How to invent a new business model based on crowdsourcing: the Crowdspirit ® case

Chesbrough's work on open innovation provides a theoretical framework to understand how firms can access external knowledge in order to support their R&D processes. The author defines open innovation as a paradigm that assumes that firms can and should use both external and internal ideas and internal and external paths to market. He considers that industrial R&D is undergoing a paradigm shift from the closed to the open model. Information and communication technologies and especially web 2.0 technologies accelerate this shift in so far they provide access to collective and distributed intelligence disseminated in the "crowd". This phenomenon named "crowdsourcing" is defined by Jeff Howe as "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."Though this approach may sound appealing to firms and R&D organizations, there is little research available about the strategic use of crowdsourcing for innovation processes. In this paper we develop the argument that crowdsourcing raises a certain number of strategic issues that we discuss on the basis of a real size crowdsourcing experiment. We were associated in the project from the very outset up to the strategic analysis of a start-up: Crowdspirit. The company's concept is based on the outsourcing of the entire R&D process to a community of designers and users, in the domain of consumer electronics. Our data is made up of the minutes of three strategic workshops with the managers that we completed step by step by additional theoretical study and some benchmarking of crowdsourcing experiments on the web. Although we started this collaboration mainly to help the company design its optimal business model, this action research process has led us to address the following research questions: how can a firm create and capture value by means of a strategy based on crowdsourcing? What are the main strategic issues to be considered when a firm intends to open its innovation process through crowdsourcing? Due to the action research approach used, we do not dissociate the theoretical part from the empirical data, but rather to present our research process step by step. We therefore successively present four main phases of the strategic analysis carried out with the Crowdspirit team: (1) The emergence of the Crowdspirit business model; (2) The value creation process related to profiles of crowdspirit community of contributors (3) The challenging of the company's initial business model and (4) The creation of a new business model successively open and closed models. In the discussion we summarize the main strategic issues that emerged during the work on Crowdspirit's strategy with its managers, and interpret them on the basis of existing literature on open innovation. This leads us to complete Chesbrough's open innovation approach and Nambissan and Sawney network-centric innovation model by introducing new options for companies whose strategy is based on crowdsourcing.