Would you mind filling out this survey?


Many of us have struggled to find participants to fill out our bachelor’s thesis/dissertation survey. I remember logging in into Facebook and finding 5 to 6 “PM’s” (private messages) A DAY from classmates that have been abusing of the CTRL+C and CTRL+V command:

Hey “name”, how are you doing?
Could you please fill out my thesis survey? It’s about 5 minutes long and it’s completely anonymous. I can fill out yours if you want 😉

Good old days…

As bizarre as it sounds, I did not ask them to fill out my thesis survey back, but this is just because the sample of my thesis was ‘manufacturing companies‘, not students, not regular people.

However, if the respondents of my thesis were regular individuals, then I would consider spamming all the contacts of my Facebook friends list. However, this comes with some cons, first and mostly, annoying your friends… But I have good news for you!

Let me introduce you to the award winning start-up project “Survey Exchange”. Even though there have been identical platforms in the past, such as http://www.survey-x-change.com, these are either shut down or do not have very good Google SEO positioning because these type of pages are usually labeled as spam. As a mater of fact, when you try to log in via Facebook, even our beloved start-up has been denied from using Zuckerberg’s APIs or the developers have messed up somewhere in the Login code.

02_errorfb

Our start-up has been operating since 2016 and has won multiple student entrepreneurship awards in the UK (Linkedin.com, 2018). As of February 16th 2018, Survey Exchange is the first result to show up when googling the search words “survey exchange” and according to its founders it has a potential market share of half million users in the UK alone (Survey Exchange, 2018), which I honestly think is a long shot, because it’s delusional to think that 100% of British students will adopt their platform before it gets shut down or labeled as spam website and get lost in Google rankings.

The dynamics of this business model are very simple yet very effective. This start-up relies on crowd-sourcing the filling of the surveys to the users of the platform in a #like4like fashion.

Like4Like is a popular hashtag on Instagram whereby users indicate their willingness to receive likes on their posts in exchange of liking other users posts back (hasthagdictionary.com, 2015). It has the same dynamics as Follow for Follow in Twitter and Sub for Sub (subscribe) in Youtube.

In this case, users of the platform have to create a free account in surveyexchange.co.uk and as the users fill out the questionnaires they will earn “Q points” based on the length of the surveys. The more surveys a user answers, the more Q points it will earn, which can be used later to request more responses for their own surveys.

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The revenue model of the start-up is quite simple, it generates traffic by facilitating a crowd-sourcing platform for students that need to get their surveys filled in and shows them targeted GoogleAds advertisements in its website. In addition, as it can be be inferred from their privacy agreement, the crowd-sourcing platform is also planning to sell premium services and products that will require personal information (Survey Exchange, 2018). Such products and services are likely to be purchased “Q points” so that the users will get their crowd-sourced responses without having to fill out additional surveys.

The beauty of this business model is in its simplicity. Just setting up a platform where its users generate value by crowd-sourcing their own surveys in exchange of an equal amount of commitment. This is therefore a one-way platform where the value of the network grows in a Metcalfe’s law fashion as the number of the users increases.

Metcalfe’s law states that the value of a network is proportional to the square of the users connected to the system (Wikipedia, 2018). This is related to the fact that the number of total possible survey responses ‘n’ (assuming that each user has only 1 bachelor survey) can be calculated by n(n-1), which is asymptotically proportional to n^2.

total amount of responses

If there are 2 users, that means that each user will get 1 response for their survey (you can’t answer your own survey),  totaling 2 responses [2(2-1)=2]. If there are 4 users there will be 12 responses, if there are 8 users there will be 56 responses…

However, there are some limitations with the valuation of this platform. Not all users will be willing to respond to all surveys, and some users may even have more than one survey.

Users are not expected to stay in the platform for any time longer than their thesis/dissertation data collection process and therefore the traffic of the website is not expected to grow in such exponential fashion.

There are also obvious limitations when it comes to the quality of the answers of the survey, both in terms of reliability of the answers and in terms of validity of the sample.

Users that need large amount of responses are likely to give low quality answers without actually reading the questions in order to get as many Q points as possible within the shortest amount of time.

Another concern is that the owner of the survey has 0 control about the type of person that is filling the survey as at this point the platform does not offer the possibility to filter the responses by demographics nor by other type of variable. This could lead to a very heterogeneous convenience sample that may have nothing to do with the actual focal unit of the thesis/dissertation.

Additionally, due to the nature of this platform, users may abuse of the Social Media function, which allows a user to collect Q points via responses from friends, and get the site black-listed from important websites such as Facebook or Reddit because of the amount of unsolicited requests to visit a link.

Despite all those limitations, the crowd-sourced platform seems to be doing fine as the interface of the website has improved overtime and students do not generally care about the quality of their data as long as they can get it quickly and cheap.

At the end of the day, it is better to ask the crowd to fill out your survey in a negligent way rather than faking the responses yourself and risk to get caught of committing fraud.

Let me know in the comment sections what do you think about this business model. Is it sustainable? Do you think they will shut down their website like it happened to survey-x-change.com? Do you think it will get lost in Google’s search rankings due to being labeled as a spam website? Would you use it for your own thesis?

If the answer to the last question is yes, I encourage you to not make a comment 😉

Thank you for reading!

List of References:

Linkedin.com, (2018). [online] Available at: https://www.linkedin.com/in/jakub-zimola-706b01104 [Accessed 16 Feb. 2018].

Survey exchange. (2018). Survey exchange | Exchange your survey and get the right respondents. [online] Available at: http://www.surveyexchange.co.uk/ [Accessed 16 Feb. 2018].

Hashtagdictionary.com. (2018). #like4like | HashTag Dictionary. [online] Available at: http://hashtagdictionary.com/like4like/ [Accessed 16 Feb. 2018].

Surveyexchange.co.uk. (2018). Privacy Policy. [online] Available at: http://www.surveyexchange.co.uk/pdf/Privacy_policy.pdf [Accessed 16 Feb. 2018].

The sharing economy: children’s toys


Nowadays the electronical screen devices provide endless entertainment opportunities for children. Apple has a special ‘kids’ section in de App Store offering numerous different kinds of apps as games apps, educative apps, book reading apps etc. A survey conducted in 2014 already concluded that touch screens are the primary play activity followed by game consoles as shown in the figure below. It is hard for the traditional toys business to compete with the rapidly developing online kids’ entertainment industry (Michael Cohen Group, 2014).

Afbeelding1 childrenSource: (Michael Cohen Group, 2014)

Parents try to limit the screen-time per day of their children as they want to promote an active lifestyle as the consequences of frequent use of screen devices are severe. Physical health issues are one of the main concerns for parents as research shows that excessive screen time can lead to serious problems including obesity, higher risk of Type 2 Diabetes and increase abdominal fat (Nightingale et al. 2017, Suchert et al. 2016). Furthermore, on-screen activities cannot replace certain essential skill developments as for example hand-eye coordination and creativity.

One of the main reasons children are not playing as much with physical toys is that they lose interest overtime. Toys are expensive and the majority of households are not able to afford new toys on a regular basis (Pley, 2018). The company Pley provides the solution to the abovementioned issues. As the founder states:

“Being frustrated with finding the appropriate toys to my children as their interests change constantly, I realized there had to be a smarter way to play. Inspired by the sharing economy, we envisioned Pley.”

-Ranan Lachman, Founder of Pley

 

Business Model

Pley is a subscription based toy delivery service company based in the United States. Currently the company has over 300.000+ subscriptions. Pley provides two different services:

(1) Surprise box subscription

Afbeelding2 children.pngThe surprise box is available in different themes. The price for the boxes depend on subscription around $22/box. The boxes are delivered every 2 months.

(2) Toy Library subscription

Afbeelding3 children.pngThe toy library is a subscription based toy rental service. Depending on the subscription $12.99 for 1 credit/month and $29.99 for 3 credits/month the customer can choose from over 500+ toys in the toy library. The service applies the pick-enjoy-return&repeat method. This is theoretically the most interesting service of Pley, therefore the blog will focus on the Toy Library.

The toy library of Pley makes use of the concept of the sharing economy, more specific the collaborative consumption. Collaborative consumption can be defined as “the peertopeer based activity of obtaining, giving, or sharing the access to goods and services coordinated through communitybased online services” (Hamari et al., 2015).  The coordination of the toys is monitored by Pley, acting as a platform arranging the exchanges as shown in the figure below. Furthermore, there is the possibility to send old toys to Pley and receive a monetary value.

Afbeelding4 children

The success of Pley is explained by the fact that the company actively takes into consideration the needs of the customer and developed a platform that serves the needs of the customers. The customers want to (1) let their children play with physical toys in order to improve health and develop critical skills (2) let their children play with novel toys regularly and (3) not spend too much money on toys. The toy library of Pley conforms to all the wishes by engaging the customer in Pley’s subscription based toy sharing platform.

Efficiency criteria

The business model of Pley’s toy library is based on joint profitability of both the company and the customers. The customers benefit as they are able to receive and return toys regularly at a low rate, which would otherwise not have been possible as the alternative for novelty in toys is to buy new toys in the store at a high rate or let the children play on on-screen devices, both not desired. Pley benefits from the profits made from providing the subscription based service and from toys send to Pley they can use in the toy library, in the long term providing profit.

Furthermore, Pley meets the feasibility of required reallocations criteria. First, the polity and judiciary aspects are not a factor of concern for the business model as the activities are political independent and within the U.S law. Efficient social norms are carefully considered as the company is a Certified B Corporation and applies the buy-one-give-one model where for every sold toy, one toy is given to a child in need an underdeveloped area in the world (Pley, 2018).

Bibliograpy

  1. Hamari, J., Sjöklint, M., & Ukkonen, A. (2015). The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology
  2. Michael Cohen Group, Toys, Learning, & Play Summit. (2014) From: http://www.mcgrc.com/wp-content/uploads/2015/03/MCGRC_Digital-Kids-Presentation_pdf Assessed: 17-02-18
  3. Nightingale, C.M., Rudnicka, A.R., Donin, A.S., Sattar, N., Cook, D.G., Whincup, P.H., & Owen, C.G. (2017). Screen time is associated with adiposity and insulin resistance in children. Archives of Disease in Childhood, 0:1-5.
  4. Pley, 2018. From https://www.pley.com/about. Assessed: 17-02-18
  5. Suchert, V., Hanewinkel, R., & Isensee, B. (2016). Screen time, weight status and the self-concept of physical attractiveness in adolescents. Journal of Adolescence, 48:11-17.

 

How to find commercially attractive user-generated entries?


Introduction

Letting users generate designs, also known as crowdsourcing, is the method when companies ask consumers to develop new ideas for products, slogans or specific problems. One of the pioneers within the field of asking ‘the crowd’ to contribute new products is the LEGO ideas platform. Here consumers can share their idea and gather support, hereafter LEGO will review all ideas and perhaps develop this particular idea into a new product.

Benefits

Crowdsourcing has several benefits for companies, such as the ability to solve problems, generate ideas, outsource tasks or use it as information pooling. (Tsekouras, 2018) However, Franke et al. (2006) found that users’ willingness to pay also increases substantially if they are allowed to design their own solutions. Resulting in a sales increase for the companies. The paper by Berg Jensen et al. (2014) studied which data can be used to help a focal producer firm to reduce its workload in the selection phase by predicting which user-generated designs it would most likely perceive as commercially attractive.

Lead-users

The study focused on the lead-users within the LEGO user community and their contributions to LEGO ideas. Lead-users were defined in 1986 by von Hippel as: “the members of a user population who get benefits of obtaining a solution to their needs and are at the leading edge of important trends in a marketplace.” Franke et al., (2006) elaborated further on this and found that lead-users tend to be the ones that come up with the most commercially attractive ideas in online communities. The study screened lead-users for input concerning relevant predictors and corresponding theories. It became apparent that one could distinguish between characteristics of the designs that lead-users tend to produce and the individual characteristics of lead-users.

Analysis

Berg Jensen et al. used 1799 designs from 116 user-designers to find whether firms can anticipate on the most commercially attractive ideas. The three prominent variables that were used by a focal producer firm of such a community for filtering of promising user-generated designs were:

  • The complexity of a given design
  • The positive feedback from the community on specific designs
  • The intensity of design activity by a user designer

The review of whether the focal producer firm perceives a user-generated design as attractive was done by measuring the assessment of two professional LEGO reviewers. These reviewers were trained by LEGO to find which design would be appealing to large market segments. However, regarding the data collection it is questionable whether this outcome is generalizable and attractive for other firms. As just two LEGO employees checked the designs, this could be highly biased and might have been checked twice or perhaps added a group of lead-users.

Complexity of design

The variable shows products that are rich in appearance and are therefore of great consumer value compared to alternative and competing designs. In this study the complexity is the number of pieces utilized in a given design. This also results in differentiation from competitors (Baldwin et al., 2006). The authors found an inverted U-shaped relationship between the complexity and its perceived commercial attractiveness. However, complexity can also result in higher production and distribution costs, as there is a point in time where the cost dimension outweighs the revenue dimension of a new design. The final turning point was found to be at 3950 pieces, which is highly context specific; therefore it is difficult to infer the application to a broad market of user-generated design platforms.

Positive community feedback

When a given design has attracted some endorsement from other users who may represent broader market segments this shows the positive community feedback (Baldwin et al., 2006). The authors found highly statistical significant evidence (.05083) that the relationship between the positive feedback received by a given user-generated design within the peer community and its perceived commercial attractiveness was positive. The empirical setting of the study was within a brand community where members have strong emotional attachments with the focal producer firm, which makes it hard for other firms’ communities to find lead-users that are such fanatics of their products.

Design activity by user designer.

The intensity of the design activity by a user designer is thus the number of designs generated and posted into LEGO ideas by a user. The results show there is a U-shaped relationship between the intensity of a certain user-designer’s activities and the likelihood that a given design by that user will be perceived as commercially attractive. The turning point turned out to be at a generation of 99 designs in two weeks time. This seems like an extreme amount, however, these types of user-designers are not uncommon in the brand community setting and might represent an important source of innovation.

 Community

There was no evidence to infer that whether the presence of a user-designer in the community increases the likelihood that a specific design by that user will be perceived as commercially attractive by the focal firm. This would show that that the community LEGO built does not add to the final commercial attractiveness of entire product. With this outcome the authors would show that the interaction within the community does not really have a commercial benefit.

Conclusion

Even though this study is difficult to generalize for other firms focusing on communities, the findings will help firms that use user-design platforms for physical prototypes, being a very niche market. This study is a first step towards a new web-based marketing research approach that can enable firms to filter vast number of user-generated designs more effectively and efficiently.

 

Sources

Baldwin, C., von Hippel, E. and Hienerth, C. (2006). How User Innovations Become Commercial Products: A Theoretical Investigation and Case Study. MIT Sloan Research Paper, (9).

Franke, N., von Hippel, E. and Schreier, M. (2006). Finding Commercially Attractive User Innovations: A Test of Lead-User Theory. Journal of Product Innovation Management, 23(4), pp.301-315.

Jensen, M., Hienerth, C. and Lettl, C. (2014). Forecasting the Commercial Attractiveness of User-Generated Designs Using Online Data: An Empirical Study within the LEGO User Community. Journal of Product Innovation Management, 31, pp.75-93.

Tsekouras, D. (2018). CUSTOMER CENTRIC DIGITAL COMMERCE – Session 3.

von Hippel, E. (1986). Lead Users: A Source of Novel Product Concepts. Management Science, 32(7), pp.791-805.

Sharing and Translating lyrics for the world: Musixmatch


“Words matter” or “Your free music sounds better with lyrics” are just two of the slogans that best describe Musixmatch, the Italian start-up that has come to be the world’s largest lyrics catalog and platform. Founded in 2010, the company has grown to reach more than 60 million users around the world. But how does Musixmatch work?

The Musixmatch catalogue, platform and app principally allow users to: 1) access lyrics and/or their translation in other languages; 2) share and/or review written down and/or translated lyrics from songs all around the world; 3) synchronize their music library of many music apps (e.g. Spotify, Deezer, Google Play Music) so that the lyrics pop up (like in Youtube lyrics videos) when one is listening to a song on a music app in his/her device; and 4) create the synchronization song(s) – lyrics, which will then be shared worldwide via Musixmatch and the apps in which Musixmatch is supported.

Musixmatch has been thus ideated for users who want to search for lyrics and also who want to see/think about the lyrics while listening to a song. In this respect, Musixmatch CEO Massimo Ciociola points out (paraphrased): “The fifth most searched category in Google is lyrics. Why, in accessing lyrics, can’t we provide a better, faster, more complete, more comprehensive catalogue and user experience with songs’ lyrics?” Another, peculiar aspect of Musixmatch is the size of its workforce compared to its users’ base. 30 employees (all engineers) vs more than 50 million users/downloads. These figures point out to an important feature of Musixmatch: the fundamental role that users and contributors have in creating value for the platform. In this respect, Musixmatch encourages users to contribute to the catalogue, by either writing, translating, reviewing or synchronizing songs’ lyrics. In this way, Musixmatch, like many other platforms, has been subjected to so-called “network effects”, where the value of the app to users has increased due to the increasing number of contributors. As CEO Ciociola points out: “Lyrics  missing? We ask the community”.  The incentive schemes for this crowd-sourced component can be best described by quoting the company’s website: “Inside the Musixmatch community users earn points based on the actions they do on the lyrics. Based on those points the user can reach a higher level and status in the community that give more power to his/her actions”. Therefore, the incentive scheme for users to generate value for the app does not include monetary rewards, but only recognition in terms of status/power of action in the user community.

Despite this absence of monetary rewards for contributing, and despite the fact that the company has not officially become profitable, there are several mutual benefits of this contribution-based system for both the firm and contributors.  Users, through their contribution(s), can “show-off” and gain “social” benefits, in terms of increased reputation and self-esteem in the community they belong to. Some top users can even become “curators”, which “gives them extra powers to control what’s happening in the community”.  Another aspect that Musixmatch emphasizes is the “feeling” aspect, where the firm asks “passionate” users who really enjoy to share lyrics to contribute. This emphasis is perfectly justified by the fact that people indeed love to share lyrics and the emotions that come with them and their blending with music in many social settings. We can think of Facebook, Twitter, or Youtube, but also of more offline settings like parties or night campfires with guitars and other instruments.

Musixmatch, from its point of view, sees the value of its platform increasing as more and more of its users contribute. Musixmatch’s current main source of revenue is data licensing , but the firm is also considering to  start selling advertising space. Either way, a platform with larger amounts of data, which results from the network effects from the increasing number of users, can be a greater source of revenue for Musixmatch. The costs of monitoring the crowd-sourcing process can be rather limited. The microtasking nature of sharing, reviewing and translating lyrics does not require high levels of cognitive ability, competences or a particular expertise to check the quality of users’ contribution. Also, often times quality checks for lyrics translation and composition are done by the users themselves. In this respect, the company has been able to successfully set up a firm and effective set of community rules that regulates users’ activities.

In terms of external arrangements, Musixmatch has been the first lyrics’ app and platform to formalize legal agreements with major international publishers, such as EMI Publishing, SonyATV and PeerMusic among others. This has permitted MusixMatch to legitimize its role in the apps and catalogues’ world, to increase its users’ base and to become the world’s largest lyrics’ platform, or, as CEO Ciociola points out, the “Music Vocabulary of the World”.

 

Sources: 

Blohm, I., Zogaj, S., Bretschneider, U., & Leimeister, J. M. (2018). How to Manage Crowdsourcing Platforms Effectively?. California Management Review, 60(2), 122-149.

“Musixmatch Wants to Be the ‘IMDb of Music Lyrics,’ Launches Lyric Video Messaging App”Billboard. Retrieved 2018-02-17

O’Hear, Steve. “Song Lyrics App Musixmatch Hacks Its Way To 50M Downloads/30M MAUs, Adds Spotify Support”TechCrunch. Retrieved 2018-02-17

https://www.musixmatch.com/

https://www.musixmatch.com/community-rules

 

 

 

Yolt: own back your financial data


A growing sense of mistrust towards traditional banks after the 2008 financial crisis gave rise to many new fin-techs. These new fin-techs were focusing on new financial services, including crowdfunding, mobile payment solutions and financial platform, which traditional banks were not offering to large extent at that time (Darolles, 2016). Personalized solutions to financial matters offered by these fin-techs were in stark contrast with the traditional finite services and products offered by traditional banks. Technological advantages and new regulation reduce the entry barriers to the financial sector, which give fin-techs access to technological solutions at much lower cost as traditional players often have a disadvantage due to their technological architecture (Darolles, 2016). Millennials in particular have lost their interest in financial matters, as traditional banking is considered too functional (Tuk, 2018). Fin-techs focus on this generation with new interactive solutions where customers are actively involved in solutions for financial matters.

Traditionally, banks were the only institutions that had direct access to customer financial data. With the introduction of new European financial regulation (PSD2) last month, the way how we interact with our banks may fundamentally change. The most fundamental change of the new PSD2 regulation is that banks are obliged to share financial data with third parties if a customer wants to share them (Manthorpe, 2018). In this way, third-parties, like fin-techs, can access the bank account of a bank customer through an API and provide services on the basis of this data. APIs have been used for years, but last decade’s technological developments allow banks to operate a new form of API management. Financial account data resulted from open APIs is used by the newcomers and therefore challenge traditional banks. For traditional banks the new PSD2 regulation have large strategic implementation as they may lose the customer interaction and just become infrastructure providers while others leverage on more profitable financial services. So, long-term success of traditional banks depends on how they respond. To a large extent, traditional banks are now collaborating with fin-techs that provide these third-party services. INGs answer to these developments is the application Yolt, a smart money management application, leveraging on the developments of PSD2 and open banking.

 

How does Yolt work?

Yolt mines customer data across different accounts of different banks and provides them in a single overview to manage all financial matters (Schiffers, 2017). Integrating accounts from different bank accounts provides Yolt with an extensive dataset from which the application can analyze financial behavior. In this way, data analysis can predict balances and provide tips on budgeting and savings, which will give customers more insight into their finance (Tuk, 2018). This does not stop here, as Yolt offers a special marketplace for partners. For example, utility service providers can collaborate as a partner with Yolt and offer comparing services on the basis of financial data of the customers (Tuk, 2018). So, if your energy bill may be reduced by switching energy provider, Yolt will automatically notify the customer. Furthermore, customers can actively be involved when one of their contracts ends. Again, Yolt will automatically notify the customer and may offer substitutes to the current contract.

 

Efficiency criteria

After one year of developing the application internally at ING, Yolt was released to the public in the summer of 2017 in the United Kingdom (Schiffers, 2017). In January 2018, the introduction month of the new PSD2 regulation, Yolt had 100.000 users (Schiffers, 2017).  As PSD2 will mandate banks to share financial data, competition about financial data will be fierce as Yolt will not only compete with traditional banks but also big tech companies like Google and Apple who both have their interest in managing finance. From a customer’s perspective, using an open banking initiative like Yolt puts the customer back in control and possession of their own financial data and can decide themselves how they want to participate in analyzing their data. The traditional financial ecosystem limits customers in awareness and access to better opportunities, which is one of the reasons that bank customers do not change quickly the bank that their parents also had. Transparency did shake up many industries, like how Trivago did shake up the travel industry, Yolt may shake up the financial sector by providing the most fitting financial product to the customer (Tuk, 2018). This may disadvantage the parent company ING, as Yolt will offer also products and services from competitors. So, from Yolt/ING’s perspective the Yolt platform is a way to leverage new regulation that will strategically impact a traditional bank like ING. In this way, ING can test new ideas concerning open banking and PSD2 in the UK market. This market is particularly important as the UK government is one of the frontrunners in the EU in terms of open banking (Manthorpe, 2017). In collaboration with the eight largest banks in the UK, Open Banking Limited a non-profit organization, has already been set up to streamline and standardize the processes to facilitate an open banking ecosystem (Manthorpe, 2017). Learning from the UK launch, ING could leverage open banking in other markets as well. Furthermore, ING can test new revenue possibilities as Yolt will receive a commission on the contract concluded through the platform.

In summary, Yolt will bring value to both the consumer as well as ING, by providing insights into financial data and related products and services as well as providing insights how to best practically apply the possibilities of the new regulation.

 

 

Darolles, S. (2016). The rise of fintechs and their regulation. Financial Stability Review, 20(4), 85-92. Retrieved from https://publications.banque-france.fr/sites/default/files/medias/documents/financial-stability-review-20_2016-04.pdf

 

Manthorpe, R. (2018). To change how you use money, Open Banking must break banks. Wired.co.uk. Retrieved 17 February 2018, from http://www.wired.co.uk/article/psd2-future-of-banking

 

Schiffers, M. (2018). Yolt verkent voor ING de wereld van fintech. Fd.nl. Retrieved 17 February 2018, from https://fd.nl/ondernemen/1230113/yolt-verkent-voor-ing-de-wereld-van-fintech

Tuk, Y. (2018). Fintech Yolt over eigen groei en komst PSD2: ‘Niet direct open Europa’. Emerce.nl. Retrieved 17 February 2018, from https://www.emerce.nl/achtergrond/fintech-yolt-groei-impact-psd2-direct-open-europa

Alexa, what is your business model?


Introduction
“The conversations of the future are between a person and a machine” (Hood, 2017). You might have seen the movie ‘Her’ where an advanced female AI voice-assistant and a man build a relationship together. We are not there yet, but conversations with machines are definitely on the rise. Today, 40% of the adults use voice search once per day and the prediction for 2020 is that 50% of the searches will be done through voice (Jeffs, 2018). Smart-speakers in houses and offices are used to channel voice-searches. Amazon Echo, had the first mover advantage in 2014, and currently dominates the market with a share of roughly 70% (Quartz, 2018). In 2017, Google Home was launched, followed by the Apple HomePod. Microsoft and Facebook are also aiming to release their first smart-speaker later in the year.

her-fp-0880
Joaquin Phoenix plays a man in love with an operating system in director Spike Jonze’s latest film, Her.

To better understand smart-speakers and virtual assistants this blog analyses the business model of the Amazon Echo with Alexa as virtual assistant.  Specifically the following questions are discussed:
1.How does Amazon create value for customers?
2.How does Amazon profit?
3.How does Amazon maximise efficiency in its developer’s network?
4.How does Amazon deal with privacy?

1. Customer value
voice-requests, music, calling and banking
The Echo allows customers to request actions at a virtual assistant using voice. Voice is faster and more convenient than typing and more easy to do while moving (Agrawal, 2017). You can ask Alexa to play specific music, search wikipedia for answers, do maths, set timers, set events or play voice games. More advanced uses cases are the ability to call, message someone, check your bank account or transfer money. More uses cases are available on the Amazon Echo and instead of the App terminology on mobile platforms, these voice programs called “Skills”.

Home-integration
The Echo can be connected with other devices such as your lights, fridge, thermostat, locks on doors. Routines can be set, for example with “Alexa goodnight” to shut down lights and lock-doors at once (Newman, 2017).

Shopping
You can order products from the Amazon store using your Echo. With the re-order command you can re-order a certain product and Alexa will review your purchase history to see what brand you want (Gartenberg, 2017)

Emergent Value
As Grönroos and Voimo (2013) discuss, Amazon can be seen as the value facilitator, offering the Echo, assistant and skills for the customer to create value in-use. Moreover, as experience increases more value for the customer emerges. Especially with AI learning from the customer, a system views can be taken towards value creation. Emergent properties arise, when the customer continuously interacts with AI, allowing the customer and AI to create more and more personalized value which could not be predicted ex-ante.

2. Profit
At this moment the monetisation of the Echo or Alexa is not the focus of Amazon. Amazon aims to capture the complete market and improve the product (Simonite, 2016).  Several revenue paths exists and will be more important as the customer base and frequency of use increases:

  1. Increased sales via improved recommendations. Recommendations stems from understanding the customer and delivery of recommendations (Adomavicius and Tuzhilin’s, 2005). Voice-conversations with Alexa provide valuable information on who the customer is, what he/she wants and in the customer funnel he/she is. This data can be merged with data with the other data Amazon has to form a completer picture. This customer understanding improves the recommendations Amazon can provide and increases the sales revenue for Amazon or marketing advice revenue. For the latter, Amazon can use the understanding to better advice other companies on how to target a specific customer.
  2. Increased sales via easier customer journey. Voice is more natural than typing and hence it has become easier to order a product. It is expected that replenishment orders, for example for toilet paper or batteries, will be increase. See figure 1 for a forecast of US voice payments and number of voice-users.
  3. Ads revenue. Amazon is looking into promoted search results for voice-searches on Alexa. Partner companies would bid to end up high in the search results, which is even more important for voice than with a desktop/mobile search (Newman, 2018).
  4. Skills commission fee. Similar to Apple taking a share from app purchases in the Appstore, Amazon could take a share from skill subscriptions or in-skill purchases to earn money from its open platform. This brings us to the next subsection: efficiency.
594adeaca3630f1b008b45b9-750-529
Figure 1: Forecast US voice (payments) adoption

3. Efficiency
Amazon has the platform challenge that it wants to increase participation on the customer as well as the developer side. Amazon is experimenting with its internal institutional arrangements (IA) with developers. Carson et al. (1999) would argue that a contractual arrangement is an efficient IA if it can, among other criteria, increase the profit of the system and of individual contributors. Since 2018, Amazon offers the option for in-skill purchases with Amazon Pay, such that users can pay developers. Subscriptions is a second channel through which developers can earn money. Profits for developers and Amazon can still be improved if discoverability of Skills, which is harder in a voice-based environment, increases. The contribution of developers also depends on the easy of use of the developer’s toolkit (Hollander, 2017).

4. Privacy
How does Amazon use your data. “Alexa uses your voice recording to answer your questions, fulfill your requests, and improve your experience and our services,” Amazon says. “This includes training Alexa to interpret speech and language to help improve her ability to understand and respond to your requests.” (Newman, 2018b).
Amazon only records data when Alexa is triggered, meaning, when the ‘wake word’ Alexa is mentioned, and allows users to review and delete voice-recordings. If you want to delete bulk recordings you need to go to the Amazon website. There is no method to have your recordings automatically deleted. (Barett, 2017)
Amazon aims to better and better understand the customer which includes deducting your emotions from speech (Dickson, 2018). The external institutions about privacy will highly influence what Amazon is able to do and not do with your data in the future and how specifically transparency information should be provided.

Concluding notes
Voice-search and virtual assistants are on the rise with smart speakers as their physical embodiment. Customer value is derived from using voice to ask questions, shop and control home furniture. As AI advances, more personalised and emergent value arises for the customer. Monetisation is not a focus yet for Amazon, but which massive adoption in the future, there will be plenty of ways to profit from the Echo and Alexa. Improved recommendation systems, sales, ad placement and commissions on Skill subscriptions are examples of profit avenues. Institutional challenges arise for Amazon in the best alignment of developer incentives and when future privacy regulations change.

References:

Adomavicius, G., & Tuzhilin, A. (2005). Toward the next generation of recommender systems: A survey of the state-of-the-art and possible extensions. IEEE transactions on knowledge and data engineering, 17(6), 734-749.

Agrawal 2017, accessed at:
https://www.forbes.com/sites/ajagrawal/2017/08/27/how-voice-search-will-change-the-future-of-seo/#636a046d7ca1

Barett, 2017, accessed at:
https://www.wired.com/story/amazon-echo-and-google-home-voice-data-delete/

Carson, S. J., Devinney, T. M., Dowling, G. R., & John, G. (1999). Understanding institutional designs within marketing value systems. The Journal of Marketing, 115-130.

Dickson, 2018, accessed at:
https://www.dailydot.com/debug/amazons-alexa-wind-monetizing-feelings/

Gartenberg 2017, accessed at:
https://www.theverge.com/2017/7/10/15947672/amazon-alexa-voice-controls-shopping-prime-echo-how-to

Hollander, 2017, accessed at:
http://www.businessinsider.com/amazon-rolls-out-monetization-tools-for-alexa-skills-2017-12?international=true&r=US&IR=T

Hood, 2017, accessed at:
https://mayvendev.com/blog/siri-alexa-conversational-systems-changing-business

Jeffs, 2017, accessed at:
https://www.branded3.com/blog/google-voice-search-stats-growth-trends/

Newman 2017, accessed at:
https://www.fastcompany.com/40474833/amazons-alexa-is-a-real-smart-home-platform-now

Newman, 2018
http://www.businessinsider.com/amazon-exploring-ad-options-echo-alexa-2018-1?international=true&r=US&IR=T

Newman, 2018b, accessed at:
https://www.fastcompany.com/40522226/can-mycrofts-privacy-centric-voice-assistant-take-on-alexa-and-google

Simonite 2016, accessed at:
https://www.technologyreview.com/s/601583/how-alexa-siri-and-google-assistant-will-make-money-off-you/

Quartz, 2017, accessed at:
Amazon Echo’s dominance in the smart-speaker market is a lesson on the virtue of being first

Helix: How Your DNA is Choosing Your Wine


Imagine that you really like pizza. You probably have a favourite pizza – and a favourite place to get it – right? Let’s say your favourite pizza is a margarita. When you get the pizza and eat it, you will probably like it. However, do you not sometimes think something could have been done differently? Maybe there should have been less cheese, maybe it’s too greasy, or maybe the temperature is just off? Does getting the perfect pizza every time sound like a dream to you?  Well, it’s time to wake up then, because consumer genomics start-up Helix is very close to realizing this concept.

But first, let’s back it up a bit.

What are Human Genomics?
The whole concept of human genomics started off in medicine. A patient’s DNA would be sequenced, which means that “the exact order of the four bases in a strand of DNA” would be determined (yourgenome, 2016). Why does this matter, you ask? Well, with the exact order of the composition of somebody’s DNA, doctors could tailor their treatment, medicine, and pretty much every factor that would impact a patient’s health (Farr, 2016). Probably the most popular case of DNA sequencing is that of Steve Jobs, who paid $100,000 in 2011 to sequence his DNA in an attempt to let doctors gain more insight into his sickness and try to help him more effectively (Farr, 2016). Next to the value of DNA sequencing in medicine, Illumina – the company whose supercomputers are behind 90% of DNA sequencing ever done – has identified a use for DNA sequencing outside of the medical field (Farr, 2016).

The Birth of Helix
Helix – an Illumina spin-off – is said to “democratize genomics” (Farr, 2016). Illumina has managed to bring the costs of DNA sequencing down tremendously – partly due to decreasing lab costs and more lenient regulatory decisions in the US (Farr, 2016; Teo, 2017). Where Steve Jobs paid $100,000 in 2011, a comparable procedure would now cost less than $1000 (Farr, 2016). According to helix, DNA sequencing can – next to provide more insight into diseases – discover other personal matters like your lifestyle, personality traits, taste senses, and much more (Farr, 2016). See where I am going with this?

Helix provides many different products. They – for now – offer six different product categories (Helix, 2018).

  • Ancestry: These products help you find out where your ancestors stem from, to hundreds of thousands of years back;
  • Entertainment: This is the fast-moving consumer goods section, if you will. Here, you can get for example a wine tailored to your taste perfectly;
  • Family: These products are mainly meant for families that want to grow, offering them fertility information;
  • Fitness: Here, Helix wants to help you to “reach your full potential” by designing the perfect workout routine;
  • Health: This is the more traditional use of DNA sequencing as explained in the previous section;
  • Nutrition: Lastly, the nutrition products let you design your perfect nutrition plan that suits your metabolism the best (Helix, 2018).

Source: Helix.com

The Business Model
Helix has a new and unusual business model. As they work closely with Illumina, they have many valuable resources that help them analyse consumers’ whole DNA spectrum, whereas similar companies are able to only analyse part of it (Zhang, 2017). Consumers pay a one-time $80 fee to analyse their DNA and the rest is subsidized by Helix (Zhang, 2017). The consumers then choose what kind of products they would like to purchase, and Helix lets third-party companies create those products based on the genetic information Helix provides them (Zhang, 2017).
Helix has, in that sense, created an online platform with customers – on one hand – who gain access to the platform by letting their DNA be sequenced, and on the other hand the product developers (Molteni, 2017).
The business model is efficient in the sense that its platform brings together companies that offer very specialized, personalized products and consumers that are seeking such products and cannot find them in conventional retail channels. Customers benefit as they receive products that are tailored to their individual tastes to the maximum extent, and companies benefit as they cater to the customers. Also, as the companies get to know more and more about individual customers, they could use this information to develop tailored product recommendations. However, as will be explained in the next section, the efficiency of the business model might suffer from regulatory decisions and consumer privacy issues.

Talk About Personalized Products
Basically, Helix takes product personalization to the next level. Personalizing products has many advantages, for example customers’ craftsmanship is emphasized, and customers form a connection with the product if they have put effort into designing it (Nagle, 2017). However, writing your name on a wine label and getting the wine tailored to your DNA are two completely different things. Because DNA is pretty much as personal as you can get, there are potential drawbacks of the Helix business model. The first and most obvious issue is privacy concerns. If people are already freaking out about the cookies that are gathered on websites, why would they send their DNA to a company to get a product of which they could by a similar version in the supermarket?

Some companies using DNA sequencing store consumer data for “unspecified research” and might sell it to third parties (Niemiec & Howard, 2016: p.23). If consumers get suspicious about this, and privacy concerns rise through the roof, it might negatively impact Helix as well. Also, ethical issues such as discrimination based on DNA information are surfacing, too (Farr, 2016). Imagine that your life insurance gets to know your DNA information, this could highly impact the price you pay.

All in all, although customers like personalized products, the safety of information security measures – or even international regulations – need to be established before customers can completely trust the businesses.

The Future
In the future, Helix aims to create an “App Store” for their genomics products and services (Farr, 2016). They want to create the platform in such way that consumers can access their DNA information, browse the “App Store” to discover products that they like (Farr, 2016). The consumers just need to let their DNA be sequenced once – just like you create your Apple ID once – and can then browse the “App Store” as they wish (Farr, 2016). Helix compares their platform to the App Store rather than to Google Play, as they aim to review each seller, which is what Apple does do each app created, whereas Google takes a more lenient approach (Zhang, 2017). Right now, Helix already has 14 employees whose task it is to get to the bottom of the products developed by their featured companies (Zhang, 2017). The buzzword of the platform is that it is “dynamic” (Molteni, 2017). Helix wants to evolve and widen its platform as the research improves, resulting in more products and services to offer to their customers (Molteni, 2017).

So, if you ask Helix, the next time you eat a margarita, you will love it so much that you will feel it in your genes, literally.

References
Farr, C. (2016). Genetics Startup Helix Wants To Create A World of Personalized Products from Your DNA. Retrieved from: https://www.fastcompany.com/3065413/genetics-startup-helix-wants-to-create-a-world-of-personalized-products-from-your-dna [Accessed February 16th, 2018]

Helix (2018). How It Works. Retrieved from: https://www.helix.com/howitworks/ [Accessed February 16th, 2018]

Molteni, M. (2017). Helix’s Bold Plan To Be Your One Personal Genomics Shop. Retrieved from: https://www.wired.com/story/helixs-bold-plan-to-be-your-one-stop-personal-genomics-shop/ [Accessed February 17th, 2018]

Nagle, T. (2017) How Personalized Goods are Shaping the Economy. Retrieved from: https://www.forbes.com/sites/theyec/2017/05/05/how-personalized-goods-are-shaping-the-economy/#b6bca33a1cce [Accessed February 17th, 2018]

Niemec, E. & Howard, H. C. (2016). Ethical Issues in Consumer Genome Sequencing: Use of Conumer’s Samples and Data. Applied & Transational Genomics, 8, pp.23-30.

Teo, G. (2017). The Second Coming of Consumer Genomics With 3 Predictions for the Future. Retrieved from: https://medcitynews.com/2017/07/second-coming-consumer-genomics-3-predictions-2018/?rf=1 [Accessed February 17th, 2018]

YourGenome (2018). What is DNA Sequencing? Retrieved from: https://www.yourgenome.org/stories/what-is-dna-sequencing [Accessed February 16th, 2018]

Zhang, S. (2017). How Do You Know When a DNA Test is B.S.? Retrieved from: https://www.theatlantic.com/science/archive/2017/07/helix-dna-tests/534402/ [Accessed February 17th, 2018]

“THIS POST IS SPONSORED”


Effects of Sponsorship Disclosure on Persuasion Knowledge and Electronic Word of Mouth in the Context of Facebook

facebook-logo-100035675-mediumThey are everywhere. We all have seen one: a post on Facebook, Instagram or any other social media platform with a little sign saying that the post is sponsored. We see a celebrity enjoying a certain product and recommending it to the audience. We think to ourselves if the person in question is genuine in his or her motives of sharing it, whether they are actually using the product or whether we should follow their recommendation to purchase it ourselves and possibly share our newly found trophy with our family and friends. This simple everyday ritual we have with ourselves, sometimes multiple times a day, has prominent psychological mechanisms coming into play, guiding us through the journey starting from the recognition of the post as sponsored to eventually activating us to share it with our loved ones.

These psychological mechanisms lay the foundation of the research conducted by Boerman, Willemsen and Van der Aa (2017). The researchers identify the source of the sponsored post(brand or celebrity) as the initial step to recognizing it as carrying persuasive, or in other words, advertising value by consumers. This is defined as the activation of the conceptual persuasion knowledge, which in turn, activates the attitudinal persuasion knowledge. Attitudinal PK gets activated when consumers start developing critical and distrusting feelings towards the advertisement (Boerman, Van Reijmersdal and Neijens 2012).  All these are used as determinants to find out whether the consumers eventually engage in electronic word of mouth (eWOM; cf., Berger 2014).

Designing the experiment

Building on the theoretical foundations mentioned above, researchers conduct an online experiment with 409 participants. A post with David Beckham drinking an Illy branded cup of coffee with the text ‘Starting the day with a nice cup of coffee!’ (posted by David Beckham) and ‘David Beckham starts his day with a nice cup of coffee!’ (posted by the brand) is shown to participants to test the following hypotheses by having participants answer a series of questions:

H1. A Facebook ad that is accompanied by a sponsorship disclosure (‘Sponsored’) will be more likely to activate consumers’ conceptual persuasion knowledge, than a Facebook ad without a sponsorship disclosure.

H2. A Facebook ad that is posted by a celebrity will be less likely to activate conceptual persuasion knowledge, than a Facebook ad that is posted by a brand.

H3. The effects of a sponsorship disclosure on the use of conceptual persuasion knowledge are stronger when a Facebook ad is posted by a celebrity compared to when a Facebook ad is posted by a brand.

H4. Source moderates the effect of the sponsorship disclosure on attitudinal persuasion knowledge through the activation of conceptual persuasion knowledge: The mediated relationship of the disclosure on attitudinal persuasion knowledge will be stronger when the Facebook ad is posted by a celebrity (vs. a brand).

H5. When a Facebook ad is posted by a celebrity, a sponsorship disclosure activates conceptual persuasion knowledge, which results in the use of attitudinal persuasion knowledge and ultimately lowers eWOM. When a Facebook ad is posted by a brand, such serial mediation is less likely to occur.

The figure below clearly outlines the experiment design and the source of the Facebook post as the initial stimulus.

Screen Shot 2018-02-14 at 18.06.39

Anticipated results

In line with the expectations, researchers found evidence to support all five hypotheses. They found that the conceptual and attitudinal PK activation was significantly different when the source of the post was a celebrity in the presence of a sponsorship disclosure. This was not the case when the ad was posted on Facebook by the brand. Activation of the attitudinal PK after recognizing the post as an ad resulted in consumers engaging less in eWOM as a result of the distrusting feelings they developed by recognizing the post as advertising. An interesting finding of the study, however, indicates that little attention is paid to the sponsorship disclosures. The study shows that 59% of the participants did not recognize the sponsorship disclosure which is also in line with previous studies conducted (e.g., Boerman, Van Reijmersdal, and Neijens 2012; Campbell, Mohr, and Verlegh 2013; Wojdynski and Evans 2016). Intuitively, this has an impact on the interpretation of the results. Even though the activation of the conceptual and attitudinal persuasion knowledge of the consumers will result in less engagement, lowering the perceived success of the ad, this does not directly condemn sponsored celebrity Facebook posts to failure since the majority of the people won’t recognize the post as an ad.

 

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 Leveling the playing field

Although the study comes with its limitations due to its single product, brand (Illy coffee), celebrity (David Beckham) and geographical (conducted in the Netherlands) focus, it provides invaluable insights into the effect of sponsorship disclosures on Facebook posts. It seems the regulators’, such as FTC’s, disclosure requirements are not sufficient enough to level the playing field for consumers when it comes to social media advertising. Further research might reveal, however, how this could be overcome as well as consumers moving along the learning curve might become more aware themselves. Until then, better to think twice before you share that post by your favorite celebrity you saw on your newsfeed.

References

Berger, Jonah (2014), “Word of Mouth and Interpersonal Communication: A Review and Directions for Future Research,” Journal of Consumer Psychology, 24, 4, 586–607.

Boerman, Sophie C., Eva A. Van Reijmersdal, and Peter C. Neijens (2012),“Sponsorship Disclosure: Effects of Duration on Persuasion Knowledge and Brand Responses,” Journal of Communication, 62, 6, 1047–64.

Boerman, S., Willemsen, L. and Van Der Aa, E. (2017). “This Post Is Sponsored” Effects of Sponsorship Disclosure on Persuasion Knowledge and Electronic Word of Mouth in the Context of Facebook. Journal of Interactive Marketing, 38, 82-92.

Campbell, M., Mohr, G. and Verlegh, P. (2013). Can disclosures lead consumers to resist covert persuasion? The important roles of disclosure timing and type of response. Journal of Consumer Psychology, 23(4), pp.483-495.

Wojdynski, Bartosz W. and Nathaniel J. Evans (2016), “Going Native: Effects of Disclosure Position and Language on the Recognition and Evaluation of Online Native Advertising,” Journal of Advertising, 45, 2, 157–68.

Missed another lecture? Don’t worry StudyDrive has got you covered


One of the biggest trade-offs students are facing in their academic career is going-out vs. going to the lecture. Some students want to join their friends for “just one drink” but somehow end up at Has at 6am and miss the lecture on the following day. On the other hand, there is also the ambitious student who comes to every class, takes notes and spends most of his time at university.

In the end, it doesn’t matter which type one is, as all students come to University to achieve the same outcome, namely, (hopefully) receive a degree at the end of their studies. In order to facilitate this process, StudyDrive has come up with a solution to make a students’ academic career easier.

What is StudyDrive?

StudyDrive is essentially a mediating platform created for students, which enables easy access to study materials. The platform allows students to upload their documents, as well as to access the work of their peers. Whether it is lecture notes, book summaries, past exams, everything can be uploaded and shared. The platform has similar features to Dropbox or WeTransfer, as it allows people to share documents in a fast and convenient way. However, it takes these features and adds a layer on top by organizing the study materials in a convenient way.

How does it work?

As a first step, a student is asked to sign up through either Facebook login or E-Mail address. Once this step is completed the student can select the University he or she is currently enrolled in. Next, the webpage allows the student to choose his area of study and exact program and starting year.

When the student has completed all of the previous steps he should be shown a list of all courses, which he is enrolled in. By clicking on one of the courses, he can access all the study materials and discussions related to this course, which have been uploaded by his (former) peers.

In order to ensure the quality of the uploaded work StudyDrive has created a governance mechanism in which peers assess each other’s work. Students can rate documents and communicate potential mistakes by commenting directly on the document.

However, the start-up has only been founded in April 2013 and heavily relies on network effects, which need to develop over time. This means that the more students join and actively participate the more students’ benefit from it. StudyDrive does not create any content itself. It only provides the structure of the website & app and server capacities for storing the content. This means that the list of courses, study materials, and reviews have to be created by the customers themselves (students).

What are the benefits of participating?

From the perspective of the lazy student missing lectures, the derived benefits are quite clear: Easy access to study materials. But how can StudyDrive motivate the well-organized and ambitious student to share his materials? In order to ensure this StudyDrive made use of an incentive governance mechanism (Blohm et al. 2018). StudyDrive hands out prizes in the form of credit points for students uploading documents, which can be exchanged for prices ranging from posters to iPads. Furthermore, there is a reputation system in place in which students receive karma points for reviewing the work of their peers to further motivate participants (StudyDrive 2018).

Where did StudyDrive originate and how does the company generate revenues?

Philipp Mackeprang, the founder, and CEO of StudyDrive developed the idea after sharing some documents with his former peers at the Maastricht University (Hahn 2014). Originally they used Dropbox to share their files, however, as they uploaded more and more files the site became confusing and difficult to manage. The founder, later on, decided to create his own platform.

One of the major difficulties he was facing was shaping the business model. He realized that students would not want to pay for such a site. However, through his time at University, he realized what great length companies go through to get in touch with students (Hahn 2014). He thus decided to approach potentially interested companies, and it was a success. StudyDrive managed to partner with around 400 companies such as KPMG, Roland Berger or EY. The partnering companies not only advertise themselves on the site but also use it as a recruitment platform by posting job openings or internship possibilities (StudyDrive 2018).

So far, the start-up has managed to offer their partners access to a base of more than 450.000 students, mainly located in Germany, Austria, Switzerland, and the Netherlands. However, StudyDrive is currently expanding to other European countries. The future is looking bright for the company, but how many more students and companies will StudyDrive manage to engage? Only time can tell.

Bibliography:

Blohm, I., Zogaj, S., Bretschneider, U., & Leimeister, J. M. (2018). How to Manage Crowdsourcing Platforms Effectively?. California Management Review, 60(2), 122-149.

Hahn, U 2014, Interview with Philipp Mackeprang of StudyDrive, in, Talkin’Business online magazine, viewed 16 February 2018, <http://www.talkinbusiness.nl/2014/10/interview-with-philipp-mackeprang-of-studydrive-getting-from-entrepreneurial-idea-to-successful-business/&gt;.

Get rewards for your study documents – Studydrive 2018, viewed 16 February 2018, <https://www.studydrive.net/rewards&gt;.

StudyDrive 2018, viewed 16 February 2018, <https://www.studydrive.net/for-companies&gt;.

 

GoFlow Surf: Crowdsourcing Waves


GoFlow is a surfing application which allows users to access life surf reports, upload pictures and videos, and contact friends and surf instructors. It was founded by 2 ex-professional surfers at Los Angeles, California, in 2012.

The need for GoFlow

Weather forecasts have become quite accurate thanks to technology, but wave forecasts are far more unreliable because they depend in many constantly changing factors. Wave conditions can change by hours and even by minutes, depending on the height and direction of the swell, the direction and strength of the wind, the tide, the wave period, and the sand underneath them which changes quicker than most people can imagine. Any person who surfs regularly has had uncountable disappointing experiences due to the unreliability of wave forecasts. Surfers often wake up before sunrise to catch the best waves and are often disappointed with bad conditions when they arrive to the surf spot. I think by now you get the idea of how unpredictable surfing conditions are, and GoFlow solves this issue with live surf reports thanks to the active contribution from all the surfers within a community.

Key characteristics of the business model

Value proposition: GoFlow satisfies the need for life surf reports, which printed surf guides or regular forecast apps (Surfline, Magicseaweed, etc.) cannot satisfy. A WhatsApp group is also not effective because it is not structured enough to show all the live reports of all the surfing spots, since there can be tens of surfing spots within a few kilometers of a coast line. In this app, surfers co-create live surf reports, therefore saving hours of frustration and unnecessary drives looking for waves. In order to understand the value of this app you have to realize that surfers are addicted to this sport and depend on forecasts and surf reports to either get surf sessions full of adrenaline or encounter disappointment and frustration. I can personally confirm this after surfing every day of my life from the age of 8 to 18.

goFlow-768x432

Moreover, GoFlow provides many other functions. It is also like a ‘surfer Instagram’, where users can show their pictures and videos and attract/promote sponsors. Another section of the App is a platform to connect surf instructors with people that want to learn or improve their skills.

The Key Activities of the start-up are attracting users to increase the network effect and improving the app, which are also the main cost sources. The resources are the know-how to keep updating the app, and the $2 million rose by the start-up between 2015 and 2016 within 2 investment rounds (Crunchbase, 2018). GoFlow is free to download and does not charge for any of its functions because it is trying to attract more users to intensify the network effect. At the moment, its only revenue source is the advertising of the surfing apparel companies.

As a last note on the efficiency of the business model, the app does not have any legal burdens and it has methods in place to ensure that the contributions of the users meet a quality standard. For example, users gain a credibility status when their surf reports are reviewed as accurate by other people, and users with wrong intentions can be pointed out to be removed from the community.

The future of GoFlow

Online reviews claim the app is very user friendly and helpful, and it has around 100,000 downloads just over a year after the start-up raised its funding (Play.google.com, 2018). On the other hand, GoFlow is simply missing enough people to create a platform effect in many surf spots around the world. Nonetheless, it is showing its full potential in certain regions of California and Brazil, where plenty of active users enjoy the benefits of this app while co-creating value (Rizz, 2018). If GoFlow gains enough users across all the surfing regions of the world, it will be a huge platform which will attract not only advertisements from the surf apparel companies but also from other companies which try to identify their brand with surfing, such as Hollister, Jeep, Samsung, etc. Surfing is a continuously growing sport whose apparel industry alone is now estimated to have a value of $15 billion per year and is expected to keep growing (Beachapedia.org, 2018). Lastly, GoFlow is also trying to expand some of its platform functions to other outdoor sport and activities, such as skating or kite surfing.

 

 

References

Beachapedia.org. (2018). Surfonomics – Beachapedia. [online] Available at: http://www.beachapedia.org/Surfonomics [Accessed 16 Feb. 2018].

Crunchbase. (2018). goFlow Surf | Crunchbase. [online] Available at: https://www.crunchbase.com/organization/goflow-surf [Accessed 16 Feb. 2018].

Play.google.com. (2018). Cite a Website – Cite This For Me. [online] Available at: https://play.google.com/store/apps/details?id=goflow.app&hl=es [Accessed 16 Feb. 2018].

Rizz, G. (2018). goFlow: Share and Discover Waves with Your Friends. [online] The Inertia. Available at: https://www.theinertia.com/surf/goflow-establishing-a-social-surfing-community/ [Accessed 16 Feb. 2018].

 

Hip teens do(n’t) wear blue jeans


Did you know that each year, 135 million kilos of clothes are burned in the Netherlands alone? And that producing one regular pair of jeans usually takes up to 7000 liters of water? This makes fashion the second most polluting industry. Shocked yet? So was Bert van Son in 2013 when he founded MudJeans, which is why he decided to offer an alternative to fast fashion after 30 years in the industry. “Sounds nice”, you may think. But how, and more interestingly, at what price?

Take an eternal classic piece present in basically every wardrobe and combine it with two of the most important social trends of the last years – et voilà Bert’s idea. What I’m talking about? Leasable, environmental friendly produced jeans made of a combination of recycled and organic cotton as one of the newest interpretations of the circular economy and general sustainability awareness. Yes, you read right, leasable clothes. If it it works for your car, why not for your bottoms? For a monthly fee of €7,50 (for 12 months) and a one-time only payment of €20 to join the community, you get a pair of brand new jeans, which you can either chose to return after 12 months in exchange for a new pair or keep them until they are worn out and you’re sick of them.

Either way, MudJeans relies on you returning the jeans once you’re done with them – as a little bonus they even offer a €10 voucher (or one free month of leasing) for future use on the website and in their stores. And this even for jeans from other brands, as long as they are made of at least 96% cotton. This way, the company gets to upcycle and renew those jeans that are still in good condition to be reborn as a unique vintage pair, which is even named after its former owner (how cool is that?) and to recycle the less lucky ones to become brand new material for future seasons and models, i.e. the circular economy aspect. Normal return options for wrong sizes/ colors and even a free of charge repair service are also part of the game, and MudJeans even treats you to the shipping charges.

Bildschirmfoto 2018-02-16 um 13.32.55

And what’s in it for you?

A great pair of jeans is like a best friend: reliable, boosting your confidence when it needs uplifting and always has your back (literally). But finding the right one can be tricky (duhh) and once successful, you may discover that the washing machine is not a great match for your young love, or simply that you grow distant after some intense months together. And then?

This is where MudJeans comes into play: instead of hoarding these memories as blasts from the past and letting them rot in your closet, you get to refresh your wardrobe without feeling guilty or even lumbering your closet. And this at a reasonable price. In addition, you basically get to save the world with 78% less water consumption compared to a regular pair of jeans, also due to 60% organic cotton used and 40% recycled jeans material*. Oh, and did I mention that they’re vegan?

Sounds nice, but..

I know what you think. Green fashion? Really? But in this case, green doesn’t have to exclude stylish. On the contrary, the #mudjeans community is full of young, hip individuals caring about the environment and the way they consume – which should include us all. And with their vintage jeans they even offer you the possibility to own a completely unique pair, for example with patches and/ or the destroyed look which you can select after choosing a color and size. For €68. Whilst sustainable fashion used to be unaffordable and/or “basic” to say the least, times have changed. With MudJeans, you have the possibility to contribute to a sustainable way of looking good – at a normal price. Contrary to fast fashion you furthermore know about where your clothes are being produced – and not only in which factory, but who owns it, how it looks inside, how many women they employ and even how many holidays employees get:Bildschirmfoto 2018-02-16 um 15.33.52

And apart from three sites in north Africa, this even takes place in Europe.

Bildschirmfoto 2018-02-16 um 15.08.25

Excerpt from the #mudjeans community

Where can I get it?!

Ok, calm down. I know it’s a great idea – so go on www.mudjeans.eu or visit one of their hundreds stores from Iceland to Melbourne and try it out yourself!

Consumer driven pricing and personalization in the airline industry


There are several ways for companies to distinguish themselves in the way they price their products and services. They can choose for group pricing, which segments customers in groups that tend to behave similarly towards prices. For example, customers can be grouped based on age (such as student discount), gender or living area. Another option is to use versioning: to offer a product line and let customers decide on the trade-off between quality and price. The last form of differential pricing is perceived as difficult to achieve, namely personalized pricing. This means each individual customer receives a personal price for a specific product or service (Schofield, 2018). You may think that, in an offline world, no customer would accept personalized pricing. Can you imagine buying bread and cheese at a grocery store, and the person in front of you pays less for the exact same groceries? However, in an online world, this method has become a lot more feasible. Actually, there is a large chance you have already experienced personalized pricing online. One of the most obvious examples is eBay: one of the first companies to implement personalized pricing with their worldwide market place platform. However, it is important not to interpret personalized pricing as dynamic pricing. The main difference between these two forms of pricing is the variables that determine the final price. In dynamic pricing, the variables that are taken into account are, for example, time of the day, available supply or competitors’ prices (Baird, 2017). Personalized pricing has a customer focus and is interested in a specific customers’ behavior. Companies use data analytics to identify characteristics of the purchase environment or the customer’s profile and behavior that impact their willingness to pay. Bertini and Kounigsberg (2014) argue that the success of personalized pricing depends on at least the following three factors. First, abundant, high-quality data is needed. Also, the companies need to overcome various organizational challenges that come hand in hand with dedication to advanced analytics. Last, companies should be prepared to deal with customers who claim that the pricing approach is not fair.

Airline industry

One of the largest industries that divides consumer groups and price accordingly, is the airline industry. Different fares are charged for the exact same product, based on a market segment’s perceived ability to pay. For example, business travelers tend to pay more for their ticket as compared to leisure travelers, even when they fly the exact same route (Sumers, 2017). The key success is working to learn what the customer needs. Lufthansa, the largest European airline in teams of fleet size and passengers carried in 2017, is testing various approaches to better understand their customers. For example, they have deployed Bluetooth beacons and sensors, to be able to send out real time messages to their customers. When a targeted customer goes through security and has Bluetooth enabled on their phone, the personalization process is started. Or as Lufthansa calls it, the “Big Data Engine”. This program checks a traveler’s mobile boarding pass and looks at how much time the traveler has left before departure. If it is more than a set amount of time, the system examines the traveler’s profile in order to determine whether the customer would be interested in the “Miles and More” program, a discount for access to the airport lounge. This information is combined with the data from the sensors in the lounge, that register whether and how much space is left in the lounge, in real time. This lounge promotion program is part of SMILE., a companywide program that is dedicated to personalizing travel (Lufthansa, 2018). Companies can also use traveler data to offer two or more products or services as a package, increasing profits as it allows companies to appropriate a larger share of customer surplus, known as bundling (Hinterhuber and Liozu, 2014).

Future chances

Although airlines have quite an advanced personalized pricing and recommendation system, there is more potential to be revealed in the future. Lufthansa is working on larger projects that try to develop a Netflix-style algorithm that seeks to guess where its most frequent flyers would like to go to next (Sumers, 2017). The airline then offers a personalized price and ticket to this customer, and further develops its algorithm using customer data. For airlines to stay competitive, they need to keep a close eye on the current and future changes in the market. First of all, airline companies should fully embrace innovation. Data should be used not only to cut costs and to be able to deliver the cheapest flight tickets, but also to facilitate new customer experiences and deliver more personalized services. This leads to an increase in importance of brand loyalty, as consumers are more closely connected to the airline that is best at personalizing their prices and services. Last, the mobile wallet should be seen as the central hub for the digital consumers. Mobile transactions are a lot richer in terms of data collection and analysis, and it provides access to end-consumers, which can drive more sales (Popova, 2016)

 

Sources:

Baird, N. (2017) “Dynamic vs. Personalized Pricing”, https://www.rsrresearch.com/research/dynamic-vs-personalized-pricing, accessed at 13th of February 2018.

Bertini, M. and Koenigsberg, O. (2014) “When Customers Help Set Prices”, MITSloan Management Review, accessed at 14th of February 2018.

Hinterhuber, A. and Liozu, S. (2014) “Is innovation in pricing your next source of competitive advantage?” Elsevier Inc, accessed at 14th of February 2018.

Lufthansa (2018) “Official website”, http://www.lufthansa.com, accessed at 14th of February 2018.

Popova, N. (2016) “Has Personalization of Passenger Experience Entered a Critical Stage?”, https://skift.com/2016/12/29/has-personalization-of-passenger-experience-entered-a-critical-stage/, accessed at 14th of Febuary 2018.

Schofield, T. (2018) “Price discriminations: definition, types, and examples”, https://study.com/academy/lesson/price-discrimination-definition-types-examples.html, accessed at 13th of Febuary 2018.

Sumers, B. (2017) “Airlines Become More Sophisticated With Personalized Offers for Passengers”, https://skift.com/2017/02/03/airlines-become-more-sophisticated-with-personalized-offers-for-passengers/, accessed at 14th of February 2018.

How can I make my 1$ Million contest worth its money?


Innovation tournaments are an important tool of organizations today to tackle important innovation challenges. One of these examples is Netflix, who rewarded $1 million to the winner of their innovation tournament for improved movie recommendations. However, many managers struggle with the question how, and if, to influence the outcomes of these open innovation settings by providing in-process feedback. The study of Wooten & Ulrich (2017) aims to address this managerial challenge by investigating the effects of feedback on the participation and the outcome of innovation tournaments. (Wooten & Ulrich, 2017)

To investigate these effects are six field experiments conducted among two real-life online contest platforms. Each of the six field experiments performs a contest in search for a new company logo, is open to all participants, is unblind (all ideas and feedback are visible to all participants), and allows for multiple entry of participants. In each contest are the participants randomly selected to three different in-process feedback treatments. Consumers received either no feedback, ‘random’ feedback (feedback is not associated to the idea submitted), and direct feedback based on the submission made. The quality of each submitted idea is judged by a panel of consumers that fall within the stated target group. (Wooten & Ulrich, 2017)

One of the results that the researchers found was that contest participation can be boosted with in-process feedback, especially when the feedback is directed. However, the result indicated that this boost was little with respect to engaging new participants and mainly increased the number of entries. This boost in participation can be explained by increased engagement, as participants may feel more connected to the process. (Wooten & Ulrich, 2017)

The other results measured the outcomes of the contests and were evaluated in two ways, either on the quality of the ideas, or the variance in quality among the ideas. In line with Hildebrand, Herrmann & Landwehr (2013) either feedback provided resulted in idea generation that tends to move towards the average, resulting in less variance of quality. In addition, they found that the quality of ideas varied less in their second entry when a first submission was already of high quality. The quality measurement, however, did turned out to be affected by the type of feedback treatment that was used. The directed feedback treatment proved to be beneficial for the next ideas submitted, where random feedback actually resulted in a negative effect for subsequent submissions.  This effect was to be expected as Alexy, Criscuolo & Salter (2011) indicated that signalling information (of which feedback can be seen as such) can ensure that incoming ideas are of higher fit, and therefore might be judged as higher quality. (Wooten & Ulrich, 2017)

The question remains what do these result imply for the management community. As indicated earlier are managers struggling how, and if, to influence their innovation contests. This study provides valuable information to these managers on how they can support their specified targets. For example Alexi et al (2011) identified that some organizations use open innovation mainly to increase engagement, but do not focus on the outcomes of it due to the evaluation costs. This study provides valuable information that feedback increases the participation regardless of the feedback that is provided. This would mean that organizations can invest relatively little in providing feedback, as it can be meaningless, and still boost the participation to the contest. On the other hand this study is showing as well that if an organization is willing to invest time and effort, it can increase the quality of ideas by providing actual directed feedback to the ideas. (Wooten & Ulrich, 2017)

Although these results could be beneficial to organizations, manager should be aware of the weaknesses of this study. One of these weaknesses that this study experiences is that it measures solely the effects of daily feedback, and therefore didn’t incorporate different timeframes. Studies in other fields, such as retargeting adds, identified that customers did turn out to be sensitive to timeframes in which a response was received (Moriguchi et al., 2016). Future research should investigate if this applies in the field of innovation contests as well, but until that point should managers be cautious in choosing their feedback timeframes. Furthermore, the star rating feedback can be seen as a too simplistic method of providing feedback. It provides the advantages that results can be easily compared and that there is no ambiguity in the meaning of the feedback. The generalizability, however, is at stake for more technical contest in which the feedback actually is required to be more in-depth to give a sense of direction. Nevertheless, these weaknesses do not hamper the practical implications but should be used as a note of caution. (Wooten & Ulrich, 2017)

References:

Alexy, O., Criscuolo, P., & Salter, A. (2011). No soliciting: strategies for managing unsolicited innovative ideas. California Management Review, 54(3), 116-139.

Hildebrand, C., Häubl, G., Herrmann, A. and Landwehr, J.R. (2013). When social media can be bad for you: Community feedback stifles consumer creativity and reduces satisfaction with self-designed products. Information Systems Research, 24(1), 14-29.

Moriguchi, Takeshi and Xiong, Guiyang and Luo, Xueming (2016). Retargeting Ads for Shopping Cart Recovery: Evidence from Online Field Experiments.

Wooten, J. O., & Ulrich, K. T. (2017). Idea generation and the role of feedback: Evidence from field experiments with innovation tournaments. Production and Operations Management, 26(1), 80-99.

Image retrieved from:

Markets insider (2017). Netflix lost the biggest Emmy to Hulu  – but its customers couldn’t care less (NFLX), Retrieved fromhttp://markets.businessinsider.com/news/stocks/netflix-stock-price-emmy-2017-lost-to-hulu-but-its-customers-couldnt-care-less-2017-9-1002379405, 15-02-2018.

Philips HealthSuite: Digital Revolution


Healthcare Management Will Never Be The Same
Today people are more connected in more places than ever and we are becoming more active participants in our own health. At the same time healthcare providers are looking for deeper clinical insights and actionable information to make better decisions and improve patient outcomes. A digital revolution in healthcare might take place by the innovative launch of an online healthcare platform initiated by Philips. The Philips HealthSuite is an open platform of service capabilities and tools designed to inspire and enable the development of next generation connected health and wellness innovation. Imagine a mobile app paired with connected health devices that allows people managing diabetes to capture and monitor their diet, glucose, insulin and more, all from their smart phone. The same data can be shared with their healthcare providers so that they 1) get a better insight into the medical conditions 2) get reminders and alerts for medication and testing 3) have a program to support the persons individual treatment plan and 4) a curated social community of others managing diabetes. Unlike other cloud computing platforms, HealthSuite is purpose-build for healthcare. It’s health optimized infrastructure allows seemless integration with existing heath enterprise ecosystems (Philips.nl, 2018).

Philips HealthSuite Business Model
The highly innovative business model is based on connecting multiple stakeholders: pharmaceutical companies, patients and care professionals. Main goal is to establish and strengthen this medical network by digital connected devices from Philips.

  1. Where are the revenues coming from?
    Both pharmaceutical companies, patients and care professionals pay for using the online HealthSuite platform. Moreover, they have to buy the digital connected devices from Philips in order to be connected to the network. This is how Philips will mainly increase its revenue streams.
  2. What value is delivered to which markets?
    Philips’ main goal is to deliver customer value to people who need medical care, e.g. elderly or people with certain diseases. These customers will get more personalized care which they can monitor by themselves and which results in a more efficient treatment. After all, this treatment will be less stressful for patients since they are now able to stay in their own environment at home instead of going to the hospital. Patients thus get more personalized care which is the main value that Philips delivers to them.
    Secondly, Philip’s delivers value to the other side of the healthcare sector, i.e. the healthcare providers. By delivering an online platform and highly innovative infrastructure, it becomes less time-consuming for healthcare providers to monitor and treat their patients. Healthcare providers share their knowledge via the HeathSuite platform and can communicate with patients easier. Healthcare providers thus get more chance on sharing knowledge, provide efficient treatments and could thus increase their positive impact on patients via the digital platform.
  3. What costs are involved in delivering that value?
    Philips has to invest in research and development of digital connected devices and the online platform infrastructure. Another important cost item is the security of customer data which is very vulnerable in healthcare. Philips thus needs to invest in 1) improving the platform and innovating its products and 2) monitoring the data streams in order to protect data leakage.

CaptureFigure 1. HealthSuite Platform Stakeholders (Philips.com, 2018)

Theoretical Point-Of-View
Following Grönroos & Voima (2013), customer value creation depends on product and service interrelationships and product and service bundling. This resource integration-based view implies that customer satisfaction partly depends on its overall goodness of fit (Solomon and Buchanan, 1991). The Philips HealthSuite Platform does connect multiple stakeholders by providing a highly interactive platform where all stakeholders are connected and where both medical devices (products) and medical care (services) are bundled together. For example, a patient can monitor its own treatment at home while doctors can follow his or her results digitally. When needed, doctors can communicate with the patients and can provide them some extra treatments, such as medicines. Doctors will then switch to pharmacists via the platform to connect them with patients. In this case, Philips delivers customer value by interrelating products and services and bundling them together.
Following Karwatzki et al. (2017), individuals’ privacy valuation is a strong inhibitor of information provision in general. Following this line of reasoning, service providers need to align their service designs with consumers’ privacy preferences. Although Philips HealthSuite Business Model might be valuable in terms of revenues and costs, there is an important risk to consider. Medical data in healthcare industry is very sensitive and vulnerable. Patients may feel scared by sharing their personal data on such a highly intensive network. How will Philips elaborate on these dangers?

Capture 2Figure 2. Patient Relationship Management (Philips.com, 2018)

Call-to-action
A digital revolution in healthcare might take place by the innovative launch of an online healthcare platform initiated by Philips. Although this might be beneficial for many different stakeholders and delivers great customer value, we need to consider the ethical and legal dilemma’s of this revolution and protect customer privacy.

Are you curious?
In collaboration with Radbout University, Philips designed a digital application where patients can monitor their own diabetes and are able to share their results with professional doctors and other patients. The following video illustrates a prototype that could help patients with type-1 diabetes. Link to YouTube Video: HealthSuite Philips

Bibliography
Grönroos, C., & Voima, P. (2013). Critical service logic: making sense of value creation and co-creation. Journal of the academy of marketing science, 41(2), 133-150.

Karwatzki, S., Dytynko, O., Trenz, M., & Veit, D. (2017). Beyond the Personalization–Privacy Paradox: Privacy Valuation, Transparency Features, and Service Personalization. Journal Of Management Information Systems, 34(2), 369-400. doi:10.1080/07421222.2017.1334467.

Solomon, M. R., & Buchanan, B. (1991). A role-theoretic approach to product symbolism: mapping a consumption constellation. Journal of Business Research, 22(March), 95–109.

https://www.usa.philips.com/healthcare/innovation/about-health-suite

http://www.smarthealth.nl/trendition/2014/10/13/radboud-en-philips-werken-samen-aan-open-cloud-gebaseerd-zorgplatform/

Author
Daan Verpalen, Student MSc. Business Information Management, Erasmus University, Rotterdam School of Management, 2018 (studentnumber: 374199)

NASA: Crowdsourcing the Universe


NASA has always been considered a symbol of scientific progress. Its task, the study of the universe, is without doubt something that requires a lot of work, from all of us. NASA is aware of this and has taken one of its first steps into its own new frontier: Crowdsourcing. Since 2011, NASA has been using crowdsourcing to help them solve some of the problems that arise on the International Space Station (ISS), from coming up with solutions regarding the difficulties of astronauts exercising in space, to searching for new planets. All these crowdsourced initiatives, framed as challenges, draw people from all over the world, and to date, more than a dozen platforms exist to host the challenges.

In the past, NASA’s aversion to crowdsource has primarily been a result of its culture. NASA Senior Policy Advisor Amy Kaminski declared that “The greatest challenge the use of crowdsourcing methods at NASA has endured is in their relative newness and lack of familiarity within most of the agency. Scientists and engineers at NASA are used to particular ways of doing R&D, and this usually entails doing work within the agency or having it done by groups within academia or industry via grants, contracts, and cooperative agreements. Crowdsourcing involves opening up the R&D participant base, which introduces uncertainty even while opening new and exciting possibilities for finding solutions to problems of interest and accelerating research work”. However, NASA’s initial mental closure began to evolve with the arrival of both private space companies and the rapidly growing ambitions of politicians to reach the stars.

The New Crowdsourcing Frontier

In 2014, NASA Deputy Chief Technologist Jim Adams stated “NASA recognizes that crowdsourcing presents an extraordinary opportunity to inspire the development of transformative solutions by offering a means to engage with non-traditional sources of innovative ideas, all in a remarkably cost-effective way”. Adding to this, Steve Rader, Deputy Manager of the Centre of Excellence for Collaborative Innovation (CoECI) at NASA, explained “If you have large crowds of hundreds of thousands, or even millions of people in communities, it is likely that you actually have within those communities some very valuable high-skilled folks. The idea is that somebody who can solve your very difficult problem often does not have traditional experience”. In fact, a main reason why crowdsourcing works so well is that a lot of the time, solutions are found by people who do not have the same area of expertise as the problem.

Some of NASA’s biggest crowdsourcing initiatives were related to its desire to know more about the Solar System. For example, their lunar instruments crowdsourcing campaign focused on NASA’s desire to better understand the Moon. Similarly, its Mars campaign, aimed at college students, was designed to find resources on Mars. It started with the Mars Forum, which used IdeaScale’s technology to engage the crowd and develop ideas while answering questions. As it progressed, college students could build and submit their own robots that were able to autonomously perform mining tasks. These are just a few examples of the several crowdsourcing projects undertaken by NASA.

The last and still ongoing initiative, hosted by crowdsourcing program Zooniverse, is the hunt for Planet Nine – the large, mysterious body thought to lurk at the edge of our solar system –. Ordinary people have now joined the search, and they have made some very interesting findings. Through the project, dubbed “Planet 9 Search”, space enthusiasts and astronomers alike are given access to thousands of images taken by ANU’s SkyMapper telescope. Their task is to find anything that appears to move against the mostly motionless background of distant stars. In just three days, about 21,000 volunteers examined more than 100,000 images and classified more than 5 million objects. This is work that would have taken an astronomy PhD student four years, according to ANU astronomer Brad Tucker.

“Planet 9 Search” Project Advertisement 

Why NASA Crowdsources

Crowdsourcing can reduce costs, speed up project timelines, tap into crowd intelligence and creativity, and engage citizens at all levels of corporate and government processes. Many large corporations such as Microsoft, GE, AT&T, eBay, IBM, Apple and Sun (West 2003) and government agencies such as NASA (Lakhani, 2013), are increasing investment in crowdsourced solutions to gain the potential value of crowdsourcing as an open innovation platform, to both drive cost efficiencies and overcome resource constraints. Specifically regarding NASA, one of the aspects that makes all of this possible is that, while solving most problems requires significant scientific knowledge, the problem itself requires minimal integration into NASA’s internal operations.

How NASA uses crowdsourcing is enlightening. It allows NASA to try several different ideas at once and sort through those that work and those that do not. If you give it a thought, NASA has the kind of challenge that would make any person cringe: Get humanity beyond the sphere of Earth and explore the universe. And as if this was not enough, it all has to be done on a budget entirely controlled by politicians. This often means they get only one opportunity at constructing something, and adding to the pressure, if that device fails, the lives of astronauts could be at risk. So crowdsourcing lets them look carefully at ideas, both conventional and unique, and lets them narrow it down to the ones that work. With respect to the intellectual property (IP) of such ideas, organizers of challenges will sometimes reserve all rights to the IP of the knowledge/technology generated from the competition and applicants are always encouraged to read the terms and conditions of a challenge.

NASA’s crowdsourcing efforts are not just about finding the best idea, but also getting some of the best talent the country has to offer. It is no secret government agencies can have trouble getting the best and brightest people, and these competitions offer a look at some of the finest minds out there. Moreover, in addition to the value of ideas and talent, announcing winners and prizes is often used as a promotional and marketing tool for the organization, as it provides “good news” stories to share on Social Media. Even participants that do not win may see an increased investment in the company as a result of feeling a part of the process.

NASA 2.png

Example Tweet (Space Apps is a NASA incubator innovation program) 

From a contributor’s perspective, NASA’s crowdsourcing initiatives are appealing not only because of cash prizes, but also because they are designed towards building relationships with its contributors, possibly also offering some of them an employment contract at NASA. As teams compete not just for the cash purse, but also for the associated validation, prestige, and satisfaction that result from solving important problems, challenges can incentivize significant additional investment, leveraging the award’s impact. According to several contributors, the real reward is helping NASA solve a space/engineering problem and gaining critical thinking and skills that are highly sought by employers.

It is therefore clear that there is a lot other firms can learn from NASA’s crowdsourcing. It is much more than just a way to get external ideas: Innovation strategy can truly transform an organizational culture. As a matter of fact, to conclude, it can boldly be stated that crowdsourcing has been “one small step for its innovation strategy, one giant leap for NASA”.

 

References

“Crowdsourcing Innovation at NASA: Q&A with Amy Kaminski.” Dialogue Review (2017). Retrieved from http://dialoguereview.com/crowdsourcing-innovation-with-nasa-q-and-a/

Day, J. “How NASA is Crowdsourcing its Innovation Strategy.” Ideascale (2017). Retrieved from https://ideascale.com/24571/

Dodgson, L. “How to get involved with NASA: Crowdsourcing ideas for Mars houses, robots, and space poop.” Business Insider Nederland (2016). Retrieved from https://www.businessinsider.nl/how-to-get-involved-with-nasa-2016-11/?international=true&r=UK

Ford, Robert C., Brendan Richard, and Michael P. Ciuchta. “Crowdsourcing: A new way of employing non-employees?.” Business Horizons 58.4 (2015): 377-388.

“Implementation of Federal Prize Authority, Fiscal Year 2013 Progress Report.” (2014). Retrieved from https://obamawhitehouse.archives.gov/sites/default/files/fy2015_competes_prizes_report.pdf

Kaplan, S. “Citizen scientists may have located candidates for Planet Nine.” The Washington Post (2017). Retrieved from https://www.washingtonpost.com/news/speaking-of-science/wp/2017/04/04/citizen-scientists-may-have-located-candidates-for-planet-nine/?utm_term=.59d019290aa6

Lakhani, K. “The crowd as an innovation partner: Lessons from NASA, Harvard Medical School, and beyond.” Presentation at the TopCoder Roadshow, Johnson Space Center, Houston, TX (2013)

Pearson, D. “NASA’s Crowdsourcing Is Out Of This World.” (2015). Retrieved from https://smbp.uwaterloo.ca/2015/10/nasas-crowdsourcing-is-out-of-this-world/

“Problem Solving Approaches at NASA: Challenges, Prize Competitions, and Crowdsourcing.” Retrieved from https://www.nasa.gov/content/prizes-challenges-and-crowdsourcing-advance-nasa-s-mission-and-outreach

West, J. “How open is open enough?: Melding proprietary and open source platform strategies.” Research policy, 32.7 (2003): 1259-1285

Duolingo: Making money from your translations


Introduction

Most of you will know the app Duolingo. For those who don’t, it is a language-learning app that is used worldwide with 200 million users that can choose many languages to learn. Maybe you have tried to learn Spanish, French or another language on the app. What most people like about the app is the way it brings gamification to learning a language. Also, and not unimportant is that the app is free to use. But how does Duolingo make its money?

How did Duolingo start?

Duolingo started by a question raised by Luis von Ahn (the founder of RE-CAPTCHA and Duolingo) in 2009, wondering how the internet could be translated into every major language using the knowledge of a 100 million people for free?

People initially wondered why translations couldn’t just be done using computer translations. However, computer translations at this moment and even more so back in 2009 were not good enough to translate texts on the internet without mistakes. Besides, another option, using professional translators, would require an enormous investment that no firm is willing to pay for.

How did Duolingo manage to ‘recruit’ a 100 million people to translate the internet? The two main obstacles they faced is that there is a lack of bilinguals in the world and a lack of motivation to translate texts for free. They solved both issues with one solution.

Millions of people worldwide want to learn a new language and usually pay quite a hefty fee for doing so, either by paying for classes or for software. Duolingo lets users learn a new language for free using their app while simultaneously translating the web. As a beginning user, you’re given very simple sentences/words from the web which you must translate. The quality of your translation is then checked with the results of the translations of other users, and after a translation has been cross checked several times it gets combined into a verified translation. As you progress you will start getting more complicated texts which both helps the learner and Duolingo.

Monetization

The company was started with the concept of a fair business model for education. Currently the business model for education is that the student pays for his courses with fiat. However, many students worldwide don’t have the funds necessary to pay for education. As such they can pay in a different way by using the app and investing their time in learning the language. By doing so they create value for Duolingo by translating text on which they can monetize by selling the translations to companies who want them. Though this was the initial core revenue model, nowadays Duolingo is focusing more on gaining revenue from their Test Center Certification Program as it is not the mission of Duolingo to become a translation business but to stay an education company. Moving forward the new direction of Duolingo is emphasising on becoming an adaptive platform that tailors teaching to the strengths and weaknesses of individual learners driven by feedback from language students using the app. The ultimate goal for the company is to give every student access to a private virtual tutor with the use of their technology.

Sources:

https://techcrunch.com/2015/06/10/duolingo-raises-45-million-series-d-round-led-by-google-ventures-now-valued-at-470m/

www.duolingo.com

 

Peaks: investing your change


Do you feel demotivated seeing your interest fall to 0.05%? Would you like to invest your money but do you not know where to start? This is where Peaks comes in. Peaks believes that investing should be for everyone, not only for the happy few!

How does it work?
Peaks digitally collects your change by rounding up all your purchases to whole euros. Let’s assume you bought a coffee for €2,40, Peaks will then automatically transfer €0,60 to your investment account. If you don’t want to provide Peaks access to your account, you can also choose to transfer let’s say €1, – a day to your investment account. The Peaks App provides an easy overview of the amount saved and the current value of your investments. All you have to do is determine the amount of risk you would like to take choosing from four risk levels, where a higher risk corresponds to a higher expected return. The video below outlines the idea behind Peaks, although it’s in Dutch, I’m sure you’ll be able to follow.

Business model
The Peaks business model is based on joint profitability of both the investors and the company itself. The investors benefit since they are able to invest small amounts of money, which they would otherwise not have been able to invest due to the high one-off investment costs charged by funds (Peaks, 2017). Since many investors invest small amounts of money, Peaks can share investment costs among this large group.  Peaks itself on the other side, benefits from profits the investor makes in two ways. First, higher profit motivates investors to invest more money, resulting in an increase in fees being paid to Peaks. Secondly, higher profit motivates new customers to join the platform. With regard to switching costs, there are alternative investment platforms which accept small investments, such as ‘Semmie’. However, since Peaks is a startup financed by Rabobank, its integration with the Rabobank banking system differentiates it from competitors. According to Peaks, integration with other banks will follow soon. Hence, switching costs in terms of convenience are quite high for Rabobank customers yet slightly lower for customers of other banks.

In terms of institutional arrangements, power given to investors is limited. An interesting comparison is Dell computer. Research looked at the degree of user design customization that was optimal when selling a computer. Turns out that the majority of people actually had no idea about the technical specifications of a computer. Letting customers customize their computer using technical design parameters hence resulted in a ‘design defect’: a choice of design parameters that does not maximize user satisfaction (Randall T., 2005). Such design defects can be mitigated by using ‘needs based interfaces’: instead of asking would you like “512MB,DDR,333MHz 2 Dimms or a “512MB,DDR,333MHz 1 Dimm” memory they would ask “do you find the performance of program X important”. In a way, the same can be applied to investing in the stock market. Since the target group of Peaks is unfamiliar with investing money and has little knowledge about the financial market, they are given only a limited degree of freedom. The only question investors are asked is, ‘how much risk would you like to take’?  Based on this level of risk, four different funds are possible: mild, spicy, very spicy and hot. According to your risk preference, the ratio of stocks versus bonds is set automatically. Using this ‘needs based’ approach rather than a ‘parameter based’ approach limits the chance of a design defect occurring and hence increases user satisfaction (Randall T., 2005).

Looking at the institutional environment, the social norms dimension is particularly applicable. Peaks plays into the current movement of Corporate Social Responsibility by banning funds that invest in controversial businesses such as weapons, alcohol/tobacco production and pornography. In terms of polity and judiciary dimensions, Peaks has a permit and is being supervised by the Dutch Authority for Financial Markets. (Peaks, 2017)

Peaks 2

Sounds great! Why not invest?
Empowering everyone rather than just the happy few to get a return on their savings sounds like a great cause. Moreover, expected returns in terms of percentages sound decent. However, after deducting the yearly costs, returns of some of the portfolios become negative. Considering that people investing at Peaks usually have little affinity with investing money, having such low transparency is appalling. For example, if you would like to invest for a period of 1 year with an investment of €30 a month your returns would be as follows (Drabbe, 2018):

  • Mild portfolio: – €3,79
  • Spicy portfolio: – €2,02
  • Very Spicy portfolio: – €0,10
  • Hot portfolio: €1,82

In conclusion, if you want to make money using Peaks you’re going to have to invest more than €30,- a month, which contradicts the whole idea of investing your change. It’s a shame since I believe the idea has a lot of potential! What are your thoughts on the topic? Would you invest your money using Peaks?

Sources:

Carson S. J., D. T. (1999). Understanding Institutional Designs Within Marketing Value Systems. Journal of Marketing Vol 63, 115-130.

Drabbe, M. (2018). Peaks: beleggen met je wisselgeld. Retrieved from Consumentenbond: https://www.consumentenbond.nl/sparen-en-beleggen/peaks-beleggen-met-je-wisselgeld

Peaks. (2017). De app. Retrieved from Peaks: https://www.peaks.nl/de-app/

Randall T., T. C. (2005). Principles for User Design of Customized Products. California Management Review.

The world is your (peer)space


Want to throw an awesome party or work in a creative environment? But you cannot find the perfect space? Today, we live in a world where you can easily rent out your house, car or offer your skill set to others in exchange for a fee. So, why can’t you rent out your office space? Look no further. The app Peerspace will help you find your perfect space!

Tell me more

Peerspace, launched in 2014 and founded by Rony Chammas and Matt Bendett, is an online peer-to-peer marketplace that connects individuals and businesses to find one-of-a-kind spaces that otherwise go unused (Peerspace, 2018). The idea emerged when Rony was a student at NYU trying to find meeting places, and saw how much open and underutilized space there was (Bercovici, 2014). Finding spaces with benefits for both parties mostly happen through word-of-mouth or platforms as Craigslist, which is inefficient. Therefore, Peerspace’s mission is to find and book short-term space through an easy and transparent process (Peerspace, 2018). Whether looking for personal or professional space, Peerspace is the solution for finding unique locations for meet-ups, pop-ups, and classes to off-sites or brainstorming sessions. Currently, Peerspace is available in the USA and the start-up has raised 18 million dollars from funders (Magistretti, 2017). The popularity of the platform goes not unnoticed as 60,000 people from world-class companies (Google, Vice) attend a Peerspace booking every month (Peerspace, 2018).

 

Continue reading The world is your (peer)space

“Tinder for leftovers”, or how OLIO helps you find the best match for your unwanted food


You bought too much food this week but tomorrow you go on vacation, so you don’t know what to do with it? Or have you changed your mind for what to cook and want to get rid of the food you have in your fridge but you feel bad throwing it away? Maybe your unwanted veggies will be your next-door neighbor’s treasure but you never talked to them before so you think it might be awkward offering them your food? Worry no more, OLIO will solve your problem and save your food from being wasted!

What is it?

OLIO is an app that started the food sharing revolution in 2015. Classified as the “tinder for leftovers” (Vaughan, 2017), OLIO helps you connect with people around you, as well as with local businesses in order to share your unwanted food with others, instead of throwing it away. The idea for developing the app struck Tessa Cook in December 2014 while she was packing up her apartment in Switzerland, ready to move back to the UK. As it normally happens at moments like this, she had food left in her fridge that she couldn’t finish but also did not want to throw away. After realizing how much food ends up being thrown away in similar situations, she teamed up with a friend of hers, Saacha Celestial-One and the two of them started working on the idea of OLIO. The vision guiding the two women was to create a world in which “nothing of value goes to waste, and every person has enough to eat” (Olioex.com, 2018). Even for the short period of its existence, the app has become a huge success. Currently it has more than quarter million users in 41 countries worldwide, and nearly half a million food pieces have been saved since the app started.

How does it work? 

The way OLIO works is simple and intuitive. Each user has a profile page where they can put a photo and briefly describe who they are. After setting up their profile, app users just need to add a photo and description of the item they want to sell, as well as specify from where and when the item can be picked up. The app has a browsing catalog with all items available near the user. Once the users have found a product they like, they simply need to request it and arrange convenient time to pick it up with the seller via a private message. Users can also rate and review other users based on the experience they have had with them. This also facilitates a safer sharing process, as users can decide for themselves with whom to share their food based on the other’s profile and ratings.

Reducing food waste through shared economy

OLIO is an example of how shared economy can be used to tackle one of the major problems societies face today: food waste. Studies shows that as much as 50% of the food produced globally is never eaten and is thrown away, making the food waste a $1 trillion problem (Olioex.com, 2018). By providing a C2C platform that connects people who want to share their food, the app does not only help in cutting food waste, but also brings people, especially neighbors, together and builds a food sharing community. The founders initially did not raise any revenues, as the main goal was to grow their network and gain more popularity. Currently, the revenue-based business model is followed, as the app charges commission fees for those items that are paid directly through the app or for donations made through the app. Nevertheless, buyers and sellers are also given the opportunity to just use the app to connect with each other without making any payment transactions through the app. In these cases, sellers can post their unwanted food items for free, while buyers derive a benefit by getting food items for free or for  super low prices (Nair, 2016). In this way joint profitability is achieved for all parties involved.

What’s next?

After seeing how successful their OLIO initiative has become, the founders took a next step by teaming up with two charities, Feedback and FareShare in order to increase the reach of their fighting-food-waste efforts. A new addition to the app allows users to add not only food, but also other household items and to request a pay-as-much-as-you-like donation for one of the charities (Olioex.com, 2018). The founders have also started collaborations with more than 11,000 volunteers who have the mission to spread OLIO’s vision and goals around the world.

The food sharing revolution that OLIO has started is now also embraced by other companies. Leftoverswap, Foodsharing.de and Eatro are among the other apps offering similar ways in which people can share their food. Despite the fact that competition for OLIO is growing, the rise in other initiatives supporting food sharing can only be seen as something positive, as it brings society a step further in its fight with food waste!

 

References:

Nair, P. (2016). Food waste: there’s an app for that. [online] Growth Business. Available at: http://www.growthbusiness.co.uk/food-waste-theres-app-2543941/ [Accessed 2 Feb. 2018].

OLIO. (2018). About. [online] Available at: https://olioex.com/about/ [Accessed 2 Feb. 2018].

OLIO. (2018). Charitable donations. [online] Available at: https://olioex.com/charitable-fundraising/ [Accessed 2 Feb. 2018]

Vaughan, P. (2017). The app that’s kickstarting a food-sharing revolution. [online] Huck Magazine. Available at: http://www.huckmagazine.com/art-and-culture/olio-app-food-free-socially-conscious-waste-sharing/ [Accessed 2 Feb. 2018].

GE crowdsourcing platform – Let’s set the collective brain on fire!


We live in a fast-paced digital world and it can be challenging for companies to keep up with the speed of today’s ever changing digital era. However, new information technologies have also empowered more technologically savvy businesses by giving them new means to operate, promote their products and services, and engage with customers. One company that is constantly taking advantage of these new tools is General Electric (GE), an enterprise who has succeeded in part because of its willingness to take risks and embrace innovative technologies. The most recent example of this mindset is Fuse, their new open innovation platform that launched in late 2016. It is basically an open crowdsourcing platform, which allows users from all around the world to collaborate with each other and work with GE engineers to solve meaningful technical challenges.

How does Fuse work?

The first step is for the Fuse team to translate GE customers’ needs and “pain points” into projects on the Fuse platform. Whereas most projects are straightforward and thus directly released in the form of challenges, some appear to be less clear and hence are uploaded on the “Brainstorming Section” of the Fuse platform as “potential challenges”. These potential challenges include a (rather extensive) description of the problem to be tackled as well as precise requirements for the solution, and contributors are asked (1) whether they would be interested in such a challenge, and (2) what additional questions the Fuse team should answer before launching the challenge. Based on the feedback received, the Fuse team might decide on further actions. When released, each individual challenge comes with a description of the problem, clear requirements for solution submissions, judging criteria, a timeline, a description of the prizes for the winners, and the official rules of the competition (including property right issues).

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Example of a Fuse challenge

In a second step, contributors from all around the world are invited to submit innovative contributions. Note that even though anyone can sign up and take part in challenges, the very technical nature of the challenges serves as a skills-based filtering mechanism as only people with a certain degree of knowledge in engineering would be able to understand the challenges. Once on the Fuse platform, anyone can have access to all the relevant information related to the challenges, however only registered users are allowed to submit entries. During the whole duration of the challenge, contributors can use the discussion board to brainstorm together or ask the competition holders questions. Not only does the Fuse team rapidly answer these questions and provide regular feedback/input, but they also organize “live Q&A sessions”, during which the participants can submit questions that are answered live in a video feed.

 The final step is for the Fuse team to evaluate the submissions, select the winners (generally the three best entries) and allocate the money prizes. The interesting entries are also forwarded to GE’s technical team, where they are further developed into implementable solutions.

Efficiency Criteria

In less than two years, GE succeeded in creating an innovative community and successful products from their contributions (Picklett, 2017). This was made possible for the following reasons: combination of extrinsic and intrinsic incentives, good management, and well-structured governance including the mechanisms recommended by Blohm et al. (2018).

From a contributor’s perspective, the Fuse platform and its challenges are interesting not only because of the cash prizes, but also because it is designed towards building long-term relationships with its contributors. For instance, competition winners actually have an opportunity to further work with GE engineers on implementing their designs (Kloberdanz, 2017). In addition, there is also an attractive physical part to Fuse projects, which consists in a micro-factory in Chicago designed for rapid prototyping, small-batch manufacturing, and modular experimentation (Davis, 2017). This faculty will be open to contributors and can constitute an incentive for them to become part of the Fuse community as it is a good opportunity to bring their ideas to life, work with GE professionals, and meet like-minded innovators. Finally, the Fuse challenges are also a good opportunity for contributors to collaborate with other brilliant mind, expand their business network, build their professional reputation, and gain recognition from their peers.

From GE’s perspective, the Fuse platform is a new source of innovative and ideas, which can speed up content creation, cut R&D costs for the company, and provide GE with an opportunity to spot talents who might be valuable additions to their team. But how is GE able to overcome the challenges inherent to crowdsourcing (e.g. huge quantity, low quality, free-riding behaviour, risks of sharing information)? First, due to the technical nature of the Fuse challenges, the clearly defined guidelines provided to the participants, and the rapid feedback/additional inputs provided during the competition, GE ensures that only a manageable number entries of a certain quality are submitted, thus facilitating the evaluation process. The platform is also clear about the transfer of PI rights, which avoids troubles along the way. Second, for most challenges, challenge, entries are private and only viewable by the creator, admins, and judging panel. As a result, GE is able to avoid free-riding behaviours. However, contributors are still able to communicate with (and help) each-other via the discussion board, and the Fuse team makes sure to encourage the discussion with feedback and additional information, hence allowing contributors to still learn from each other. Finally, even though opening up GE’s internal workings/information of some products in order to run these challenges can be risky, the company acknowledges that “there are certain risks you just have to roll with if you want to make progress and that willingness to take those risks is what makes this exciting.” (Davis, 2017). This quotes shows that GE understands the need to willingly take risks in order to continuously transform the company and, so far, Fuse seems to be worth it as GE reunited more than 8000 contributor successfully implemented several ideas generated by the platform in less than a year (Davis, 2017).

In summary, the joint profitability criterion is met as the Fuse platform creates value for both GE and its contributors. Furthermore, the costs linked to this innovative business model are relatively low as the Fuse team only consists of 4 employees based in Chicago (Pickett, 2017). However, as the platform matures, hosts more challenges, and attracts more contributors one can assume that the number of employees will have to increase. Still, the costs-benefits ratio should remain interesting compared to doing everything in-house. Finally, the legal concerns are taken care of thanks to inclusion of PI agreements in the official rules of the Fuse challenges, and the social norm dimension is met as GE is a well-known, reputable brand, hence building trust with contributors.

References

Blohm, I., Zogaj, S., Bretschneider, U., & Leimeister, J. M. (2018). How to Manage Crowdsourcing Platforms Effectively?. California Management Review, 60(2), 122-149.

Davis, B. (2017). How GE is using co-creation as part of its digital transformation. Retrieved from https://econsultancy.com/blog/68902-how-ge-is-using-co-creation-as-part-of-its-digital-transformation

Fuse. (2018). Fuse Platform. Retrieved from https://www.fuse.ge.com

Kloberdanz, K. (2017). Working The Crowd: This Fuse Will Set The Collective Brain On Fire. Retrieved from: https://www.ge.com/reports/working-crowd-fuse-will-set-collective-brain-fire/

Pickett, L. (2017). GE Fuse’s open innovation platform invites NDT professionals to co-create solutions. Retrieved from https://www.qualitymag.com/articles/94304-ge-fuses-open-innovation-platform-invites-ndt-professionals-to-co-create-solutions

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