Crowdsourcing_Dissertation

Crowdsourcing and
the Circular Economy
A Way to Generate Sustainable Solutions
- A Literature Review
Student Name: Eitai Ben-Natan
Course: M.Des Design, Strategy and Leadership
Faculty: School of Applied Science

Crowdsourcing and the Circular Economy Page 2
Table of Contents
Introduction .......................................................................................................................................................3
Circular Economy ...............................................................................................................................................4
Background ....................................................................................................................................................4
Principles of the Circular Economy.................................................................................................................6
Potential Benefits...........................................................................................................................................7
Challenges in Adopting a Circular Economy Approach...................................................................................7
Innovative Solutions for the Circular Economy ..............................................................................................8
Innovation........................................................................................................................................................10
What is innovation? .....................................................................................................................................10
Innovation Strategies ...................................................................................................................................11
Types of Innovation......................................................................................................................................13
Crowdsourcing .................................................................................................................................................15
What is Crowdsourcing?...............................................................................................................................15
Consumer/Innovators’ Participation in Crowdsourced Events.....................................................................16
The Process of Crowdsourcing .....................................................................................................................18
Benefits of Crowdsourcing ...........................................................................................................................19
Challenges of Using Crowdsourcing .............................................................................................................20
Crowdsourcing – A Source of Ideas for the Circular Economy?....................................................................22
Summary..........................................................................................................................................................23
Appendix A - Examples of Government-Led CE Initiatives Worldwide.............................................................24
Bibliography .....................................................................................................................................................25
List of Tables
Table 1 – Challenges of the Linear Economy ......................................................................................................4
Table 2 – The Five Circular Business Models ......................................................................................................6
Table 3 – CE Challenges & Suggested Solutions .................................................................................................8
Table 4 – List of Innovation Strategies Modes..................................................................................................11
Table 5 – Innovation Modes Used in Different “Closed-Loop” Product Design in KingFisher plc.....................13
Table 6 – Kingfisher Product Launches.............................................................................................................14
Table 7 – Examples of Companies Co-developing Products through CS...........................................................15
Table 8 – Different Motivations of Consumer/Innovators to Participate in OIPs .............................................17
Table 9 – Challenges in Running a CS Event .....................................................................................................20
List of Figures
Figure 1 - The Five Circular Business Models......................................................................................................6

Introduction
Purpose
The following study aims to explore the feasibility of using Crowdsourcing (CS) as a way to generate new
products and services in the spirit of a Circular Economy (CE) and a Cradle-to-Cradle (CTC) product design
approach.
Both CS and CE are relatively new concepts, but while CS is becoming mainstream and is used quite
extensively by leading companies worldwide, such as Amazon, Google, Microsoft, etc., CE has so far been
adopted by only a few countries, industries and companies. This may be due to the fact that implementing
CE will require greater coordination efforts and the willingness of various stakeholders to collaborate.
The present report consists of three parts:
o Circular Economy (CE): This part will explore the concept of CE, including its principles and the
potential benefits for companies and governments in adopting the CE approach, as well as assessing
what challenges there are in adopting the CE approach, all the while, paying particular attention to
the aspect of product design and innovation.
o Innovation: This part will explore the notion of innovation in the context of open-sourced
innovation, looking into the different types and strategies of innovation potentially relevant to
companies in adopting the CE principles of product design.
o Crowdsourcing (CS). This part will explore the idea of CS, in particular, who are the participants in CS
events, how a CS event is conducted, the benefits and challenges in hosting a CS event, and whether
CS is a viable source to generate innovative ideas for products under the CE approach.
Methodology
The study was conducted in the form of a literature review around the topics of: Circular Economy (CE),
Innovation, Open Innovation (OI), Crowdsourcing (CS) and sustainable product design.
Findings
There are plenty of separate academic studies and resources based around the topics of Circular Economy
(CE), Crowdsourcing (CS) and sustainable product design, but no studies were found to directly link CS with
either CE or sustainable product design.
Two reasons for this may be: a) sustainable product design requires specific skills and knowledge that usually
is not readily available in the general public and b) studies have shown that a product’s environmental
attributes are usually of low significance to the consumer in terms of their overall buying decision-making
process, meaning that CS events around sustainable product design might only appeal to a few people.
However, as official government bodies and leading companies agree, the current form of global
manufacturing is not sustainable in the long run, but it can be risky for companies to adopt CE principles
alone, and therefore, the use of CS in that respect could be a go-between solution to minimise the risk for
those companies that want to explore the idea of CE but are worried about the risks. Hence, the idea of
using CS as a platform for innovative product design under the CE principles definitely warrants further
investigation and is therefore studied in the present paper.
List of abbreviations
CE Circular Economy
CS Crowdsourcing
CTC Cradle-to-Cradle
OI Open Innovation
OIP Open Innovation Platform

Circular Economy
Background
The notion of a CE has its roots in industrial ecology dating back to the mid-1950s, when a large number of
studies by environmental academics looked for ways to remodel the current industrial systems, taking into
account both the earth’s eco-system and the availability of an efficient utilisation of natural resources
(Bonciu, 2014; Ellen MacArthur Foundation and McKinsey & Company, 2014; Ellen MacArthur Foundation,
2012, 2013; McDonough and Braungart, 2010)
The current global system of production and consumption is predominantly linear, meaning that natural
resources are extracted (either through mining or natural growth), then used in manufacturing, distributed
as end-products and then finally disposed of once a product has been consumed or reached its end-of-life
(Ellen MacArthur Foundation, 2012, 2013; Hislop and Hill, 2013; McDonough and Braungart, 2010).
In the past years, several global, regional and local initiatives have taken place to tackle environmental issues
stemming from the linear-flow of materials; initiatives such as: waste management, global CO2 emission
quotas, pollution reduction, efficient material extraction through recycling, etc., but studies have shown that
despite such initiatives, the current linear system places a high toll on the environment and is unsustainable
in the long run (see Table 1) (Bakker et al., 2014; Bonciu, 2014; Ellen MacArthur Foundation and McKinsey &
Company, 2014, 2015; Ellen MacArthur Foundation, 2013; Fischer-Kowalski and Swilling, 2011; Hislop and
Hill, 2013; Lacy, Keeble and McNamara, 2014; Mathews, Tang and Tan, 2011; Preston, 2012; Rivera-Camino,
2007).
One of the major contributing factors to the unsustainability of the linear economy is the steady decline of
the lifespans of most physical products, leading to an accelerated creation of products to replace the
obsolete ones, and thus resulting in increased environmental waste (Bakker et al., 2014; Bartels et al., 2012).
There are three main contributing factors leading to the shortening of a product life cycle:
 Planned obsolescence, which benefits the manufacturer by increasing product sales over time (e.g.
printer cartridges, consumer electronics).
 Changes in technology or legislation, which can render a product obsolete (e.g. a move away from
the physical storage medium (cassettes, floppy disks, CD/DVDs) to cloud-based storage.
 Competition, which can force manufacturers to abandon old products to keep pace with consumer
demands and expectations for new products (e.g. the move away from Plasma TVs to LCD TVs in
2009, which was accelerated by the drop in consumer demand for the former class of TVs).
Table 1 – Challenges of the Linear Economy
Category Challenge Issue Impact
Demography
Rapid
Growth
 Estimated growth of world population from est. 7bn
(2014) to 9bn people by 2050 (The World Bank, 2014).
Increase in overall energy and
water consumption, reduction
in land-mass.
Intense
Urbanization
 In 2007, 50% of the world population lived in cities, and
although cities occupy less than 2% of earth’s land-mass,
they account for 70% of global CO2 emissions (from
transport, construction and industrial-activities) (IEA,
2008).
 It is expected that the extra 2bn people by 2050 (mainly
from developing countries) will be living in cities in what is
called “Second Wave Urbanization” (Fischer-Kowalski and
Swilling, 2011).
Further increase in energy
consumption and CO2
emissions by 76% (Fischer-
Kowalski and Swilling, 2011)
Consumption
Limited
Regenerative
Capacity
 Rise in global affluence together with increase in demand
for non-renewable resources (e.g. metals, minerals and
fossil fuel) created great strains on Earth’s regenerative
If current trends will continue
this way by 2030 human
activity would need 2 earths to

Category Challenge Issue Impact
capacity of resources (e.g. land, forest and water)
threatening the ecosystem (IPCC, 2014; Lacy, Keeble and
McNamara, 2014).
 Between 45-60 bn. tonnes of resources are extracted
globally annually, and current growth trends suggest that
this figure could increase to 140 billion tonnes by 2050,
(Ellen MacArthur Foundation, 2012; Hislop and Hill, 2013;
UNEP, 2012).
 As a matter of fact on Aug 13th 2015, it’s been reported
that Earth reached its “Overshoot Day”, the moment
when humanity exceeds "nature’s budget” for the year
was reached, It means humanity is on course to consume
the equivalent of 1.6 Earths this year (Withnall, 2015).
function and by 2050 3 earths
(Global Footprint Network,
2014; Withnall, 2015)
Raw
Materials
Intensive
Extraction &
Material
Scarcity
 Thanks to scientific and technological advances, the
extraction of construction materials grew by a factor of
34, ores and minerals by a factor of 27, fossil fuels by a
factor of 12, and biomass by a factor of 3.6 (Fischer-
Kowalski and Swilling, 2011)
 Tangible resources are in finite quantities (Macarthur,
2013)
 Scarcity of resources also refers to limited access to raw
material due to geo-political issues (e.g. trade barriers),
economic dimension (e.g. limitation in supply chain) and
ecological conditions (e.g. air/water pollution) - (Kok,
Wurpel and Ten Wolde, 2013)
Continued dependence on
scarce natural resources for
growth, exposes a company’s
tangible and intangible value to
serious risks of revenue
reduction and cost increases
(Lacy, Keeble and McNamara,
2014)
Price
Fluctuations
 Historically prices of raw material were cheap and by 2008
the price of many commodities has peaked. (Ellen
MacArthur Foundation, 2012; Kok, Wurpel and Ten
Wolde, 2013)
 However, from 2009 to present day prices of most
commodities (metals, crude-oil, gas, timber etc.) dropped
dramatically due to: fall in global financial activities (credit
crunch), slow growth in China, low consumption rate in
developed countries, and geo-political instabilities
(Ukraine/Russia, EU [Greece] and Middle-East) (Anjli Raval
and Nathalie Thomas, 2015; Jerin Mathew, 2015; Peter
Koven, 2015; Sudip Kar-Gupta and Liisa Tuhkanen, 2015;
The Canadian Press, 2015; Trista Kelley, 2015; Vladimir
Kuznetsov, 2015)
Waste
Energy
 Estimated that energy used to produce metals could
approach 40 per cent of global energy supply by 2050
(Maclean et al., 2010)
Water
 Water shortage is likely to present one of the largest
challenges on the resource supply side globally.
 Estimated annual pace at which supply is added over the
next 20 years in water would have to increase by 140%,
this expansion will have negative effect on the
environment.
 This expansion of supply could have a wide range of
potentially negative effects on the
 There would be an additional 1,850 cubic kilometers of
water consumption by 2030, 30 percent higher than
today’s levels (McKinsey Global Institue, 2011)
Raw
Material
 60 metals analysed, only 18 had end of life recycling rates
(EOL-RR) of more than 50 per cent This linearity matters
because ultimately, metals are finite resources (Graedel
and et.al., 2011)
 80% of mined or harvested products ending up in landfill
within only a couple of years of sale to consumers
(Inglethorpe, 2013)

Principles of the Circular Economy
The idea behind the CE is to create an industrial system that is restorative or regenerative in nature. New
business models (see Table 2) based on “closed-loop” production chains are created, while looking for ways
to: a) reduce dependency on particular virgin raw materials in the manufacturing of products, and b) to
design products with an end-of-life strategy whereby materials either biodegrade (Biocycle Design) in a safe
way or could be easily separated for reuse (Technocycle Design) (Bonciu, 2014; Ellen MacArthur Foundation,
2012, 2013; Hislop and Hill, 2013; Ind, Iglesias and Schultz, 2013; Kok, Wurpel and Ten Wolde, 2013; Lacy,
Keeble and McNamara, 2014; Preston, 2012; Schulte, 2013; Zils, 2014).
Table 2 – The Five Circular Business Models
Model Description Examples
Circular Supplies Provision of renewable energy and the
use of bio-based or fully recyclable
materials.
Both Amazon and IKEA recently purchased wind farms in
North Carolina (Amazon) and Illinois (IKEA) as part of an
effort to produce more renewable energy than they
consumes (Novet, 2015; Wernau, 2014).
Resources Recover Recovery of useful material from
disposed products or by-products.
US grocery chain Kroger conversion of food waste to
renewable energy (DiBenedetto, 2013).
Product Life Extension Extending the life-cycle of products
through: repair, product upgrade and
reselling.
Google’s Project Ara through the design of a modular
smartphone with interchangeable parts (Vincent, 2013).
Sharing Platforms Increase utilization rate of products by
making possible shared
use/access/ownership.
Streetbank that allows community-based share of
products/goods between neighbours (Bell, 2015);
BlaBlaCar that allow shared car-drive between cities to
save on fuel cost (Kleinman, 2015).
Product as a Service Offer product access and retain
ownership to internalise benefits of
circular resource productivity.
Xerox per-pay-copy model of s office equipment (Xerox,
n.d.).
Adapted from Lacy, Keeble and McNamara (2014)
Figure 1 - The Five Circular Business Models

Potential Benefits
Several studies have tried to place a monetary value on the business opportunity generated by adopting the
CE principles globally. The estimates vary greatly as CE is an emerging concept and there are no unified
metrics or key indicators yet in place to use in the valuation process; therefore, estimates focus mainly on a
valuation of the material cost savings (Bonciu, 2014; Clancy, 2014; Kok, Wurpel and Ten Wolde, 2013; Lacy,
Keeble and McNamara, 2014)
In Davos 2012, the EMF estimated the business opportunity to be in the range of USD 380–630 billion per
year for Europe alone (Confino, 2013a), and the European Commission estimated “… that resource efficiency
improvements all along the value chains could reduce material inputs needs by 17–24% by 2030 and a better
use of resources could represent an overall savings potential of EUR 630 billion per year for European
industry” (European Commission, 2014, p.2).
Globally, Accenture estimates that CE has the potential to become a trillion-dollar industry per year by 2030,
based on (Lacy, Keeble and McNamara, 2014, p.6):
 Lasting resources, which could be continuously regenerated over time to not only last longer
(efficiency) but to even last forever (effectiveness) (e.g. renewable energy and biochemicals). This
aspect could be worth around 40 per cent of the total value of CE to industry.
 Liquid markets, where products and assets are optimally utilised by making them easily accessible
and convertible between users (e.g. sharing/trading idle products and asset capacity): worth around
10 per cent of total CE value to industry.
 Long life cycles, where products are made to last (e.g. monetising product longevity through
servicing, upgrades and remanufacturing): worth around 30 per cent of total CE value to industry.
 Linked value chains, where zero waste is generated from production to disposal (e.g. boosting
recycling and resource efficiency): around 20 per cent of total CE value to industry.
Challenges in Adopting a Circular Economy Approach
CE is a theoretical model and is currently supported by only a few countries, industries and companies,
probably on the account that moving forward in implementing CE requires great coordination efforts and
the willingness of various stakeholders to collaborate (Bonciu, 2014; Kok, Wurpel and Ten Wolde, 2013). See
Appendix A - Examples of Government-Led CE Initiatives Worldwide on page 24.
Accenture estimates that fewer than 100 global companies are currently working on employing the CE
principles (Lacy, Keeble and McNamara, 2014), and since 2010 in the US, only around 200 companies and
just up to 2000 products were certified by the “Cradle to Cradle Products Innovation Institute” (Luther,
2014), highlighting that the adoption of CE principles is only slowly being picked up.
Table 3 below lists the different challenges various stakeholders (companies, industries, governments, etc.)
are faced with in approaching the implementation of CE in their field.

Table 3 – CE Challenges & Suggested Solutions
Areas Challenges Suggested Solutions
Financial  Major up-front costs.
 Lack of sufficient finance.
 Corporate tax incentives/credits for companies
adopting CE.
 Financial Absorption Analysis of markets/countries
to ability to adopt new technologies, skills and
infrastructure in the move toward CE.
Institutional  Powerful stakeholders might resist changes in
current status-quo.
 Political obstacles.
 Lack of local government incentives for businesses.
 Limited information and lack of best practice
guidelines on implementing CE.
 Insufficient government support in waste
management and recycling infrastructure
 Weakness in policy coherence.
 Setting up simple index for Circular Performance.
 Prepare roadmaps for established economic sectors.
 Adjust national and international government
policies incorporating the principles of CE.
Infrastructural  Recycled materials still more expansive than virgin
raw material.
 Complex international supply-chain.
 Current levels of resource pricing that discourage
changes to the way resources are being treated.
 Search for material pooling opportunities.
Societal  Limited consumer and business acceptance.
 Limited consumer awareness.
 Gather and distribute successful business case
studies.
 Promote circular products using current social media
and online marketing platforms.
Technological  Insufficient skills and investment.
 Linear technologies are deeply rooted in the current
industrial.
 Encourage experimentation with new technologies
and materials.
 Integrate principles of CE in education and training
programmes.
 Create centralised centre for knowledge sharing and
management.
Sources: (Bonciu, 2014; Ellen MacArthur Foundation, 2013; Fischer-Kowalski and Swilling, 2011; Kok, Wurpel and Ten Wolde, 2013;
Lacy, Keeble and McNamara, 2014; Macarthur, 2013; Preston, 2012; Vanner et al., 2014; Zils, 2014).
Innovative Solutions for the Circular Economy
As stated earlier, the main aims of CE is to find innovative ways to reduce the dependency on raw material
extraction for manufacturing (material decoupling) and to efficiently design products incorporating efficient
end-of-life strategies.
This requires a significant shift from the current form of product design, which relies heavily on
competitiveness and growth and that has "… contributed to an extraordinary increase in production,
consumption and economic activity and therefore improvements in the average human welfare. However,
this has occurred along an unsustainable trajectory” (Fischer-Kowalski and Swilling, 2011, p.38), into a
sustainable “closed-loop” product development, where materials are designed to either safely biodegrade
(Biocycle Design) or to be easily separated for reuse (Technocycle Design) (Bonciu, 2014; Ellen MacArthur
Foundation, 2012, 2013; Hislop and Hill, 2013; Ind, Iglesias and Schultz, 2013; Kok, Wurpel and Ten Wolde,
2013; Lacy, Keeble and McNamara, 2014; Preston, 2012; Schulte, 2013; Zils, 2014).
This move is quite challenging, as companies will need to develop products/services that not only make
money and generate profits but that also have a positive impact on both the environment and society (Chou,
Chen and Conley, 2012; Kemp and Martens, 2007; Preston, 2012), and will probably require different types
of innovation or approaches to make the successful transition towards a “closed-loop” product design
(Fischer-Kowalski and Swilling, 2011), specifically:

 Technological innovations, to provide specific techniques for managing/processing materials and
energy.
 Institutional innovations, to collaborate and manage society-wide based innovation (e.g.
government incentives, transactional costs, etc.)
 Relational innovations, to manage cooperation, social cohesion, solidarity, social learning and the
benefit sharing around CE.
In order to generate ideas for new products and services around the principles of closed-loop design,
companies of all sizes will need to tap into the various resources available at their disposal for that purpose.
In the next section, I explore the concept of innovation, and in what ways it might serve companies as a
launch pad for new products and services under a CTC approach.

Innovation
What is innovation?
Innovation is defined as the successful implementation of creative ideas within an organisation (Amabile,
1983, 1998; Amabile et al., 1996).
In today’s turbulent and uncertain business environment, organisations are forced to make great efforts to
be more flexible and entrepreneurial in order to achieve long-term organisational effectiveness and
performance (Foray and Phelps, 2010; Taylor, 2009). From the point of view of CE, as resources are finite and
as the demand for materials continues to grow, innovating in the area of closed-loop product design, will
provide an excellent opportunity for businesses “to improve resilience and competitiveness, regain control
of resources and ultimately drive growth” (Kingfisher, 2014, p.3).
In many cases, an organisation’s competitive advantage lies in its ability to develop a work culture that
embraces flexibility, adaptiveness, entrepreneurship and innovation (Armbruster et al., 2008; Gumusluǒlu
and Ilsev, 2009; Jansen, Vera and Crossan, 2009).
The academic literature shows that innovation is a must for organisations if they are to survive (Parry and
Proctor-Thomson, 2003), and that creativity and leadership support are a required first step for innovation
(Boerner and Gebert, 2005; Jaskyte et al., 2010), and that innovation, the organisational climate and
leadership are all related (Bain, Mann and Pirola-Merlo, 2001; Jaskyte, 2004).
However, commercialising new technologies requires substantial funds and time, and usually entails strong
levels of risk and uncertainty (Baer et al., 2015; Dahlander and Gann, 2010; Evan, 2009). In many cases, to
keep up with competition on the innovation front, an organisation cannot innovate in isolation and will have
to engage with different types of partners to acquire ideas and resources from the external environment
(Chesbrough and Appleyard, 2007; Chesbrough, 2003), and here, “by pooling intellect in a system
architecture, open invention and open coordination can produce superior products and services relative to
those produced by a smaller number of minds huddled together in a single company …”(Chesbrough and
Appleyard, 2007, p.64).
Research has also shown that suggestions from external contributors are critical to innovation (Chesbrough,
Vanhaverbeke and West, 2006), and that sourcing suggestions from external actors, such as customers,
venture capitalists, inventors and suppliers, may result in more effective problem identification and solution
(von Hippel and Euchner, 2013).
The advent of the Internet has revolutionised the way society operates (Poynter, 2010) as it has brought
people together to communicate (Shirky, 2008). The growing reach, accessibility and ease of
individualisation of the web has enabled people to utilise it for communication, information, entertainment
and commerce (Beenen et al., 2004; Preece, 2001), as well as to form online communities (Panovich, Miller
and Karger, 2012; Ridings and Gefen, 2004; Williams, Cothrel and Permanente, 2000). It has also been
recognised that online communities in their various forms (emails, forums, blogs, chat rooms, social media
platforms and instant-messaging services) can create value for any organisation (Nair, 2011; Preece, 2001),
as participants’ engagement in social media ranges from passive consumption to active participation and
content generation (Shao et al., 2012).
The rise of the Internet, and greater recognition of the benefits of increasing the diversity of inputs into
creative processes, has contributed to the growth of new forms of organising innovation, such as open
innovation, crowdsourcing and co-creation (Chesbrough, Vanhaverbeke and West, 2006; Cummings et al.,
2013; Howe, 2006; Pera and Viglia, 2015; Prahalad and Ramaswamy, 2000):

 Open innovation, refers to “the use of purposive inflows and outflows of knowledge to accelerate
internal innovation, and expand the markets for external use of innovation” (Chesbrough,
Vanhaverbeke and West, 2006).
 Crowdsourcing, occurs when an organisation outsources projects to the public, tapping into the
knowledge of a wider crowd, and input is thus sourced from a large and undefined group of people
(Cummings et al., 2013).
 Co-creation, defined as “an active, creative and social process, based on collaboration between
producers and users that is initiated by the firm to generate value for customers“ and is related to
the relationship between an organisation and a defined group of its stakeholders, usually its
customers (Prahalad and Ramaswamy, 2000, p.2).
Innovation Strategies
Academics have identified four leading innovation strategies from which organisations can source-out ideas
for new product designs (Abulrub and Lee, 2012; Bellantuono, Pontrandolfo and Scozzi, 2013; Cândido,
2012; Chesbrough and Appleyard, 2007; Evan, 2009):
 Open-sourced innovation. This type of innovation strategy places an emphasis on enriching an
organisation’s own knowledge through the integration of external knowledge. The sourcing activities
are defined by their “breadth” or by the number of external sources available, and the “depth” or
the level of use of the different external sources (Chesbrough and Appleyard, 2007; Laursen and
Salter, 2013).
 Outside-In. Refers to earning profits by bringing knowledge to market.
 Inside-Out. Refers to co-creation with complementary partners, with mutual exchanges of “give”
and “take” that are crucial for this type of innovation to succeed.
 Closed-sourced innovation. This type of innovation strategy relies heavily on an organisation’s own
resources (employees, managers, departments) to generate ideas for new products.
In the range between open-sourced and close-sourced innovation activities, academic studies identified
sixteen different modes of innovation (see Table 4 below).
Table 4 – List of Innovation Strategies Modes
Type Mode Definition Source
Open-Sourced Open An innovation strategy that place emphasis on enriching
organisations own knowledge through the integration of
external knowledge. The sourcing activities are defined by
their ‘breadth’ or the number of external sources available,
and ‘depth’ the level of use of the different external sources
(Chesbrough and Appleyard,
2007; Laursen and Salter,
2013)
Outside-In
(also defined
as technology
exploration or
inbound
innovation).
Purchasing Buying technologies (intellectual property; patents, copyrights
or trademarks) from external partners
(Dahlander and Gann, 2010;
Gassmann and Enkel, 2004)
Licensing-in Obtaining a right to exploit technologies(intellectual property;
patents, copyrights or trademarks) by paying royalties to
external partners
Gassmann and Enkel, 2004)
Joint Venture Establishing a joint venture in collaboration with other
companies to commercialize technologies
(Van Der Meer, 2007)
Joint Development Jointly developing technologies with external partners such as
universities or, other companies
(Chesbrough, 2003)

Type Mode Definition Source
Contract R&D
(Outsourcing)
Buying R&D services from other organizations such as
universities, public research organizations, commercial
engineers or suppliers.
(Spithoven, Vanhaverbeke
and Roijakkers, 2013)
Venture Capital Investing promising ventures through venture capital (the
external venture capital or the internal venture capital).
(Van Der Meer, 2007)
Mergers and
Acquisitions (M&A)
Acquiring companies with promising technologies, in case of
having difficulty in-house development (e.g. high risk
technologies)
(Henkel, Schberl and Alexy,
2013)
Customer
Involvement
Involving customers in innovation processes (e.g. market
research to check their needs, or developing products based
on customers’ specifications or modifications).
(Gassmann and Enkel, 2004;
van de Vrande et al., 2009)
External
Networking
Drawing on or collaborating with external partners to acquire
new knowledge and technologies or human capital
(Chesbrough, 2003;
Gassmann and Enkel, 2004;
Van Der Meer, 2007)
Inside-Out
(also defined
as technology
exploitation or
outbound
innovation).
Selling Selling internal technologies (intellectual property; patents,
copyrights or trademarks) to the market to better profit from
them.
(Gassmann and Enkel, 2004)
Licensing-out Granting licenses to exploit internal technologies to external
partners instead of direct commercialization and receiving
royalties from them
Van Der Meer, 2007)
Spin-Off Creating up a new organization based on internal knowledge,
and also with all the support from the parent company or
organization
(Chesbrough, 2003; Van Der
Meer, 2007)
Open Source Revealing internal technologies without immediate financial
rewards for indirect benefits to the company
(Dahlander and Gann, 2010)
Close-Sourced
(also in-house
innovation)
Close Relying heavily on organization’s own resources (employees,
managers, departments) to generate ideas of new products.
(Cândido, 2012; Chesbrough,
2007; Evan, 2009)
Adapted from (Abulrub and Lee, 2012, p.132)
Studies also indicated that there was no difference in the Open Innovation (OI) mode usage between
manufacturing and service industries (Abulrub and Lee, 2012); however, the size of companies did affect
their choice of innovation mode, mainly due to the resources (financial, infrastructure and human) at the
disposal of the company in question (Gassmann and Enkel, 2004; Spithoven, Vanhaverbeke and Roijakkers,
2013), where SMEs tend to make use of open practices at the more advanced stages of their innovation
process, especially at the marketing stage (Spithoven, Vanhaverbeke and Roijakkers, 2013).
Table 5 below shows how the different ranges of innovation modes can be seen in the case of Kingfisher plc,
a multinational retail company operating in the home improvement sector that collaborated with the Ellen
MacArthur Foundation in 2014 to look for ways to adopt a close-looped approach in the company, which
resulted in the launch of six different products/services.

Table 5 –Innovation Modes Used in Different “Closed-Loop” Product Design in KingFisher plc
Company Product Description Innovation Mode
Kingfisher plc
(company-
wide)
Closed Loop
Calculator
Development of a 10 questions form to assess the
level of how “closed-loop” a product is.
External Networking: worked with
Advancing Sustainability a
consultancy company.
Castorama
France
Infinite
Worktop
Development of worktops for kitchens and
bathrooms made of 100% waste sourced from
Kingfisher’s stores and end-of-life DIY products
Closed: conducted a cross-
company (Castorama) “one team”
workshop.
B&Q UK Carrierpac &
Longspac
Reusable packaging system for large kitchen products
that reduces product damage during delivery, and
reduces cardboard packaging by 2.5K tons every year
Joint Development: used
consultants from WRAP, Outpace
and B&Q own suppliers Grief and
Kayserbger Plastics
Castorama
France
Métisse
InsulatioN
Taking back customers waste textiles from discarded
clothes and fashion accessories and remanufacture
them into thermal and acoustic insulation products
sold in Castorama’s shops nationwide.
Joint Venture: with Le Relais a
retail fashion shop.
Screwfix UK Re-mining
Materials from
Power Tools
‘Harvesting’ materials from used and damaged power
tools, extracting valuable parts, plastics and metals to
create new revenues from traditional waste streams
External Networking: worked with
iForce to assist in the disassembly
of discarded tools.
Castorama
Poland
Rental & Repair
Services
For the past 16 years, Castorama Poland has provided
repair and rental services to its customers in Poland.
This approach is been now expanded into other
Castorama branches through-out Europe.
Spin-off: This service was already in
place now it’s been expanded to
other Castorama shops EU-wide.
Adapted from (Kingfisher, 2014)
Types of Innovation
From the point of view of closed-loop product innovation, the development of more sustainable products
involves numerous considerations, such as environmental impact, resources availability and societal impact,
as well as market issues, such as stakeholder interests, patents and policy instruments. Therefore an
organisation looking to adopt the CE concept needs to choose which of the following two types of innovation
to adopt (Clancy, 2014; Dyllick and Hockerts, 2002; Wrisberg et al., 2004):
 Incremental innovation. This refers to the refinement or optimisation of a product/process. This
type of innovation normally results in marginal improvements of the product/process, and cannot
fully take advantage of truly innovative ideas that are based on completely different solutions.
 Radical innovation. This refers to a complete design of a new product/process, often created
through an organisation’s long-term view or strategy. It is usually considered to be a high-risk
venture due to the high potential and number of failure-points during the design, production and
launch of the new product.
Table 6 uses the same Kingfisher plc example, but this time it highlights the different types of innovation
used in the creation of the new closed-loop products/services they launched.

Table 6 – Kingfisher Product Launches
Company Product Description Innovation Source
Innovation
Type
Kingfisher plc
(all
companies)
Closed Loop
Calculator
Development of a 10 questions form to assess
the level of how “closed-loop” a product is.
External – worked with
Advancing Sustainability a
consultancy company.
Incremental
Castorama
France
Infinite
Worktop
Development of worktops for kitchens and
bathrooms made of 100% waste sourced from
Kingfisher’s stores and end-of-life DIY
products
Internal – conducted a
cross-company (Castorama)
“one team” workshop.
Radical
B&Q UK Carrierpac &
Longspac
Reusable packaging system for large kitchen
products that reduces product damage during
delivery, and reduces cardboard packaging by
2.5K tons every year
External – used consultants
from WRAP, Outpace and
B&Q own suppliers Grief
and Kayserbger Plastics
Radical
Castorama
France
Métisse
InsulatioN
Taking back customers waste textiles from
discarded clothes and fashion accessories and
remanufacture them into thermal and
acoustic insulation products sold in
Castorama’s shops nationwide.
External – joint venture with
Le Relais a retail fashion
shop.
Radical
Screwfix UK Re-mining
Materials from
Power Tools
‘Harvesting’ materials from used and
damaged power tools, extracting valuable
parts, plastics and metals to create new
revenues from traditional waste streams
Internal Radical
Castorama
Poland
Rental &
Repair Services
For the past 16 years, Castorama Poland has
provided repair and rental services to its
customers in Poland. This approach is been
now expanded into other Castorama
branches through-out Europe.
Internal Incremental
As mentioned earlier, thanks to the rise of the Internet and the formation of online communities, new forms
of organising innovation have emerged. In the next section, I provide a more in-depth look at CS and in the
ways in which it could assist organisations to achieve CTC product design.

Crowdsourcing
What is Crowdsourcing?
The concept of CS, as first coined by Howe in a Wired magazine article, “... represents the act of a company
or institution taking a function once performed by employees and outsourcing it to an undefined (and
generally large) network of people in the form of an open call” (Howe, 2006, p.5). CS is related to the idea of
OI, of tapping external sources of knowledge and skills to generate ideas and solutions (Brabham, 2010;
Howe, 2006); however, unlike OI that looks into the natural flow of information from inside and outside
sources (Chesbrough, Vanhaverbeke and West, 2006), CS occurs when an organisation outsources specific
projects or tasks to the public, tapping into the knowledge and skill set of a wider crowd (Cummings et al.,
2013).
CS also differs from outsourcing on two accounts:
 There is no need for a formal tendering process or for the development of legal contracts between
an organisation and the participants in the process of idea generation (Branham, 2012).
 Both “amateur” enthusiasts and people with professional qualifications that have experience in the
area related to the solution sought are encouraged to take part in the CS event (Keen, 2007).
Pisano and Verganti wrote that “the new company leaders in innovation will be those who figure out the
best way to leverage a network of outsiders” (Pisano and Verganti, 2008, p.1), marketing managers already
recognise the increasing importance of customer participation as the new frontier of gaining a competitive
advantage (Prahalad and Ramaswamy, 2000), as they are not only the buyers and users of products and
services, but they may also actively engage in value co-creation with firms (Battistella and Nonino, 2012a).
More and more companies are finding ways to CS their innovation efforts, either through co-developing
products with customers or by allowing customers to innovate on their own (von Hippel and Katz, 2002;
Hoyer et al., 2010), see Table 7 for some examples.
Table 7 – Examples of Companies Co-developing Products through CS
Company Product Description Source
Apple Swift for iOS8 Swift platform to CS ideas for new iOS mobile apps. (Bonner, 2014)
Audi Audi Infotainment
System
Using a toolkit provided by Audi, consumers configured radio-
navigation concepts and proposed their own ideas for a new and
improved infotainment device.
(Füller, Jawecki
and Mühlbacher,
2006)
Bombardier Bombardier's
innovation contest
Bombardier was looking for innovative features to be incorporated
into the interior based upon insight from leisure passengers, business
travellers, and everyday passengers. Participants registered to join this
CS community and a corporate jury considered the submissions.
(Smith, Manesh
and Alshaikh,
2013)
Dell
Computers
Dell Idea Storm
platform
Operating since 2007 where Dell users are invited to collaborate with
the company in the creation and modification of consumer products.
(Bayus, 2013)
Google
(India)
MyGov PMO
Mobile App
The project is a CS effort to build a mobile app for a public office. (Indo-Asian News
Service, 2015)
Lego Lego Cuuso
Platform
A dedicated platform for Lego-fans to upload and share their ideas for
new Lego set designs.
(Antorini and
Muñiz, 2013)
Lufthansa Lufthansa Air
Cargo Innovation
Challenge
Lufthansa was looking for creative ideas about the future form and
function of customer service as it related to cargo and in particular the
touch points between a customer and Lufthansa customer service
representatives.
(Smith, Manesh
and Alshaikh,
2013)

Company Product Description Source
Microsoft Bing Display Ads Microsoft has worked with consumers to co-create ad formats that it
says will be more engaging and provide better value than current
online ads.
(O’Reilly, 2013)
Nike Nike basketball
shoes
Nike reached-out to its Nike basketball community in an attempt to
design new designs of show-lacing and cushioning technologies.
(Füller, Jawecki
and Mühlbacher,
2006)
Threadless Atrium Project Threadless, a fashion company, provided its community a platform
(Atrium), for them to upload t-shirt design for mass production and
revenue-share over successful designs.
(Ogawa and Piller,
2006)
Consumer/Innovators’ Participation in Crowdsourced Events
According to Herstatt and Verworn, the innovation process model consist of five phases: 1) idea generation
and evaluation; 2) concept development and product planning; 3) product development; 4) prototyping,
piloting and testing and 5) production, marketing and market entry (Herstatt and Verworn, 2007; Vaisnore
and Petraite, 2012). Each phase requires a different set of skills and knowledge for its completion, and in the
context of CS, some of these phases can be sourced-out to the general public.
The participation of customers/users in CS events is determined by the roles they can take in respect of the
type of involvement (Hutter et al., 2011; Vaisnore and Petraite, 2012). Piller and Ihl highlight three possible
modes of customer participation in new product development (Cui and Wu, 2015; Piller and Ihl, 2009):
 Design for customers. Here, products are designed on behalf of customers; firms use customer
information from diverse input channels to explore their needs, e.g. listening into the customer
domain by analysing sales data, Internet log files, or by surveying sales personnel; by ethnography or
by deploying a quality function.
 Design with customers. This involves displaying solutions or concepts to customers so they can react
to proposed design solutions and involves, e.g. the use of pilot customers or beta users, concept
testing, focus groups; or output-driven innovation methods.
 Design by customers. This involves an active integration of customer participation in new product
development, often with tools that are either provided by the firm or by customers themselves.
The modes of “Design with Customers” and “Design by Customers” are closely related to the principles of CS
and Co-Creation, whereas “Design for Customers” that often uses external data input for analysis, is more
closely related to OI.
A CS event will usually consist of the following three types of consumer/innovators (Bilgram, Brem and Voigt,
2008; Cui and Wu, 2015; Harhoff, Henkel and Von Hippel, 2003; Parmentier and Mangematin, 2014; Piller
and Ihl, 2009):
 Lead users, highly active individuals who provide important information about future trends and
possible solutions, and who are great sources of innovation throughout the five phases of the
innovation process model.
 Co-creators, highly active individuals who are more beneficial in the evaluation and protoyping
phases of the innovation process model.
 Lurkers, passive participants, i.e. those most likely to just sign-up to the CS event as listeners but
who won’t take an active role in any of the five phases of product development.
With regard to the motivation factors of consumer/innovators’ participation in CS and OI events, studies
have shown that participants are typically looking to gain both an individual and communal (societal) impact

with regard to their contribution at the event, and that their motivation lies in both intrinsic and extrinsic
reasons, see Table 8 below:
Table 8 – Different Motivations of Consumer/Innovators to Participate in OIPs
Adapted from: (Battistella and Nonino, 2012a p.229-231, 2012b p.560)
Impact Motivation Description Source
Intrinsic
Individual
Entrepreneurial mindset Refers to the natural entrepreneurial inclination
of the participant.
(Tapscott and Williams,
2006)
Opportunity to express
individual creativity
The OIP platform provide the participant an
opportunity to express himself/herself
creatively.
(Roberts, Hann and
Slaughter, 2006; Ryan and
Deci, 2000)
Attachment to the group,
sense of membership, sense
of caring about community
Refers to a natural human tendency for
likeminded people to form communities and
feel belongingness.
(Hars and Ou, 2001;
Lakhani and Wolf, 2003)
Enjoyment, fun and
entertainment
This refers to the fun and personal pleasure
that comes from doing what we like.
(Bandura, 1994; Kollock,
1999)
Psychological compensation
and sense of efficacy
This refers to the sense of personal
achievement participants will have when they
take part in a group activity.
(Antikainen and Vaataja,
2010; Antikainen, Mäkipää
and Ahonen, 2010)
Social
Sense of cooperation Individuals feel obliged to contribute and to
cooperate for the development of their area of
interest.
(Evans and Chi, 2008)
Social responsibility Individuals feel motivated by ideals linked to
sustainability.
(Antikainen, Mäkipää and
Ahonen, 2010; McLure
Wasko and Faraj, 2000)
Economic
Monetary Rewards Monetary rewards, studies shown that there is
a positive correlation between the intensity of
contributors’ participation in collaborative
projects and the amount of money received.
(Antikainen, Mäkipää and
Ahonen, 2010; McLure
Wasko and Faraj, 2000)
Free Products & Services Some participants enjoy the idea that they will
be rewarded through physical goods or services
for free, for the time they invested in taking
part in the event.
(Tapscott and Williams,
2006)
Extrinsic
Individual
Reputation Enhancing the contributor’s reputation among
his peers in the CS event or outside the event.
(Jeppesen and
Frederiksen, 2006)
Recognition by the company,
professional growth, career
benefits
Enhancement of the individual's reputation and
receiving special merit awards from the
company helps to improve and increase the
“value" of the individual's work and helps the
individuals reach new levels of professionalism
that could improve his/her economic condition.
(Bagozzi and Dholakia,
2002; Lakhani and Wolf,
2003; Lerner and Tirole,
2005; McLure Wasko and
Faraj, 2000)
Reciprocity Reciprocity represents the possibility of
establishing a continuous and durable exchange
relationship with a community over time.
(Raymond, 2005)
Social
Individual accountability With an increase in the level of individual
responsibility, the contributors feel compelled
to “do well” and to succeed in a project.
(Antikainen and Vaataja,
2010)
Social Capital This motivation refers to the set of
interpersonal relationships, formal and
informal, that are essential for the community
to function.
(Curtis, 1992)
While pure extrinsic motivations in the form of monetary rewards or the prospects of getting freemiums
(products and services) do seem to have a positive correlation with the intensity of contributors’
participation, still for CS events’ hosts to engage participants in a meaningful way they also need to take into
account other motivational reasons, otherwise the participants “use value” in the event will be diminished,
together with a strong chance of them dropping out or not engaging in future CS events related to that
company (Battistella and Nonino, 2012a, 2012b).

The Process of Crowdsourcing
Unlike OI activities that rely on the natural flow of internal and external information, customer/user
participation in CS events are reliant on some strategic preconditions that are defined by the firm itself and
that are influenced by (Vaisnore and Petraite, 2012):
 Customer characteristics: Lead users, Co-creators.
 Company type: B2C or B2B.
 Sector in which the company operates.
 Organisation size.
 Business strategic model (Porter, 1985):
o Low-cost (or cost leadership): Maximising market share by appealing to cost-sensitive and
price-conscious customers.
o Differentiation: Differentiates the products/services from other similar providers/companies
in the same industry/sector category.
o Niche: Creates or exploits a market gap and develops it into a small but profitable market for
the company.
 Company-customer interaction strategy: “Design with Customers” or “Design by Customers”.
 Event outcome: Project, task completion.
The vast majority of CS events take place in the form of a challenge or competition (Mortara, Ford and
Jaeger, 2013; Schweitzer et al., 2012; van de Vrande et al., 2009), using dedicated Web-based Open
Innovation Platforms (OIPs), which most likely will be hosted by the company that organises the CS event.
Unlike open social media platforms, such as Facebook, LinkedIn and Twitter, the OIPs are semi-closed and
traffic/sign-up to these platforms is done either naturally (existing customers of the company’s products
who are aware of this platform) or through an online marketing/competition promotion conducted by the
organising company (Battistella and Nonino, 2012b; Bayus, 2013).
The OIPs for product development purposes are intended to service one or more of the innovation model
services and are structured in a way to allow the systematic collection and diffusion of information between
the organising company and the participating members (Battistella and Nonino, 2012b; Bayus, 2013).
According to Smith, Manesh and Alshaikh (2013), CS tasks can be divided into three types:
 Public-based CS, where the general public is asked to perform a specific task or set of tasks, with a
minimal relationship between the crowd participants, who each contribute according to their
individual abilities. This form of CS tasking is commonly used in companies from the retail
(electronics, fashion) and new-media (product design, digital media, graphic/web design and
advertising) sectors.
 Employee-based CS, where participants with a specific set of skills are temporarily employed in a
corporate environment for the conduct of a specific task/project. According to Smith, Manesh and
Alshaikh (2013), this form of CS is not that common, but was documented in two cases of
companies from the IT (IBM) and financial (PostFinance) sectors (Muhdi and Boutellier, 2011;
Stewart, Huerta and Sader, 2009).
 Information Exchange-based CS, where the participants working with the organisation have dual-
roles in both seeking and providing technical information around the CS event. This form of CS is
quite common in companies working in the open-source software industry (e.g. Linux, Mozilla
Firefox), mobile apps, information platforms (e.g. Wikipedia, WikiAnswers, Quora) and in the online
gaming industry (e.g. Minecraft, Cube World, 2nd World and Masterspace).

Benefits of Crowdsourcing
Several studies have shown that consumer innovation is quite common (Dobre, Dragomir and Preda, 2009;
Foxall, 1994; von Hippel, 2005; von Hippel et al., 2011; Jeppesen and Frederiksen, 2006; Näkki and
Antikainen, 2008; Park, Yu and Zhou, 2010). According to a national study of UK, US and Japanese consumers
aged 18 and over, between 3.7% and 6.1% of consumers in these countries innovate (von Hippel et al.,
2011), while, higher innovation rates, of up to 37%, were found among consumers who belong to online
communities of engaged and active consumers (von Hippel, 2005).
Organisations can benefit from consumers/users as innovators on several accounts:
 Reduced economic risks, as user innovations typically emerge in response to real needs, problems,
or a desire to reduce the risk of product failure by identifying the potential market in advance before
launching new products (von Hippel, 2005; Ogawa and Piller, 2006).
 Savings on development costs, as users, working in their own spare time, often with the support of
a community, generate ideas, develop prototypes and evaluate their creations (Jeppesen and
Frederiksen, 2006).
 Spotting market trends, as user innovators usually identify previously unknown needs and offer
some assurance that a market may exist for products that address them, and therefore they act as
test labs that allow companies to obtain an early indication of the potential market value of a new
product (Hippel, 1994).
With regard to the type of innovation (see “Types of Innovation” on page 13), consumer/innovators are
known to engage in both incremental and radical forms of innovation. When consumer/innovators are active
in generic online communities (e.g. service-based, FCMG, retail, new-media), they tend to engage in
incremental forms of innovation, whereas consumer/innovators who are active in technically oriented online
communities (e.g. automotive, IT (hardware and software), engineering) might engage in both incremental
and radical forms of innovation, depending on the participant’s level of technical skills (Baldwin and von
Hippel, 2011).
For example, in a study of user innovations for the Audi brand, it was estimated that between 3% and 15% of
ideas and suggestions made by users were completely new to the Audi R&D and marketing department.
Furthermore, one radical innovation that came up from such activities was the development and design of a
brand new infotainment device for Audi’s vehicles, which was well received by Audi enthusiasts, created a
huge market demand and won Audi several awards for best usability (Füller et al., 2010).
In the context of a CS event, it’s really up to the organising party to set the rules on whether they are seeking
an incremental or radical product design solution, and then to attract the relevant users to the event.
Some additional benefits for organisations seeking to employ CS as part of their product development
process are:
 Talent pool. Both CS and OI practices enable an organisation to tap in to a wider range of talent
outside the company’s own boundaries (Chesbrough, Vanhaverbeke and West, 2006; Howe, 2006).
 Spread the workload. Problems can be explored and solved quickly, without diverting an
organisation’s staff away from their current tasks (Brabham, 2008a).
 Future market indicators. By interacting with the crowd through a CS event, organisations can gain
insights into customers’ or potential customers’ preferences (Chesbrough, Vanhaverbeke and West,
2006; Van Dijck and Nieborg, 2009).
 Cost effective. CS tends to be cheaper, as payment is done usually in the form of a prize for the
chosen/winning solution (Brabham, 2008a; Kleemann, Voß and Rieder, 2008).

 Media buzz. From a marketing point of view, taking part in a CS event for a particular
company/product can generate the necessary buzz to draw non-participants to engage and show
interest in the product/company in question (Whitla, 2009).
 Brand loyalty. The way CS participants interact with the company in question may develop kinship
and brand loyalty, as participants feel a sense of ownership over the product innovation through
their contribution and collaboration. This form of loyalty may also contribute to CS participants
taking part in future CS events, or to contributing to the company product development outside the
scope of a CS event (Brabham, 2008b).
Challenges of Using Crowdsourcing
Once a company decides on the strategic preconditions for the CS event (for a list of strategic preconditions,
please refer to page 18), it needs to take into account the various organisational challenges it might be faced
with throughout the CS event (see Table 9 below).
Table 9 – Challenges in Running a CS Event
Area Issue Description Suggested Solutions Source
Administrative
Qualifying
Participants
As a CS event is open to both professional and
amateur enthusiasts, one of the biggest
challenge to hosting companies would be to
select and qualify suitable participants in the
event.
Ideally event hosts should identify Lead Users
and Co-Creators, as these type of participants
are more likely to engage and generate ideas.
 Initially the organizing company
should monitor closely its existing
online communities activities
(forums, blogs, social-media,
emails etc)
 From the online communities
activities they should be able to
tag participants as potential Lead
User or Co-Creators and pro-
actively invite them to the CS
event.
 Alternatively, they can pre-qualify
tagged participants by creating
pre-CS event challenges/events to
weed-out Lead Users/Co-Creators
that aren’t a good match for CS
main event.
 There should be clear criteria as to
the type of solutions that will be
considered by the company.
 The company should dedicate a
relationship manager to engage
with participants ensuring that
motivational issues are addressed.
(Antorini and
Muñiz, 2013;
Baldwin,
Hienerth and
von Hippel,
2006; Füller,
Jawecki and
Mühlbacher,
2006;
Kleemann,
Voß and
Rieder, 2008)
Qualifying
Solutions
CS event participants are often amateurs
bringing with them different levels of skills and
knowledge.
As the competition hosts devolve the
responsibility to the crowd to come up with
solutions there’s a risk that some of their
solutions may be unrealistic or of poor
standards.
Keep-them-
motivated
Various studies examined the motivation
behind users participation in online
communities (see Table 8 on page 16), and as
CS is often a one-off event, it could be quite
challenging to keep participants motivated and
continue to contribute to the event to the end.
There’s also a risk that once solutions/ideas
will be submitted, most of them won’t be
picked-up by the company as suitable solutions
which will further demotivate participants
taking part in future CS events.
Furthermore, there’s a risk of losers
disenfranchised, once the winner of the
competition will be announced, that can also
discourage them from taking part in future
events.
(Antikainen
and Vaataja,
2010;
Antikainen,
Mäkipää and
Ahonen,
2010;
Brabham,
2008;
Kleemann,
Voß and
Rieder, 2008)

Area Issue Description Suggested Solutions Source
Financial
Frictional
Costs1
Despite the many good reasons to include user
communities in their innovation processes,
many companies fail to do so, suspecting that
the frictional costs presented by these
challenges will outweigh the potential benefits.
Frictional costs in implementing
innovating ideas is unavoidable - way
to reduce it would be through:
 Clear statement of firm's goal
 Ongoing communication with user
innovators to clarify objectives
(Antorini and
Muñiz, 2013)
Institutional
Firm’s
Reputation
In most CS events participants are compensate
for their time by either below-market wages or
through prize winning.
Participants might feel exploited because of a
lack of contractual obligations, raising ethical
issues that may damage a firm’s reputation.
In the terms & condition parts of the CS
event/platform it should be clearly
stated what form of compensation are
there for people taking part in the
event.
(Brabham,
2008;
Kleemann,
Voß and
Rieder, 2008)
Professional
challenge
CS events can annoy and discourage internal
employees or traditional contractors who see
their professionalism being undermined.
(Olson and
Bakke, 2001)
Identity Clash
As CS winners are not part of the company and
have no ongoing relationship with them, their
solutions may not fit with the historical identity
or culture of the organisation.
Transparency
CS events cannot operate without companies
disclosing information about its problems to
outsiders and such transparency can be very
difficult to some businesses.
Infrastructural
Project Delays Because there is no guarantee that the crowd
has the ability to provide the solutions sought,
or the motivation to see a project through,
projects may drag on and not be brought to an
acceptable conclusion.
Hosting company should have a clear
contingency plan in case such risk
should arise, and to “kill” the project if
need be.
(Chanal and
Caron-Fasan,
2010;
Kleemann,
Voß and
Rieder, 2008)
Integrating
Winning
Solution into
the firm
Depending on the level of complexity of the
winning solution, the integration of the
solution into the company’s existing system
can be potential cumbersome.
(Alexy,
Criscuolo and
Salter, 2009)
Legal
Intellectual
Property
Issues
Firms have a strong interest in protecting the
innovations they bring to market. Failing to
provide a satisfactory answer to the question
of who owns the right to exploit a given
innovation will pose a serious challenge for
firms.
At the same time, user innovators have an
interest in protecting their rights.
In the terms & condition parts of the CS
event/platform it should be clearly
stated what are the Intellectual
Property terms surrounding the event,
and contractual obligation to its
participants.
(Antorini and
Muñiz, 2013)
Ambiguous
liability
Because of the lack of employment contracts,
liability for faulty or poor quality work lies
completely with the company that used the
CSd solution.
(Chanal and
Caron-Fasan,
2010)
1
Frictional Costs relates to the cost of hosting & running the event.

Crowdsourcing – A Source of Ideas for the Circular Economy?
Past empirical studies on integrating customers into the innovation process concentrated on the industrial
goods and service fields (Balka, Raasch and Herstatt, 2014; von Hippel and Euchner, 2013) and consumer
goods (Franke, Poetz and Schreier, 2013; Frey, Lüthje and Haag, 2011; Füller and Hienerth, 2004; Hutter et
al., 2011).
There is also some evidence, that OI involving customers can be successful in the consumer electronics
(Christensen, Olesen and Kjær, 2005), medical equipment technology (Lettl, Herstatt and Gemuenden, 2006)
and mechanical engineering (Füller et al., 2006; Hutter et al., 2011) fields.
However, there has been little research carried out around OI, let alone CS events, in regard to government
policies and environmental-related products and services (Cui and Wu, 2015), meaning that the general
usage of OI in developing environmental-related products or services is not that common. There may be
several contributing factors for this:
 Some companies cannot see the benefits of adopting a sustainable approach to product design, and
why they should build the principles of sustainable product design into their business in the first
place (Confine, 2014; Confino, 2013b; Hynds, 2013).
 CE and CTC product design are emerging concepts that many organisations are not aware of yet,
which can further complicate things for companies who want to explore the idea of sustainable
product design, as there are no clear distinction as to what constitutes a product to be designed
under the principles of a CTC approach compared to a “regular” sustainable product design (Bjørn
and Hauschild, 2011; Preston, 2012; Yap, 2005); therefore, there’s no clear environment for
consumer/innovator communities to form in relation to either sustainable product development or
product development using the principles of CTC.
 The product development of environmental-related products or services require specialised
knowledge that is not necessary available in the general public, and in order to bridge the gap, OI or
CS event participants might need to be trained in order for the innovation events to be successful.
 Studies show that associating environmental attributes to a product can contribute towards product
differentiation (Gallarotti, 1995), but this will only be viable if the environmental advantages can be
communicated to the public (Davari and Strutton, 2014); however, research has shown that
environmental features are typically not important factors in the consumer buying decision-making
process (Davari and Strutton, 2014; Finklestein, 2008; Rivera-Camino, 2007). This could imply that a
CS event around sustainable product development will only appeal to few people.

Summary
The idea of using CS as a platform for innovative product design under the CE principles definitely warrants
further investigation.
On the one hand, there is an overwhelming acceptance by government bodies and leading companies that
the current global manufacturing system is unsustainable in the long run and that there is a need to adopt a
“closed-loop” approach to product and service design; however, changes on that scale are quite challenging,
as companies will need to develop products/services that not only make money but that can also have a
positive impact on both the environment and society. Adopting such changes requires substantial funds and
entails strong levels of risk and uncertainty, and no wonder that very few companies worldwide have
adopted the CE principles.
This could be an opportunity for CS to emerge as a go-between solution for companies that want to explore
the idea of transitioning to CE and at the same time want to minimise the associated risks involved in
developing new products and services, by tapping in to the knowledge and skill sets of external participants
over a specific product development phase, such as for product idea generation, product testing and even
product marketing.
The usage of CS might also involve much-needed exposure and awareness for CE to the general public, as CE
and CTC product design are relatively new concepts.

Appendix A - Examples of Government-Led CE Initiatives Worldwide
Region Country/Market Initiatives
Europe EU-wide In Jul 2014 the EC adopted the CE Package consisting of communications on:
sustainable building, green employment, SMEs and review of waste legislation
(European Commission, 2015).
EU-Wide initiatives:
 Europe 2020 – a strategy for smart, sustainable and inclusive growth
 The Seventh Environment Action Programme, 2013
 Horizon 2020: The Framework Programme for Research and
Innovation
 Roadmap to a Resource-efficient Europe, 2011
 The Bioeconomy Strategy
 European Innovation Partnership on Water
 European Innovation Partnership on Agricultural productivity and
sustainability
 Blueprint for Forest-based Industries
 Eco-innovation Action Plan, 2011
 Single Market for Green Products 2013
Germany National Resource Efficiency Programme – where Germany plans to become
world champion in resource efficiency (Preston, 2012)
UK WARP (Waste and Resource Action Program) since 2000 (Bonciu, 2014)
Green Alliance CE studies focusing on economic instruments and raw-materials
security (Hislop and Hill, 2013)
France Roadmap for the transition to a CE by 2017 established the French Institute for
the Circular Economy (Bonciu, 2014)
Netherlands Materials roundabout – a hub for the high- grade recycling of materials and
products – in the Netherlands (Preston, 2012)
Asia Asia-wide Asia 3R conference (October 2006) – supporting the formulation of 3R (Reduce,
Reuse, Recycle) strategies in Thailand, Bangladesh, Vietnam and Indonesia
(Namiki, 2008)
China Circular Economy Law 2008 – promote an economy based on closed-loop
cyclical processes (Mathews, Tang and Tan, 2011)
Japan Sound Material-Cycle System 2001 (Namiki, 2008)
Japan 3R imitative at the G8 summit in 2008 (Namiki, 2008)
India Water Management collaboration with Germany (BS B2B Bureau, 2015)
North America US The RCRA (Resource Conservation and Recovery Act) – proposal for waste and
materials management in the US, in the year 2020 (Heck, 2006)
Oceania Australia Annual World Resources Forum in Sydney Australia
Creation of official bodies Circular Economy Australia (2010) and Closed Loop
consultancy (2003) (Circular Economy Australia, n.d.; Closed Loop, n.d.)

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