product / technology knowledge in order to co-create (Nambisan 2002) and the tools of creation must comply with these increased information needs. Among others, Dahan and Hauser (2002) outline in their work many types of customer collaboration tools for creating new knowledge mainly from company-generated material. However, modern crowdsourcing in many cases utilizes tools that go beyond testing alternative company materials, instead focusing on original customer-created material

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(Piller 2005, Ogawa and Piller 2006). For this reason, attention needs to be directed to how this material is supposed to be created; the alternatives vary at the base level from company-provided materials and software to 3rd party originating materials and software. Also Füller et al’s (2006) key questions in community-based innovation include efficient design of the interaction with the targeted community members regarding the particular development task and the individuality of the selected online community. Proposition 5b: Tools for interacting with the brand and creating the desired input are a key consideration in implementing crowdsourcing activities. 3.6.3. Tools of monitoring and action

A major challenge for the company in collaboration ventures is capturing customer knowledge and input (Nambisan 2002). According to Nambisan, longtitudal and informal knowledge gathering is more beneficial than cross-sectional and formal types. He also separates between knowledge acquisition support and knowledge conversion support, both of which are crucial decision points in building virtual customer communities. While it is impossible within the scope of this thesis to go into any detail on how internal processes and tools for selecting the contributions for advanced consideration and production should be planned and built it is an essential final part of the FLIRT model and specifically the Tools element to take also this angle into account. Without these internal processes and tools, all the potentially useful contributions gathered with effort are left unattended and won’t cause a desired effect in the company. Proposition 5c: Tools for monitoring and capturing customer contributions are a key consideration in planning contemporary crowdsourcing activities. Proposition 5d: Tools for converting customer contributions to useful knowledge and making decisions are a key consideration in planning contemporary crowdsourcing activities.

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3.7. Summary of the FLIRT model
In this chapter I have outlined the FLIRT model, first by defining on a rough level using few key works as foundation and then by elaborating on said issues and more finely defined the propositions behind the model. For a detailed summary of the relation of previous literature to the forming of the FLIRT model, refer to Appendix 1. – Previous literature and the FLIRT model. There are five main elements in the FLIRT model: Focus, Language, Incentives, Rules and Tools, which each contain a number of propositions, as shown in Tables 59. The Focus main element aims at getting the company to think about its aims, its target groups and its resources for achieving what is needed. Through answering these questions, the scope, scale and depth of the crowdsourcing activity can be established. My argument is that the attributes listed in Table 5. are the core ones to be established before advancing further in implementing crowdsourcing.
Table 5. Summary of the FLIRT model – FOCUS
FOCUS Proposition 1a: Business needs are a key consideration in planning crowdsourcing activities Proposition 1b: Targeting a diverse set of customer participants is a key factor in planning crowdsourcing activities Proposition 1c: Organization capabilities are a key consideration in planning crowdsourcing activities Proposition 1d: Establishing scope is a key element in planning crowdsourcing activities Proposition 1e: Establishing scale is a key element in planning crowdsourcing activities. Proposition 1f: Establishing time-scale is a key element in crowdsourcing activities Proposition 1g: Establishing depth is a key element in planning crowdsourcing activities

Table 6. Summary of the FLIRT model – LANGUAGE
LANGUAGE Proposition 2a: Social objects, shared objects of value to the participants, are a key consideration in planning crowdsourcing activities. Proposition 2b: In addition to the social objects, different types of social interaction are a key element in planning crowdsourcing activities. Proposition 2c: Authenticity in brand and company presence is a key element in planning crowdsourcing activities. Proposition 2d: Transparency in roles and processes is a key element in planning crowdsourcing activities

The Language-part of the FLIRT model focuses on the customer. I argue that as participatory service live and die by their participants, it is extremely important that the target group be known well and social objects meaningful to the desired participants will be chosen. In addition, I posit that focus on relevant areas of social interaction help engaging the right crowds. Furthermore, the FLIRT model suggests

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that transparency and authenticity play a key role in involving people and getting them to actually care about the company / brand they are helping with their efforts.
Table 7. Summary of the FLIRT model – INCENTIVES
INCENTIVES Proposition 3a. Intrinsic incentives are a key consideration in planning crowdsourcing activities. Proposition 3b. Extrinsic subjective incentives are a key consideration in planning crowdsourcing activities. Proposition 3c. Extrinsic objective incentives are a key consideration in planning crowdsourcing activities.

However close to the customer a company gets with selecting the right social objects, I argue that in modern crowdsourcing, people still require compensation for their efforts. However, these need not be monetary or even material, as the strongest incentives come from within, such as fulfilling the need for creativity or enjoying the challenge. In social activity, also the community-related social benefits are to be taken into account as relevant and significant benefits. The incentives are listed in Table 7. Every community, especially in the digital realm, requires common rules in order to function fluidly and safely. In the FLIRT model I present that the essential rules that govern a crowdsourcing community are those of a) access and initiation, b) interaction and conduct and c) explicit rules for transfer of intellectual property and other legal issues. The propositions for these issues are listed in Table 8.
Table 8. Summary of the FLIRT model – RULES
RULES Proposition 4a: Rules of access and initiation are a key consideration in planning crowdsourcing activities. Proposition 4b: Rules for interaction and conduct are a key consideration in planning crowdsourcing activities. Proposition 4c: Rules for IP and legal issues are a key consideration in planning crowdsourcing activities.

Tools are the final element in the FLIRT model and especially in today’s environment where people are used to well functioning web applications, a very crucial one. Both the platform and the tools of creation and interaction need to be at least on par with what the industry standard is in terms of usability, usefulness and experience, or it will be in a serious disadvantage. Also, I present that there is a need for tools for monitoring contributions and recognizing the best of them and furthermore that there needs to be a dedicated set of tools for converting those contributions into useful knowledge that can act as basis for informed decisions. The summary of propositions is listed in Table 9.

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Table 9. Summary of the FLIRT model – TOOLS
TOOLS Proposition 5a: The technical platform is a key consideration in implementing crowdsourcing activities. Proposition 5b: Tools for interacting with the brand and creating the desired input are a key consideration in implementing crowdsourcing activities. Proposition 5c: Tools for monitoring and capturing customer contributions are a key consideration in planning contemporary crowdsourcing activities. Proposition 5d: Tools for converting customer contributions to useful knowledge and making decisions are a key consideration in planning contemporary crowdsourcing activities.

As many of the propositions in the FLIRT model are quite broad and high level assumptions that can be held as self-evident to a certain degree, I will in the empirical part focus on enriching these propositions with practical examples of what they actually mean for a company, utilizing expert opinions and illustrative case examples. Chapter 5 will thus focus on further elaborating and expanding the model from this initial state as well as examining its practical manifestations and applicability in different settings. The FLIRT model moves in the order presented from strategic approach to tactic to technical. It is best used in this order, starting from Focus, the strategic element and going through it via setting the proper Language, crafting Incentives, setting up Rules and finally building the Tools for collaboration. Nevertheless, like any proper development model, it should not be a unidirectional waterfall model, but utilize feedback flow from each stage to both its consecutive and previous stages.

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4.

METHODOLOGY
4.1. Research Methodology

Gathering research data within the realm of social media is in many ways easier than in many other fields since social media in itself offers the best tools for researching it. Utilizing modern tools for searching, discovering, subscribing to, storing, sharing, categorizing and cultivating information, I was able to unearth extensive insight on the subject. On many occasions this insight was published on a fellow researchers or practitioners blog, linked to many more conversations on the subject and so easily facilitating even further insight by the collective effort of people fervently discussing the subject topic. My main tool was netnography targeted at industry experts and enthusiasts, coupled with illustrative case examples. 4.1.1. Illustrative Case Examples

The primary examples consisted of companies considered well known and apparently successful in their respective fields of business. This means that they have been mentioned numerous times in online articles (e.g. news and blog articles) and they are usually portrayed as pioneers and exemplary actors in the arena, especially as regards the way they handle their communities and the online collaboration. Below they are briefly introduced. The primary case example companies were: Threadless is an online T-shirt shop at its core, but it is also an ongoing design contest with thousands of home made designers worldwide. Everybody that is registered to the open community is eligible to submit a design and everybody is also eligible to give it a rating. After a rating period of seven days, the people at Threadless can see which shirts are drawing the best ratings and can make educated decisions on which designs to put to production. Innocentive is a global community of scientists and hobbyists, cracking challenging R&D problems for major companies as well as smaller ones. The companies (seekers) submit their problem online and community members submit their answers, after which the company and Innocentive’s consultants choose the winning solution (if there is one). The winning seekers are usually substantially rewarded for their efforts.

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Sellaband launched in 2006 as the ‘people’s record company’. Sellaband involves its customers more integrally than many other companies even in the crowdsourcing arena; it depends on its customers to fund its investments before making a decision to promote them. In short, any unsigned band can post three songs to their own Sellaband profile. Instead of merely rating the songs, members of the community invest real money to the bands they like. Once a band reaches a specified level of money invested by fans, Sellaband takes them to the record studio and shares the proceeds from their income with the band as well as the fans. iStockphoto is professional-grade stock photography created by non-professionals. Anyone can create a profile, post pictures online and start selling their production for a few dollars per image license (compared to tens or hundreds of dollars per license on professional stock photography services). However, iStockphoto does have quality standards to ensure consistent quality for its clients. Lego Factory is an online place for Lego enthusiasts to share their own Lego designs made with dedicated software. Anyone can view anyone’s design and upon liking a certain design, order it for herself in which case she receives, in a customized package, only the blocks needed to build the designed model. Cambrian House is an ambitious project aiming to crowdsource idea generation, resource gathering and implementation for initiatives focusing on software products and services. It has a strong community focus, relies on wisdom of crowds identify the best ideas and is dependent on peer production as regards executing the ideas. Anyone can post basically an idea online and all members can grade ideas. All members can also join practically any stage of building a business out of a given idea. Zuda Comics is a comic sharing service for aspiring cartoon artists to upload and share their stories and art with a growing community that determines which works deserve to be published in the physical world and which deserve to stay unknown. DC Comics, a major U.S. comic publishing house set up the service to discover new talent in part to respond to the Japanese Manga comic phenomenon that is eating market share from U.S. publishers.

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4.1.2.

Netnography

Much meaningful consumption takes place in a communal, collective and tribal environment of the web. According to Kozinets (2006), to map the thoughts, preferences and ideas of consumers who spend their time online, netnography is a faster, simpler, timelier, and less expensive than traditional ethnography. It is also more naturalistic and unobtrusive than focus groups or surveys, enabling observation without the participant ever necessarily knowing about the presence of the researcher. In a society rich in ever increasing flows of data, netnography offers an extremely easy way to gather it, and thus concerns of expedient research can arise. According to Kozinets (1998), this argument can be countered with rigor in performing and judging research through prolonged engagement and persistent observation, triangulation of sources, recording of field notes, and member checks as the most important methodological techniques. Netnography is used successfully also by Morgan (2006), Cova and Pace (2006) and Giesler and Pohlmann (2003). Puri identifies blogs as useful tools for netnograhers, for they offer several advantages, such as containing detailed profiles (age, gender, location, interests, occupation, and so on) of the blogger, making authentication and segmentation of the author easy. They also offer detailed and vivid glimpses to contemporary issues though opinions of both individuals and communities of bloggers and are noted to be unusually honest, as often bloggers regard blog communities to be the only places they can truly be themselves. Furthermore, as most blogs are public, bumping into privacy concerns in researching blogs is usually not an issue. As search and analysis tools in general, also blog search and analysis tools are rapidly evolving, enabling faster finding of truly relevant data. (Puri 2007) The disadvantages of utilizing blogs, given their present abundance on just about any given topic, have to do with respect to efficiency when searching for specific information: a newsgroup will often provide much greater breadth of data much faster than searching through multiple blogs (Puri 2007). With today’s tools, such as blog alerts, RSS readers, topic aggregation services (such as Twine.com), however, this overwhelming stream of data can be tamed and researched effectively, as I noticed during my research.

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4.1.3.

Netnography in the current thesis

Blogs are excellent for spotting trends and making sense of the ‘buzz’ revolving around contemporary phenomena. According to Puri (2007), they are useful for understanding the needs and wants of people as regards specific recently emerged offerings and picking up what people are actually saying about certain brands or companies. Studying blogs around a specific interest or topic over time is a good way of keeping track of shifts in consumer and/or professional attitudes. In addition to blogs, other channels in netnography can be any digital channels through which people communicate, such as online forums, blogs, networked game spaces, instant messaging and mobile technologies. For my purposes, I utilized netnography mainly to induce thinking of researchers and professionals instead of consumer attitudes and preferences. To conduct my research I sought out the opinion leading blogs on social media, web 2.0 and customer collaboration and subscribed to all the relevant RSS feeds. Occasionally, I also engaged in a discussion to deepen the discussion on the subject in question. The process was indeed an organic one, as part of my empirical material was not posted on the primary blogs I was following, but instead on blogs, traditional websites, sites for sharing video and presentations, etc. that were linked to other blogs that were linked to the primary blogs I was following. While this naturally on some occasions led me to articles of very little relevance or authority, it also allowed me to explore the phenomenon from viewpoints that would have been left in the dark had I stuck to a limited number of key blogs. To further enhance my research, I used alert services offered by blog search engines such as Google and Technorati to subscribe to posts appearing all over the net. This method kept me up-to-date on a large number of English-language postings on the subject without the need to actively seek them out or know where they would emerge. I also expanded my research by storing my raw material (URL’s) to the social bookmarking service del.icio.us and as a result was able to find more relevant material stored and shared there by other people looking into the subject. Out of thousands screened, 500 blog posts out or other URLs directly or indirectly linked to these posts were selected as the main empirical body for this thesis. They

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were thoroughly read and analyzed to extract knowledge and understanding of the phenomenon and whether or not they would back my propositions. I carefully made sure that the phases of netnography according to Kozinets (2002) were fulfilled (indented are my actions to ensure proper conduct): Investigating online field sites, initiating making cultural entrée I identified as key blogs those that had a high rating in Technorati (‘proven’ authority), wide and active reader base (extensive conversation), and frequent posting schedule (active approach and timeliness). I also set up my own blog and also sent mail about my blog and my initial thoughts on the research to certain key bloggers within he blogosphere most actively discussing the subject. I also linked to my blog in conversations around the subject from other blogs when the opportunity allowed. Collecting and analyzing data I stored all the relevant blog posts on key blogs to my del.icio.us (a service for storing, categorizing and sharing URLs) account together with relevant keywords so that other people could find them too easily as possible and engage in a conversation around the topic. I also collected all the comments to my blog. Ensuring trustworthy interpretations I carefully investigated the comments on each post for clarifications and alternative viewpoints on the subject. When needed, I engaged in conversations around the subject through posting my own comments and requesting feedback. Ethical research When researching blogs that are meant to be public, the issue of utilizing the individual posts in research is less ambiguous than when researching discussion forums, chat services, etc. where the degree of privacy is not always clear to all participants. However, I did let many bloggers know that I will be using their thinking as input in my research.

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Opportunities for feedback of culture members Many bloggers I invited to comment have indeed commented on my blog regarding my research and the FLIRT model of crowdsourcing. In addition, anyone has the right to comment, and many actually have. For the purposes of this study, I used a level of immersion above pure observation, as I also started my own blog to report my findings on the field and engage in a dialogue with some of the thought leaders I set out to listen. I perceive myself to have fulfilled Kozinet’s standards of netnography, immersive depth, prolonged engagement, researcher identification and persistent conversations to a sufficient extent.

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5.

FINDINGS

Overall, results from both netnography and case examples support the initial propositions and indeed enrich them and bring them more focus. In the following I will go through my findings, illuminating the validation criteria with selected snippets from my empirical material. In will proceed in the same order I outlined the elements in the theory section, starting from Focus and moving through Language, Incentives and Rules to finally arrive at Tools and my conclusions.

5.1. Focus
The empirical material brought validation and depth at variable strengths to my working propositions and their cross-reflections. I am able to state in this point that the defining attributes of Scope, Scale and Depth defined through reflecting them on the constraining attributes of Business Objectives, Customer Participants and Organizational Capabilities is indeed a valid way to approach the initial Focus phase of planning crowdsourcing activities. On focusing crowdsourcing efforts it needs to be noted that while the new tools of social media do give greater power to consumers and individuals, crowdsourcing essentially is a tool for organizations and corporations for getting things done better, e.g. more efficiently, while at the same time enhancing innovativeness or customer ownership and loyalty – in short, for benefiting the initiating organization. Clay Shirky, an American writer, consultant and teacher on the social and economic effects of Internet technologies, notes in an interview: …This is an economic model. You can do it in democracy; you can do it outside of democracy. Look at Amazon's Mechanical Turk. It is specifically nondemocratic. It's pure managerial culture. Here is my job, here is what I am paying, do it if you can. The workers don't go underneath the production. The workers don't own the surplus of labor value. Although Clay’s posture is rather bleak for the participants, examples, such as Dell’s Ideastorm, Sellaband and other social initiatives show that offering genuine value for people other than money or material incentives can create new opportunities for innovation, strengthen ownership and loyalty of the customers and generate goodwill 68

– even at times when these areas are perceived as the organizations biggest challenges (the Dell Hell and Dell’s exploding laptops). Jeff Jarvis was one of the most prominent bloggers voicing the agony of Dell’s customers over appalling customer service, broken devices and so on. However, after Dell launched its Ideastorm initiative and the Direct2Dell blog, he was convinced that this would be a dawn of a new age for Dell. As he writes in his blog: …So what fascinates me so much about Dell is that it can rise from worst to first. Precisely because it got hammered by customers now empowered to talk back to the wall, it had to get smarter faster. Whether Dell can fix the rest of its problems, I don't know. But if it keeps on the road it's now on, it could well end up being the smartest company in the age of customer control. That would be one helluva turnaround. Another prominent thinker on the field, Chris Lawer indeed suggests in an interview viewing the collaboration market as: …a forum for both value-creation and value-extraction that is enacted through the firm-customer experience”, where “Tacit and intangible forms of knowledge take centre-stage derived from experience-based and personalized forms of value that rely on a combination of sensory AND rational judgments of value”, and furthermore where an individual customer is “sometimes giving, sometimes taking…yet has higher levels of dependency on firm and customer community expertise. The blog community does indeed see crowdsourcing as a viable model for connecting with the customers, albeit one that requires not just jumping into the bandwagon, but thinking through the implications it might have for the business and on the other hand what it requires from the company. As Renee Hopkins Callahan crystallizes it: What is crowdsourcing going to do for -- or to -- *your* business?

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5.1.1.

Business Needs

Business objectives are especially after leveling off of the consumer-generated boom emphasized widely among industry insiders. Among the various benefits that crowdsourcing and collaborative marketing can be applied in, clearly among the most important ones are increasing customer loyalty and ownership and creating genuine and meaningful relationships. An interview on the Church of the Customer blog, a prominent media on customer engagement, is telling: Executives are increasingly finding that the winning differentiator is no longer product or price, but the level of customer engagement relative to the competition,” said Rama Ramaswami, senior editor of the EIU. “Companies see there is a competitive advantage in going beyond traditional customer loyalty programs to create engaged customers.” “The secret to success isn’t just about gathering or churning data, it’s about how you connect with customers through the medium of their choice,” said Adobe CEO Bruce Chizen. “Customers now demand information and interaction anytime, anywhere and through any medium” Some seem to argue that engaging in collaboration communities where people interact with their peers, that they trust more than companies or brands, grants the brand an opportunity to utilize this trust and move into a better position in the consumer’s trust hierarchy, as presented by Avenue A Razorfish’s digital outlook report in Table 10.
Table 10. Trust hierarchy and social media (Avenue A Razorfish, 2007)
Consumer Trust Low (far from the consumer Example Unknown companies Known companies Experts and Media People with shared values and experiences Personal circle Inner circle Own experiences / own gut Brands correctly utilizing communities and social media can move… …from here… …or here… …to at least here… …or even here.

Medium

High (close to the consumer)

On how social media marketing and crowdsourcing should lead to sales, Search Engine Land blog staff writer argues in a post on social media marketing: The bottom line for many marketing campaigns is to bring an increase in sales. Sometimes this is done directly and sometimes it is a very indirect process. It is

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very hard to create a social media marketing campaign that will result in direct sales. This is because you're reaching consumers in a non-purchasing stage of the cycle. It contrasts from standard SEO where consumers are looking for what you're selling and at the point of purchase already. Social media is less intrusive, and part of the reason people engage is because there's more there than just a selling message. Reaching into our case examples we however find that there is also selling power in the crowd. Sellaband, the record company whose customers invest real money on artists they deem fit to reach wider appeal succeeds in harnessing its users as a vast sales force. The fans, in addition to making a powerful attachment to the artists because they like their music, also share revenue on the band’s collaboratively funded first album (the other beneficiaries being the record company and the band). This extremely strong ownership of the company’s product makes fervent evangelists out of the users, encouraging them to promote their own bands in every channel in imaginable, creating a potent word-of-mouth marketing machine. At the time of writing this passage (30th July 2008), Sellaband has 12 artists with an album out, 11 currently recording an album and over 8000 artists or bands signed up. A quite convincing track record for a record company that has at this point been live just little under two years. Focusing needs to be done in how the benefits are to be realized in the long run in order to justify investment to crowdsourcing. Utilizing examples and cases, I created a list of different types of revenues that can be pursued with crowdsourcing. This list is shown in Table 11. While there are many types of benefits that can be sought utilizing crowd engagement, it should be the business’s strategy and competitive situation that dictates which revenues are pursued. In addition to classifying different kinds of benefits, I felt it necessary to still classify some models in regard of the sales channel and target of the members’ contributions. This is illustrated in the comprehensive but not exhaustive list in Table 12.

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Table 11. Types of revenue in crowdsourcing projects.
Type of Revenue Direct revenue from customers / members of the service Revenue Source Revenue from access to the community (rare) Revenue from access to enhanced service (e.g. more storage space, more features) Revenue from letting members realize and sell their creations (e.g. printing physical books) Revenue from selling created output to other members of community Revenue from more sales of existing products to an increased customer base Revenue from access to the community (partnering) Revenue from selling created output to 3rd parties (e.g. B2B clients) Revenue from selling data on member-customer base (e.g. for market research) Revenue from advertising Connecting with the customer in novel ways more relevant ways Gaining experience in two way, multi-node method of connecting with customers Learning something about customers that was never known before (profiles, etc.) Involving customers in telling and sharing brand / company story Moving up in the customer’s trust hierarchy Increasing brand loyalty, decreasing churn Getting direct feedback in real time Accessing novel knowledge that was unavailable before Accessing novel, more effective solutions to existing problems Sharing risk from experimental activities with customers and partners Speeding up development cycle and time to market Scaling successes rapidly through involving community, word-ofmouth effect Better, proven market potential of co-created services and products Lowering costs through customers self-supporting each other

Direct revenue from 3rd parties (other businesses)

Indirect revenue

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Table 12. Sales targets and channels in different crowdsourcing communities.
Target and channel Crowdsourced product sold to business clients of the crowdsourcing community Crowdsourced product sold to community members and non-members alike indirectly via sales channels other than the online community Proceeds sold to members of the community directly via the community Examples Innocentive Crowdspring iStockphoto Sermo Dell Ideastorm Zuda Comics MyStarbucksIdea Threadless Etsy Lulu Sellaband

As can be seen from Table 12, there are at least a few options as regards how to organize the utilization of the contributions and although the business’s industry largely dictates how these matters will be solved, this is an issue that shouldn’t be left without a thought. Proposition 1a thus gains additional focus and texture; sound business needs should come high in importance for crowdsourcing companies and it can be concluded that while crowdsourcing is seen by many as being more about co-creation and customer relations than sales, opportunities for direct sales and even basing the whole business model on crowd collaboration also exist. I have thus clarified the different business needs that crowd collaboration can adhere to. 5.1.2. Customer Participants

The empirical material also gives support to customer capabilities as a critical element in focusing crowdsourcing activities, with influence especially on the scope part, as Gord Hotchkiss illustrates in his critical assessment on Wikipedia founder Jimmy Wales’ people-powered Wikia search: …the minute you put people into the equation, you introduce "signal noise": in engineering parlance, you add friction between the end user and the desired content. Automated algorithms are relatively friction-free. Results are ranked with mathematical objectivity, based on universally applicable principles. Queries flow through this channel to connect with the content as determined by the algorithms. People are smarter and more intuitive than the smartest algorithm, but they're also political. And the reality is, the very segment that Wikia (and Wikipedia) depends most on are those most prone to politics.

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This clearly demonstrates the instability of people as an asset. Once a company starts utilizing the crowds, it can’t dictate how they will behave. Targeting, screening, guiding, encouraging and punishing all can be used to drive activity to a certain direction, but in the end the people will decide where they want to take the community once they are handed the keys. In addition to their skill levels, there is fluctuation in interest and enthusiasm levels of people as Influx Branding -blog posits in a post on “8 ways to go beyond the consumer generated ad”: Not all customers are equal in their level of enthusiasm for the brand. Use some intelligent research to identify the levels of enthusiasm that exist. …Once you know the levels of enthusiasm, create a plan to migrate customers up the ladder. On a similar note, Jennifer Alsever, a writer for BNET, states: Learn Who Loves You (and Who Hates You)… …Cull your call center and feedback databases to identify outspoken consumers who have a history of repeated interaction with your firm—be it positive or negative. By this she seems to imply that most enthusiastic participants are usually the ones who love your brand – or hate it. While many a marketing manager might be afraid of the takeover of the community by angry customers, Jennifer adds that actually it is the most critical people that provide the most useful input. Of course, things can go very wrong if there are nothing but haters on your service, as has happened in recent participatory initiatives by Wal-Mart, an American retail chain. Especially the web savvy young are extremely critical of the chain and its practices, and have recently e.g. infested its Roommate application on Facebook and flooded its message wall with rants. Customer insight as to who are the people most likely to engage in a creative dialogue will nevertheless be precious in targeting these activities among the larger public. As regards customer participation levels, it seems to be widely accepted among experts that homogeneity of participants and exclusivity of the community drives participation. Lois Kelly writes in Future of Communities blog:

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People may get more involved in private, intimate communities because they feel like they can have a say and that community members and the sponsoring company hear their views… …They see participating as an interesting or fun outlet for communicating with other people who love what they love. However, it needs to be kept in mind that according to the ‘wisdom of crowds’ theory it is exactly the broad and heterogeneous participant base that brings the best results. This can be seen as contradictory with homogeneity’s apparent effects on participation levels. As we can see, proposition 1b gains support, as industry experts clearly hold the consideration over customer participants, who they are, what they’re capable of and also what they are willing to do, in high importance. However it needs to be further researched which kind of participant group would be ideal in different settings, as there is tendency to suggest that homogeneous groups would be more active and do better, which is in contradiction with the wisdom of crowds concept. 5.1.3. Organization capabilities

A passage in Bnet’s blog post “How to Get Your Customers to Solve Problems for You” by Jennifer Alsever has a special meaning to thinking about organization’s capabilities in crowdsourcing projects: Decide If You Really Care What Your Customers Think. This seemingly self-evident notion strikes me as of crucial importance. Many companies might nowadays actually be rushing into crowdsourcing or other collaborative initiatives without even thinking through how – and whether or not – they are actually going to utilize the product of this collaboration – whether or not their organization’s culture is fruitful enough soil for it. I am able to also draw on my own experience here as well for empirical material. In my work as a customer manager nowadays in a large multinational company, I have realized very personally the challenges of working with collaboration projects across the organization where divisional and departmental boundaries are sometimes higher than what is formally agreed. As I stated in my initial layout in Chapter3, it is very

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hard to plan organization spanning crowdsourcing projects if other activity doesn’t span the same boundaries. People in organizations nowadays are also keen to think that crowdsourcing, like outsourcing lessens the need for resources in-house. This is not however automatically true with crowdsourcing efforts, as resources need to be built and people need to be dedicated to activate the community, take care of its members and advance matters in-house as well. The following blog passage from Heather Green of Businessweek clarifies the point: Sometimes the NYTimes see so off track in its very earnest voice. Case in point today was their story on online videos that brands ask people to make and send in. There is this thread about how, shock, it's not cheaper to do this than to do a standard ad. Well, it's an entirely different process and it takes different costs...making ads on the cheap isn't the point. The point is interacting with people. Interacting with people takes resources, and these resources more often than not need to reside in the organization initiating the crowdsourcing activity if it is them who seek to make the connection with their customers. Summing up the organizational challenges from researching discussions of industry experts and utilizing case examples, the challenges listed in Table 13 rise to surface as regards organizational capabilities.

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Table 13. Different kinds of organizational challenges recognized in the FLIRT model
Type of Organizational Challenge Cultural resistance Lacking skill base Examples Fear towards and resistance of open operating model Resistance to control of brand experience Risk aversion too high for achieving change Internal staff insufficiently skilled in crafting open operating models High-enough-profile people perceive themselves as not ready to function in the transparent company-customer interface Partners (advertising and media agencies) advocating shallow and expensive ‘techniques’ instead of building long term solutions targeted at deep interactions Units and departments lack resources to dedicate to managing required operations The structuring and organization of different units and departments in the organization hinders direct, company-wide connection to customers Company policies and practices hinder spontaneous co-creation efforts with customers

Structural rigidity

For the different reasons laid out in Table 13, it is extremely important, before heading to implement the crowdsourcing plan, to ensure that all involved internal parties and persons understand and agree on the content of the endeavor and are committed to achieving the desired results. This might require additional training to the benefits and also methods of crowdsourcing, as open collaboration with customers is not necessarily the standard modus operandi of companies on any field. Judging from the results, it can be stated that Proposition 1c – organization capabilities being a key consideration in crowdsourcing activities – also has a solidly founded place in the Focus part of the FLIRT model and it has also been given more form than just stating the obvious. 5.1.4. Scope

Among all the consumer-generated hype, it was sobering and refreshing to find Hitwise’s April 17th 2007 Web 2.0 Expo presentation on proportion of creators on the hottest Web 2.0 sites (and read comments about it all around the blogosphere), as shown in Figure 4.

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Figure 4. Consumer creation on select Web 2.0 services (Hitwise 2007).

While many were quick to cry for the death of social media with this report, what it did was it simply confirmed the 1-9-90 rule that is an unwritten law in the participation media world and surrounding blogosphere and states that in every community, only 1% creates content, 9% interact on it, and 90% simply consume it. However, as I stated already in the beginning of the framework building, creation is only one aspect of crowdsourcing, the other being categorization, voting, rating, etc. As Josh Catone at Read/Write web puts it: Crowds are better at vetting content than creating it. It is important to note that in most of the above projects, the group merely votes on the final product; they do not actually create it (even at Cambrian House, where the group collaborates to create the product, individuals are still creating each piece on their own and the group votes on whose implementation of an idea is best). This has implications on how to scope crowdsourcing activities. Along with asking for lesser contributions, another alternative is to capitalize on things that people do anyway and not ask them anything extra, but simply introduce new tools to capture that behavior for everybody’s benefit – making participation a side effect. Microsoft, for example now uses this approach to make better its spellchecker in Word, its market-leading word-processing software: when people teach it their own vocabulary, Word collects these contributions (by permission of the user) and sends them to

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Microsoft’s development centre. When a certain expression accrues enough frequency, it will be added to the next update of Word and thus automatically sent to all other customers, making the development cycle faster and more focused on customers’ current needs. Philips also uses crowdsourcing for collaborative design in Second Life without asking their customers to actually create anything: Philips Design has decided to enter the virtual community of Second Life by engaging residents in co-creation and gaining feedback on innovation concepts. It developed a creation process called Multiple Encounter Approach, which consists of multiple encounters with consumers, either face-to-face or in this case online. Naturally, Second Life is, despite their reported user base in millions , still a niche activity as many that have registered to the service have never used the service more than once. For this reason we can’t really talk about crowdsourcing in the Philips example, but rather an exploratory research method. However, it shows what kind of crowd engaging visually rich virtual environments we might have at our disposal for market research in the coming years. As briefly mentioned already in the theory section, crowdsourcing can be conducted also in B2B environments e.g. by gathering a crowd of professionals and selling their know-how to b2b clients, as Sermo does: Backed by an investment from Longworth Venture Partners, the Cambridge (Mass.) company SERMO thinks clients will pay plenty for a look inside doctors' heads. The price? One package starts at $150,000 per year. The social network has two main components. One is a bulletin board where doctors, without disclosing their names, can ask questions and post comments about medical practice, drugs, and other information. Doctors get to join for free. As on Amazon (AMZN) or eBay (EBAY), the docs rank each other based on their answers. This sort of information sharing might help doctors improve patient care, but as with so many social networks, the question is: "Where's the business model?" The answer is the second component, AlphaMD, a product officially launched earlier in April. Sermo clients including investment and financial firms can now poll doctors on specific questions and get exclusive

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access to the answers weeks before they become available to the entire community.” In addition to helping profit seeking companies, also governmental and NGO implications, such as urban planning and problem solving have been raised as potential areas of crowdsourcing. As Cnet news reported the presentation of Jane McGonigal, a longtime developer of alternate-reality games who has now gone to work as the in-house game developer for the Institute for the Future: At her talk, titled "The future of collective play: Fostering collaboration, network literacy and massively multiplayer problem-solving through alternatereality games," McGonigal spent an hour explaining how "collective intelligence," and games designed around that concept, could be a prime component in future learning, as well as in helping governmental agencies and private organizations solve a wide range of problems. Regarding scope and drawing on examples and cases, the comprehensive but not exhaustive list as shown in Table 14 can be drawn on different business areas that can be covered via crowdsourcing activities:

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Table 14. The different scopes of crowdsourcing
Scope Base level research / R&D Recognizing upcoming trends and weak signals Recognizing trends in customer behavior, ‘market sensing’ Recognizing undiscovered human resources and talent Product development ideation Funding collectively recognized opportunities Continuous existing product development Automatic real-time product enhancement Content creation Product recommendations and ratings End product design Marketing activities Advertising C2C sales Product and service support Product and service utilization guidance Examples innocentive.com Springwise.com Tremor.com Zuda.com Sellaband.com Ideastorm.com MyFootballClub.com Sellaband.com P&G Vocalpoint Microsoft Word spell checker Next.three.com iStockphoto.com Amazon.com Threadless.com Tremor.com Holotof Doritos Crash the superbowl campaign Threadless.com Sellaband.com Mac forums Studiodell.com

It can be said that most of the functions in contemporary business can at least be touched, if not completely driven, by crowdsourced activities. Naturally, there are critical functions, such as accounting, that can’t be left to the crowds. Relating to this, an important notion still regarding scope is that crowdsourcing initiatives don’t work well in deterministic systems where every consequence of every action needs to be known and every item needs to be exact and certain. Indeed, crowdsourcing works best in so-called probabilistic systems, where it is enough that the answer or other contribution is right and good on average, but where no one contribution can be taken as a proven fact. Chris Anderson writes on this in his blog post ‘The Probabilistic Age’: The good thing about probabilistic systems is that they benefit from the wisdom of the crowd and as a result can scale nicely both in breadth and depth. But because they do this by sacrificing absolute certainty on the microscale, you need to take any single result with a grain of salt. As Zephoria puts it in this smart post, Wikipedia "should be the first source of information, not the last. It should be a site for information exploration, not the definitive source of facts” One important addition to the original FLIRT model is the cross-examination of the defining attributes against each of the constraints. This helps checking aspirations against resources and capabilities of both the customers and the company, as well as keeping in mind the business objectives that ultimately drive the initiative. Cross-

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examining Scope with the constraining attributes, we get a clear picture of what considerations are important in this first defining phase of scoping the crowdsourcing activity, as depicted in Figure 5.

Figure 5. Cross-examining Scope with the constraining attributes

Reflecting the scope of activity against business objectives, we can weigh whether or not the planned activity really answers central challenges. On how the customers can answer the challenge in a way that is usable for the company, one needs to assess whether the problems are suitable for leaving them for the masses to solve. As already stated, also the organization’s internal resources need to be informed, capable and committed to the upcoming task in order for it to succeed. In sum, Proposition 1d gains traction and focus; scopes of crowdsourcing vary widely among companies with different starting points and are thus an important consideration in the planning phase. It can be further extended that to properly set the scope crowdsourcing activity, it needs to be reflected on the three constraining attributes as described above. 5.1.5. Scale

In addition to Focus, scale matters as the tighter the scale, the easier it is for people to participate. It must be kept in mind that there’s only so much attention the majority of consumers can spare a given brand or company. A good example of this is the 82

crowdsourced startup company ‘Ringside Startup’ that left everything open to its target group and left them to decide on everything related to the company. Having too wide scale for people to grasp and no clear focus, it failed to raise even close to the $50,000 it sought, landing only a few hundred dollars over the course of many months before re-launching with a different name and focus. The front page of Ringside Startup is pictured in Figure 6.

Figure 6. Ringside startup’s initiative failed because the scale of activities to undertake was too large

Scaling is certainly one of the most important aspects of defining the crowdsourcing initiative from the customers perspective, since where too narrow a scale of activity might prove trivial, to wide a scale is simply too complex for people to grasp and in this case nothing will get done. Kathy Sierra from Creating Passionate Users –blog expressively illustrates this challenge in Figure 7.

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Figure 7. Kathy Sierra’s description of the declining benefit of increasing customer control

Also other sources have agreed to Kathy’s assertion. More user control over more things doesn’t make a customer happier. Instead, customers want to be able to affect the very things that most matter to them. Influx Insights blog sets down a ground rule on how to go beyond the customer-generated ad: Challenge them. Don't just ask random, broad questions. Seek answers to tough challenges; give them clear briefs not blank sheets of paper. The tighter and clearer you are, the better the response will be. In the theory part I suggested through an example (Ideacity blog post by Joel Greenberg) that time scale is also a crucial consideration in setting up scale of the activity. The said post has had support among top bloggers, although Clay Shirky, author of the book ‘Here Comes everybody – The Power of Organizing without Organizations’, commented on the non-usefulness of traffic alone as a metric for true engagement on Joel Greenberg’s post: Why are you using the traffic graph as a proxy? It is unrelated to use. Traffic to the website only measures interest, not adoption. A lot of people sent away for Sea Monkeys too, because they liked what they saw advertised, but that said nothing about how many were satisfied by their purchase. Crucially, no web numbers measure anything about SL use — the only source of real SL numbers is Linden, and they are obviously not in the mood to report

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anything about actual use. Making assumptions about SL using SL.com is like that old joke about the physicist betting on the ponies: “First, I assumed a spherical horse…” However, many experts hold time scale as a crucial factor in planning activities, and it has been stated by many, that campaign-thinking belongs to TV/print advertising and fails in social media. As Ben McConnell of the Church of the Customer Blog ponders: Disney's Virtual Magic Kingdom is a virtual representation of the real-life Disneyland theme park. It's also an online community for evangelists of Disneyland. More than a million avatars have been created at VMK. By almost any standard, it's a popular site. But Disney plans to shutter VMK tomorrow night, and that's caused consternation in paradise. Petitions have been signed, protest sites have been created. VMK citizens wonder why Disney would want to close something that solidifies and extends their loyalty. Here's one reason: Disney envisioned VMK as an 18-month promotion, not a long-term loyalty effort. The closing of VMK illustrates a schism prevalent today at many companies, especially larger ones: the battle between short-term campaigns vs. long-term evangelism. Campaign thinking is a byproduct of the last 25 years of business school education. The formula has been to create a short-term project using established metrics, execute, then start over with a new idea. Move the needle quickly. The formula for evangelism thinking is: Create a project where the community of users become part of the process and most importantly, are considered a tangible asset. The needle may not move as fast because the investment is for the long term, but it's less likely to have wild, up-and-down swings. The need to move away from short term campaign thinking and towards longer term community thinking has been voiced by many experts in the blogosphere for some time already, and it can be stated that this is a thing that many on the field hold in importance. Naturally, campaigns do have their place still, but within social media they should be tied to a longer-term focus. One example of this kind of thinking would be to build campaign sites so that a customer’s username and password for e.g. creating and posting content would remain the same over multiple campaigns. 85

In deciding whether the scale of activity is appropriate, a cross-examination of Scale with the constraining attributes elaborately clarifies the considerations needed with the Scale element as shown in Figure 8.

Figure 8. Cross-examining Scale with the constraining attributes

Naturally, by expanding scale economies of scale can be reached by spreading the investment over multiple areas and time periods, which needs to be weighed against added benefits. However, there are also costs associated such as getting more internal people involved and for longer periods of time. Also when it comes to outside participants, as we saw, more scale is not always a good thing, since the attention span might break before getting to grips with increased scale. As stated in the part 5.1.3., scaling up activities across department boundaries require that crossorganizational cooperation is on a level that allows this.

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Summing up scale, it can be stated that in addition to having to do with how far from the core scope the activity is to be extended or the number of different scopes to be covered, crowdsourcing initiatives broadly fall under two categories: campaignoriented and community is oriented and initiatives, anonymous, of which campaign-oriented oriented crowdsourcing short-term while community

crowdsourcing is long term and requires personal engagement also from the company side. Proposition 1e and Proposition 1f can thus be considered viable at this point. 5.1.6. Depth

The empirical material gives weight also to the consideration for depth of interaction. The extent to which the crowdsourcing company might want to be dependent on its community should be carefully considered. Naturally, the worst thing companies fear is giving away intellectual freedom and revealing where the company is heading. Karim Lakhani states in an interview: For firms, the first order risk is the loss of intellectual property, especially if you think about the fact that most firms and scientists believe that the problems they work on are actually their most important things. If you provide hints to competitors, it will reveal a lot of your strategy. However, he further states that: Even if you reveal everything about what's going on, there's tacit knowledge behind a lot of scientific and technological activities. And the benefit of opening up your problems to outsiders is that in fact you can get novel solutions— quicker solutions than what the firm or R&D lab might develop… Some other research has shown that, in fact, if you do open up the solution process you can get anywhere from 10 times to 100 times improvement in problem-solving performance. In effect Mr. Lakhani seems to imply, like many others, that with careful planning, the threats brought by open collaboration would be offset by the benefits it brings. He further continues that:

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When you talk with lawyers, most of them say, "Protect, protect, protect, close, close, close," but there are some very innovative licensing schemes and innovative ways by which you can allow others to peek into your process and not give up the entire keys to the kingdom. Traditional companies can inspire their customer community by letting them in on new information, products and services first and letting them have a say in new product development. Genuinely giving up control and power can win customers’ trust even in difficult times when this trust has been under debate. Nickname KFM Kamal from Brandautopsy blog elaborates this futher: Companies can convert critics by giving up some control and giving in to participating in the conversation. It seems Dell is turning the corner with regards to its online reputation. Is Dell’s reputation pristine now? No. But Dell is showing other businesses that if you listen to detractors and show detractors that you are listening, then negative word-of-mouth can negated. Businesses that are built on the foundation of collaboration enjoy the help of their customers and/or community members, but are also quite exposed to the risk of these people finding something better to do and quitting the community without ever returning. This dependence comes forth very well in Church of the Customer blog’s interview with the head of the popular T-shirt design community: As we were settling in for a chat earlier this year with Threadless co-founder Jake Nickell so we could profile his company for Citizen Marketers, Jake said something that stopped us cold: ‘Our community could destroy us if they wanted to.’ Naturally, all businesses are ultimately dependent of their customers for survival, but not traditionally for product development and design. This dependence can naturally act as a very powerful deterrent for sharing power. Nevertheless, deep relations with customers can also help in times of distress, as shown later in the same interview: During our chat, Jake was still a bit shaken from what had happened several days earlier. While redesigning the site, he accidentally deleted a good part of the content created by the community. Poof, it was gone and unrecoverable.

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Jake feared the worst: a community so angry that it would harm the company. He needn't have worried. Based on the company's elaborate efforts to encourage the community's participation and ownership in decision-making, some members wrote scripts to recover content from Google's cache servers. Some said the content dump was for the best; a fresh start. There were no swells of anger. That doesn't mean Jake and Jacob took the Threadless community's acquiescence for granted. They said that if they made major decisions without the community's input, it could backfire in unpleasantly powerful ways. In short, the company completely destroyed its customers’ collective effort, but instead of taking to barricades, the community helped the company to get back on track. This is a powerful example of the benefits of involving the community more deeply than might be absolutely necessary. Also for companies dreading the riskiness of being open, the following thought by Peter Turner is worth thinking about: Being ‘open’ is less risky than remaining ‘closed’. Don’t close yourself out from talent, new ideas, and a leadership position among your constituents. Chris Anderson is one of the proponents of extreme in terms of depth when he blogs in his long tail blog that: As the Web becomes the greatest word-of-mouth amplifier in history, consumers learn to trust peers more and companies less… …What really interests me, however, is when this goes even further. Not just transparency, but Radical Transparency. The whole product development process laid bare, and opened to customer input. Management in public, via blog. CEOs venting, without benefit of legal counsel, in late-night postings. Of course, the Wired editor has a story to sell, and his statements need to be taken with a grain of salt, but stories of this kind of radical transparency have been popping up with the advent of blogging culture and at least within the blogosphere the perception is that they usually do more good than harm, bringing customers closer by showing vulnerability and dependence on them, and creating true engagement.

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Summing up depth and adding it time perspective (campaign vs. community orientation), we can derive the classification in Table 15 to help clarify the Depth element and its uses in crowdsourcing.
Table 15. Community and time orientation in crowdsourcing
No strong community or community interaction between participants Individuals create in explicit competition. Community interacts and e.g. helps select the best material. Community co-creates and cooperates in a joint venture without financial commitment Community makes financial investments and has a large role in directing action. Community ‘owns’ the initiative. Short term Many advertising contests Doritos Crash the Superbowl Long term Innocentive Amazon’s mTurk Threadless Ideastorm Cambrian House Wikipedia Sellaband MyFootballClub

Nokia ‘Color campaign

Your

World’

As can be expected short term doesn’t achieve as deep a relation than some long-term projects, which can even engage crowds in joint funding ventures (sellaband.com and myfootballclub.com). Figure 9 summarizes the depth attribute of the Focus element in a similar fashion with Scope and Scale.

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Figure 9. Cross-examining Depth with the constraining attributes

When depth of interaction is increased, we see an increase also in the risk the company is taking, both in terms of being more dependent on its customers and also exposing more previously hidden company information. This added risk need to be weighed against the added benefits, such as loyalty and engagement of as well as potentially more precious contribution from the customer participants. Also, the minimum level of depth that the customers find significant enough to participate needs to be established, as this is the minimum threshold that can’t be gone under. In the end it is the trade off between risk and benefits but also the company’s ability to bear that risk that establishes the right level of depth and access for the customers. In the light of empirical evidence, depth is a key consideration already at planning phase. Proposition 1g would also seem relevant and concludes the Focus main element in its entirety, with its three constraining attributes (Business Needs, Customer Participants, Organization Capabilites) and three defining attributes (Scope, Scale, Depth), justified as a relevant first major steps in setting up crowdsourcing activities.

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5.2. Language
Language, tone of voice, company role and approach as well as related issues were certainly deemed important by industry experts and practitioners. Especially after numerous failed attempts to engage the customers with fake blogs, artificial customergenerated content, paid discussion starters on forums etc., language and the way of presenting the challenge and the party behind it defends its place as a crucial key element in the FLIRT model. 5.2.1. Social Objects

Judging from the empirical material, social objects are certainly a key aspect in collaboration and co-creation and also in crowdsourcing. Especially during spring 2008 social objects have sparked extensive discussion, but one of the strongest advocates of this concept is also one of the earliest ones in the blogosphere, Jyri Engeström, who writes in his blog already in 2005: …the term 'social networking' makes little sense if we leave out the objects that mediate the ties between people. Think about the object as the reason why people affiliate with each specific other and not just anyone. For instance, if the object is a job, it will connect me to one set of people whereas a date will link me to a radically different group. This is common sense but unfortunately it's not included in the image of the network diagram that most people imagine when they hear the term 'social network.'… …The fallacy is to think that social networks are just made up of people. They're not; social networks consist of people who are connected by a shared object. The social networking services that really work are the ones that are built around objects. And, in my experience, their developers intuitively 'get' the object-centered sociality way of thinking about social life. Flickr, for example, has turned photos into objects of sociality. On del.icio.us the objects are the URLs. On builiding collaboration on social objects Jyri in his later keynote presentation brings forth the following considerations:

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1. You should be able to define the social object your service is built around. As shown already in the theory section and verified by contemporary services built around many kinds of social objects, these need not be concrete traditional objects, but also e.g. places, everyday happenings, etc. 2. Define your (social) verbs that your users perform on the objects. For instance, eBay has ‘buy’ and ‘sell’ buttons; YouTube has an ‘upload video’ button; Flickr has an ‘upload photos’ button. It's clear from the beginning what these sites are for. 3. How can people share the objects? Sharing and discovering, not only searching, the objects needs to be made easy and enjoyable. Like attaching a prominent ‘send’ button to each of your photo page. 4. Turn invitations into gifts. In the virtual world, scarcity is not a naturally occurring issue since everything can be replicated indefinitely with virtually no added cost. However, scarcity can be artificially generated by e.g. limiting participation by the popular ‘invitation only’ approach. 5. Charge the publishers, not the spectators. YouTube, Google or numerous social networks and social service are free to use for consumers but advertisers and content producers might need to pay. One of the more visible proponents of social object recently has been a prominent blogger Hugh McLeod. He writes in his many posts on social objects that: Social Networks are built around Social Objects, not vice versa. The latter act as "nodes". The nodes appear before the network does. Granted, the network is more powerful than the node. But the network needs the node, like flowers need sunlight… …Social Object can be abstract, digital, molecular etc… These discussions would seem to strongly emphasize the role social objects play in digital networks and communities. Also many other industry actors state the 93

importance of social objects without necessarily using the specific expression. As Jordan McCollum and Gavin O’Malley observe on a Communispace study: The stronger the “social glue”–or common interests and passions among members–the greater the participation… Continuing the same idea, Bud Caddell at SEOMOZ blog continues: Communities rally around a strong purpose – A clear purpose provides a common goal for all stakeholders to pursue. As regards Proposition 2a, the importance of social objects in collaboration, the message from industry experts is quite clear; engaging customers around a collaborative offering, it needs to be considered what common interests they share that are important for them and can act as the catalyst in the customers becoming interested in collaboration. These social objects may or may not be directly linked to the collaborative offering or the company making the offer. A good example of boundary spanning social object is that of Naked & Angry (screenshot in Figure 10), a shopping service and design contest not unlike Threadless.com (it is actually owned by the same people); at first it might not be completely clear what people who do tie design have in common with people that do wallpaper design (other than the general passion for design, of course). However, it is pattern design, the ability to craft seamlessly repeating patterns, that is the common denominator between these two groups of people. Pattern design is thus the common social object for Naked & Angry’s service for its members.

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Figure 10. Naked & Angry front page

5.2.2.

Social Interaction

Along with the importance of social objects, the types of social interaction indeed do draw interest around the blogosphere as posited in my Proposition 2b. Dirk Knemeyer from Thread Information Design argues that people use the web for four things and four things only. People use the web to learn People use the web to feel People use the web to connect People use the web to trade

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While Knemeyer’s model is a bit rough and not entirely spot-on as regards specifically crowdsourcing, there is one comprehensive model that has received a lot of attention in the blogosphere for covering the different types of social interaction that happens on especially in the social end of the online service spectrum. In a post on nform.ca, information architect Gene Smith of the Atomiq.org blog outlines the 7 building blocks of social software, as depicted in Figure 11. This pulls together the work of various people including Matt Webb and Stewart Butterfield and provides a solid framework for social interaction, including community engaging crowdsourcing acitivities. Mr. Smith’s assertion is that all social interaction online includes some or all of the following six ingredients: identity, presence, relationships, reputation, groups, conversations and sharing.

Figure 11. Gene Smith’s model of types of social interaction on the web

Both Smith and Knemeyer argue that it is important in designing social interaction to focus on one or two of these, since everything can’t be efficiently covered. Like social objects, in the industry experts’ opinion also the nature of social interaction clearly needs defining in the planning phase of setting up crowdsourcing operations. Furthermore, the consensus seems to be that focusing on few key modes of social interaction that support the overall goals and activity best brings better 96

results than trying to cover everything with one service. A good example is the crowdsourced news service Digg that thrives by focusing strongly on conversations and sharing stories, and leaves grouping and presence aspects out, although enabling these features technically would be a relatively small task. Proposition 2b thus seems a valid point in planning crowdsourcing activities and is also enriched and defined in more detail for the FLIRT model. 5.2.3. Company presence

It seems to be common understanding among the experts in the blogosphere that first and foremost, the crowdsourcing effort must be true and transparent to the customer or member of the community. It needs to be very clear what the entity behind the endeavor is. Although people companies might think that by revealing their commercial aims they would discourage people from participating, in fact the reverse is true. As Gavin O’Malley observes from a recent study by Communispace: When potential members were considering whether to participate in a community, they were 30% more likely to log on when the welcome notice disclosed the company sponsoring the community. Branded sites had an initial log in rate of 71%, compared with 55% for unbranded sites. Jordan McCollum at Marketing Pilgrim blog further elaborates by commenting on the same study: When potential members were considering whether to participate in a community, they were 30% more likely to log on when the welcome notice disclosed the company sponsoring the community. Branded sites had an initial log in rate of 71%, compared with 55% for unbranded sites… This is crystallized in a blog post “New research: participants vs. lurkers” by Lois Kelly in Future of Communities blog. ...People get more involved when they know whom they are talking to and why… Thus, companies need to engage in straight talk with the customers. All kinds Company presence in traditional brand communications is inherently averse to any 97

negative feedback. Brands traditionally need to be shown in a positive light and, more often than not, as perfect, best-in-the-market (whether as regards quality, price or other differentiators) items. However, with crowdsourcing as well as with other forms of utilizing social media to corporate ends, negative comments and contributions must be tolerated in order to first credibly converse with customers, but also to gather ideas and response that is truly valuable. John Moore of Brand Autopsy states: Negative word-of-mouth is also an invaluable source of feedback for the product, brand, and company. It is very possible to run focus groups, do test marketing and in-home consumer interviews, and still not discover how consumers are going to communicate about the product as they use it and integrate it into their lives. In the words of Influx Insights, a marketing consultancy, by showing a brand’s vulnerability they are showing humanity. From their blog post “Brands need to be in permanent beta”: This is a radical with most of the brands that came to life in the C19th and C20th, they have an industrialized view of the world, a view that assumes everything about them should be tightly controlled and perfect… The state of beta suggests they are open to questioning and ideas for improvement To the question of how can inanimate brands actually achieve this informal, open and allowing style of communication, community managers are in many discussions deemed crucial by industry experts. Writes Joshua Porter of Bokardo.com: No matter how prescient your designers and how well thought out your design strategy, there is no way to design a perfect social web site that doesn’t need ongoing management. Yet, some social start-ups fail to recognize this and launch their app without a designated caretaker. The result is a slow failure…the worst kind of failure because it’s not immediately apparent that it’s happening In order to gain human attachment and involvement, human resources need to be dedicated to take care of the community. Also the Church of the Customer blog notes that

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Customer communities need stewards. They need a strong-willed, yet highly approachable and friendly manager who will boldly represent the pervading will of the community to his bosses at the sponsoring organization, then handle the often-difficult chores of explaining the rationale for business decisions made several levels up the food chain. A few people more engaged in the discussion around community management and community managers are Jeremiah Owyang, formerly community manager at Hitachi, Mario Sundar, community manager at LinkedIn, and Christopher Salazar, a partner enablement programs specialist at Hitachi Data Systems. While Owyang emphasizes the need for the community manager to “put community first”, Sundar sees sees the role of a community manager largely as “pushing the membrane” between the organization and the members and making the interface more porous, in effect connecting people inside and outside of the company; Salazar on his behalf advocates “experience with communities and corresponding social methods and tools”. Also Daniel Riveong posits community managers or community evangelists becoming integral to marketing, describing them as “going beyond being a spokesperson, writing to the community (writing post, responding to comments) and generally engaging the community, be it on Yelp, Amazon.com reviews or blogs or in-real-life (IRL)” and advocating the “need for Evangelists and Community Managers to execute Social Media Program to engage, manage and measure Social Media and Communities”. It is also taken as a given that these community managers or specialists need to work with the community in their own personas, as Chris Anderson blogs about the rules of transparent media: Show who we are. All staff edit their own personal "about" pages, giving bios, contact details and job functions. After stating the need for community managers, it still needs to be noted that this is necessary especially in long term collaboration and not as acute a requirement in short, campaign-oriented crowdsourcing efforts, as we learned while executing our Itekki Tekisin –campaign for Sonera (screenshot in Figure 12). In this short-term advertisement contest, we utilized a board of judges made up of three fictional characters, whose commentary on the customer generated works in the gallery was purely random and designed to simply add a fun twist to the campaign worthy of 99

spreading out to friends. It worked well as the target group is very media literate and the aim was to create first and foremost an entertaining experience. Should there have been an aim to more deeply connect to the customers and build trust and long-term commitment, this approach won’t suffice in itself. Of course consistent utilization of crow-engaging campaigns can create an image for the company as caring what their customers have to say.

Figure 12. Sonera’s Itekki Tekisin -campaign with a fictional board of judges

Many companies fear that by giving their customers voice and part in brand building, they lose brand assets carefully built over time. However, David Armano eases companies in this subject matter: If brands let their communities define them – are they strong brands in the first place? The answer is yes. My voice is my voice. It will not change – I am who I am. But my thoughts and actions can be influenced by what you say and do. Are brands willing to do the same? Furthermore, it is common for companies to be wary of presenting themselves as not having all the answers. In social media however, if a company or a brand aspires to connect to its customers on a human level, human level interaction is also required,

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and this includes imperfectness. As Jeremiah Owyang addresses this issue on one of his numerous posts on corporate use of social media: Don’t shy away. Acknowledge deficiencies, no matter how shameful immediately. If you don’t have the answer, at least acknowledge you see the problem and will respond as soon as you have an answer. As a result you will become the first source of news, and will control any additional buzz. Stay relevant and address the issues. Related to this, an important notion is made by KMF Kamal of brandautopsy.com on how companies relating with their customers online should not strive to conquer the conversation and be right on all accounts: When you join the conversation, tell your side of the story. Write for the record. But don’t try to win every point in the online debate. That’s futile and will only amplify the heckling. Dell is doing its part to be more transparent and address issues directly and honestly. The Organization Presence part of the Language – how should a company present itself towards the customer – seems to be the most controversial and talked about sub element in the Language element of the FLIRT model. At the very least, we can conclude that with organization presence; authenticity and transparency are elements central to succeeding in collaboration and crowdsourcing. Proposition 2c and Proposition 2d are thus justified at this point as belonging to the core of the FLIRT model. On a further note, the task of community manager would seem to be essential as regards company presence. In general, then, we can conclude that it is relevant and valid to think about Language issues through thinking thoroughly about Social Objects, Social Interaction and Organization Presence.

5.3. Incentives
When it comes to incentives, talking about ‘social’ media and collaboration might lead some to believe that social benefits, doing together and the fruits of collaboration would be what’s driving the people to collaborate. However, this is usually not quite enough: Bud Caddell at SEOMOZ sums up the true motivation behind participation.

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Me-first! Successful communities build around the individual rather than the work group, allowing single users to create profiles, customize components of the environment and express their individuality. Moreover, individuals must gain some benefit by becoming a member of the community and contributing. Otherwise too, the notion of self-interest as the driving force behind participation and collaboration gains wide support around the blogosphere. While clearly people exist that simply want to make the world better for everyone, it is usually the individual whose needs come first. Despite the expressions ‘social media’, ‘collaboration’ and the likes, overt focus on social value on the cost of personal value is harmful as regards the usefulness of the community to the individual. As Joshua Porter illustrates: “…much of the motivation within social sites is actually rooted in personal value, or answering the question: “what’s in it for me?”…At the beginning…there is no social value because there is no user base. Instead, focus on how a single person can use your service even if others don’t share or tag anything…Even at the very beginning YouTube (for example) was providing personal value: hosting your videos for free…So while YouTube excels at getting viral growth out of the sharing of videos, they’re providing a valuable, personal service at the same time. It should also be noted that altruistic people, or people who do things for the good of the group regardless of personal benefit, are incredibly rare. They’re so rare in fact that they make a very poor population to design for…Even Wikipedians, who have been called altruistic at times, are mostly driven by reputation…the reputation they gain from their peers and other Wikipedians.” Gord Hotchkiss also elaborates on incentives when comparing wikipedia (peoplepowered encyclopedia) and Wikia (people-powered search): Finally, we have to look at the motivation on why people contribute to Wikipedia, and ask ourselves if this would translate to a search engine. When you contribute to Wikipedia, you've staked your claim in online intellectual territory. You've left a mark, speaking to your expertise in a particular area, on

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a place on the Web where you can point and say, "See, that's me. I did that!" It may not have your name on it, but it's visible. In a search engine, your contribution would be lost in a background process that would leave virtually no trace that you ever trod there. There are no bragging rights. And that's essential to appeal to the segment of the online community that Wikia needs to survive. If we're going to take even a few seconds out of our busy days to tag, vote, nominate or whatever else Wales needs us to do, there'd better be something in it for us, or it just won't fly. For these reasons, it is crucial to focus on the individual first and the community second when thinking about different kinds of incentives for the participants. But they need not always be monetary or material. Below we will go through some of the findings as regards intrinsic, extrinsic subjective and extrinsic objective incentives. 5.3.1. Intrinsic Incentives

As laid out in the theory part, intrinsic incentives seem to matter also as regards the industry experts opinions on crowdsourcing. Amaresh Tripathy writes in his Analytical Engine blog on crowdsourcing analytics: Probability of being a winning solver (in Innocentive’s community) is significantly and positively correlated with both a desire to win the award money and intrinsic motivations like enjoying problem solving and cracking a tough problem. Intirnsic incentives would definitely play a part then in crowdsourcing efforts. Karim Lakhani, a recognized researcher on the field explains in an interview: We've found that the population was divided into two sets of folks: those motivated by money who wanted to win the challenge, and those who enjoyed the problem-solving experience in itself. They found it to be stimulating and fun, and both of those were strong indicators. Enjoyment and the challenge of learning was the strongest correlate of being a successful solver. Intrinsic motivations indeed seem to be strong motivators for people to participate in the light of expert opinions and are thus critical in planning contemporary 103

crowdsourcing activities. The things that drive many people to participate is the challenge, enjoyment, fun and fulfillment of the need for creativity that they get from participating challenging projects. But one does need to ensure proper level of challenge. Too trivial tasks do not hold up interest for long. In Table 16 we can see different kinds of intrinsic incentives that drive people to engage in online activities.
Table 16. Some intrinsic incentives in the FLIRT model

Intrinsic incentives (subjective)

Challenging oneself Learning by doing knowledge expertise Satisfying curiosity Outlet for creativity Use value motivations Enjoyment & fun

Proposition 3a is therefore supported by empirical evidence. 5.3.2. Extrinsic Subjective Incentives

As with wikis, the success stems from the ego reward of immediate gratification compounded by a sense of participation in a large and worthwhile activity. As the above blog passage suggests, being a part of community with related extrinsic immaterial benefits is an important incentive for participants. Furthermore, companies need to show that they are actually influenced by their customers’ input. This creates a true relationship between the parties and shows company recognition towards the active members. Says Kamal of brandautopsy.com:

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By addressing hot-button ideas head-on, companies can show customers they are listening. Dell is showing its customers they are listening by acting upon the ideas to blog in other languages and to offer more support for Linux users. Influx Insights urges companies to keep their customers informed and give them exclusive access, should they wish to involve them closer into the marketing process: Use blogs to keep customers informed on what's going on at the company. Treat your customers as if they are media, which they are… …If you have contentnew ads, new designs,etc...give them access. Give them exclusives when you have the opportunity. In the same vein, Jennifer Alsever states that companies should bring the customers inside the tent and make engaged customers feel special. Also Andy Oram of Onlamp.com writes: Although reputation seems to offer a smaller incentive than many people expect in drawing forth contributions, it's potentially powerful. Something as simple as a sidebar showing the most prolific posters can encourage participation. A few people may try to abuse the system by flooding the forum with irrelevant or lowquality postings, but eventually they'll almost always get flamed off the list. Extrinsic subjective incentives do also seem to be strong motivators for people to participate as industry professionals are concerned and can be concerned central in planning incentive schemes for contemporary crowdsourcing activities. In Table 17 I have gathered some commonly quoted extrinsic subjective incentives. Proposition 3b seems thus to be supported by empirical evidence.

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Table 17. Some extrinsic subjective incentives in the FLIRT model

Extrinsic subjective motivations

Sense of belonging to a community Togetherness and common cause Learning through reciprocity Possibility of sparring own ideas Fame through exposure Peer recognition Company recognition Authority and readership Access to exclusive resources Access to exclusive channels Gaining social capital

5.3.3.

Extrinsic Objective Incentives

Extrinsic objectives, cash, products and services that have determinable monetary value, are ever present in crowdsourcing activities, although they are emphasized at different intensities. From the examples abound on the web today, it can be observed that short-term campaign sites have more need for these kinds of incentives (explicit rewards and prizes) than long-term communities that rely more on intrinsic and extrinsic subjective incentives and tend to even downplay them in order to get contributions form the right kinds of people (motivated by challenge, not money). For example, Dell’s Ideastorm community hides the $1,000 prize on ideas that the company uses deep within terms and conditions of the service. Likewise, Innocentive, that used to portray the $10,000 to $1,000,000 rewards on its front page has taken all kinds of monetary sums off display; you won’t now find the paid sums anywhere even if you tried.

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Revenue sharing is one popular way to pay for crowdsourced content. Metacafe for example shares revenue with users and thus pays not for the participation but only for performance: Metacafe, one of the web's leading independent video-sharing sites. The company is launching a new service Monday called Producer Rewards which will offer cash payouts to video creators who upload the most interesting and entertaining clips… …After a video reaches 20,000 views on Metacafe, the video creator starts receiving payments of $5 per 1,000 views. The Metacafe approach is different from another popular video sharing service, Revver: Video startup Revver serves short, static advertisements at the end of user videos. If a viewer clicks on the ad, Revver splits the ad revenue with the video creator, paying out 50 percent of the profits. Even Karim Lakhani, despite advocating other types of motivation, states in an interview that in their research on Innocentive: …Money was also important and it was a significant correlate. In the professional opinion, and also as the cases show, extrinsic objective incentives need to be in place in order to justify participating commercial activity. They are thus key consideration in planning contemporary crowdsourcing activities and Proposition 3c can be considered as strongly suppoorted. As we can see from some of the cases however, extrinsic objective incentives need not and actually should not be the primary incentive communicated to the customers. As a result of the analysis of empirical evidence on customer participation and incentives and motivations, I have collected below a comprehensive (although not exhaustive) list of incentives that comprise the Incentives section of the FLIRT model in Table 18.

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Table 18. Some extrinsic objective incentives in the FLIRT model

Extrinsic objective motivations

Company products and services Products & services from relevant 3rd parties Cash rewards Revenue share Sales commission

5.4. Rules
As argued in the theory-building phase, rules are an essential part of any functioning community. Rules do seem to play an important part in how people behave within online communities, and this issue seems to rise to importance especially in crisis situations. 5.4.1. Rules of access and initiation

In the Customer Participants part of the Focus element, I declared that collaboration as any marketing - need to be carefully targeted also when it comes to participants. There are some occasions where targeting however is not enough and an exclusive network is required. Examples of this are especially professional networks like Reuter’s financial analyst network or the doctor network of Sermo. The participants enjoy a well-defined, unified and loyal group. Stuart Hogue of Brandchannel.com elaborates: ...social networking sites like MySpace and Facebook are getting too expansive to offer their members a truly meaningful community interaction. Only when networks regulate membership will members really commit to their online communities. The power of exclusivity lies in allowing members of a group— any group—to embrace what is unique to them, temporarily denying the

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pressure to assimilate within society at large. Whatever the criteria at play, success among exclusive networks will come from the clear definition of the customer and strict discipline of the boundaries for membership. The next wave in social networking may be to move people away from the "short head" of community accessibility (mega-networks like MySpace) toward the "long tail" of human individuality, the traits that we share with the few, rather than the many… Mega-networks will continue to serve as destinations for fitting in, while exclusive communities will be where users stand out, satisfying the dual needs for belonging and differentiation. For this kind of activity to realize, rules need to be in place that state the criteria of getting in to the community. Marketing Pilgrim’s Jordan McCollum comments on a study by Communispace: 86% of the people who log on to private, facilitated communities with 300 to 500 members made contributions: they posted comments, initiated dialogues, participated in chats, brainstormed ideas, shared photos, and more. Only 14% merely logged in to observe, or “lurk.” [The opposite of most sites, yes?] The more intimate the community, the more people participate. Rules of initiation to any community need to be in place for participation to happen in the first place. Opinions from the blogosphere seem to validate my proposition that even if everything else is in place and people should come pouring in, making your customers’ life hard by asking them too much just to have a peek at what you have on offer will likely send you down the line of unsuccessful social experiments. As David Armano, an a-list blogger on customer experiences in the digital collaboration age, writes: “…great experiences aren't enough. It's entirely possible to design and develop a rich, immersive, experiential Web site, only to have light traffic and little return on investment. Bud.TV, for example, is falling short of its goal of 2 million to 3 million monthly visits…In spite of a slick interface and highly produced video, Anheuser-Busch (BUD) doesn't seem to be reaping what was sown…Many fault the (complex) registration process.”

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A social service that seems to have gotten it right as regards access and initiation is LinkedIn. One would be forgiven to think that signing up to a social network devoted to bringing together professionals, peers and companies across a plethora of disciplines and professions and thus requiring masses of information on its members would be a tedious and lengthy undertaking. LinkedIn does however attract people (again, after a slower period) by splitting the process into small, manageable portions. It first asks you only the very basic information and after that, with each consecutive sign-in asks you to fill out just one small piece of additional data (such as filing an endorsement or uploading your photo). Furthermore, it does this very invitingly by showing a status bar on your profile and stating your profile’s completeness percentage and indicating how much it would improve if you carried out the minuscule task (figure 13).

Figure 13. A LinkedIn page with the profile completedness bar on upper right

Cases and expert opinions seem to show support for the argument that rules of access and initiation are important in planning collaborative and communal activity – and can indeed be even the critical factor in the customer deciding whether or not to join. Proposition 4a thus justifies its place in the FLIRT model.

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5.4.2.

Rules of interaction and conduct

As crowdsourcing, online collaboration and co-creation become more mainstream and the value and resources created and steered through these co-creation efforts increases, rules of interaction and conduct gain ever more weight. Says Bud Caddell of SEOMOZ: Communities need an administrator and a set of ethical principles to adhere to. Communities must have rules of interaction and a system in place to effectively enforce those rules in order to maintain the quality of the communication within the community. Off-topic conversations, advertising, or abuse can lower the value and rate of active participation. However, brand and product based communities should balance the need for civilized interaction with the requirement to have an open and unbiased forum… How is bad behavior handled throughout the site? How easy is it to find your general policies and codes of conduct? What level of authority do users possess to moderate other user’s actions? While Josh Katone of ReadWriteWeb crystallizes this even better: Crowds should operate within constraints. To harness the collective intelligence of crowds, there need to be rules in place to maintain order. Rules of conduct in the community have also been addressed in discussions related to contemporary brand communications. Says Kamal of brandautopsy.com: One determined detractor can do as much damage as 100,000 positive mentions can do good. In the same way that we need to understand who the positive influencers are, it is becoming even more critical to identify and manage determined detractors. Apart from mischievous behavior, an equally important approach to interaction and conduct is how ideas and contributions can be presented and enhanced in the community. As Karim Lakhani, a researcher of crowdsourcing and online collaboration states in an interview:

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I think that that (open revealing of others’ contributions) is one of the bigger issues, because the firms that participated were concerned about IP so they didn't feel they could open up the solution process and expose the solution to others. Some other research has shown that, in fact, if you do open up the solution process you can get anywhere from 10X to 100X improvement in problem-solving performance. The ideal process would be to keep it open and get other people to comment on the solutions and perhaps even refine them more. In order to avoid badwill resulting from customer feeling they are being arbitrarily discriminated, rules need to be in place also for accepting and validating contributions. A good example of this are the rules sections of iStockphoto, a popular crowdsourced stock photography service and Threadless, a continuous t-shirt design contest. The services that succeed usually have a very comprehensive but compact and simple walkthrough where the basic processes and other beneficial instructions and tips are given. iStockphoto’s short but comprehensive online training manual in Figures 14-16 show how to guide the member into the workings of the community. Threadless also has another kind of good example, a comprehensive ‘reasons of decline’ (Figure 17) list that they can easily refer to in disputes.

Figure 14. List of quality standards on iStockphoto’s site

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Figure 15. Basic walkthrough at iStockphoto

Figure 16. Instructions and tips on iStockphoto

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Figure 17. List of decline reasons of Threadless

An important lesson in why rules of conduct are especially important is given in the case example of “Digg revolt 2007”: Digg is a community-based popularity website with an emphasis on technology and science articles, recently expanding to a broader range of categories such as politics and entertainment. It combines social bookmarking, blogging and syndication with a form of non-hierarchical, democratic editorial control. News stories and websites are submitted by users, and then promoted to the front page through a user-based ranking system. This differs from the hierarchical editorial system that many other news sites employ. In the spring of 2007, Digg.com faced a serious situation, after one of its members posted a news item containing directions to break the encryption on HD-DVDs. Faced with a threat of a lawsuit from AACS (the owner of the encryption technology), Digg took down the post and after a few re-postings, 114

banned the poster. This led to other members sympathizing the original poster and start posting the very same news item time and time again ‘digging’ it ferociously, so much so that at one point all news items on the Digg front page were pointing towards the same article. Digg then tried explaining to its community that it couldn’t survive a lawsuit against the patent holder and pointed the users to its terms of use, but at this point the ‘digital revolt’ had already gotten out of hand and Digg’s servers were crashing. According to co-founder Jay Adelson, the stories were deleted as a result of intellectual property infringement, but some users of the site speculate that the stories were deleted as a result of ties to the MPAA and its Diggnation podcast. Thus, many users saw Digg taking down the post as a capitulation to corporate interests and an assault on free speech. In the end Digg founder Alex Rose posted a response telling the people that they had been listened to and Digg will leave the post untouched. After this emotional appeal, the In this case the feelings of the community towards the subject of the post were so strong that even referring to clearly stated rules of the game didn’t help in the end. Having clearly stated rules helped to make Digg’s stance very clear, but in this case the emotional side of the issue was simply too strong and had been driven too far to comply with by reason alone. Had this happened if Digg had from the beginning pointed out its rules as the reason for removing the troublesome post? In this case people were feeling arbitrarily discriminated at first, which led to an outpour of sympathy for the posters, leading to a vicious cycle. This is an important example of the fact that rules need to be clear for all the parties involved. One important observation related to rules of conduct from a different angle is made by Jeff Howe, coiner of the term crowdsourcing, who states that too much can be too much also in terms of overt collaboration: What's often misunderstood about the wisdom of the crowds is that it's the wisdom derives from a crowd of individuals thinking and working independently, not from a crowd thinking as a single unit, which leads to mobocracy.

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It is worth mentioning that this passage of thought is well in line with the individuality requirement of the Wisdom of the Crowds concept brought forth by James Surowiecki. Josh Katone of ReadWriteWeb continues in the same vein: Crowds must retain their individuality. Encourage your group to disagree, and try not to let any members of the group disproportionately influence the rest. Securing individuality is important since herding of the crowds leads to groupthink, which handicaps the wisdom of crowds. How to do this is a key question for companies planning crowdsourcing activities. One simple way of getting people to contribute before being contaminated by others’ thoughts is to force some contribution before allowing the participant to even see other people’s entries. The herding behavior is noted also in recent research. Paul Dunay of Buzz Marketing for Technology comments on research on social influence in driving consumer demand by Columbia University and published in Science Magazine February 10th 2006: The main finding was that social influence amplified the inequality of outcomes, meaning that popular songs were more popular and unpopular songs were less popular than when participants made their decisions independently. Rules of conduct should therefore not pursue perfect harmony, but instead encourage disagreement and creative friction. It is necessary to set out rules how decisions will be made and who makes them. Everything can’t be left can’t be left for the community to decide. As Josh Katone (ReadWriteWeb) describes: Not everything can be democratic. Sometimes a decision needs to be made, and having a core team (or single person) make the ultimate decision can provide the guidance necessary to get things done and prevent crazy ideas and groupthink from wreaking havoc on your product. In other words, explicit rules on who makes the decisions should be clear to all members of the community in order to streamline decision-making process and actually get ideas to work, but also to avoid outcrys of arbitrary discrimination. Rules

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on decision-making need to be made also because some are intent to game the system if it is left unprotected from malignant behavior. Annalee Newitz writes in a Wired article ‘Herding the Crowd’ that malicious participants nowadays have more than enough tools to manipulate social systems if need be; these are listed in Table 19.
Table 19. Four ways to manipulate the crowd (Wired 2007)
HACK The buddy system Geek baiting Network for hire Pump-and-chump SITE Digg Digg, Reddit, Del.icio.us Digg eBay HOW IT WORKS Users organize into groups to vote up one other’s stories. Companies publish geek-friendly articles that have nothing to do with their business. The goal: to drive traffic to an ad-filled web site. Clients hire scamming firms to promote their articles. These outfits recruit networks of users willing to sell their votes. Retailers earn a good reputation selling inexpensive products, then defraud customers on more upscale items.

Clearly, rules of interaction and conduct raise active and widespread discussion among the industry experts and case examples show that these issues are well thought out by the leading companies. Thus Proposition 4b – that the need to set up these rules is critical in planning crowdsourcing activities – is secured as valid and relevant element in the FLIRT model. 5.4.3. Intellectual property and legal issues

If there’s one thing managers and executives fear with open collaboration networks, it is that alongside with their customers, also their competitors will have access to these communities. Mukund Mohan writes in Future of Communities blog on the lawsuits ensuing from SAP employees presenting themselves as Oracle customers on Oracle’s development community: Can you realistically manage your user community and prevent competitors from joining your community? - Even if you have a public and password protected community, you can still have competitors come in. Yes, there are some entitlement areas that you can cordon off based on specific id’s and PO# etc. but still nothing will stop a determined competitor to do anything if they wish to gain access… …The matter of message control and legal ramifications are relevant and true for senior executives who want to invest in communities. Clearly, this is a nightmare for traditional service organizations living off intellectual capital. However it needs to be noted that whatever exchange of information goes on in a crowdsourcing environment it should the kind of information that can ‘leave the

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premises’ without damage to the company, as it is against the principle of open collaboration to move around information within the system that is not open to all. Also. companies should strive to create an organization that bases its competitive edge on how the information is used between the actors, as this protects the company from leaks of individual pieces of information. IP transfers are also a question in modern crowdsourcing. It needs to be taken care that the transfer of intellectual property generated through crowdsourcing is handled properly and through solid processes, so that disputes over ownerships rights to e.g. a certain idea can be smoothly settled. Indeed, in the growing complexity created by a two-way and multipolar value creation and exchange, IP transfer and legal issues are of growing concern within the industry. Thus, my last proposition with this element, Proposition 4c that deals with the importance to address these matters, gains ground.

5.5. Tools
The empirical material on the final Tools section of my FLIRT model will be covered with mainly short examples, for they illustrate this final section better than quoting blog posts. 5.5.1. Platform

3rd party platform can be utilized with the most ease. With leading world-class services (Such as Google, Youtube and Flickr) offered to the public for free, there is an opportunity for also companies to utilize these existing platforms to connect with customers without cost. Technically, companies can set up their own profiles on these services and connect to the consumers just as they would among themselves. However, the code of conduct set up in the Language part of the FLIRT model should be kept in mind when engaging in these communities. Another alternative is to use software specifically built for this kind of use and sold as a hosted web service, which naturally costs, but is often only a fraction of the costs for similar service built from scratch. In addition, the software is developed continuously by service provider on behalf of its users and clients. As an example, in Figure 18 we can see DeinDesign’s design contest that utilizes Flickr for virtually free hosting service for photographs. 118

Figure 18. Dein Design’s design contest hosted on Flickr

Proprietary platform comes to question when there is a long-term perspective in developing the collaborative service and the respective customer relations. Also, when there is a specific purpose to be filled by the service not achieved with free services, a proprietary platform comes into question. This option takes a lot of resources and time and with the amount of competition battling for the attention of the consumer, is riskier than leveraging existing communities. However, it enables complete tailoring and ongoing modification to the company’s needs and doesn’t add media costs other than initial and maintenance costs. A good example of a proprietary platform is Threadless.com, pictured in Figure 19.

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Figure 19. Threadless’ proprietary service

In addition to simply piggypacking on existing services or building an own platform from scratch, companies can set up a hybrid platform, where a type of front-end is built that is used to aggregate customer input and interact with it to certain extent, but e.g. the contributions are hosted on a free or low-cost services so that there’s no need to reserve extensive server space. In this solution, the engine and the storage space behind the platform might run on pre-existing service. This is a popular solution with e.g. ad contests, where consumer-generated videos and photos can be stored to a free global service such as YouTube or Flickr, but the contest interface and visual look is built separately and videos and pictures are shown there as embedded to this front-end page. Svenskafans.com did this in their video contest (figure 20).

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Figure 20. Svenskafans video contest as a hybrid service

I was able to validate my Proposition 5a; selecting and/or developing a platform for collaboration is key to engage in crowdsourcing activities. Furthermore, I was able to further build on this and showed that there are at least three kinds of collaboration platforms; existing 3rd party ones, self-developed proprietary systems and kinds of hybrids. 5.5.2. Tools for creation and contribution

Social Portability between different platforms has been an issue especially in 2008 in the ever-diversifying environment of different collaboration tools and communities. How many networks can one person join? How many different identities can one person sanely manage? How many different tagging or photo-uploading or friending protocols can one person deal with? Social media fatigue and social portability: K. Dawson on Slashdot.org: 121

Users may soon tire of social networks — if they don't open up and embrace standards allowing greater interoperability among the different networks. O'Hear writes: "Unless the time required to sign-in, post to, and maintain profiles across each network is reduced, it will be impossible for most users to participate in multiple sites for very long. One solution is to create co-creation applications that are portable to online environments that people use anyway. Facebook and nowadays MySpace too offer open APIs through which any commercial entity can create an application to harness their clientele on the said social networks for crowdsourcing. A good example is Amazon’s visual bookshelf, pictured in Figure 21, that allows people to create a visual bookshelf of the books they have read, are reading or want to read using Amazon’s database as resource. The users get status benefits from showcasing their eruditeness and gain benefit also from being able to find new books that match their individual tastes. Each book on the shelf can be bought from Amazon.com by just a few clicks.

Figure 21. Amazon’s visual bookshelf on Facebook

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In addition to being readily available in environments people are willing to utilize, the tools of creation need to be easy to use, experiential and preferably instantly show the effect of a person’s contribution. Picked from Influx Insights blog: Give them tools. Help them use their creativity by giving them tools to help them express their ideas… …How easy is it for users to access the features of your site, including all community vehicles (blogs, forums, etc). How easy for a user to find another? Some companies grant their customers tools for contribution as an online service. Examples of this kind of crowdsourcing include Dell’s Ideastorm (where the only contribution is ideas, Figure 22); Sonera’s Itekki Tekisin campaign (with a web-based editor for creating advertising); and the abovementioned Amazon’s visual bookshelf (providing the building blocks, visual book covers, from Amazon’s vast resources).

Figure 22. Dell’s ideastorm

Services that are located wholly online are the least burdensome for the customers to participate on, since they only need their web browser. With these services it is important to ensure that all the popular browsers are supported and also mobile interface, with the introduction of fully internet-capable devices like the iPhone, need consideration.

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Other crowdsourcing projects employ software that requires installation on the participant’s computer. These kinds of crowdsourcing projects include Threadless (professional grade design software is needed in order to fulfill the quality constraints set by Threadless) and Lego Factory (Lego’s Digital Designer software is needed in order to create models that can be uploaded to Lego Factory’s gallery). The two abovementioned crowdsourcing communities differ in that the first relies on the participant to acquire the software – legal or pirated – while the latter offers the tool for the community to use for free. An interesting detail is that Lego’s Digital Designer wasn’t initially developed by Lego; it was created independently by users of Lugnet, an online community for Lego enthusiasts, for the purpose of modeling lego sets before building them. It was then picked up from the forums by Lego, who put it into professional production to be used as a tool for creating content for Lego Factory. Lego Digital Designer, pictured in Figure 23, is a prime example of an innovation toolkit (von Hippel 1998; von Hippel and Katz 2002; Franke and von Hippel 2003) in use in the modern crowdsourcing arena. The Lego Digital Designer however expands the target segment of the toolkit to segments beyond lead users (basically to anyone with a computer, a web connection and interest for Legos), and is therefore an example of crowdsourcing in action.

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Figure 23. Lego Digital Designer

Yet another type of crowdsourcing requires physical equipment or material. For example, all photography or video contests require the participant to have a camera, which the company (usually) doesn’t provide. On one extreme, crowdsourced contributions are physical creations, such as is the case with Red Bull’s Art of the Can contest (screenshot in Figure 24), where people create sculptures out of empty Red Bull cans and photograph them or submit them to Red Bull.

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Figure 24. Red Bull’s Art of the Can happens online but the sculptures are real

As posited, there are many tools through which to interact with customers, and the best tools of creation depend on the overall focus of the crowdsourcing initiative. Proposition 5b is thus brought into focus and enriched. 5.5.3. Tools for the company

Measuring results in the social web is still in its infancy and there are still no established standards for these metrics. Brian Oberkirch from LikeItMatters blog sheds some light on the challenge of measuring social and collaborative action by listing some key metrics in social media in a blog post descriptively named “Like naling down a shadow”: Page views Feed subscriptions Comments Quality of comments Number and types of user submissions 126

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Resyndication of our content Time spent on our site Media files consumed Unique visitors Email subscribers Traffic generated for other sites Numbers of bookmarks for our content Tags associated with out content Search engine effectiveness Offline public relations impact Downloads of a piece of content/software Satisfaction levels Inquiries Improved relations with developers, analysts, media, customers Sales Cross sales Reduced support costs

As can be seen, there are quite an amount of different metrics for a contemporary marketing person master. One of the metrics that draws much attention in the collaboration economy is that of engagement. Despite extensive work and discussions on the subject, even this is not clear-cut. Jim Nail of iMedia Connection defines four different types of engagement: Media engagement: Ad-selling media organizations have pounced on engagement like a pride of lions on a wounded wildebeest. They aim to prove that their audience is more engaged with their media property than their competitors. But they typically fall back on old-school metrics like traffic or time spent with the medium. The ARF is trying to move beyond these metrics. Ad engagement: Advertisers and agencies have begun to talk about how engaging their ads are but, again, typically relying on old communication metrics like attention or recall. These fall short of the ARF's new definition because they only capture whether the audience saw the ad, while the ARF is aiming for a more subtle measure of whether the consumer reacted to the ad. 127

Engagement marketing: An approach that plans a sequence of activities to draw the consumer through the purchasing process, e.g., running an ad that drives the consumer to a website where they sign up for email that delivers additional information over time until the consumer buys. This sequence actually comes after the more emotional engagement the ARF is focused on. Brand engagement: This sounds closer to the ARF's idea, but also often defaults to old-school metrics like customer loyalty or the more recent Net Promoter score. Important metrics to be sure, but the ARF is looking to identify when the earliest beginnings of this consumer relationship happen so it can be nurtured and grown. Measuring true engagement is still a matter under debate among marketers, analysts and agencies. For better understanding the behavior of members in the community their interactions need to be systematically tracked and better yet, built into archived knowledge that can help the organization to better understand and drive the community, but also help people understand the community aims and rules better. According to Joshua Porter of Bokardo, not building this archived repository is a common pitfall in building social applications: “One strategy to avoid repeating the same things over and over again is to use these interactions (between community management and members) to feed a FAQ or a user’s guide. Whenever you start to see trends in help, add it to your FAQ and add a section to the user’s guide. This will allow the community manager to focus on the latest, more unique problems without having to rehash older issues again and again. This seems pretty obvious now that we’ve talked about a general case. But it’s not so obvious when you’re in the heat of battle and these issues are cropping up unstructured for the first time. The secret is to observe patterns in the questions people ask but also in the underlying cause of the questions while leaving enough design time dedicated to creating a healthy set of resources that can serve future users.”

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The key seems to be then to plan these information-capturing processes and methods beforehand as well as possible and also making it as automated as possible. Also Chris Lawer is treading the same paths in stating that the role of knowledge in cocreation should be mutually shared and that firms should provide: Superior personalized experiences through setting up knowledge environments. The firm’s specialist resources and capabilities enable the creation of new customer knowledge and the continuous delivery of improved customer experiences In addition, having systematic tools for archived knowledge facilitates lifting relevant content and contributions from among the clutter, helping making decisions on which contributions are worthy and actionable. A separate whole altogether is taking these contributions from among the community and actually making them impact the organization in a way that truly changes how things get done, products get made and customers get treated. While a crucial point in overall performance of crowdsourced operations it is beyond the scope of the current thesis to explore this in depth. It suffices for now to state that it is a necessary area to focus on in operational management and further studies. In the modern digital environment pretty much all things can be measured, but the organization itself sets its own goals and metrics need to be built accordingly; this is widely discussed among industry experts, although there is also widespread recognition that standards still need to emerge and practices evolve. However, all agree that sophisticated systems for monitoring community activity and flagging relevant contributions need to be developed. Thus Proposition 5c can be seen as an essential part of crowdsourcing planning. However, as important as measuring contribution is, it is taking it forward within the company that ultimately makes or breaks crowdsourcing success. This concern is also recognized among the industry experts and seen as an important development point for many companies. It seems justified to include to the FLIRT model also my Proposition 5d.

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6.

DISCUSSION AND CONCLUSIONS

I have taken a brief look at some central developments in end-user participation in innovation and marketing through digital media. The transformation we are witnessing is a genuine one and is to be taken into account while devising not only the communications and marketing strategies of a company, but also its top-level core strategy (Salmenkivi & Nyman 2007). Customers and users are talking and they are too loud to be ignored or dismissed. Passionate users are challenging even the companies themselves and their contractors and partners in their quest for creative, winning ideas (Aunola, 2006). Building on various previous models, such as Prahalad and Ramaswamy’s (2004b) DART, Nambisan’s (2002) Virtual Customer Community, Bouras’ (2005) web-based virtual collaboration communities, Füller et al.’s (2006) community based innovation, the current thesis combines these with recent works dealing specifically with crowdsourcing (although many don’t call it by this term), such as Piller’s (2005) works on mass confusion and how to relieve it as well as Ogawa and Piller’s (2006) work on de-risking business activities through collective customer commitment. It takes into account companies’ changing relation to the customers, expanding on Charron et al.’s (2002) thinking in engaging the customers into a two-way, multipolar dialogue instead of persuading them with traditional top-down communications. The FLIRT model can indeed be seen as one of the models setting a new direction for marketing in general The current study thus defines a new concept and framework – the FLIRT model – for evaluating modern customer collaboration – or crowdsourcing – initiatives. It deepens our understanding of the qualification criteria and key success factors at play in crowdsourcing activities. Below you will find a more detailed dissection of the implications of the study, plus an evaluation of how this thesis reached its goals. The FLIRT framework outlined here would seem to quite well answer the challenges company new to the field of deep customer collaboration proceed with inaugurating crowdsourcing efforts. It identifies true, relevant and timely issues and challenges in the process of planning and conducting crowdsourcing and also lighter forms of customer-engaging business activities.

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During my research time frame I noted an increasing number of people joining in on the effort to make sense of the current phenomenon of customer participation. Drawing on this collective wisdom and researching what themes were continuously recurring in the discussion I finally came to my conclusion, validating the FLIRT model of crowdsourcing in the light of qualitative evidence. However, the model stil needs further validation through extended research and with the intensifying discussion, the FLIRT model is open to continuous revision and restructuring when necessary.

6.1. Theoretical Contribution
Starting with my original propositions, I have managed to illuminate their practical significance in a crowdsourcing setting and also demonstrated elaborately some different ways in which they manifest themselves in this environment in practice. Starting with Focus, the first element, I was able to find backing for all propositions and also elaborated them through case examples and expert opinions. The results are summarized in Table 20. Combining the constraining attributes of business benefits (e.g. Füller et al. 2006, McAfee 2006, Anderson 2006, Prahalad and Ramaswamy 2004a), customer-participant perspective (e.g. Nambisan 2002, Piller 2005, Prahalad and Ramaswamy 2004a, Lakhani and Jeppesen 2004) and organizational capability perspective (e.g. Prahalad and Ramaswamy 2004a, Ogawa and Piller 2006, Füller et al. 2006, Charron et al. 2006) with the defining attributes of scope, scale and depth, I have created a novel way of cross-examining constraints vs. definitions in tackling the root challenges in setting up crowdsourcing initiatives. Furthermore, I have through empirical evidence enriched the existing understanding of the applicable scope, scale and depth through extensive listings on suitable alternatives. The Focus section, therefore projects a comprehensive image for the first challenges a company is to face when entering open customer collaboration. The propositions are listed in Table 20.

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Table 20. The realization of propositions - FOCUS
PROPOSITION Proposition 1a: Business needs are a key consideration in planning crowdsourcing activities COMMENTARY Many different business areas were found that crowdsourcing specifically answers to, from self-evident, such as connecting with the customer, to even some surprising ones, such as customers funding company operations (sellaband) On the other hand this proposition is supported, but on the other, it is widely discussed that a heterogeneous group drives more activity and commitment. Industry experts consider this issue important. Especially it is emphasized that crowdsourcing doesn’t necessarily release internal resources, but might indeed constrain them. As there are many different areas in which to apply crowdsourcing, this issue is a crucial one and should be dictated by cross-reflecting scope with the constraining attributes. Especially it is emphasized that it is not always the best idea to ask people to create something, evaluating, voting on, vetting, screening etc. can bring fruitful results as well. It is seen in both case examples and industry experts’ opinions that scale is a matter of balance, too little or too much of it will fail. Also the time scale is a relevant consideration, and it is posited that short-term campaign thinking is not always the right way with social media. It can be seen in industry experts’ opinions that depth in community building is an essential question. Too much depth can be a hazard for the company, but on the other hand, a devout community rewards deep involvement during times of crisis

Proposition 1b: Targeting a diverse set of customer participants is a key factor in planning crowdsourcing activities Proposition 1c: Organization capabilities are a key consideration in planning crowdsourcing activities Proposition 1d: Establishing scope is a key element in planning crowdsourcing activities

Proposition 1e: Establishing scale is a key element in planning crowdsourcing activities. Proposition 1f: Establishing time-scale is a key element in crowdsourcing activities Proposition 1g: Establishing depth is a key element in planning crowdsourcing activities

Business needs should indeed come first when setting up the territory for crowdsourcing activity. As Charron et al. (2002), Pitt et al. (2002) and Beelen (2006) posit, the internet is the domain of the consumers, and companies need to recognize that if they want to gain consumers’ trust, they need to play on the same level. As Chen (2001) and Hong-Youl (2004) argued, brand building doesn’t stop in the internet, it simply needs new forms – and crowdsourcing would seem to offer some useful tools for this. As regards customer participants, Surowiecki’s (2004), Lakhani and Jeppesen’s (2004) and Piller’s (2004), among others, requirement for a diverse base of participants was widely considered as an essential requirement, but nevertheless it was also noted that homogeneous groups drive the most participation. This is a matter to be researched in further studies. As regards Language, the tone and manner of discourse between the actors, I have in the Language section brought into focus not only the authenticity (Freeman and Chapman 2007) and transparency (Ogawa and Piller 2006) issues, but strongly focuses on issues not always noted on a sufficient level in academic discourse when discussing online collaboration: the social objects (Knorr-Cetina 1997, Zwick et al. 2006, Zwick 2006) – that may lie outside the focus of activity but which can be used

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to tie customers more strongly into the collaborative offering – and types of social interaction (DeSanctis & Poole, 1994, Fulk, 1993, Postmes, Spears, & Lea, 1998, 2000, Walther, 1996), of which only a few should be focused on at a time in order to not confuse the customer. These elements are tied into a comprehensive Language element that widely answers the question of what should the company talk to its customers about and how it should go about it. The realizations of different propositions on this field can be seen in Table 21.
Table 21. The realization of propositions – LANGUAGE
Proposition 2a: Social objects, shared objects of value to the participants, are a key consideration in planning crowdsourcing activities. Proposition 2b: In addition to the social objects, different types of social interaction are a key element in planning crowdsourcing activities. Proposition 2c: Authenticity in brand and company presence is a key element in planning crowdsourcing activities. Social objects are given much weight and are indeed confirmed as a crucial element in planning crowdengaging activities Types of social interaction are seen almost as relevant to planning crowdsourcing activities as social objects. Also, a comprehensive tool for screening types of social interaction was discovered This matter is deemed crucial among industry experts. Fake blogs and other ways of deceiving the public are considered a complete waste of resources. On an additional note, community managers for companies were discovered as a relevant form of approach towards the communities. This was seen as essential, although in short term, entertainment focused crowdsourcing campaigns the company representatives can also be fictional.

Proposition 2d: Transparency in roles and processes is a key element in planning crowdsourcing activities

Other Language-related issues were deemed essential as well. Relating to e.g. Hargadon and bechky’s (2006) and Nambisan’s (2002) social interaction types, there was found a relevant vehicle to depict focus of social interaction in a given service and this framework I readily adopted as a part of my FLIRT model. As regards company presence, a matter raised by Freeman and Chapman (2007), among others, authenticity and honesty were seen as absolute necessities when dealing with crowdsourcing. Community managers, advocated in the empirical material by Owyang, Sundar and Salazar, were a new addition to to the company presence issue, and while personal engagement from the company’s side is not critical in short-term campaigns, community managers should be considered in longer-term crowdsourcing efforts. As regards incentives, I have built a solid and comprehensive view on what all kinds of incentives are possible on specifically crowdsourcing initiatives, be they intrinsic (e.g. Ahonen, M., Antikainen, M. and Mäkipää, M. 2007, Harhoff, Henkel and von Hippel 2003, von Hippel and von Krogh 2003), extrinsic subjective (e.g. von Hippel and von Krogh 2003, Sansone and Smith 2000, von Hippel 2001, Lakhani and von

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Hippel 2003) or extrinsic subjective (Franke and Shah 2003, Boggiano and Ruble 1979; Wiersma 1992; Shu-Hua, Hall, Wentzel, Lepper 1995). I also enriched this contribution significantly through empirical evidence and I haven’t come across similar wide view on incentives in previous academic work. The main findings in this area are shown in Table 22.
Table 22. Realizations of propositions – INCENTIVES
Proposition 3a. Intrinsic incentives are a key consideration in planning crowdsourcing activities. Intrinsic motivations, such as fun and curiosity seem to hold true according to the expert opinion as well. Challenge is seen to be playing an important part and collaborations that don’t offer real challenge are worse off. Community-related benefits are crucial in stimulating communal activity and even seemingly small communityrelated features, such as ranking lists, can enhance participation. Crowdsourcing offers novel ways to share benefit with customers, such as revenue share. Extrinsic objective benefits are on the rise as people want rewards for their time.

Proposition 3b. Extrinsic subjective incentives are a key consideration in planning crowdsourcing activities. Proposition 3c. Extrinsic objective incentives are a key consideration in planning crowdsourcing activities.

Incentives were quite loudly voiced in both bad and good. While some writers argued that crowdsourcing companies systematically exploit their customers, it has nevertheless been noted that customers draw other, quite significant benefits from participating, like challenge and creativity as well as learning from others and gaining social capital. It was noted on many occasions that money and material benefits are rising in importance in the consumers’ minds. With the Rules section, I took on the important but many times forgotten notion that a set of rules is necessary for collaboration to be both safe and effective for all parties involved. Three wider areas of rules were identified as crucial in setting up crowdsourcing operations: rules of access and initiation (e.g. Nambisan 2002, Füller 2006, Bouras 2005), rules of interaction and conduct (Duparq 2007, Nambisan 2002, von Hippel and von Krogh 2003, Schwartz and Tomz 1997) as well as IP transfer and legal issues (e.g. Füller et al. 2006). Also this kind of comprehensive rules-oriented approach to collaboration has been missing from current literature. A summary of the key findings can be seen in Table 23.

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Table 23. Realizations of propositions – RULES
Proposition 4a: Rules of access and initiation are a key consideration in planning crowdsourcing activities. Rules of initiation to the community do seem to rise to importance at the crucial moment when a person decides on registering with the community. This process should be as light as possible and later information could be stepwise added. Especially in crisis situations, such as the Digg Revolt, it is crucial that there are rules in place that can be referred to so as not to make the participants feel let down by arbitrary moderation or management. Legal and IP issues need to be in order, if not for the competitors sneaking in your community (because they can’t really be stopped), then for making it clear to all parties the rules and processes of exchanging rights to customer contributions.

Proposition 4b: Rules for interaction and conduct are a key consideration in planning crowdsourcing activities. Proposition 4c: Rules for IP and legal issues are a key consideration in planning crowdsourcing activities.

Rules of access and initiation are shown to rise in importance when a person is deciding on whether or not to join a community. To extensive procedure might cut the process there. Rules as regards interaction and conduct rise to importance especially in crisis situations. Finally, I brought concrete tools of interaction into the discussion with a new angle. E.g. Nambisan (2002), Füller (2006), Bouras (2005) as well as Prahalad and Ramaswamy (2004a) have all talked about the platorms for collaboration, but don’t take into account that nowadays companies don’t need to build these platforms themselves, as there are many free or low-cost hosted alternatives on the web along with existing communities that already have substantial customer base. This owned3rd party-hybrid discussion is new to the academic discourse and will surely spark debates on costs vs. benefits. Also tools of creation (Nambisan 2002, Dahan and Hauser 2002, Ogawa and Piller 2006) are in crowdsourcing not necessarily hosted by the company but can reside in many places and be owned by parties other than the ones engaging in the dialogue. I also raised the critical question of how should a company monitor its investment (Nambisan 2002) and take relevant action when needed. The key findings in the tools section as listed below in Table 24.

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Table 24. Realizations of propositions – TOOLS
Proposition 5a: The technical platform is a key consideration in implementing crowdsourcing activities. Proposition 5b: Tools for interacting with the brand and creating the desired input are a key consideration in implementing crowdsourcing activities. Proposition 5c: Tools for monitoring and capturing customer contributions are a key consideration in implementing crowdsourcing activities. Proposition 5d: Tools for converting customer contributions to useful knowledge and making decisions are a key consideration in implementing crowdsourcing activities. The platform can be arranged in one of three main rd modes: proprietary, existing 3 party, or a hybrid of some kind These tools can be classified as 1) a fully online service, 2) requiring installable software (provided by the company or not) or 3) requiring physical devices, such as cameras or even raw materials from which to make the contributions. While metrics with measuring engagement within social media and collaborative marketing are still at their infancy, it is agreed that tools sifting out the relevant contributions from the non relevant are important and should work with as little user input as possible. This relates to the inner processes of the company and is seen as an important last step not only for getting useful contributions to work but also for showing customers that their input really matters, thus strengthening loyalty among the customers.

Tools need to be in order in order to enchant the increasingly web-savvy customer. There can be seen three main ways to arrange the platform for crowdsourcing and three main ways to arrange the tools for creation, while tools for the company, for monitoring, capturing, converting and acting on customers’ contributions are certainly still in their fermentation phase when it comes to measuring crowdsourcing success. The main theoretical contribution of this thesis is the formation of a new, original and timely end-to-end framework for planning, establishing and evaluating crowdsourcing activities. It adds new viewpoints to the discourse of customer collaboration, and also challenges some existing concepts. I believe the FLIRT model to hold a significant theoretical contribution to the research of the topic. Illuminating the wider phenomenon it takes on cultural and sociological changes in explaining the rising importance of crowd-engaging methods and techniques. Furthermore, it binds the long tail effects (Anderson 2006) to the rise of crowdsourcing and takes into focus Surowiecki’s (2004) wisdom of the crowds thinking as a rationale for choosing crowds over elite teams in solving problems. It also posits collective customer collaboration as being the next phase in the continuum from market research to lead users and modern, digital research methods and finally into crowdsourcing. The FLIRT model’s contribution, then, lies clearly in acting as a kind of theory unifying the different works on collaboration but also enriching and restructuring the framework via empirical material and case examples, thus creating a comprehensive end-to-end model on crowdsourcing. The FLIRT model in its final form can be seen

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in Figure 25 (the strategic levels of different FLIRT elements) and Figure 26 (the FLIRT elements and first-level subelements).

Figure 25. The FLIRT elements according to their strategic level

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Figure 26. The FLIRT elements and sub elements in the FLIRT framework

In addition to providing the FLIRT model, the current thesis presents a socially oriented, extremely efficient way of utilizing netnography to gather up expert insight. As shown in my study, netnography facilitates efficient harvesting of active discussion of industry experts, researchers, managers and consultants through modern pull and subscription-based methods of gathering research material using RSS readers, search engine alerts, etc. Furthermore, modern netnography facilitates extracting meaning and understanding on a given phenomenon through usage of social bookmarking tools, collaborative categorization of raw information and actively engaging in online discussions.

6.2. Managerial Implications
As the aim of this thesis was indeed creating a managerial tool, the managerial implications are quite clearly visible in the Findings section. However, I would like to repeat the main managerial implication for my thesis, and their applicability: In setting up crowdsourcing operations, there are five main steps to take and with each step, a crucial wholesome part contributing to the success of the collaborative effort is established. 138

Focus needs to be established for directing the collaborative effort to activities and areas that are relevant for the needs of the business as well as interesting for the customers and also can be executed with the companies capabilities. This first phase is basic groundwork that each company should go through thoroughly before advancing to next levels. Basically the Focus elements are all very basic questions of fitting the different basic constraints and needs together. My clear and visual presentation however helps a great deal in comprehending the key questions in the right context and order. Language is a crucial key element for the collaborative effort, for deeply engaging the customers a company must know their customers and be able to talk about things that matter to them, steer social interaction to the right direction and also present the company or brand in an authentic and transparent manner. The key in the Language part could be summed up as “know what your customers care about, talk to them about it and remember not to screw them”. Although simple sounding, this thinking is often what’s most hardest to the companies engaging in crowdsourcing activities. I do see the Language part as one of – if not the most – influential part for managers and directors when they’re reading this. Incentives are needed to reward participation and performance, but money alone is rarely the answer. Intrinsic motivations like challenge, creativity and fun are many times the most important factors but also extrinsic subjective incentives, such as reputation, status and joining a common cause matter significantly. In incentives companies should not fall for the obvious trap of offering money and leaving other things unattended. As stated, other motivators are often stronger and money can even destroy a well functioning creative community. Rules are needed so that everyone understands the protocols of access and initiation into the community and shares an understanding of the founding objectives and guidelines directing the action. Rules for creation and exchange of ideas and interaction ensure that participating is easy, fun and safe for all those involved. Also, rules for IP transfer as well as legal issues need to be addressed.

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The IP transfer and legal issues sub element is probably the most timely and relevant for companies as they are pondering how to share revenue and benefits but also intellectual rights to co-created material with their customers. Tools is the last of the FLIRT elements. Deciding on the platform for the community and the tools of creation is to be given thought and building an own platform from scratch is not always the best alternative. The company also needs internal tools for effectively harvesting the input of their customers and converting it into meaningful action within the organization. The key for companies to understand here is that the organization does not have to build things itself. Not all means of collaboration involve substantial investments as there are a multitude of existing communities and community tools on the web – free of charge or for an amount fraction of a cost of building a new service from scratch. These are all things that managers can put to use right away, as empirical evidence suggests that the thinking presented in this thesis is a valid way to make sense of the problems involved and my propositions are indeed relevant to most crowdsourcing and collaboration efforts regardless of the area or field of business. It is still worth noting that despite the FLIRT model processes in orderly fashion from the strategic via the tactical level and ends up with technical issues, developing and directing crowdsourcing should indeed be a reciprocal and interactive process where the contribution of the crowds is systematically and continuously evaluated also when it comes to developing the community and its founding principles.

6.3. Limitations and Ideas for Future Research
As stated already in the objectives section, the FLIRT model built here is not, nor was it meant to be, a statistically proven model. Its meaning was to establish a solid framework that could be further validated and elaborated with future research. This is also its biggest contribution to the academia, as it will surely serve as a good platform to build future work on. A key issue that was at the final phases excluded from this thesis was the definition of participant roles in crowdsourcing efforts. I had already built a model describing four different participant roles (Creators, Critics, Connectors and Crowds), but as the

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thesis began to grow impossibly broad, I had to exclude it from this paper. The question of participant roles is nevertheless a very interesting and crucial one within crowdsourcing and definitely needs further research if the phenomenon is to be understood at the fullest possible level. Also the issue between homogeneous and heterogeneous participant groups and their performance in different kinds of crowdsourcing settings is a relevant one and requires further research. Also it would be very interesting to delve into the Language part more, as it is a crucial element in the FLIRT model and especially large companies continuously find it very difficult to find the right tone. Critical discourse analysis could serve well in this context. As regards Incentives, a contingency model would be beneficial to assess which incentives dominate which settings in crowdsourcing. With the web 2.0 still in motion, it would also be interesting to Tools and the shiny but useless paradox in order to find out which attributes and features make Tools attractive and which discourage their use. Finally, what’s really interesting is that while only 1 million of the more than 215 million social networkers regularly active today are older than 50, by the end of the year that number could explode to tens of millions, as Paul Lee, Director of Technology Research at Deloitte predicts. How these people with a lot more buying power than their younger tech savvy brethren are taken into account in social networks but also in crowdsourcing is a question I find very intriguing.

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Golder, S., Wilkinson, D., and Huberman, B. (2006) Rhythms of social interaction: messaging within a massive online network. HP Labs research paper, retrieved 1st April, 2007 from http://www.hpl.hp.com/research/idl/papers/facebook/facebook.pdf Halperin, A. (2007) The Wisdom of the Medical Crowd. April 29th 2007. http://www.businessweek.com/investor/content/apr2007/pi20070429_699650.htm?ch an=technology_technology+index+page_top+stories Howe, J. (2006). The rise of crowdsourcing, http://www.wired.com/wired/archive/14.06/crowds.html Kirsner, S. (1999) Digital Competition – Laurie A. Tucker. http://www.fastcompany.com/magazine/30/tucker.html Leskovec, J., Adamic, Lada A., & Huberman, Bernardo A. (Working Paper) The Dynamics of Viral Marketing. Retrieved on 12th December from http://wwwpersonal.umich.edu/~ladamic/papers/viral/viral-market-short.pdf Lombard, M. and Ditton, T. (1997) At the Heart of It All: The Concept of Presence. Journal of Computer Mediated Communication 3 (2) September 1997 http://jcmc.indiana.edu/vol3/issue2/lombard.html#PresenceEx Lyman, P. (2007) The Poetics of the Future: Information Highways, Digital Libraries and Virtual Communities. School of Information Management and Systems, UC Berkeley. Retrieved on 3rd July from http://www.ischool.berkeley.edu/~plyman/articles/Lazerow.pdf Mayfield, R. (2004). The Difference Between Communities and Networks. Retrieved on 20th October 2007 from http://many.corante.com/archives/2004/02/17/the_difference_between_communities_ and_networks.php Meeker, M. and Joseph, D. (2006) The state of the internet, Part 3, Morgan Stanley Research Report. Retrieved April 2nd from http://www.morganstanley.com/institutional/techresearch/pdfs/Webtwopto2006.pdf Nielsen, J. (2006) Participation Inequality: Encouraging More Users to Contribute. Jakob Nielsen's Alertbox, October 9, 2006, retrieved on 10th December, 2006 from: http://www.useit.com/alertbox/participation_inequality.html O’Reilly, T. (2005) What is web 2.0 – Design patterns and business models for the next generation of software. http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html Open AJAX Allliance White Paper (2006) http://www.itmill.com/news/OpenAjax_Alliance_White_Paper.pdf Owyang, J. (2007) Looking Forward Past “Web 2.0", Predictions for Technology in the next 1-10 years. http://www.web-strategist.com/blog/2007/01/31/looking-forwardpast-web-20-predictions-for-technology-in-the-next-1-10-years/

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PEW INTERNET & AMERICAN LIFE PROJECT (2007) 28% of Online Americans Have Used the Internet to Tag Content. Interview: Author David Weinberger Describes How Tagging Changes People’s Relationship to Information and Each Other. Retrieved on 3rd July from http://www.pewinternet.org/pdfs/PIP_Tagging.pdf Piller, F., Schubert, P., Koch, M., and Möslein, K. (2005). Overcoming mass confusion: Collaborative customer co-design in online communities. Journal of Computer-Mediated Communication, 10(4), article 8. http://jcmc.indiana.edu/vol10/issue4/piller.html Spannerworks (2007) What is Social Media? Spannerworks E-Book. Retrieved on 3rd July from http://www.spannerworks.com/fileadmin/uploads/eBooks/What_is_Social_Media.pdf USC-Annenberg Digital Future Project (2007) Online World As Important to Internet Users as Real World? Retrieved on 3rd July from http://www.digitalcenter.org/pdf/2007-Digital-Future-Report-Press-Release112906.pdf Wang, S. (2006) The Long Tail: Why Aggregation and Context and not (necessarily) Content are King in Entertainment. Retrieved April 2nd from http://www.bearstearns.com/bscportal/research/analysts/wang/112706/index.htm Greenberg, J. (2007) Contrasting Community Sites with Marketing Sites. January 4th 2007. http://blog.ideacity.com/2007/01/04/contrasting-community-sites-withmarketing-sites/

Empirical Material – Blogs, Presentations, Videos, White Papers, etc. URLs
The URL’s used as empirical evidence in my research are too numerous (500 in total) to list here and are indefinitely stored at del.icio.us service. They can be openly accessed at http://del.icio.us/brayrie/thesis

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APPENDICES
Appendix 1. Previous literature and the FLIRT model
Table 25. Previous academic work and the Focus element of the FLIRT model
FOCUS organization capabilities business objectives customer participants scope scale depth

Concepts and their contribution to Authors Orava and Perttula 2005 Charron et al. 2002 Charron et al. 2002 Beelen 2006 Chen 2001, Hong-Youl 2004 Gruen et al 2005 Ragunathan and Corfman 2006 Rosenbaum and Massiah 2007, Bickart and Schindler 2001, Charron et al. 2002 Bagozzi and Dholakia 2002 Füller et al. 2006 Prahalad and Ramaswamy 2004, Ogawa and Piller 2006 Alam 2004, Füller et al. 2006 Füller et al. 2006, McAfee 2006, Anderson 2006, Prahalad and Ramaswamy 2004 Cothrel 2000, Füller et al. 2006, Charron et al. 2002 Reid and Brentani 2004 Füller et al. 2006 Füller et al. 2006, Prahalad and Ramaswamy 2004 Cothrel 2000 Jeppesen and Fredriksen 2006 Prahalad and Ramaswamy 2004, Lakhani and Jeppesen 2007 Cothrel 2000 Füller et al. 2006, Muniz and O’Guinn 2001 Cothrel 2000 Füller et al. 2006, Cothrel 2000 Berthon, Hulbert, Pitt, and Leyland 1999 Cothrel 2000, Antikainen 2007, Charron et al. 2002 Nambisan 2002 Piller 2005 the FLIRT model types of revenue direct consumer, direct 3rd party, indirect Effects of social media on brand loyalty trust in media consumer power new tools for brand management C2C interaction value for marketer C2C experience sharing and increased value for consumers and brands Prolonged interaction and increased credibility Economic, social and personal value Image enhancement De-risking experiments Better performance of new products and services through co-creation Faster scaling and adoption of new offerings Lowering costs, failing cheap Highest of value for co-creation in fuzzy front end fewer prototypes produced by the company leads to less resources spent on market research Faster development Lowering staff costs Additional intellectual resources finding novel and unconventional solutions to existing challenges More resources for routine tasks Increasing customer retention Faster feedback cycle Better understanding of customers Better customizability with customer needs More revenue Need for wide participant base Completely open invitation reduces mass confusion best

x x x x x x x x x x

x x x x x x x x x x x x x x x x x

153

Prahalad and Ramaswamy 2004 Füller et al. 2006 Surowiecki 2004 Füller et al. 2006 Lakhani and Jeppesen 2004 Prahalad and Ramaswamy 2004 Nambisan 2002 Füller et al. 2006 Ogawa and Piller 2006 Füller et al. 2006 Füller et al. 2006 Charron et al. 2006 Flowers 2008 Prahalad and Ramaswamy 2004

Need for heterogeneous participant base Which attributes should customers have in order to participate? Wisdom of Crowds Knowing where the customers are is key Need for heterogeneous participant base What it takes from the organization to participate Depth and handling risk Openness and added risk Collaboration and reducing risk Co-creation and collaboration require significant resources Training and proper orientation of staff required relinguisihing control necessary Understanding scope, scale and depth of co-creation efforts Customers as multipliers of company’s R&D efforts Open source problem solving in various settings Customer made: contests, ongoing development, create and sell, ongoing conversations Co-creation as source of new product designs, connection with customers, preselection of ideas, minimum order size, commitment, incentives, reorders, organization, relation to conventional product development and market research idea generation, co-creating, testing, providing end-user support, Community as source of innovation Crowdsourcing as a model for problem solving B2B crowdsourcing Overcoming Mass Confusion Community vs marketing sites Depth and loyalty Insiders and depth five key questions for managers in co-creation customer capabilities customer capabilities

x x x x x x x x x x x x x x x x x

Lakhani & Jeppesen 2007, Boutin 2006a, Brabham 2008 Trendwatching report

x

Ogawa and Piller 2006

x

x

Nambisan 2002 Füller et al. 2006 Brabham 2008 Halperin 2007 Piller 2005 Greenberg 2007 Collins and Gordon 2005 Lakhani and Jeppesen 2004 Prahalad and Ramaswamy 2004 Afuah 2006 Lengnick-Hall 1996

x x x x x x x x x x x organization capabilities business objectives customer participants scope scale depth x

FOCUS

154

Table 26. Previous academic work and the Language element of the FLIRT model
LANGUAGE social interaction x x x x x x x x x company presence social objects x x x x x

Concepts and their contribution to Authors Prahalad and Ramaswamy 2004 Knorr-Cetina 1997 Zwick, Detlev, Dholakia and Nikhilesh 2006, Zwick 2006 Law and Singleton 2005 Suchman 2005 Rutter 1987, Sproull & Kiesler 1986, 1991 DeSanctis & Poole 1994, Fulk 1993, Postmes, Spears, & Lea 1998, 2000, Walther 1996 Myers 1987 Lombard and Ditton 1997 Hargadon and Bechky 2006 the FLIRT model engaging emotionally intellectually is key Social Objects Epistemic consumption objects and

The amorphousness of social objects Criticsim on objectualization of interaction Impersonal interaction Types of personal and interaction in digital services social

Many forms of establishing identity online Increasing amount of possibilities for manifesting presence online Four types of interaction: help seeking, help giving, reflective reframing and reinforcing Nature of interaction orientation key in virtual customer communities Authenticity in brand and company presence process transparency Role transparency

Nambisan 2002 Freeman, B. and Chapman, S. 2007 Ogawa and Piller 2006 Nambisan 2002

1 155 155

Table 27. Previous academic work and the Incentives element of the FLIRT model
INCENTIVES intrinsic subjective extrinsic subjective extrinsic objective x x x x x x x

Concepts contribution Authors Lakhani and Jeppesen 2004 Nambisan 2002 model

and to the

their FLIRT

Von Hippel 2001 Harhoff, Henkel and von Hippel 2003 Prahalad and Ramaswamy 2004 Lyman 2007 Roberts, Hann, Il-Hom and Slaughter 2004, Hann et al. 2004 Bandura 1995 Ahonen, M., Antikainen, M. and Mäkipää, M. 2007 Lakhani and Von Hippel 2003 Harhoff, Henkel and von Hippel 2003, von Hippel and von Krogh 2003 Lakhani and Jeppesen 2004 Von Hippel and Von Krogh 2003 Sansone and Smith 2000

Enjoyment of challenge is key Creation of incentives and motivating customer one of 3 major challenges with virtual customer communities Incentives are needed Amateurs are not conserned about loss of IP at low price Individual in center also in social media Gift economy does not equal common good Intrinsic and extrinsic incentives Self efficacy as intrinsic incentive Regular quality contributions make people feel self efficacious Personal learning from activity itself Fun and enjoyment Enjoyment of challenge is key Intrinsic doesn't secure long term engagement extrinsic motivations can boost, regulate and maintain the interest in doing a task. Career and status enhancement are examplesof this Intrinsic and extrinsic incentives coexist helping the cause with likeminded people Helping to build community Expectations of reciprocity Improvements on own ideas and thinking Reputation jobs, tenure, audiences, viral resume and lucrative offers of all sorts Increase in ranking boosts contributors’ subsequent intrinsic and extrinsic motivations. Promotion in rank enhances a contributor’s status in the developer community and increases incentive motivation

x x x x x x x x x x x x x x x x x x x

x

Roberts, Hann, Il-Hom and Slaughter 2004 von Hippel 2001, Lakhani and von Hippel 2003 Von Hippel 2001 von Hippel 2001, Lakhani and von Hippel 2003 Franke and Shah 2003, Harhoff, Henkel and von Hippel, 2003 von Hippel 2001, Lakhani and von Hippel 2003 Anderson 2006 Sansone and Smith 2000

x

x x x x x x x

x

Lerner and Tirole 2002

x

Roberts, Hann, Slaughter 2004

Il-Hom

and

1) welcome commercial efforts, 2) nurture status/opportunity motivations and 3) capture a competence component in the feedback system

x

2 156

Von Hippel and von Krogh 2003

Franke and Shah 2003

Franke and Shah 2003

Boggiano and Ruble 1979, Wiersma 1992, Shu-Hua, Hall, Wentzel, Lepper 1995

Contributors whose identity is known to the community enjoy greater benefits from revealing their innovations than do those who are less integrated Concrete rewards are often necessary in order to justify the company benefiting financially from openly revealed information and contributions. Intrinsic motivations (challenge, mental stimulation, control, curiosity, fantasy) may even be downplayed by monetary incentives as the shift in motivational orientation from intrinsic to extrinsic can negatively affect interpersonal interactions and creativity Overjustification effect can be brought on by extrinsic objective incentives

x

x

x

x

x

x

extrinsic subjective

intrinsic subjective

INCENTIVES

3 157

extrinsic objective

Table 28. Previous academic work and the Rules element of the FLIRT model
RULES Interaction and conduct x x x x x x Access and initiation IP and Legal x

Concepts and their contribution to Authors Nambisan 2002 the FLIRT model Access and initiation into the community are key in designing virtual customer communities Human rejects User access and participation eligibility are key questions in community-based innovation the community needs to choose who participates in the community and members of the community choose to participate in it one of the key requirements for the development of a web-based virtual collaboration community is enabling multiple, shifting and overlapping membership and participation OpenSocial movement and social portability The purpose and participants of the community affect the platform, which in turn affects policing – governance, rules and boundaries – in the community Rules need to set the degree of user control in ongoing interaction The participants’ self-rewarding through private benefits related to intrinsic motivations that are not available to so-called freeriders may diminish contributors’ concerns about freeriders Leaders who can choose who is a member of a social category can secure a more talented group and more effective production of goods and services. Legal claims for the exploitation of consumer ideas and inventions can be problematic in co-creation

x

Johnston 1989 Füller et al. 2006 Bouras et al. 2005

x

Bouras et al. 2005

x

Mitchell-Wong, Kowalczyk, Roshelova, Joy & Tsai 2007 Duparcq 2007

x

Nambisan 2002 von Hippel and von Krogh 2003

Schwartz and Tomz 1997

Füller et al. 2006

4 158

Table 29. Previous academic work and the Tools element of the FLIRT model
TOOLS Creation and contribution x x x x x x x Monitoring analysis and action x x x x x Platform Concepts and their contribution to Authors Gommans, M., Krishnan, K., Scheefold, K. 2001; Lorenzo, Oblinger and Dziuban 2007 Moroney, L. Alliance 2006 2006, Open AJAX the FLIRT model Consumer savvyness and quality consciousness as regards features and user-friendliness of online services is increasing Web services and their building principles and methods as regards possibilities to enhance user experience Open source and peer-to-peer methods quicken and enhance the development cycle of online services Staying aware of technological advancements and capturing opportunities from emerging technologies to enhance user experience is key in developing environments for co-creation Customer contributions can be limited by the high cost of providing facilities or mechanisms to structure and channel those customers’ inputs Customer co-creators require colocation, a common physical or virtual space for collaborative activities Customer co-creators will need to be somehow integrated with internal teams Recognizing both the technical & social aspects of co-creation experiences is key “Glossy but useless” Community identification important regardless of whether an own community will be built or not. one of the key requirements for the development of a web-based virtual collaboration community is enabling multiple, shifting and overlapping membership and participation OpenSocial movement and social portability x x Benatallah, B., Duma, M. and Sheng, Q. 2004, Floyd, I., Jones, M., Rathi, D. and Twidale, M. 2007, Panke, S., Kohls, C. and Gaiser, B. 2006 Prahalad and Ramaswamy 2004 x x Nambisan 2002 x Bouras et al. 2005 x Nambisan 2002 x Prahalad and Ramaswamy 2004 x x x BBC 2007 Füller et al. 2006 Bouras et al. 2005 x Mitchell-Wong, Kowalczyk, Roshelova, Joy & Tsai 2007 x Nambisan 2002 it needs to be kept in mind that customers may need higher levels of product / technology knowledge in order to co-create modern crowdsourcing in many cases utilizes tools that go beyond testing alternative company materials, instead focusing on original customercreated material Ogawa and Piller 2006

5 159

Füller et al. 2006

Efficient design of the interaction with the targeted community members regarding the particular development task and the individuality of the selected online community is key A major challenge for the company in collaboration ventures is capturing customer knowledge and input Longtitudal and informal knowledge gathering is more beneficial than cross-sectional and formal types Separation between knowledge acquisition support and knowledge conversion support

x

Nambisan 2002

x

Nambisan 2002

x

Nambisan 2002

x Monitoring analysis and action Creation and contribution TOOLS Platform

6 160

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