Utility of crowdsourcing for the evaluation of business ideas and their market potential in the context of creation of a business plan

Table of Contents

List of Abbreviations

List of Tables

List of Figures

1 Introduction
1.1 Motivation
1.2 Problem definition
1.3 Research question and objectives
1.4 Structure and methodology

2 Framework and theoretical background
2.1 Crowdsourcing
2.1.1 Evolution
2.1.2 Term and definition
2.1.3 Concept
2.1.4 Delimitation from other terms
2.1.4.1 Open innovation
2.1.4.2 Open source
2.1.5 Process
2.1.6 Motivation of the crowd
2.1.7 Types
2.1.7.1 Intermediaries platforms
2.1.7.2 Company owned platforms
2.1.7.3 Collective Knowledge
2.1.7.4 Market places for own ideas
2.1.7.5 Public initiatives
2.1.8 Opportunities and Risks
2.1.8.1 Opportunities
2.1.8.2 Risks
2.1.9 Interim summary
2.2 Business plan
2.2.1 Definition and purpose
2.2.2 Evolution
2.2.3 Structure and content
2.2.3.1 Executive summary
2.2.3.2 Business model
2.2.3.3 Market and competitor analysis
2.2.3.4 Objectives and strategies
2.2.3.5 Service and product portfolio
2.2.3.6 Marketing and distribution
2.2.3.7 Management, Human Resources and organization
2.2.3.8 Opportunities and risks
2.2.3.9 Financial planning
2.2.4 Consultants, guides and tools
2.2.5 Critical review
2.2.6 Interim summary

3 Empirical Investigation
3.1 Method of data collection
3.2 Survey
3.2.1 Design of survey
3.2.2 Population and sample of the survey
3.2.3 Execution of the survey
3.2.4 Evaluation and presentation of data
3.3 Interpretation and results

4 Initial stages for implementation of crowdsourcing
4.1 Utility of established provider
4.2 Creating a new crowdsourcing platform

5 Conclusion
5.1 Summary
5.2 Answering the research question
5.3 Critical review
5.4 Recommendation for further research
5.5 Outlook

Bibliography

Appendix

A.1. Development Internet usage worldwide

A.2. Developing search-term „Crowdsourcing“ in Google

A.3. Cover letter to participants in the survey

A.4. Example of request

A.5. Example of a rejection of a request

A.6 Henkel – Pril – Marketing- campaign

List of Abbreviations

illustration not visible in this excerpt

List of Tables

Table 1: Product-Market Matrix. Source: Own creation based on Ansoff

Table 2: Content and structure of the survey. Source: Own creation

Table 3: Overview about possible established providers for the creation of a business plan..

List of Figures

Figure 1: Five steps of the crowdsourcing process. Adopted from Gassmann

Figure 2: Five categories of crowdsourcing initiatives. Adopted from Gassmann

Figure 3: The Business Model Canvas. Source: Osterwalder

Figure 4: Dimension of market attractiveness. Adopted from Nagl

Figure 5: The five competitive forces. Source: Michael E. Porter

Figure 6: Fictitious example for resource analysis.

Figure 7: SWOT Analysis. Adapted from Weihrich

Figure 8: Porter’s Three Generic Strategies. Source: Wikipedia

Figure 9: The 7 P's Marketing Mix Model. Source: Professional Academy

Figure 10: Components and structure of the financial planning. Adopted from Nagl 2014

Figure 11: Return online survey.

Figure 12: Question 2 - Motivation for the creation of a business plan.

Figure 13: Question 5 - Supporting tools in the preparation of the business plan.

Figure 14: Question 6 - Supporting institutions in the creation of the business plan.

Figure 15: Question 7 - Estimation of external support in the creation of the business plan

Figure 16: Question 10 - Difficulties in the preparation of the business plan

Figure 17: Question 11 - Areas of personal need for support

Figure 18: Question 14 - Areas of crowdsourcing support for the business plan creation.

Figure 19: Question 15 - Willingness to pay for the support of the crowd

Figure 20: Question 17 - Presentation of branches in which the foundations took place

Figure 21: Question 23 - Reasons for self-employment.

Figure 22: Question 24 - Level of education.

Figure 23: Development Internet usage worldwide.

Figure 24: Number of internet users in the years 2013 and 2014.

Figure 25: Search term Crowdsourcing - Result Germany

Figure 26: Search term crowdsourcing - Result worldwide

Figure 27: Search term crowdsourcing - distribution of german interest.

Figure 28: Search term crowdsourcing - distribution of global interest.

Figure 29: Pril popular crowd designs (before adjustments by Henkel).

Figure 30: Pril winning design (after adjustments by Henkel).

Figure 31: Tapped design by the crowd.

1 Introduction

1.1 Motivation

If candidates in the TV show “Who wants to be a Millionaire?“ no longer know what to do, they often seek help at the phone joker. In the supposed experts, most players see the best advisers. But only in 54 percent of cases the responses of the phone joker is correct. This is still more than a 50:50 joker. However the much better choice is the audience joker. This joker has an average success rate of about 90 percent regardless of the time of its use. Therefore it is the best joker of all by using the collective distributed knowledge of people.^[1] That demonstrates that the participation of the crowd usually leads to a better result because the average of many independent judgments is often very close to the truth.

Several years ago the sociologist James Surowiecki described this phenomenon in his international bestseller "The Wisdom of the Crowds" and demonstrated with many examples that a group can find better solutions and make more intelligent decisions than individuals. He justified this on one hand with the fact that individuals are often guided by feelings, on the other hand that they have limited information and consequently only a limited view. Because of self-organizing, statistical effects (e.g. law of large numbers) and the fact that the crowd is not limited to bureaucracy, administration, time or location the crowd can surpass every individual expert.^[2] Crowdsourcing, the next step in the evolution of outsourcing can activate the wisdom of the crowd by using the collective intelligence of a large number of individuals from cognitively diverse perspectives.^[3]

For instance the web-based encyclopedia Wikipedia, the web browser Firefox or the operating system Linux rely on the participation and collective knowledge of the crowd. On Wikipedia any internet user can write, use, edit and distribute articles free of charge and in accordance with some principles. After the publication, the article will be corrected, expanded and updated by the collective.^[4] The creation of open source software works in a similar way. The program is accessible to everyone and so the source code can be continuously processed by globally spreaded software developers. The idea is to use knowledge and skills from many people and make it accessible to all.

The crowd already has reached the business world and supports companies among other things within innovation processes. Innovation is one of the main drivers for sustainable growth and profitability. Only companies and organizations that manage to continuous reinvent themselves, to differentiate from other competitors in the market and align products to consumer needs can gain new competitive advantages and will survive in a long term.^[5] In order to remain competitive, innovations need to be developed faster, better and cheaper. Therefore many companies open the innovation process to the outside and activate the wisdom of the crowd. So customers, fans, prospects, suppliers, universities, etc. can be interactively involved in the value creation process from the very beginning.^[6] For example, in the year 2012 the Bundesliga club VfL Wolfsburg has looked for new, innovative and creative merchandising products for its fan shop which attract the fans and which support the club in the repositioning of the brand. The Wolfsburger have seen themselves as "the most modern football family in Europe" and have defined the new brand values as "passionate and team orientated", "holistic innovative" and "sustainable successful". In this context the club called for a design competition on the creative platform Jovoto.com. About one month the design community had time to develop ideas, which were then ranked by the community and the VfL fans. For the ten best designs the club placed prizes of totaling 5,000 euros.^[7] The result after 36 days were more than 350 submitted ideas, 7,500 comments and 18,000 ratings.^[8] A great story of success for the club.

An even more successful campaign runs McDonalds with "My Burger"^[9] or "Burger Battle"^[10] where customers create their own burger and vote on which burger will be sold in restaurant. Also Starbuck with their web based idea portal “My Starbucks Idea”^[11], BMW with their portal “Virtual Innovation Agency“^[12], Lego with “Lego Ideas”^[13], Unilever with “Ideas4Unilever”^[14] and many more companies involve their clients from the very beginning in the innovation process.

But crowdsourcing is not just limited to the innovation process or even to the business world. In recent years, the location-independent act of the swarm has overtaken all areas of our lives. Since crowdsourcing is the fastest and most efficient way to collect information and measurements, it comes increasingly to collaborations between scientific, government agencies, non-profit organizations, and mobile crowdsourcing projects. On the website of InnoCentive.com companies can post online difficult scientific research and development challenges and offer cash bounties for solutions. Members of InnoCentive’s online community come up with solutions where previously researcher and engineers desperately failed.^[15] With the application from SeeClickFix citizens form different cities in the U.S. can report nonemergency problems like graffiti, defects on roads, lanterns, traffic signals and other issues of disrepair and public safety by taking pictures and sending them including GPS data directly to the city administration in order to attract attention on abuses in the urban infrastructure.^[16] In the same way the crowd supports first aiders and organizations in crisis regions by helping them to get a quick overview of the scale of catastrophes. The Ushahidi platform enables people to report instances of ethnic violence, bundles this information and visualizes them in maps.^[17] During the reactor disaster around Fukushima, the website RDTN.org allowed residents from all regions of Japan to publish radiation levels and maps them out next to data from official sources and measurement dates. This way, anyone could quickly get an idea of what was happening on the ground.^[18]

Mobile crowdsourcing works not only in acute crisis, but also in long-term projects, such as the company Nextdrop impressively shows. The platform will enable Indian residents a more reliable water supply. In many cities in Asia and Africa, there is water only once a day for several hours. Especially women and the poor spend the day waiting for the arrival of the water. In Nextdrop the water utilities can report when they concern to open the taps for the region. The system converts the data into updates and informs locals automatically 30 to 60 minutes before the arrival of the water via SMS.^[19]

Even in the entrepreneurial process, the crowd is already involved. Idea platforms such as Atizo^[20] assist founders in the idea generation. Crowdfunding platforms like Kickstarter^[21], Companisto^[22] or Seedmatch^[23] help startups to finance the development, production and marketing of new product or service ideas. Even if it seems that the crowd has already conquered the entire entrepreneurial process an essential part of establishing an enterprise has remained sidelined.

1.2 Problem definition

A key element in the planning process of a new venture is the creation of a business plan. In this context the business plan serves as a helpful instrument for comparing, coordinating and identifying fits and gaps between the business idea, the available resources and the entrepreneur.^[24] Therefore the plan helps the entrepreneur to take a critical look at his business idea and its potential on one hand and to convince stakeholders and investors from the idea on the other hand. The business plan is used as an evaluation tool for business ideas or projects, in the way that it describes how the company or the project aims to make money in the future.^[25] Consequently high are the expectations of the founder and the stakeholders in the business plan and accordingly difficult to fulfil these. Carefully prepared and professionally created documents with the business plan as the central part increasing the likelihood of funding and coaching. An incomplete or unclear formulated business plan discourages investors.^[26] Without a business plan a promotion or coaching of a project is not possible^[27], because submitting a formal, written business plan is an essential component of the requirements.^[28] Taking into account that in 2015 nearly 3.1 billion EUR were invested in German startups^[29] underlines the importance of a well-developed business plan in Germany.

Due to the fact that the creation of a business plan is for many entrepreneurs new territory and related with significant administrative burden it feels for many of them like an unpleasant, time-consuming, and anxious obligatory act that they would like to shorten or bypass it entirely.^[30] The high standards on the preparation of business plan of objectivity, honesty, integrity, simple language, accurate estimates, consistency and sufficient information often lead to many errors and can have a negatively impact on business success. Furthermore, for the preparation of the central document often extensive business knowledge in areas such as marketing, organization, financing, etc. is necessary.^[31] The current study of the chamber of commerce and industry reflects that not all company founders have the necessary know-how to create a business plan properly. According to this study about a third of the entrepreneurs make too little thought about the customer benefits or have shortcomings in terms of price calculation, sales forecast, cost accounting, financing etc. and around a quarter expresses only vague ideas about target customers or cannot clearly describe their product idea.^[32] This illustrates that many entrepreneurs lack the basis knowledge for the preparation of a business plan. This knowledge is mainly treated within the studies but only about 30 percent of the company founders can show an academic education.^[33] Even in the case that a company founder has the necessary know-how to create a business plan professionally, he still has only limited information and a limited view. That can be balanced by gathering much information from external sources. This is associated with considerable work and needs to be coordinated. Many entrepreneurs compensate the lack of knowledge by guides, courses or software that can assist in the preparation. But working through these requires a lot of time by the entrepreneurs that they simply do not have or are not willing to invest. Therefore, it is not unusual to find in practice the recommendation to use professional service providers in order to increase the chances of success.^[34] But professional help in form of counseling sessions with tax advisers or management consultants, etc. are not in vain, even though the federal government contributed to the cost.^[35] Therefore, some founders find themselves in a conflict of interest. On one side they want to create a professional business plan, what is not possible with their existing knowledge and therefore they rely on external chargeable support and on the other side they have to minimize the costs within the founding process in order to spare the resource capital. Several years ago, Günter Faltin has noted in his bestseller "Kopf schlägt Kapital" and the book “Wir sind das Kapital” that it would be easier, less risky and therefore more attractive to outsource certain business tasks from the very beginning.^[36] It indicates that the creation of a business plan could be such a task.

1.3 Research question and objectives

In consideration of the outlined complexity regarding the creation of a business plan in the previous section, Faltins statement and the idea that the crowd may expand the limited perspective of a single entrepreneur by gathering faster and more information about a certain topic as well as the fact that the potential of the crowd continues to grow due to the world's growing number of internet users^[37], this master thesis is an attempt to link established knowledge concerning preparation of a business plan with the young, promising and influential field of crowdsourcing. For this purpose, the following research question is investigated in the context of this work.

Is it possible to use the “Wisdom of the Crowd” through crowdsourcing for the effective and efficient creation of parts of a professional business plan in order to assist the founder within the startup process?

From the research question the following objectives are derived:

The first objective of the work is an empirical analysis whether founders have a fundamental interest in the support by the crowd at the creation of a business plan. This analysis is essential, as the business plan should be prepared in general by the founder himself. The empirical analysis also should determine in which areas of the business plan, the founders most have deficits and thus need support.

The second aim is to demonstrate in what parts established crowdsourcing providers can support the entrepreneur within the creation of a business plan.

Another goal of this work is to inspire other people through the knowledge winning of this paper to develop special applications which involve the crowd at the business plan creation process and thereby simplify the creation of a business plan.

1.4 Structure and methodology

This work is divided into different parts. The first part presents the theoretical background based on existing literature. The previously scattered published or accessible information are arranged, analyzed and interpreted in this part. The sources of secondary data are gathered from books, magazines, journals, research studies and in the worldwide-web. The theoretical framework demonstrates the broader areas of knowledge that are relevant to understand the investigated topic of this research paper. At the same time the theoretical framework limits the work. The first part of the theoretical framework introduces the phenomenon of crowdsourcing by investigating evolution, defintion, concept and theory. Furthermore it demonstrates the current application fields, shows opportunities and risk as well as the process of crowdsourcing. The second part of the theoretical framework considers the topic business plan. It presents among other things the definition, evolution and structure of this instrument and indicates more in detail the various tools that can be used within the business plan.

The second part of this paper is the empirical investigation. By using a questionnaire primary data were gathered in order to work out whether entrepreneurs lack the expertise and knowledge to create a professional business plan. Also the survey should help to answer the question if business founders would use crowdsourcing to compensate their supposed lack. Therefore in the first step the survey is designed, followed by the definition of the population and sample. After the execution of the survey the gathered data are compressed and displayed by using the descriptive data analysis. This is done in three steps: the description and representation of the data, the recognition and description of any detected patterns in the data and the check whether these data can be generalized to the population. The empirical investigation concludes with the interpretation of the results.

The third part attempts to match the results of the theoretical framework with the results of the empirical investigation in order to answer the research question. It describes two opportunities to use crowdsourcing wihin the creation of a business plan.

The last section Conclusion will complete, sum up and limit the entire work and will give recommendation for further research. Also this part answers the research question and takes a critical look at the procedure of this paper. The end of the last section is a brief outlook on the further development of crowdsourcing.

2 Framework and theoretical background

This chapter describes the concepts, definitions and theories of the topic business plan and the phenomena of crowdsourcing that are relevant to this research paper by reviewing the related literature.

2.1 Crowdsourcing

2.1.1 Evolution

The first known example of application of crowdsourcing concept was found in Britain in the 18th century. The British Government offered a prize of £20,000 for a simple and practical method of calculating a ship’s longitude in 1714. It was finally awarded in 1765 to John Harrison for his chronometer.^[38] The other example of crowdsourcing initiative was in the same century in 1783 in France. The King Louis XVI of France offered a prize for producing alkali from sea salt and Nicholas Leblance won the prize in 1791. In the year of 1795, the French government offered a 12,000 franc prize to anyone who could devise a cheap and effective method of preserving large amounts of food.^[39]

This demonstrates the idea of crowdsourcing is nothing new even if Brabham represents another opinion.^[40] By the development of the Web 2.0, which enables fast and global networking of actors regardless of geographic location, the "wisdom of crowd" could fully bloom.^[41] The Web 2.0 has lowered the barriers to entry for Internet activities^[42] and has created new models for business, communication, personal relationships and learning in the way that it has enabled individuals to actively participate in the creation of web content rather than just passively consume it.^[43] The Web 2.0 represents a connective and collaborative technological environment that involves individuals in internet-mediated social participation, communication, and collaboration.^[44] The phenomenon of crowdsourcing is one of the new models of the Web 2.0 and the intellectual background was first described by Yoachi Benkler in his book “The Wealth of Networks”.^[45] In the same year Jeff Hove analyzed and mentioned in the Wired magazine article “The Rise of Crowdsourcing” the term crowdsourcing. In this article Hove describes a fundamental change of the industrial production of goods. In many areas transaction and production costs have dropped so significantly through technological advances that amateurs have access to professional production technology. Connected via the Internet, they can make the results of their work available to others and markets. Thereby amateur like hobbyists, part-timers, and dabblers can produce not only cheaper but also partly in very high quality.^[46] Since, crowdsourcing has received wide applications in business world and intense attention from the academic community.^[47] Especially in America, the issue has spread rapidly and driven the development.^[48] In Europe and particularly in Germany, the theme was taken up a few years later.^[49] The numbers of crowd events like crowdday, crowddialog, crowdsourcingweek etc., where people discuss challenges, further development, new business models and new trends in crowdsourcing increases year after year. Since crowdsourcing uses the knowledge and labor of the broad mass these value added method is predicted enormous potential.^[50] Meanwhile, many companies have recognized the business potential of crowdsourcing and make increase use of it.^[51] Various studies demonstrate that the market is growing by an average of almost 50 percent per year.^[52] Even non-profit organizations have adopted crowdsourcing as an effective model for problem-solving.^[53]

2.1.2 Term and definition

The term crowdsourcing is a neologism and a combination of the words crowd and outsourcing. Schenk and Guttard define the term crowd as a large collection of heterogeneous individual which are basically anonymous.^[54] Howe defined it as “… an undefined, generally large group of people …”.^[55] As an alternative to the term crowd the term community can be used.^[56] Outsourcing is in general an arrangement in which one company provides services for another company that was before performed in-house.

A definition of the term crowdsourcing was first published on Jeff Howes website. Accordingly to this “Crowdsourcing is the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”^[57]

Meanwhile, there are numbers of crowdsourcing definitions because many researchers attempt to propose their own definitions for crowdsourcing, based on a diverse set of practices and a number of different theoretical bases and models.^[58] Some researchers even state several versions of definitions (e.g. Brabham has two versions^[59] ). The definitions of Howe and Brabham are the most common used definitions in the literature.^[60]

Estelles Arolas and Gonzalez Ladron de Guevara synthesized and analyzed existing definitions in the literature and found 40 different interpretations of crowdsourcing.^[61] After considering some specific aspects of the crowd they identified within these definitions eight fundamental elements that any crowdsourcing initiative must contain. These elements are:

1. There is a clearly defined crowd.
2. There exists a task with a clear goal.
3. The refund received by the crowd is clear.
4. The crowdsourcer is clearly identified.
5. The compensation to be received by the crowdsourcer is clearly defined.
6. It is an online assigned process of participative type.
7. It uses an open call of variable extent.
8. It uses the Internet.^[62]

In another investigation from 2015, Estelle Arolas and Gonzalez Ladron de Guevara could reconfirm these eight characteristics and their definition.^[63] Nevertheless, even with a significant increase of effort on crowdsourcing research, it is still under construction and its contours are not clear yet.^[64] Therefore, at the moment there is no universally accepted definition of crowdsourcing.

2.1.3 Concept

Crowdsourcing is a story of interdisciplinary cooperation, teamwork, consensus and creativity of heterogeneous, temporally and spatially independent group of individuals to achieve a common goal.^[65] The open innovation movement was the starting point of the concept. Chesbrough`s work provides a theoretical framework on open innovation to understand how firms can access external knowledge.^[66] The aim is to open the value chain to external in order to integrate the customer in the value creation process. By integrating the customer as an active value-added partner those needs should be optimally satisfied. Thus the customer plays as co-operating a central role in the value chain.^[67] But the opening is not only limited to the customer. The process is actually open to anybody who wants to participate. Hence, the concept benefits by having a number of individuals from cognitively diverse perspectives offer their solutions, even if those individuals are not themselves experts.^[68] Accordingly to Brabham crowdsourcing generates content through a deliberate blend of bottom-up (content form the people) and top-down (content from business) process, with the locus of control over production.^[69] This means the power is shared between the organization and the public.^[70]

According to Greengard, the concept is based on a simple, but powerful assumption that virtually everyone has a potential to plug in valuable information^[71] and bring fresh insights to internal problems.^[72] Therefore, crowdsourcing seeks to mobilize competence and expertise among the crowd.^[73] Thru the Internet the crowd is unlimited to age, gender, time a.s.o. and offers diversified range of people. The combination of skills and knowledge from many individuals with different backgrounds and views helps a company to generate quick costumer friendly solutions. The distributed knowledge a.k.a. wisdom of the crowd^[74] or collective intelligence can be a source of competitive advantage for any company.^[75] For that reason, outsourcing certain task to an undefined, generally large group of people is a new arrangement for doing work and can enable groups of people to outperform individual experts.^[76] It is also a new principle of division of labor which helps to utilize specialization effects and to tackle efficiently complex tasks.^[77]

For the application of crowdsourcing some requirements must be fullfilled. This includes a sufficient and diversified number of actors to gain an optimum level of creative ideas. The participants (a.k.a. crowdsourcees or crowdworker) should have also technical, creative and cognitive skills.^[78] It requires also special motivation and incentive systems. The incentives have not be of essential monetary nature.^[79] More and more frequently symbolic and gamification elements serve as incentive.^[80] Furthermore, the task should be dividable and the problem clearly defined. Also, as a critical factor is considered the mutual trust within the crowd and to the organization (e.g. fair rating and cooperation, no manipulation).^[81]

2.1.4 Delimitation from other terms

2.1.4.1 Open innovation

The term Open Innovation refers to the opening of the innovation process of organizations and active strategic use of the external world in order to increase the innovation potential. The open innovation concept describes the benefits of incoming and outgoing knowledge in the company, thru internal and external marketing channels to generate innovations.^[82] Open innovation and crowdsourcing belong together but are not the same. Some researchers indicate that open innovation can be effectively done by crowdsourcing^[83] and that the two concepts are based on the same assumption that knowledge is distributed and crowd wisdom and collective intelligence can be a source of competitive advantage. Nevertheless, they have some differences. The most obvious difference is that open innovation focuses exclusively on innovation processes of firms, while crowdsourcing has a much broader coverage and target users (see section 2.1.7). Another difference is applying the open innovation strategy to a very large degree, firms tend to interact not only with other firms, but also with other stakeholders, mainly customers,^[84] while crowdsourcing refers to links between an organization and the undefined crowd, which is diverse in forms and has a hallmark of internet-mediated or supported mass participation, communication, and collaboration.^[85]

2.1.4.2 Open source

The open source production describes an arrangement in which individuals cooperate to produce a common resource on their own terms, in their own format, as a self-governing community.^[86] Anybody has the right to share the software, to obtain and modify the source code and give it away to other people. Also everybody can use the software for any purpose.^[87] A typical open source software is the Mozilla Firefox Web browser. The difference to crowdsourcing is that there is no top-down management of the project that defines the content of the project. Therefore there is no link or shared power between the crowd and the management. The open source projects are intended to be bottom-up, self-organized collaborations among individual that work toward a common goal.^[88]

2.1.5 Process

According to Gassmann, typical crowdsourcing projects can be divided into five consecutive steps as demonstrated in the following illustration.

illustration not visible in this excerpt

Figure 1: Five steps of the crowdsourcing process. Adopted from Gassmann.^[89]

1. In the preparation phase, an organization identifies tasks and makes the decision to solve this problem through the crowd. The phase ends with the decision to start a project and with the selection of a crowdsourcing platform and the conclusion of a contract with a crowdsourcing intermediary.^[90]
2. The initiation phase includes all activities that are necessary before you can give a task to the crowd. That contains the clarifications of ownership structure, the confidentiality of the obtained information, as well as the detailed formulation of the tasks in the exact wording. At the end of this phase the task will released to the crowd.^[91]
3. The third phase is the period in which the task is online and the community can generate and submit ideas and suggestions. Then a vast number of individuals offer to undertake the tasks individually or in a collaborative way. Upon completion, the involved individuals submit their work to the crowdsourcing platform. This is called the implementation phase.^[92]
4. With the end of the idea submission phase starts the evaluation process. In this step the organisation evaluates the received proposals and rewards the winners for their submitted ideas.^[93]
5. Although, the real crowdsourcing project is now complete the company must continue to develop the result and transpose into real concepts and products. This is called the utilization phase.^[94]

It has been turned out that in the early stages (preparation and initiation) the important decisions are made that determine the success or failure of a crowdsourcing project. Wrong decisions in these phases cause hardly correctable consequences.^[95]

2.1.6 Motivation of the crowd

Many platforms record at the beginning a large number of visitors, but the content does not grow in the same level. According to Nielsen for crowdsourcing platforms applies in principle the 90-9-1 rule that means 1% of the participants produce the bulk of the content, 9% modify the content and the rest 90% just consume the contentt.^[96] Therefore the motivation for participation in projects is the most important and central aspect of crowdsourcing.^[97] The economy is based on the rule of rational act of participants who only contribute when they receive a counter value.^[98] Therefore, crowdsourcing needs a functioning motivation and incentive system, in which there are fair and transparent rewards.^[99] Deci and Ryan differentiate between intrinsic and extrinsic motivation. They write that “intrinsic motivation is defined as the doing of an activity for its inherent satisfactions rather than for some separable consequence” and that extrinsic motivation “pertains whenever an activity is done in order to attain some separable outcome.”^[100] There are many existing studies on motivation research on digital phenomena and all can be applied to crowdsourcing. These studies show that people have many common reasons, both intrinsic and extrinsic, for participating but that no single motivator applies to all crowdsourcing applications.^[101] In general the existing studies suggest that individuals who participate in crowdsourcing have the motivations to earn money, develop creative skills, network with other creative professionals, build a portfolio for future employment, challenge oneself to solve a tough problem, socialize and make friends, pass the time when bored, contribute to a large project of common interest, share with others, and have fun.^[102]

An analysis of Franke and Klausberger has clearly shown that also the architecture of the crowdsourcing model has a significant influence on the motivation of the contributors. Accordingly to this, it is important that the participants know that the creator of the winning design will be published and can experience the appropriate recognition. Contributors also want a performance-related bonus instead of a fixed payment and want to be involved in selecting the best ideas or designs and select the winner. This has an extremely strong effect on motivation, because it is perceived as fair. For reasons of justice, many participants want that the exploitation rights are limited in time, and they get back the rights over time.^[103] All in all, it shows the motivation can be intrinsic as well as extrinsic but in most of the cases dominates the intrinsic motivation.^[104]

2.1.7 Types

The range of applications of crowdsourcing has extremely broad dimensions which is why this phenomenon occurs in appearance in various forms.^[105] Currently there is no uniform typology. Depending on the perspective (motivation, function, process, etc.) in the literature are existing various classification approaches.^[106] An understandable, comprehensive and clearly arranged categorisation provides Gassman. He sums up the numerous crowdsourcing initiatives in five categories as illustrated in the following chart.^[107]

illustration not visible in this excerpt

Figure 2: Five categories of crowdsourcing initiatives. Adopted from Gassmann.^[108]

2.1.7.1 Intermediaries platforms

Crowdsourcing initiatives bringing together different parties are called intermediaries. The individual sites represent a link between questioners and solvers. The participants are rewarded usually with prizes or fees for the preparation of solutions or for the best result. There are four types of intermediaries:

Research and development platforms

Research and development platforms solve scientific problems from the research and development. Platforms like TekScout, InnoCentive or ideaconnection.com connect companies with scientists and researchers and give companies access to a large knowledge basis. At the best-known intermediary InnoCentive almost 200,000 scientists are registered. The platform pays for solving complex problems 10,000-1,000,000 US dollars. Its customers include many large companies such as Procter & Gamble, Solvay or Eli Lilly. Platforms like yet2.com or pharmalicensing.com serve as marketplaces for patents. The new platform Skipso goes one step further and links as a one-stop hub crowdsourcing with a B2B network, investors and current content. Moreover, Skipso focused exclusively on one sector, the rapidly growing cleantech market.^[109]

Marketing and design platforms

Compared to the development platforms these intermediaries take care of marketing or design questions. CrowdSPRING for example performed already 80,000 competitions for the design of websites, logos and marketing campaigns. A similar service offers 99designs, with already 200,000 designers. With brandtags.com companies can look what customers associations with their brands.^[110] Other similar providers are twago.de or oDesk.com.

Platforms for freelancers

Platforms of this type bring companies and individual freelancers together. The tasks are varied, simple and often less innovative. The idea of these platforms is basically the same as Henry Ford had in the 20 years when he disassembled the production processes in the smallest possible working steps. Afterwards he put the pieces back together and made a huge splash with an end product which was not only cheaper but also better than the previous. Unlike to Henry Ford times this process works today virtually and the small steps are called "micro-tasks". On these platforms big and complex work projects are broken down into tiny pieces and distributed to the crowd.^[111] The selection of tasks ranges from checking links or content of a web page, digitalization of short texts and documents, tagging videos, pictures or shop items till preparation of press releases and participation in market research activities. These simple, repetitive but not machine-executable tasks are offered for low pay. This kind of work is also known as mircotasking or mircoworking. The best-known providers are Amazon Mechanical Turk, Clickworkers, CrowdFlower, AppJobber, cash4feedback, spudaroo and HumanGrid.^[112] Another interesting approach did offer the already insolvent Startup Workhub. With the app of Workhub, tasks could be done directly on the smartphone in order to use non-productive time e.g. in train or waiting times at airports to make productive use of this time.^[113]

Idea platforms

For intermediary of this group the qualifications of its members does not count, but the solution-finding process. Its members develop solutions for a variety of industries and issues. The members of atizo.com for example, develop new concepts for the zipper, new foods, new business models or fine screens for waste water treatment plants. In 2006 the Berlin University of the Arts established Jovoto.com. This webpage networks worldwide creative talent has become a creative department.^[114]

2.1.7.2 Company owned platforms

Meanwhile, many companies have opened their innovation process to the outside. Anyone who has a well-known name and do not want to rely on one of the many intermediaries creates its own platform. Company owned platforms are often implemented as white label versions in cooperation with providers of intermediary platforms. Often a side effect is the positioning of the brand as innovative. By the use of these platforms, companies looking for solutions, new designs or new products that could be offered in the future. Tchibo is looking for something new so for the weekly changing offers, Starbucks asks how the customers want the future, and BMW calls the Virtual Innovation Agency on the shaping of the car of tomorrow.^[115]

[...]

---

^[1] cf. Franzen, Pointner 2009, p. 247

^[2] cf. Surowiecki 2007, pp. 11–15

^[3] cf. Brabham 2013, p. 23

^[4] cf. Wikipedia 2016a

^[5] cf. Disselkamp 2012, p. 11

^[6] cf. Gassmann 2013, p. 5

^[7] cf. Mozart 2012

^[8] cf. Jovoto GmbH 2012

^[9] cf. Hofer 2012

^[10] cf. McDonald's Deutschland Inc. 2015

^[11] cf. Starbucks

^[12] cf. B.M.W. Group 2014

^[13] cf. LEGO Group

^[14] cf. Unilever PLC 2016

^[15] cf. InnoCentive

^[16] cf. SeeClickFix

^[17] cf. Ushahidi

^[18] cf. Bonner 2011

^[19] cf. NextDrop Inc.

^[20] cf. Atizo

^[21] cf. KICKSTARTER

^[22] cf. Companisto GmbH

^[23] cf. Seedmatch GmbH

^[24] cf. Timmons, Spinelli 2009, pp. 111–114

^[25] cf. Nagl 2014, p. 1

^[26] cf. Wolf 2006, p. 23

^[27] cf. Honig, Karlsson 2004, p. 37

^[28] cf. Brüderl et al. 2009, pp. 174-175; Ullrich 2011, p. 47

^[29] cf. Ernst & Young GmbH 2016, p. 8

^[30] cf. Warsewa 2010, pp. 18–23

^[31] cf. Lahn 2015, p. 159

^[32] cf. Deutscher Industrie- und Handelskammertag e. V. 2015, pp. 12–13

^[33] cf. KfW Bankengruppe 2015, p. 6

^[34] cf. Lahn 2015, p. 57

^[35] cf. Existenzgründungsportal des BMWi

^[36] cf. Faltin 2013, 2015

^[37] cf. According to the website www.worldometers.com the current world population has reached 7.4 billion. According to the website www.Internetlivestats.com the number of internet users in the world has reached 3.3 billion. That means that 2016 only around 44 percent of the world populaton has access to the internet. This number has increased the last years by around 8 percent (see appendix A.1.

^[38] cf. Wepster 2010

^[39] cf. McGrayne 2001

^[40] cf. Brito 2008, pp. 10–11; Brabham 2013, pp. 10–11

^[41] cf. Grimme-Institut, p. 2

^[42] cf. Brabham 2013, p. 14

^[43] cf. Estellés-Arolas et al. 2015, p. 33

^[44] cf. Zhao, Zhu 2014, p. 418

^[45] cf. Benkler 2006, pp. 220–221

^[46] cf. Howe 2006b

^[47] cf. Zhao, Zhu 2014, p. 417

^[48] cf. Weißenborn 2012

^[49] cf. The appendix A.2. demonstrates the developing of the search-term „crowdsourcing“ in Google for Germany and the rest of the world

^[50] cf. Goel et al. 2009, p. 182

^[51] cf. Leimeister et al. 2009; Whitla 2009; Rouse 2010

^[52] cf. IBIS World 2016; Massolution 2013

^[53] cf. Brito 2008; Brabham 2013

^[54] cf. Schenk, Guittard 2011, p. 94

^[55] Howe 2006a

^[56] cf. Brabham 2013, p. 117

^[57] Howe 2006a

^[58] cf. Zhao, Zhu 2014, p. 434

^[59] cf. Brabham 2008a; Brabham 2008b

^[60] cf. Estellés-Arolas et al. 2015, p. 34

^[61] cf. Estellés Arolas, Ladrón de Guevara, Fernando González 2012, p. 3

^[62] cf. Estellés Arolas, Ladrón de Guevara, Fernando González 2012, p. 10

^[63] cf. Estellés-Arolas et al. 2015

^[64] cf. Zhao, Zhu 2014, p. 421

^[65] cf. Arns et al. 2014, p. 5

^[66] cf. Chesbrough, Henry, W. 2006b, 2006a

^[67] cf. Mangold 2002, p. 6

^[68] cf. Brabham 2013, p. 23

^[69] cf. Brabham 2013, p. 14, 38

^[70] cf. Brabham 2013, p. xxi

^[71] cf. Greengard 2011

^[72] cf. Brabham 2013, p. 1

^[73] cf. Zhao, Zhu 2014, p. 417

^[74] cf. Surowiecki 2007

^[75] cf. Zhao, Zhu 2014, p. 421

^[76] cf. Brabham 2008a, pp. 79–80

^[77] cf. Piller 2007, p. 89

^[78] cf. Reichwald, Piller 2009, p. 74; Puscher 2009, p. 83

^[79] cf. Ebner et al. 2009, p. 349

^[80] cf. Arns et al. 2014, p. 44

^[81] cf. Reichwald, Piller 2009, p. 74; Puscher 2009, p. 83; Ebner et al. 2009, p. 347

^[82] cf. Chesbrough, Henry, W. 2003, p. XXIV

^[83] cf. Leimeister et al. 2009

^[84] cf. Chesbrough, Henry, W.; Leimeister et al. 2009

^[85] cf. Zhao, Zhu 2014, p. 421

^[86] cf. Brabham 2013, p. 6

^[87] cf. Diedrich 2007

^[88] cf. Brabham 2013, pp. 6–7

^[89] cf. Gassmann et al. 2013a, p. 27

^[90] cf. Gassmann et al. 2013a, pp. 28–31

^[91] cf. Gassmann et al. 2013a, pp. 32–37

^[92] cf. Gassmann et al. 2013a, pp. 38–40

^[93] cf. Gassmann et al. 2013a, pp. 40–42

^[94] cf. Gassmann et al. 2013a, pp. 42–44

^[95] cf. Gassmann et al. 2013a, p. 27

^[96] cf. Nielsen 2006

^[97] cf. Arns et al. 2014, p. 12

^[98] cf. Lutterbeck 2007, p. 94

^[99] cf. Puscher 2009, p. 83

^[100] cf. Miller et al. 1988

^[101] cf. Brabham 2013, p. 66

^[102] cf. Brabham 2013, p. 68

^[103] cf. Franke, Klausberger 2010

^[104] cf. Arns et al. 2014, p. 12

^[105] cf. Schenk, Guittard 2011, pp. cf. 98–99

^[106] cf. Sloane 2011; Arns et al. 2014; Howe 2009; Schenk, Guittard 2011; Martineau 2012; Gassmann 2012; Brabham 2013; Eisfeld-Reschke et al. 2012

^[107] cf. Gassmann et al. 2013b, p. 6

^[108] cf. Gassmann et al. 2013b, p. 6

^[109] cf. Gassmann et al. 2013b, p. 7

^[110] cf. Gassmann et al. 2013b, p. 7

^[111] cf. Weißenborn 2011

^[112] cf. Arns et al. 2014, pp. 16–17; Gassmann et al. 2013b, pp. 7–8

^[113] cf. Schlenk 2016

^[114] cf. Gassmann et al. 2013b, p. 8

^[115] cf. Gassmann et al. 2013b, pp. 10–11