Open innovation through social media in the idea generation phase of the design consultancy process. Case company: Case Company X
Oladimeji Joseph Fakayode
Bachelor?s Thesis Degree Programme in International Business November 2012
Abstract Date of presentation Degree programme Author Oladimeji J. Fakayode Group or year of entry GLOBBA ?09 Title of report Number of Crowdsourcing input from end users using social media in the idea pages and generation phase of the design consultancy process. Case number of company: Case Company X appendices pages 79 + 31 Supervisor(s) Jari Luomakoski & Maija Suonp?? In a competitive business environment, innovation among others present companies and organizations the opportunity to differentiate themselves from competitors. While in the past, internal R&D activities of companies could provide the magic required for world class innovation, the fast changing demand of users requires their involvement in the innovation process refered to as open innovation. This paradigm shift from closed innovation to open innovation is applicable at different stages of the design process. Furthermore, the proliferation of digital technology especially in the form of social media and online communities supports this paradigm shift. Social media has not only been utilized for engaging customers and enhancing brand images of companies but also for generating input from end users especially in the business to consumer category. In addition, weak ties such as public creative thinkers or professionals who do not work for such firms in the design consulting process are rarely looked upon for such inputs. Therefore, this study explored social media platforms that enables contribution of input by such creative thinkers, their profile, as well as establish techniques, strategies and processes required to make this function. The entire study was carried out in the second half of year 2012 through a qualitative research method of indepth interviews, video analysis and benchmarking. The selected method was due to the exploratory nature of the research and rarity of materials in the field. The convergence of theoretical concepts and collected data was utilized in establishing different strategies and techniques utilizable in online open innovation. In addition, the result of the study pointed to online open innovation as a new way of producing things as well as the source of new business models for a design consulting firm. Keywords Open innovation, crowdsourcing, social media, online community management, business model, competitive advantage.
Table of contents
1 Introduction .......................................................................................................................... 1 1.1 Background of this study ........................................................................................... 1 1.2 Case company introduction ....................................................................................... 4 1.3 Research problem and objectives .............................................................................. 5 1.4 Key concepts................................................................................................................ 6 1.5 Scope and limitation of the study.............................................................................. 7 2 Theoretical concepts ............................................................................................................ 8 2.1 Open innovation ......................................................................................................... 8 2.2 Crowdsourcing............................................................................................................. 9 2.2.1 Collective intelligence or wisdom of crowd ............................................... 10 2.2.2 Crowd creation .............................................................................................. 11 2.2.3 Crowd voting ................................................................................................. 12 2.2.4 Implicit crowdsourcing ................................................................................. 12 2.2.5 Summary of crowdsourcing techniques ..................................................... 12 2.3 Social Media ............................................................................................................... 13 2.4 Online Community Management............................................................................ 14 2.5 Competitive advantage and Business model generation ...................................... 17 2.6 Relationship between theories ................................................................................. 20 3 Field research design .......................................................................................................... 21 3.1 Research methodology and design .......................................................................... 21 3.2 Research method ....................................................................................................... 22 3.3 Data collection technique ......................................................................................... 24 3.4 Data quality assurance .............................................................................................. 26 3.5 Type of data collected ............................................................................................... 27 3.6 Interviewees and benchmarked platforms ............................................................. 27 3.7 Data analysis and main issues .................................................................................. 29 4 Results .................................................................................................................................. 30 4.1 Type of social media that enables crowdsourcing ................................................ 30 4.2 Strategies, techniques and processes utilizable in online open innovation ........ 30 4.2.1 Categories of open innovation .................................................................... 31
4.2.2 Application of open and closed challenges ................................................ 33 4.2.3 General process of starting a microsite ...................................................... 34 4.2.4 Motivation of people for contribution to open innovation..................... 35 4.2.5 Other Important factors to consider in online open innovation. ........... 38 4.3 Existing profile of people for open innovation in benchmarked B2Bs............. 38 4.4 Acquiring and maintaining online social communities ........................................ 39 4.4.1 General procedures and guidelines ............................................................. 40 4.4.2 Targeted marketing on the social web ........................................................ 40 4.4.3 Customer engagement effort as obtained in benchmarked platforms ... 41 4.4.4 Other collected community engagement features .................................... 45 4.4.5 Internal structure and resources .................................................................. 46 4.5 Competitive benefits and challenges of open innovation .................................... 47 4.5.1 Benefits of open innovation to the current service offering of Case Company X ................................................................................................................ 48 4.5.2 Challenges and keys to mitigating them ..................................................... 50 4.6 Summary of collected information from fieldwork .............................................. 51 5 Key findings and interpretation of results ...................................................................... 53 5.1 Recap on study background..................................................................................... 53 5.2 Type of social media that enables crowdsourcing idea generation ..................... 54 5.3 Strategies, techniques and processes utilizable in online open innovation ........ 55 5.4 Existing profile of people for open innovation in benchmarked B2Bs............. 60 5.5 Acquiring and maintaining online social communities ........................................ 60 5.5.1 Marketing on the social web and customer engagement process ........... 61 5.5.2 Other suggestion for online community building ..................................... 64 5.5.3 Internal structure and resources .................................................................. 65 5.6 Competitive benefits and challenges of open innovation .................................... 66 5.6.1 Competitive benefits: New way of producing things ............................... 66 5.6.2 Challenges of open innovation and how to mitigate them ...................... 69 6 Conclusion & recommendations ..................................................................................... 70 6.1 The use of open and closed challenges .................................................................. 70 6.2 Critical success factors .............................................................................................. 71 6.3 Ethical points of view ............................................................................................... 72
6.4 Research reliability and validity ............................................................................... 73 6.5 Suggestions for development................................................................................... 74 6.6 Assessment of own learning and thesis process ................................................... 75 References ................................................................................................................................ 76 Attachment .............................................................................................................................. 80 Attachment 1. Overlay matrix .......................................................................................... 80 Attachment 2. Profile of experts and video analysis subject ........................................ 82 Attachment 3. Measurement themes/questions ............................................................ 84 Attachment 4. Elements of an open challenge system of open innovation ............... 87 Attachment 5. Challenge process at OpenIDEO .......................................................... 88 Attachment 6. Elements of closed challenge system of open innovation .................. 89 Attachment 7. Design process at OpenIDEO ............................................................... 90 Attachment 8. Types of motivation for open innovation ............................................ 91 Attachment 9. Different elements of a challenge questions ........................................ 92 Attachment 10. Engagement efforts at OpenIDEO .................................................... 93 Attachment 11. Engagement effort at Innocentive ....................................................... 95 Attachment 12. Image showing tip in order to motivate community members ....... 96 Attachment 13. Sample of a site layout at OpenIDEO ................................................ 97 Attachment 14. Sample of challenge display at Innocentive ........................................ 98 Attachment 15. Challenge project room at Innocentive............................................... 99 Attachment 16. Problem solving process at Innocentive ........................................... 100 Attachment 17. Sample Agreement at Ideastorm ........................................................ 101 AAttachment 18. Sample of initial question framing at OpenIDEO ....................... 102 Attachment 19. Business model canvas of the open network system of creating things.................................................................................................................................. 103 Attachment 20. Sample how Innocentive markets its services to clients ................. 104 Attachment 21. Sample business model for the open network ................................. 105
1 Introduction
This part of the study introduces the background to this study, the case company, scope of the thesis and the key concepts covered in the study. 1.1 Background of this study
Marketing, a primary activity in the value chain associated with providing a means by which consumers can purchase a product and influencing them to do so through advertising, promotion, salesforce, quoting, channel selection, channel relations and pricing has evolved over the years (Porter 2004, 40). Recent trends in marketing as indicated in recent articles and publications indicate a shift to digital media in marketing communications and genericization of brands- described as a single brand name dominating a product category. Dominating the shift to digital media is search engine marketing and optimization, influencer management, mobile and tablet, social media such as Facebook, viral and emotional video and internationalization and localization of content. Marketing nowadays is seen from a holistic point of view cutting across different activities of the value chain including service, operations outbound logistics among others. Customer Relationship Management and Communication as a specialization programme at Haaga-Helia University of Applied Sciences approaches marketing similarly. As a consequence, Innovation Management for Global Competitiveness, Creative and Corporate Marketing Communications emerged as part of the core specialization courses studied where social media and innovation became of personal interest to me. Like other companies in the fast changing business environment, Case Company X, customer-centred design firm is faced with numerous business challenges. They include among others, how to be different in the emerging customer experience industry, how to communicate its strategies to clients, how to offer a complete user experience service consulting to clients, how to gather innovation input from the external world, how to utilize the ubiquitous social media for competitive benefit, how to acquire an online community on social media and how to maintain such communities. Filtering 1
the business challenges faced by Case Company X using my specialization and personal interest, the focus of the thesis research began to unfold. The focus was identified as how the company can obtain external input for innovation in order to improve the quality of service offered to its clients as shown in figure 1 below. The figure was modified from the customer involvement stages and purpose of Edvardsson, Gustafsson, Kristensson, Magnusson and Matthing (2006, 6).
Figure 1. Customer involvement stages in service design (adapted from Edvardsson, Gustafsson, Kristensson, Magnusson, & Matthing 2006, 6) While most firms choose to rely on people, companies or labs they already know well for such external inputs which often result in same local search biases that are present in internal problem solving, this study aims at exploiting the strength of weak ties (Howe 2008, 153). Such weak tie in this study is indicated in figure 2 below which includes the end customers of its clients or even ordinary creative thinkers from the general public. Figure 2 below had been drawn by the author of this thesis to describe the different players in this design process. Due to its collaborative nature, social media emerged as the platform to be explored for this purpose. In the interactive process, social media had become a platform for brand monitoring, crisis management, customer service, referrals and recommendations, fostering communities, brand content awareness, targeted deals, offers, product launches and customer input (Edelman, 2012). However, the use of social media in the business to business industries is quite restricted for such purposes and it is mostly used for support activities such as recruitment and networking. This is obviously due to the difference in the decision making structure in B2B compared to B2C markets. 2
As a result, customer input through social media in B2B consultancy became the purpose for which this study will be carried out.
Case company X X
Strong ties
Weak ties
Figure 2. Image describing different players that might exist in the design process In order to get the best out of this study, it aims to focus on utilizing this platform(s) for open innovation in the idea phase of design service as indicated in the figure 3 below but not restricted to this only. Based on the outcome of the field research, there exist possibilities to extend the outcome to include prototyping, testing and usage as these are important service stages of Case Company X.
Figure 3. Customer involvement stages in service design indicating innovation stage as the focus of the study (adapted from Edvardsson, Gustafsson, Kristensson, Magnusson, & Matthing 2006, 6)
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This study therefore covers theoretical concepts in the fields of open innovation, social media, crowdsourcing, competitive advantage and online community management theories and combined with an empirical study, a set of recommendations for Case Company X in building and managing such open innovation platforms were proposed 1.2 Case company introduction
Case Company X is a customer-centred design consulting firm. It brands itself as a company that provides world best customer experiences by helping its clients increase service value for end customers (Case Company X 2012.) Case Company X?s customers are across different sectors such as IT, healthcare, processing, media, industry, public and consumer product sectors. Some of the companies Case Company X works with include Nokia, Rovio, Fifth Element, Sulake, Suunto, KONE, Veikkaus among others. Figure 2 below shows the main services provided by Case Company X. The services are broken into research, design and evaluation. Research services include requirement specification; user persona development; customer feedback analysis; user experience competitor analysis and user experience lifecycle study. (Case Company X 2012)
Figure 4. The service offerings of Case Company X to its clients (Case Company X 2012)
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Its design services include conceptualization, user interface design, visual design, user interface guidelines and service design. Furthermore, Case Company X provides evaluation services such as usability testing, usability expert evaluation, concept evaluation and testing among others. (Case Company X 2012) Case Company X?s direct competitors in Finland include Adage, IDEAN among others. On a global scale, IDEO, the American design consulting giant is also a competitor. Adage?s strategy is slightly different from Case Company X?s because it is more of an evaluation company than one that provides the integrated services of research, design and evaluation. There are many other design and marketing companies that are obviously competitors but Case Company X comes from a different angle of providing fully integrated services to its clients. The competitive advantage of the company compared to competitors lies in its vast portfolio of usability experience and user centred design. 1.3 Research problem and objectives
Customized to the service process of the case company, presented below is the thesis topic: Open innovation through social media in the idea generation phase of the design consultancy process. Case company: Case Company X As described in the introduction, the thesis topic transcends marketing but the central idea is a marketing challenge. Currently in customer centred design consulting, end users are mainly utilized offline in the service process and in restricted stage of the service process. Similarly, social media as a tool for end user input in a B2B consultancy is rather an uncommon phenomenon. Therefore, the problem in this research can simply be described as ?How to obtain end user input at the idea generation phase of the design consulting process and how this can lead to competitive advantage.? In order to cover all aspects of the research problem, the investigative questions below have been developed to divide the research problem into researchable chunks. They include: 5
1. What types of online social media platforms enable crowdsourcing idea generation? (IQ 1) 2. What are strategies, techniques and processes utilizable in online open innovation? (IQ 2) 3. What is the existing people profile for open innovation in benchmarked B2Bs? (IQ 3) 4. How to acquire and maintain these online social communities? (IQ 4) 5. What are the competitive benefits and challenges of open innovation for Case Company X? (IQ 5) 1.4 Key concepts
The key concepts covered in this study include open innovation, social media, online communities, crowdsourcing and competitive advantage. They are deeper discussed in the next chapter but are briefly defined below. Open Innovation Open innovation can be defined as
?the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation respectively. Furthermore, it can be described as the antithesis of the traditional vertical integration model where internal research and development (R&D) activities lead to internally developed products that are then distributed by the firm.? (Chesbrough, Vanhawerbeke &West
2006, 1.) Crowdsourcing Crowdsourcing as defined by Sheehan (2010, 107) is ?the ability to gather large group of people around your brand and get them working to develop products and/or solutions.
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Social Media Social media is defined as that which provides the way people share ideas, content, thoughts and relationships online (Scott 2010, 38). Also, Sterne (2012, xvii) defines social media as that which allows anybody to communicate. Online community management Online communities are communities that have their own identities, norms, goals and these goals may be shared with one or more other related communities (Brandtzaeg, Obrist, Geerts & Berg 2010, 2) Competitive advantage Competitive advantage is that which allows a firm to differentiate itself from competitors by being unique at something that might be valued by its clients (Porter 2004, 119). Business model ?A business model describes the rationale of how an organization creates, delivers and captures value?. (Osterwalder & Pigneur 2011, 14). 1.5 Scope and limitation of the study
This part of the study describes the scope of this study. Open Innovation, a rather wide concept would have been too wide for the scope of this study. As a result, the demarcation of the topic has been done by considering just one part of open innovation which is crowdsourcing or co-creation. Another aspect of open innovation as will be seen in description of theoretical concepts could include the use of technology from other firms among others. In addition to this, the demarcation has also been done by considering only certain aspect of the design process. Figure 3 above depicts the stage of the design process that will be considered for democratization in this study. Finally, while this might be applicable to any category of business, this study is focused on low involvement brands such as consulting companies who usually don?t have direct access to the end users of consumer products or services.
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2 Theoretical concepts
The next paragraphs describe the key concepts, theories, models and practices and previous studies covering the theoretical aspects of this study. 2.1 Open innovation
In the competitive business environment, innovation among others offers an opportunity for companies and organizations to differentiate themselves from competitors. While in the past, the internal R&D activities of companies could provide the magic required for world class innovation, the fast changing demand of users requires their involvement in the innovation process. And contrary to the bias found in corporate environments, open innovation, co-creation and user innovation enables organizations to collaborate with the crowd and tap into their collective intelligence. The paradigm of open innovation (Chesbrough, Vanhawerbeke &West 2006, 1) assumes that firms should use both internal and external idea parts to markets in their technological advancement. They further state that open innovation combines internal and external ideas into architecture and systems. Chesbrough et al (2006, 2) also states that open innovation assumes that useful knowledge is widely spread and that capability extent of R&D should not limit the identification, connection and leveraging of external knowledge sources as a core process in innovation. It is however important to bear in mind that the external R&D discussed by Chesbrough extends to patented technologies by other organizations while this study aims to focus only on co-creating with users or user innovation. Based on an earlier project on how people interact and create user-generated content in online communities, Brandtzaeg, Obrist, Geerts & Berg, (2010,1) in their paper on innovation in online communities, predicted that online communities will be a key enabler of novel innovation chains and network. Two years after Brandtzaeg et al. published their paper, Quesenbery and Szuc (2012, 29) utilizes another term related to open innovation and online communities called open network. Open network poses a problem and invite people to contribute ideas or solutions to such problems using 8
their creativity. While it has mostly been used for social innovation purposes in some organizations, some profit making organizations have been able to apply similar concept to their business. Examples include firms like Nokia, Ideo, Toyota among others. This concept is further described in the crowdsourcing section later in this chapter. Furthermore, the question of which category of customer and how to get them involved for this innovation purpose comes into place. Studies of innovation (Jokula 2012, 24) have shown that active participation among innovation processes is frequently taken by lead users, main suppliers and large institutions. These studies have also demonstrated that innovators share their knowledge openly and are often part of communities or network of interactions. They rarely innovate alone, as they tend to be part of teams within communities of their interests in which they interact with their ideas (Brown & Duguid 2000, 31). In this respect, the relationship between the firm and the external environment can play a very important role in shaping innovative performance. This relationship will be further discussed in the online community management of the theoretical framework. 2.2 Crowdsourcing
As seen from the theories of social media and online community management, it requires motivation and carefully laid out technique to get people engaged in online communities. Crowdsourcing, an emerging concept in the online open innovation offers a rich approach and a number of techniques to get users engaged or to obtain input from online community members. Aniket, Chi & Suh (2008, 1) describe that collecting user input is important for many aspects of the design process which requires several techniques and it is expensive. However, crowdsourcing models enable a large number of users to be engaged for low time and monetary costs. There are several definitions that have been coined for the term ?Crowdsourcing? by different authors. Crowdsourcing as defined by Sheehan (2010, 107) is ?the ability to gather a large group of people around your brand and get them working to develop products and/or solutions. Henry Ford would say ?if he had asked people what they wanted, they would have said faster horses.? However, crowdsourcing offers another 9
perspective to that these days. Crowdsourcing can help lead your team to invent the ?ipod? or lead your team in that direction. (Sterne 2010, 196.) Similarly, Crowdsourcing as described by Howe (2008, 280) can occur in different forms including collective intelligence techniques such as crowdcasting; idea jams; prediction markets; collective intelligence improvisation, crowd creation, crowd voting and crowdfunding. Tina Rosenberg (2011, 1) in a New York Times article says ?companies stuck on a problem put it up on the site and offer a cash prize for a solution. About 30 percent of the time, an outsider solves the problem ? often someone who isn?t even in the same field?. For the purpose of this study aimed at a customer-centred design consultancy firm, collective intelligence, crowd creation, crowd voting and implicit crowdsourcing are explored as possible crowdsourcing categories for user innovation purpose. 2.2.1 Collective intelligence or wisdom of crowd Collective intelligence or wisdom of the crowd aims to collect large amounts of information and aggregates it to gain a complete picture of a topic based on the idea that a group of people is often more intelligent than an individual (Howe 2008). Collective intelligence, which utilizes the existing knowledge of the crowd, has been used in three different forms as earlier described. However, only two of them are considered suitable at this stage of the study. Crowdcasting can simply be described as broadcasting a problem to the widest possible audience in the blind hope that someone, somewhere will come up with a solution (Howe 2008, 147). Like an open source, you pose a problem, and someone suddenly pops up saying I have got a solution to that problem. The people you would least expect to solve a problem were exactly the ones most likely to crack it (Scott Page?s diversity trumps ability theorem). This can be traced to historical problem solving process such as the invention of a way to determine longitude on a sailing vessel. After failures at several attempts by the Royal Navy to solve the problem, the British established a prize of 20,000 pounds for someone who is able to come up with the solution. John Harrison, a cabinet maker was able to develop a device for this purpose. The key to making it work is to broadcast a problem or open up an idea collection platform using a massive network like Innocentive?s, an online open innovation platform. Examples of companies that have used such innovative approach include Colgate, P&G, Boeing and Netflix. (Jeff Howe 2008, 153.) 10
On the other hand, ?Idea jams? category of collective intelligence is a customer collaboration technique that does not aim to solve a specific problem but to create solutions to problems that don?t exist yet. It has been pointed out that this is more like an internet-enabled suggestion box making crowdsourcing vastly more effective. This technique has been used at IBM?s innovation jam and Dell?s ideastorm to create new businesses using the power of diversity. (Howe 2008, 159.) Conclusively, social community members can be utilized for solving difficult product or service problems as well as coming up with new product ideas and/or design. 2.2.2 Crowd creation Crowd creation is also often referred to as crowdsourcing creative works. This often consists of sourcing creative projects from a crowd by utilizing the assumption that the crowd possess a great deal of creative energy. (Howe 2008, 281.) Over the years, creative works from the crowd has evolved in the form of user generated content platform like iStockphoto, YouTube, Digg where users or members of a community are relied on as the source of content for the consumption of other members of the same community (Howe 2008, 277). Crowd creation usually involves cultivating a robust community comprising of people with deep and continuous commitment to their craft and to one another. However, traditional compensations can be adopted in crowdsourcing creative works but the social environment usually provides creative works with a great meaning for the invested resources. (Howe 2008, 180-181.) As cited by Howe (2008, 181-182), it is important to pay attention to the caveats that come with the gathering and maintaining an online community as will be later discussed later in section 2.5. Some of them include intellectual property possession, transparency issues and trust. It is also important to pay attention to Bradley Horowitz?s postulation on participatory media- the 1:10:89 rule, which indicates that for every 100 people on a site or community, 1 percent creates something, 10 percent will vote (crowd voting) on what has been created and the rest of the people are there to consume. However if a company is able to mix the ingredients appropriately, the reward can be an invaluable source of creative production for its business. When nar11
rowed down to utilization by a user experience design consulting firm like Case Company X, there exist a possibility to crowdsource product or service design from online communities with certain incentives as a motivating factor. 2.2.3 Crowd voting While collective intelligence utilizes what the crowd knows, crowd voting utilizes the thoughts of the crowd. It utilizes the crowd?s judgement to organize information often the one created by the crowd itself. (Jeff Howe 2008, 281.) It mostly occurs when a website gathers a large group?s opinion and judgement on a certain topic. Examples of firms around the world that have used crowd voting include Threadless, iStockphoto and Dell?s IdeaStorm. iStockphoto allows anyone to upload photo a photo by utilizing crowd creation technique earlier described above. However, a user searching for an excellent image might encounter more than 50,000 images while searching for a perfect fit. Through crowd voting, a collaborative filtering technique that utilizes users? ranking of contributors and number of downloads allows users to find the best images within a short period of time. (Howe 2008, 224-225.) In similar way, online social community members can be utilized for validating new product ideas and/or design and usability testing as might be validated later in this study. 2.2.4 Implicit crowdsourcing This type of crowdsourcing is less obvious and users do not necessarily know they are contributing but can still be very useful in competing tasks. It involves users doing another task while a third party obtains information for another topic based on the user?s action. 2.2.5 Summary of crowdsourcing techniques As a summary, figure 5 below shows the four crowdsourcing types described above that are considered in this study as techniques for open innovation. While it is apparent why these selected categories of crowdsourcing will be adoptable on social media platforms, the field study later discussed in chapter 4 will help justify the what and how of making it work in reality for the case company. 12
Figure 5. Modified cycle showing different crowdsourcing techniques to be considered in this study (Howe 2008, 147-281) 2.3 Social Media
The main channel to be explored in this study is the use of social media as a platform for obtaining end user input. Social media, a media that fosters online community is defined as that which provides the way people share ideas, content, thoughts and relationships online (Scott 2010, 38). Similarly, Sterne (2012, xvii) defines social media as that which allows anybody to communicate. Based on Sterne?s definition, social media has been categorized into six broad categories which include forums and message boards, review and opinion sites, social networks, blogging, microblogging, bookmarking and media sharing. These media have unique characteristics that position them for specific purposes. Similar to traditional communities, the communities formed on social media are distinguished by enabling technology, frequency of interaction, links in or outside the community and the member characteristics. (Brandtzaeg, Obrist, Geerts & Berg 2010, 2)
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For the purpose of this research, the social media categories considered include forums and discussion boards, social networks and micro blogging. McCorvey (2012) wrote that the ability of users to create profiles on social networking sites is what distinguishes them from other social media sites. He further states that this helps set the stage for building relationships with people who share the same interest and activities as opposed to just disseminating information. This among others such as ability to incorporate the earlier mentioned types of crowdsourcing techniques helps justify the consideration of the earlier listed social media categories for obtaining end user input as this will happen among people with similar interest. Other criteria or questions (McCorvey, 2010) necessary to ask in selecting the best social media includes: What are the business needs? What am I using the sites for? Whose attention am I trying to get? Which sites do I want to take on? The field research addressed some of these questions as will be later seen in section 4 of this study. Finally, Brandtzaeg et al (2010, 3) argues that the novelty of utilizing online social communities as a platform for co-creation in the open innovation process is that users are allowed to contribute their creativity and problem solving skills. Social media, which usually comes in the form of online communities, is further addressed in the next section as they both have some common elements in the build-up and management. 2.4 Online Community Management
As earlier stated, online communities have their own identities, norms, goals and these goals may be shared with one or more other related communities (Brandtzaeg, Obrist, Geerts & Berg 2010, 2). However, it requires a systematic process to build and attain the end goal on such communities. For the purpose of this study, community management is divided into two parts: 1. Online community engagement process 2. Building and managing the communities
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In the online community management process, figure 6 describes the steps customers pass through before the end goal is attained (Sterne 2010, 15).
Figure 6. Online community engagement process adapted from Social Media Metrics (Sterne 2010, 15) Awareness, the first step in the process need not necessarily happen in the social media sphere. However, the other four steps should happen on the selected social media platforms. Engagement is described as both when someone cares about your content and interacts with it. Persuasion has to do with people not just engaging with the content but also seeing a positive side and justifying reasons to take action. Conversion is when the final business objective has been achieved which in this case represents when a user contributes to open innovation online. (Sterne 2010, 106.) Weber (2009, 65) focuses on the other aspect which includes building and managing the online communities. This includes the internal process of acquiring the community, internal organizational structure and the relationship between the organization and the end users. ?To avoid the build it and they will come syndrome, you have to do your homework, build a solid foundation for your community and get the dialogue going.
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The internal process can be summarized as shown in figure 7 below: Observe caters for finding the most important places online where people congregate, listening to them and mapping their conversations. Recruitment is about enlisting a group of people who wants to talk about the brand or industry, evaluation is about figuring out where to enter the conversation- blog, own social network or a combination of places, while engaging is about content-how to get them coming back. Measure, promote and improve in order to drive towards the business goal. (Weber 2009, 66&67.)
Figure 7. Steps to marketing on the social web (Weber 2009, 66&67) While the detail of the steps above will not be thoroughly discussed here to keep this study focused, it will be value adding to discuss step two; recruit, a critical and rather not-so-easy to accomplish part of online community building for a business consulting firm that has no direct access to end users. The customer needs a real reason to show up for this purpose and that is where recruitment comes in. Furthermore, only by recruiting and getting ready for community members can the power of social media be harnessed for the purpose of this study (Weber 2009, 79). A study by Compete Inc.
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(Weber 2009, 29) shows that people join online communities to meet people, entertain themselves, learn something new and/or influence others. Weber (2009, 84) further states that it is harder to recruit people for a community involving a low-involvement service- which applies strongly to the case company considered in this study. One way to start building an online community in this category is to set up a microsite for enthusiasts in the industry you operate in as a way to add appeal to an existing site. This will enable members of the community to share or exchange content-video, photos, texts with other members of the community. Preferably, the members of the community should include experts and amateurs from geographical areas of the business to ensure balance of knowledge. The survival of online communities (Brandtzaeg et al 2010, 2) is largely dependent on user motivation and user participation. Content like linked blogs, photos, articles, contests will inspire people to come as well as maintain their presence in the community. Other means to building the community could include search engine optimization, paid search, paid advertisements among others. Finally, McCorvey (2010) addressed some of the most important questions that address internal criteria for successful management: Such questions include who?s going to manage my page? Who has access to my page? In their thesis research which focused on how businesses implement web 2.0, Hirn & Melto (2009, 82 ) concluded that small and medium sized companies were more satisfied when their online communities were built internally as opposed to outsourcing to external firms. They argued that the success of building these communities internally can be related to control over such communities and manageability. 2.5 Competitive advantage and Business model generation
Porter (2004, 119) states that a firm can differentiate itself from competitors if it can be unique at something that might be valued by clients. This differentiation is usually viewed too narrowly by firms along the value chain. Therefore, any activity along the value chain can be a potential source of uniqueness for the firm. The drivers of uniqueness can come from different factors such as policy choices of the firm, linkages 17
within the value chain, supplier linkages, location, interrelationships, integration and scale. Policy choices about activities to perform along the value chain and how to perform them offer some of the most prevalent uniqueness drivers (Porter 2004, 124). Example of such policies includes technology employed in performing an activity, quality of input procured for an activity among others. Utilizing external input using social media for innovation purpose by Case Company X can offer similar uniqueness from input and R&D perspectives. Furthermore, the uniqueness described above can come in the form of a new business model as discovered later in the fieldwork. Therefore it became important to understand in this theory part the concept of business model. ?A business model describes the rationale of how an organization creates, delivers and captures value? (Osterwalder & Pigneur 2011, 14). They further use the nine building blocks mentioned below to describe how businesses can create and capture value. The building block referred to as the business model canvas is shown in attachment 20. The first element of the business model is the customer segment which describes the different groups of people or organization a firm aims to reach and serve. And in relation to the use of open innovation in design consultancy, it is important that the firm understands which customer segment it will be able to offer and capture value from. Such segments can be niches in the market, multi-sided platforms, mass market and diversified. The second element of the business model is the value proposition which describes the bundle of products and services that create value for the identified segments. Value propositions can be disruptive or similar to existing market offers. They often come from identifying opportunities in design, newness, performance, and customization cost reduction among others. (Osterwalder & Pigneur 2011, 20-25.) Next is the delivery channel which describes the way the company will communicate the value proposition and reach its customer segments. There are different channel phases. They include awareness, evaluation, purchase, delivery and after sales. In relation to the study at hand, such channels will include how Case Company X can communicate the value obtained from its online innovation to the customers. Also, differ-
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ent customer segments require different customer relationships. The customer relationship element of the business model describes these types of relationship required to capture value from the clients. Relationships could come in terms of co-creation, automated services, self-service among others. The revenue stream element shows how the company will make money by generating cash from customer. Such cash in this study might be additional value captured from clients for using online open innovation in design process. This type of revenue stream can be classified as brokerage fees charged for facilitating open innovation. (Osterwalder & Pigneur 2011, 21-31.) The other elements of the business model canvas include key resources, key activities, key partners and cost structure required in creating the proposed value. Key resources are the most important assets required to make a business model work. They include people, money and intellectual property among others. Similar to the key resources, the key activities describes the most important actions required to create the value. Activities identifiable at open innovation companies include platform maintenance (Innocentive, 2012). Furthermore, key partnership is another important element of the business model and it describes the collaborative network of people required to create and deliver value. The advantages of such partnerships include risk reduction, business model optimization and resource acquisition. The last but not the least element of the business model is the cost structure and it describes the cost of actually creating value. The cost may come in different structures such as fixed cost, variable cost, economies of scale and economies of scope. (Osterwalder & Pigneur 2011, 38-41.) While the theories explored in this study were pulled together from several trusted sources, there exists an inter-relation of the key concepts which helps provide the basis for the hypotheses that are verified through the field research. The next section provides a pictorial image of this relationship as well as a short description of the relationship without repeating the deeply discussed concepts above.
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2.6
Relationship between theories
Though the relationship between the theoretical concepts has been somewhat discussed while discussing individual theories above, figure 8 below is matrix showing the relationship between the theoretical concepts that are involved in this study.
? ?
Figure 8. Theoretical frame of reference developed by the author Figure 8 clearly shows open innovation as the central idea of this study as a way to gain competitive advantage. Online community management is the theoretical concept supporting the recruitment, engagement, persuasion, conversion and retention of members of the online community. Crowdsourcing indicates the input techniques because social media is being considered unconventionally in this study as a platform for open innovation. As reflected in figure 5 earlier, wisdom of crowd, crowdvoting, crowdsourcing creative works and implicit crowdsourcing all serve as the techniques explored for open innovation. Social media in this case includes social networking site as well as the possibility to create a separate online social media that will enable open innovation. With all happening in the ?social mediasphere?- a combination of several social media platforms, this will amount to competitive benefits in the form of new ways of servicing clients and a completely new business model.
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3 Field research design
This chapter describes the research methodology, research method and data collection technique adopted in this study and justifications for the selected methods. In addition to these, detailed description of data collection process, data analysis method and data quality assurance issues are also covered. 3.1 Research methodology and design Attachment 1 shows the relationship between the research problem, research objectives, the theoretical concepts, research methodology and the expected outcome of the study. The utilization of qualitative methodology in this study has various justifications. Firstly, this study involves the unusual use of emerging social media to crowdsource innovative idea during the service process of a business to business consultancy company. This therefore makes the detail of experience and perception more useful to this study than a quantitative study which focuses on variance (Silverman 2005, 8). However, this does not completely render the use of quantitative approach useless as both research methods aims at generating individual points of view. Moreover, if resources permit, the combination of different research methods can facilitate thorough address of the investigative questions (Silverman 2005, 8). Furthermore, a qualitative study allows the investigators to get closer to the actor?s perspective through the adopted data collection tool (Silverman 2005, 10). This aligns perfectly with Burns & Bush?s (2010, 233) description which state that a qualitative study allows for an in-depth exploration of each respondent?s experiences and perceptions in order to develop a set of hypothetical techniques, processes and recommendations from the research. In addition to the above, while there are a few papers and books encountered on how social media can be a crowdsourcing platform for open innovation, this study provides recommendations to B2B organizations but not restricted to other categories from experiences of leading organizations and thought leaders in the field of study. Lastly, as
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suggested by Silverman (2005, 7) I consider myself, the author of this study more comfortable with a qualitative method than a quantitative one. Using purposive sampling in the selection of cases, this study sought out individuals and settings where the processes being studied are most likely to occur (Silverman 2010, 141). The cases in this study had been selected to cut across both B2B and B2C organizations and experts that have been able to build and crowdsource ideas from online social communities. As earlier mentioned in the previous paragraph, social media and the adoption of the crowd in creation of things, popularly known as web 2.0 is an evolving one. A few individuals and organizations around the world are at the frontend of this while some are lagging behind. Such organizations have been able to apply some of the theories studied in chapter 2 of this study to build online communities using social media and involve the crowd in their value creation process and maximized the advantage presented by this phenomenon. Similarly, while there is access to some of these organizations for qualitative studies via online technologies, some are not reachable. This therefore justifies the utilization of both the emotionalist model (opinions, stories, and perceptions) and constructivist model (existing behaviours) of qualitative studies in the data collection instrument. 3.2 Research method As stated in the earlier subsection, the research design accessed the perception, meaning and behaviours of individuals and organizations that are at the front-end of utilizing this phenomenon. Case documentary analysis (existing behaviour) and Experience surveys (opinions, stories, examples) were chosen as the research methods. Case study analysis is reviewing available information about past situations that has similarities to the current study (Burns & Bush 2012, 146). In addition, case study (Swanborn 2010, 13) also refers to a social phenomenon that focuses on process tracing i.e. describing and explaining social processes existing between persons in the process, people and their values, expectations, opinions, perceptions, resources, controversies, decisions, mutual relations and behaviour. In this study, case analysis has been referred to as benchmarks for congruence with the introductory chapter of this study. This aims to study how phenomena are constructed as indicated by Silverman (2005, 11). On the 22
other hand, experience surveys in this study referred to as expert interviews is the act of gathering information from knowledgeable people on the issues related to the research problem. This was utilized in gathering authentic insights through open-ended interviews from experts in the fields of open innovation, customer-centred design, social media and crowdsourcing. The selected methods are justifiable because in applied research, we try to solve the problems of description and explanation- what is, how and why questions (Swanborn 2010, 33). Specifically, this is related to what platform is most suitable for open innovation, how can the platform be set up and what should be the motivation for the company as well as the contributors. In addition to the design problem, other justifications for the case methods include rarity of the phenomenon at hand and ability to compare actions at the selected cases. However, one of the challenges associated with this approach is that researchers often find it difficult to generate conclusions based on their case studies (Swanborn 2012, 12). This risk posed by this method was mitigated by the analysis of up to 3 cases which enlisted a number of actors in the watch for useful information (Stake 1995, 68). Table 1 below shows the research method and investigative issues that are covered in the study. Table 1. Data collection technique and investigative questions aimed to address Research method Expert Interviews Investigative questions (1) What types of online social media platform enables crowdsourcing idea generation? (2) How to acquire and maintain these online social communities? (3) What are the strategies, techniques, and processes involved in online open innovation? (4) What are the competitive benefits
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and challenges of crowdsourcing for open innovation for Case Company X?
Platform analysis of benchmarked companies
1. What types of online social media platform enables crowdsourcing idea generation? (2) How to acquire and maintain these social communities? (3) What are the techniques, strategies and processes involved in online open innovation? (4) What is the existing people profile for open innovation in benchmarked B2Bs? (5) What are the competitive benefits and challenges of crowdsourcing for open innovation for Case Company X?
3.3
Data collection technique
Qualitative studies are more focused on detail other than scope and they tend to deal with a small number of cases (Silverman 2005, 9). This therefore limited the number of companies studied as well as experts interviewed. At the planning stage of this research, it was planned to combine interview of experts and benchmark across international firms from Finland, The United States of America and other parts of Europe. The collective case analysis approach is utilized where a number of cases are examined in order to investigate generalizable phenomenon (Silverman 2010, 138). The chosen geography was due to accessibility and experience of firms and individuals in this area 24
of study. While most of the companies selected are business to business firms, some business-to-consumer firms are as well included. This is because social media as an open innovation platform has been widely used in the B2C categories compared to B2B and good practices can be applied to this study. Experts, earlier defined as knowledgeable people on the issues relevant to the research problem are divided into 3 main categories. First is an expert in social media and online communities. The others are experts in open innovation techniques and strategies, and experts in usability and design. Experts in usability and design as well as the open innovation are assumed to possess adequate knowledge on how this mechanism could be transformed into competitive benefit for the case company. Attachment 2 shows the profile of the interviewees and the issues covered by the interaction with them. As earlier indicated, responsive interviewing termed as an approach to depth interviewing research (Rubin & Rubin 2005, 30) is one of the instruments used for data collection in this study. There are several characteristics of this model that affected the entire research process. Firstly, this model relied on combining interpretive constructionist philosophy and theory to meet the needs of doing the interview (Rubin & Rubin 2005, 30). For a quick clarification, interpretive constructionist philosophy in research, ?look for specifics and the detailed and try to build an understanding based on those specifics.? (Rubin & Rubin 2005, 28b). The other characteristics of responsive interviewing that affected the build- up of the interview include focus on depth understanding and flexibility in design through the entire process. The interviews were structured to consist of main questions, follow-up questions and probes as indicated by Rubin & Rubin (2005, 129). The main themes were prepared in advance as shown in attachment 3. In depth interviews were planned to be recorded and later transcribed into texts during the analytical process. The flexibility earlier described above was reflected in the modification of questions along the data collection process. As more data were collected, it was important to reduce and shape data collected in order to ensure that all relevant information was obtained. This was achieved by modifying the thematic questions used for every interview conducted.
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On the other hand, data and information from benchmarked companies were collected through desktop analysis of their online platform and guided by the investigative questions allocated to this method in table 1. This serves as the constructionist approach (Objective) aimed at balancing the emotionalist method of in-depth interviewing (Subjective). In addition to this, a video detailing existing behavior and practices at one of the benchmarked companies was combined with the platform analysis. The video consisted of detailed description of the set-up of a similar mechanism at one of the benchmarked companies. The subject of the video is later described as Expert Y. Using multiple data sources comes with its own setbacks but the data collected from different sources converged. Therefore the results were accepted. 3.4 Data quality assurance
There are several measures taken to ensure the quality of the collected data. Firstly, in selecting experts, it was ensured that they had first-hand experience in the covered themes (Rubin & Rubin, 2012, 60). Similarly, experts interviewed had diverse experience covering the different concepts of the study. And where data collected was deemed to be insufficient to ensure richness, other methods were employed to cover missing data. Such is reflected in the usage of benchmarks to obtain information about intellectual property since respondents were unable to give comprehensive responses on how intellectual property could be managed in open innovation. Furthermore, the use of diverse experts with different backgrounds as well as combination with platform analysis and video analysis helped mitigate the risk of imbalance and lack of thoroughness (Rubin & Rubin 2012, 62). The subjective opinions of experts were complemented with more factual documentation of practices at benchmarked platforms. As matter of fact, interviewees were further queried using probing question when they make comments that brought new perspectives or unanticipated ideas. And for accuracy, expert interviews were recorded and later transcribed in order to ensure that details of the interview were captured. In addition to that, notes were taken to make side remarks that helped to understand some statements during analysis. In 26
several cases, the transcripts were read more than two times in order to truly capture the expressions. And to ensure the credibility of collected information especially expert interviews, the measurement questions were framed to emphasize the usage of own experiences and opinions. For example, when an expert cited the usage of externals in her company?s service delivery, follow up questions were asked to clarify if it was from the strong ties of the company or weak ties. (Rubin & Rubin 2012, 65.) Finally, Swarnborn (2010, 36) stipulates that an obvious way to determine the quality of an applied research project is that the result will be usable for the commissioning company which will be verified months from now. 3.5 Type of data collected
As described in the previous chapter, multiple data collection methods were employed in obtaining information required to achieve the objective of this study. The methods were initially planned to include only platform analysis of benchmarked companies and expert interviews in the fields of user experience design, open innovation and online community management. However as mentioned earlier section 3.3, an additional video analysis was added to ensure sufficiency of collected data. More than 20 experts across the world were approached via phone, email and LinkedIn for possible interviews. In the end, 5 experts were interviewed, 3 open innovation platforms were benchmarked and one video analysis was conducted. The data collected were in the form of texts, images and audio recording of experts. 3.6 Interviewees and benchmarked platforms
For the purpose of anonymity, the experts are described in as Expert A, B, C, D and E in attachment 2. Their names or their organizations are not recorded in this report but can be provided in special circumstances. On the average, the time spent interviewing each respondent was about an hour and all interviews were conducted in respondents? company premises. Interviews were conducted using the responsive interview model described earlier in chapter 3. Also, brief summary framework of the study and inter-
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view themes was sent in advance to respondents. During interviews, a mobile recording application was used to tape responses and they were later transcribed into written texts. Each time an interview is completed, it gives me more insight on what how to structure the next interview and what data would be the priority. For example, after the first interview, it was figured out that a study framework was needed so that they would better understand the purpose of the study .As a result, a summary of the study framework was designed and subsequently attached it to the interview themes for every contacted expert. On the other hand, the benchmark platforms are open and are briefly described below for the purpose of familiarity with their services. ?OpenIDEO is a place where people design better, together for social good. It's an online platform for creative thinkers: the veteran designer and the new guy who just signed on, the critic and the MBA, the active participant and the curious lurker.? (OpenIDEO, 2012.)The description above reflects the diversity of the crowd on OpenIDEO?s open network ?Innocentive is the open innovation, crowdsourcing, and prize competition pioneer that enables organizations to solve their key problems by connecting them to diverse sources of innovation including employees, customers, partners, and the world?s largest problem solving marketplace.? (Innocentive, 2012.) As opposed to OpenIDEO, Innocentive combines internal capabilities with input from the open network in solving client?s problems. Ideastorm is a platform for Dell?s customers and fans to submit product ideas they will like to see implemented by the company. Ideastorm is mainly used in the idea phase of the product development as contributors are not mandated to make a prototype of their ideas.
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3.7
Data analysis and main issues
Data analysis cuts across the method in which the data gathe
Source: http://www.crowdsourcing.org/document/open-innovation-through-social-media-in-the-idea-generation-phase-of-the-design-consultancy-process-case-company-case-company-x/23492
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