Crowdsourcing and Risk Management

CrowdSourcing Innovation Models & involved Risk

Crowds Renewing Value Creation

CrowdSourcing „People tend not to really look at the risks when making the decision to

crowdsource or not. Not really know (the risks). They just go for it, with the benefits in mind.“

Main Risk Categories

Complexity of relationship

The increased number of participants and diversity within the crowd can increase the probability of risk in managing relationships within the crowd.

Main Risk Categories

Crowd-Control+Effectiveness

Control is less attractive in crowds. Referring to the effectiveness of the control measures, whether centrally located

or distributed through an intermediary platform.

Main Risk Categories

CoopetitionRefers to the effects or impact of co-innovating with competitors within a

joined crowdsourcing project and a larger mix and diversity of participants.

Main Risk Categories

Actor/Worker interdependence

Crowdsourcing requires proxy, but not internal control. Risk arises due to the uncertainties that can occur while coordinating with contributing actors. In crowdsourcing, the company relies on the

crowd as a supplier of ideas and solutions. The crowd has less at stake relative to the company.

Main Risk Categories

Replication of business model

Crowds may gain access to business model data or related insights, due to a larger number and diversity of participants.

Main Risk Categories

Loss of know-howWhen the crowd is integrated in the innovation process, crowd actors may

acquire some key know-how and use it for their own purpose or even sell it to the competition.

Main Risk Categories

IP risksCompanies may encounter serious IP risks by assigning

tasks to an anonymous crowd.

Main Risk Categories

Loss of certainty in results

The crowd actor has less at stake for not contributing to the innovation process and does not feel the responsibility and accountability for solving tasks.

Five categories of risk associated with radical innovation

Financial risk

Market risk

Organizational- and societal risk

Technological risk

Turbulence risk

Conceptual Risk Framework

Risk & User Engagement

Intrinsic motivesIdeology

Enjoyment, fun, recreation

Intellectual challenges, stimulation, interesting objectives

Learning, improving skills and knowledge exchange

Risk & User Engagement

Extrinsic motivesCompany recognition

Reputation, enhancement of professional status

Sense of efficacy

User need, influencing the development process

Rewards

Risk & User Engagement

Social motivesAltruism, reciprocity, care for community

Friendships, “hanging out together”

Peer recognition

Adaption and Use of CrowdSourcing

Study 2012-2013 University of Glamorgan

Descriptive statistics on risk levels of Crowdsourcing

Risk Management Measures

FinancialDefining quality levels and fixed compensation for these levels

Entry evaluation of participants

Task replication

Ensuring greater participation

Behavioral screening

Tracking performance

Have people to facilitate process

Risk Management Measures

Organizational/ SocietalCopyright and service agreements

Building an “innovation mindset” within the organization

Voluntarily + mild force following

the rules and regulations

Risk Management Measures

Market and ConsumerCommunity Building (intrinsic)

Integration of gamification concepts

strong tears + leveled communication

Risk Management Measures

TechnologicalClearly define task

Use collaborative rather than competitive model

Automated quality control

Build community of subject area experts

Risk Management Measures

TurbulenceCrowd moderation

Avoid crowdsourcing for sensitive areas such as HR policy

Restricting access by type of log-in

Anonymizing the data

Drive change for corporate culture and mindset

to an “innovation mindset” within the organization

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Risk Management Measures

CreativeBehavioral screening

Define quality levels and fixed compensation

Copyright and service agreements

Break down a big project into very small bits

CrowdSourcing Innovation Models & involved Risk

Crowds Renewing Value Creation

Dr. Michael Gebert Crowd Mentor Network

!#crowdsourcerisk