Crowdsourcing Introduction


Published on

Bruno Pellegrini made a lesson in Bocconi about Crowdsourcing.

Bruno Pellegrini is one of the top Italian experts in new media and UGC, after graduating in business administration at the Bocconi University in Milan, he worked at Procter & Gamble and Bain & Co. He took his MBA at Insead, Paris, and joined Mediaset where he developed and produced multimedia projects including the web-TV during the first edition of Big Brother.
He was co-founder in 2001 of Offside, a company which produces several television programs and films for private cinema that won numerous international awards, including the Locarno Film Festival and David di Donatello.
In 2004 he conceived and founded the satellite channel, NessunoTV.
He is currently CEO of TheBlogTV, a media company he founded in 2006 specializing in user-generated production.

Published in: Business

Crowdsourcing Introduction

  1. 1. Crowdsourcing Università Bocconi 8 Marzo 2011TheBlogTV S.p.A
  2. 2. TheBlogTV is the first Social Media Company in Europe, and it is present in Italy, France, Spain, and the UK. Founded in 2007, Our mission is to TheBlogTV spa is create economic supported by a team of prominent investors among value through the whom an Italian industrial potential of Web 2.0 member leader in television production (DeAgostini) and by engaging and two Venture Capital communities. funds specialized in media and and telecommunications (Innogest e Tlcom). 100 people work for the company.TheBlogTV S.p.A 2
  3. 3. Participatory Value is the new fronteer of business management. Crowdsourcing is one emerging model which leverages on external resources in order to create participatory value. INTRODUCTION Crowdsourcing In the near future any company and organization must recognize where its participatory value lies and how to create/activate it.TheBlogTV S.p.A 3
  4. 4. DEFINITION CROWDSOURCING is when a COMPANY takes a job that was ONCE PERFORMED BY EMPLOYEES and outsources it in a form of an open call to a LARGE UNDEFINED GROUP OF PEOPLE generally using the internetTheBlogTV S.p.A
  6. 6. THE ORIGIN OF CO-CREATION The origin of crowdsourcing are to be found in the early work of Eric von Hippel (MIT) in late ’70: Users as innovators (1979) or Get new products from customers (1982) For me, the 1991 book of Salvatore Vicari “L’impresa Vivente” highlighted sharply that enterprises must open their boundaries if they want to fight the entropia and win the competition. More recently, Ramaswamy and Prahalad (Co-Opting Customer Competence, 2000 HBR) have defined some key pillars of the co-creation model. 0 9TheBlogTV S.p.A / 6 0
  7. 7. CROWDSOURCING MODEL A first generic categorization of crowdsourcing sees two basic models: Corporate Crowdsourcing happens when crowdsourcing is started by a company Crowdsourcing Vendors are enterprises whose business model is entirely built on crowdsourcing 0 9TheBlogTV S.p.A / 7 0
  8. 8. CROWDSOURCING TURNOVER IN 2009 Accounting for overlap, and using some very general assumptions relative to work type, category and company revenue model, we’d estimate that over 1 million workers have earned $1 – 2 billion over the past 10 years via crowdsourced work allocation. The revenues earned by the paid crowdsourcing vendors themselves are subject to a wider margin of error in estimation, but are likely around $500 million per year among all vendors. Vendor Revenues will pass $1B in 5 Years 0 9TheBlogTV S.p.A / 8 0
  9. 9. “No matter who you are, most of the smartest people work for someone else” Attributed to Sun Microsystems cofounder Bill Joy, this “law” emphasizes the CASE STUDIES essential knowledge problem that faces Crowdsourcing many enterprises today, that is, that in any given sphere of activity most of the pertinent knowledge will reside outside the boundaries of any one organization, and the central challenge for those charged with the innovation mission is to find ways to access that knowledge.TheBlogTV S.p.A 9
  10. 10. INERNATIONAL CROWDSOURCING MAP www.crowdsourcingresult.comTheBlogTV S.p.A
  11. 11. ITALIAN CROWDSOURCING MAP www.crowdsourcingnetwork.itTheBlogTV S.p.A
  12. 12. CROWDSOURCING HISTORY 0 9TheBlogTV S.p.A / 12 0
  14. 14. CROWDSOURCING CASE STUDIES CORPORATE INNOVATION: Dell / StarbucksDELL IDEA STORM MYSTARBUCKSIDEASSince 2007, DELL has received 15.400 StarBucks has received more thanideas and implemented 432 100.000 ideas in 2 years (more than 400)TheBlogTV S.p.A
  15. 15. CROWDSOURCING CASE STUDIES CORPORATE INNOVATION: Mulino Bianco / NesquickNELMULINOCHEVORREI NESQUIK – SAI COME ME LO IMMAGINOIn 2010 MulinoBianco receives almost 5.000 In 2010 Nesquik engaged mothers toideas and are implemented 4. develop a new concept for its website TheBlogTV S.p.A
  16. 16. CROWDSOURCING CASE STUDIES INNOVATION VENDORS: Innocentive / YourEncoreINNOCENTIVE YOURENCOREThe site aggregate more than 200.000 The characteristic of this platform is toscientists from 200 countries. Since 2003 “keep retires in the game” allowing themmore than $7mln prizes have been to participate to crowdsourcing projectsassigned. for top customers. TheBlogTV S.p.A
  17. 17. CROWDSOURCING CASE STUDIES CREATIVITY VENDORS: BootB / CrowdspringBOOTB CROWDSPRINGBorn in 2009 it allows brand to engage a Together with 99design it is the mostcommunity of creatives famous creativity crowdsourcing vendor in US TheBlogTV S.p.A
  18. 18. CROWDSOURCING CASE STUDIES CONTENT VENDORS: UserFarm / Associated ContentUSERFARM ASSOCIATED CONTENTSince 2009 more than 80 content Yahoo bought AC in 2010 for almostcrowdsourcing project have been $100mln in order to integrate its model inlaunched on the platform the content making process. TheBlogTV S.p.A
  19. 19. CROWDSOURCING CASE STUDIES CORPORATE CONTENT: RAI / France24FRANCE 24 – LES OBSERVATEURS CITIZEN REPORT - RAI The first time Rai opens to user generated content, a participatory TV Show aired on 2010 with excellent audience results.CNN – I REPORT TheBlogTV S.p.A
  20. 20. CROWDSOURCING CASE STUDIES CROWDFUNDING VENDORS: SellaBand / FashionStakeSELLABAND FASHIONSTAKEBorn in 2006, it helps new music bands to Since 2010 it gives young designer araise money and get visibility chance to enter in the fashion world TheBlogTV S.p.A
  22. 22. CUSTOMER CARE Vodafone / Crowdengineering VODAFONELAB CROWDENGINEERING Since 2007 more than 100.000 A white label customer care Vodafone users subscribed and crowdsourcing platform used by participate to the lab. many international customers.TheBlogTV S.p.A 22
  23. 23. MARKETING CORPORATE CSR: Pepsi / WWF PEPSI – REFRESH YOUR PROJECT SONY/WWF – OPEN PLANET IDEAS A sizable 44 percent have used crowdsourcing – asking customers to provide ideas and help in decision-making on how to tackle issues. Of these, 95 percent found it valuable to their company. Regardless of use, 83% see the potential. The perceived value of crowdsourcing is that it surfaces new perspectives, builds engagement with key audiences, invites clients and customers from nontraditional sources to contribute ideas and it brings new energy to the process of generating ideas and content. Weber Shandwick – October 2010 – 216 Fortune 2000 Corporate Executives with Program orTheBlogTV S.p.A Communications Oversight for Corporate Philanthropy, Social Responsibility & Community Relations 23
  24. 24. CROWDSOURCING CASE STUDIES I Pad and Iphone applications On my opinion one of the most interesting crowdsourcing example is the Iphone and Ipad AppStore. Here the concept of “becoming a platform to harness the participatory value” is fully exploited. Letting anyone to develop and sell their applications has led to 250.000 apps building a critical mass far above any competitors. APPLE APPLICATION STORETheBlogTV S.p.A
  25. 25. “Choose the best” “… To achieve the objective of leveraging the knowledge of the masses, business must realise that to get the best answers, it is necessary to attract those GUIDELINES who can give them, and these are the Crowdsourcing people who also best know the value of the knowledge they hold.” Donal ReddingtonTheBlogTV S.p.A 25
  26. 26. CO-CREATION GUIDING PRINCIPLES 0 9TheBlogTV S.p.A / 26 0
  27. 27. CROWDSOURCING 5 KEY SUCCESS FACTORS1.  Crowd Responsiveness - What each vendor seeks to achieve is enough volume, breadth and quality in their on-demand workforce to provide the payers a good chance of getting results in a timely fashion. They also seek to provide the most lucrative experience for their workers as the barrier to working for alternative vendors is low.2.  Ease of Use - A well designed on-demand service will hand hold a work requester through the process of creating a work definition and proposal. Itll provide a mechanism for the provider to keep tabs on the progress of the work all the way through to approving the results delivered and the subsequent payment of the worker.3.  Satisfactory Results – Low quality or unexpected results are the single biggest factor in companies choosing to abandon paid crowdsourcing as a viable outsourcing option. Many of the business people surveyed were willing to invest the time and effort to submit trial work through a paid crowd vendor, but unwilling to give it a second chance when the initial results were below their expectations.4.  Cost Advantage - Cost benefits run second to results quality in determining business interest in paid crowdsourcing. Cost advantages over traditionally sourced work range from orders of magnitude difference to similarly priced. Some work types can only be done economically via paid crowdsourcing. Some examples: Traditional Outsourcing Paid Crowdsourcing Transcription $2 – 6/minute $0.75/minute Company Research* $3 - 10/hr $1.85/hour Image Tagging Feasible? $0.02/image5.  Security / Privacy – The option for autonomy and the assurance of security is a built in feature for most 0 categories of paid crowdsourcing. In addition, vendors have developed sophisticated procedures that 9 utilize accounts, escrows, and modern payment processors like Paypal along with approval procedures TheBlogTV S.p.A / that work fairly well in protecting both the provider and the worker when settling the bill. 27 0
  28. 28. CASH REWARD IS NOT EVERYTHINGIn the case of output that is not needed by the contributor, a cash reward might betendered for substantial contributions. Such efforts are not undertaken with any ex-ante guarantee that they will be rewarded. Rather, payment is at the discretion of thesponsoring organization, made after the work has been completed and evaluated asmeeting a certain criteria, and is usually attended by the formal transfer of intellectualproperty between contributor and sponsor.Beyond pecuniary benefits, extrinsic reasons for participation include job marketsignaling and skill and reputation building. Distributed innovation communities providea relatively open and transparent platform for exhibiting skills and talents toprospective employers. Participants don’t need high-level credentials to directlydemonstrate their abilities in highly specialized domains, and employers can screenand hire talent by directly observing or soliciting third-party verification of skills.The intrinsic and extrinsic motivations to participate in distributed innovation systemsare not intuitively obvious to new observers of the phenomenon. Most, in fact, find tobe counterintuitive the association of fun, enjoyment, and a personal sense of identitywith the accomplishment of complex technical tasks. But the research findings stronglysuggest that the functioning of these systems is driven by mixed and heterogeneousmotivations. Consequently, optimizing on only one dimension might have the effect oflimiting participation. 0 9TheBlogTV S.p.A / 28 0