The Difficulties involved in Developing Business Models open to Innovation Communities: the Case of a Crowdsourcing Platform

Abstract

Recent literature on open innovation suggests that firms can improve their performance by “opening” their business models, in other words, they can reduce their R&D costs by incorporating external knowledge. This implies that firms will be able to capture value through knowledge produced outside the organization. This, however, presents a number of difficulties notably where the knowledge produced is the result of collective creativity carried out by communities of peers. Here, tension can arise when some of the business actors involved take, or attempt to obtain, financial benefit from part of the value created by the online communities. The purpose of this article is to address the following research question: what are the main strategic difficulties encountered by firms whose business models rely on public web communities to create value? Our study used a collaborative research approach, and our empirical data is based on the longitudinal strategic analysis of a web start-up, CrowdSpirit, a collaborative web-based platform which enables communities to imagine and design innovative products. Our research highlights three main points that need to be addressed in further research on open business models. First, we highlight the fact that the ‘openness’ of the business model to online communities leads to the development of a multi-level incentive model adapted to the different profiles of the various contributors. Second, we suggest that crowdsourcing platforms act as intermediaries in multi-sided markets and, as such, are at the core of a knowledge-sharing and IP transfer process between multiple actors. Finally, we suggest that the business model design and development can be considered as an ongoing learning process.