Keynote speech given at CrowdSourcing Summit Venice 2015

1. CROWDSOURCING:
A BUSINESS MODEL
GAME CHANGER
Dr. Michele Osella
Head of Business Model & Policy Innovation Unit
@MicheleOsella
#CSWVenice
Venice, 5th March 2015

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THE HARSH REALITY
Joy's Law
“No matter who you are, most of the smartest people work for someone else”
Bill Joy – Co-founder of Sun Microsystems

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PROBLEM SETTING
‘Not invented here’ syndrome,
coupled with managerial ‘turf
wars’, tends to originate non-
communicating silos with
knowledge rarely flowing
between departments.
Tons of disparate, independent
and accessible ideas – going
beyond the voices of
traditional elites of indoor and
outdoor experts – await
consideration.
Useful knowledge today is
widely distributed and no
company – no matter how
capable it is or how big its
R&D labs are – could innovate
effectively on its own. New
inputs are required.
Silo
trap
‘Usual suspects’
trap
Self-sufficiency
trap
Inside the company Inside & outside the company Outside the company
Solution space

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OPENNESS AS EMERGING PARADIGM
Openness occurs when
“companies recognize that
not all good ideas will come
from inside the organization
and not all good ideas
created within the
organization can be
successfully marketed
internally.”
Henry Chesbrough

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OPEN INNOVATION
By adopting open innovation,
the boundaries between a
company and its environment
– including customers,
suppliers and competitors –
become porous.

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THE STARK CONTRAST 1.0
Old guard New guard
Innovation paradigm Closed innovation Open innovation
Motto ‘The lab is our world’ ‘The world is our lab’
Knowledge sourcing approach ‘Not invented here’ syndrome ‘Best from anywhere’
Innovation patterns Centralized and monocentric Distributed and polycentric
Prominent R&D activity Knowledge creation Knowledge connection
Source of competitive advantage Technical excellence Absorptive capacity
Attitude towards IP Ownership and protection Selective sharing
Role of customers Passive recipients Potential active co-innovators
Innovation funnel surface Impermeable Porous

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OPENNESS AS THE ‘NEW NORMAL‘
Business
Citizen science
Science 2.0
MOOCs
Open Access
Crowdsourcing
Crowdfunding
User co-creation
Open Government
Open Data
E-Participation
Open source software
Open hardware
Open standards
Open contents
Internet-only Cross-cutting phenomenon at societal level
‘Tipping point’
Triple
helix

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THE KING OF OPENNESS

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CROWDSOURCING IS NOT NEW
Trailblazing crowdsourcing
in action
In 1936, Toyota held a
contest to redesign its
logo, receiving 27,000
entries.

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CROSSING THE CHASM…
‘Exploration’ phase
Isolated experiments conducted by
enthusiasts and visionaries
‘Exploitation’ phase
Powerful approach to problem solving
widely recognized among pragmatists

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THE CROWDSOURCING SPACE

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CROWDSOURCING FOR ENTERPRISES
Fertile soil for private sector business models

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CROWDSOURCING AS A BUSINESS MODEL
“Crowdsourcing has changed from a buzzword to a business model”
Financial Times (2012)

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CROWDSOURCING AS INNOVATION LEVER

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THE STARK CONTRAST 2.0
Old guard New guard
Approach to crowdsourcing Incremental Radical
Dependence on the crowd Low High
Role of crowdsourcing in the business model Peripheral Vital
Locus of crowdsourcing in the company Back-end Front-end
Customers’ perception of the crowd Transparent Visible
Business model novelty Evergreen Groundbreaking
Size of the company Large Small
Industry Mature Thriving
Longevity of the business Incumbent Newcomer
Management style Codified, hierarchy-based Lean, reputation-based

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BM A – INNOVATION CONSUMPTION

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BM B – BRAIN ATTRACTION

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BM C – SOCIAL PRODUCT DEVELOPMENT

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BM D – LABOR AS A SERVICE

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WHO IS LAGGING BEHIND?
Mainly companies that are:
• large
• complex
• hierarchical
• long-running
• in mature industries

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BIG PHARMA: A FRIGHTENING RULE OF THUMB
Moore’s Law
The number of transistors incorporated in a
chip approximately doubles every 24 months.
Eroom’s Law
The number of new drugs approved per dollar
spent on R&D has halved every 9 years since 1950.
Computer science Pharmaceutical industry

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AUTOMOTIVE: A HEIGHTENED INNOVATION PRESSURE
Background
Automotive as a mature,
asset-intensive industry
resting happily on the
plateau of productivity.
Innovation pattern
Innovation process usually
seen as restricted to the
boundaries of the firm.
‘Comfort zone’
‘Pressure zone’
Background
Automotive industry
trapped by sectorial crisis,
fierce competition and
sizable sunk costs.
Innovation pattern
Call for a discontinuity in
the way innovation is
generated and turned into
profits.

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NEW AVENUES FOR LAGGARDS
How can laggards
overcome inertia?

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A TWIST FOR LAGGARDS?
Need for
‘ambidexterity’
Employees have to take care of the
current business (exploitation),
while coping with tomorrow’s
changing demand (exploration) in
a creative and adaptable way.
Challenge of workforce
engagement
According to The Economist Intelligence
Unit (2010), 84% of senior leaders say
disengaged employees are considered
one of the biggest threats facing their
business. However, only 12% of them
reported doing anything about this
problem.
Workforce empowerment Workforce engagement
Indoor crowdsourcing
Dispersed workforce
of big companies
considered as a crowd
Risk mitigation

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THE ‘GOLDEN CIRCLE’ OF INDOOR CROWDSOURCING
Exploit untapped
innovation potential,
empower and engage
the workforce, mitigate
risk
Intrapreneurship,
diversity, purpose,
co-opetition,
codification, reward
Indoor crowdsourcing
calling upon different
divisions, departments
and units

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THE ‘TABLEAU DE BORD’
Progress in crowdsourcing exploration
No crowdsourcing Internal crowdsourcing
Full-fledged
crowdsourcing
(internal and external)
Achievements
Silo trap
Usual suspects’ trap
Self-sufficiency trap
Achievements
Silo trap
Usual suspects’ trap
Self-sufficiency trap
Achievements
Silo trap
Usual suspects’ trap
Self-sufficiency trap

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CONCLUSIONS
“The mind is like a parachute.
It doesn't work
unless it's open.”
Frank Zappa

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Thanks for
your attention!
We believe in collaboration as a powerful source of innovation.
We consider interdisciplinarity as a genuine multiplier of opportunities.
We are optimistic.

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CONTACTS
Dr. Michele Osella
Head of Business Model & Policy Innovation Unit
Istituto Superiore Mario Boella
E-mail: osella@ismb.it
Twitter: @MicheleOsella
LinkedIn: linkd.in/MicheleOsella
Web: www.ismb.it/michele.osella