Submission behavior and its implications for success in unblind innovation contests

Today more than ever, innovation and a constant search for novel solutions with economic value, is vital to strengthen competitiveness of firms (Bockstedt, Druehl, & Mishra, 2015). In the recent years, there has been an emergence of cost-effective “innovation contests”. Innovation contests are a way to invite individuals to submit their ideas or solutions to a specified problem. These contests are used to leverage the creativity, skills and intelligence of thousands of individuals on the internet (Füller, Hutter, Hautz, & Matzler, 2014). Innovation contests can either be ‘blind’ or ‘unblind’. In blind contests, the visibility of the submission posted is limited only to the individual who submitted it and the contest holder (Wooten & Ulrich, 2015). Wooten and Ulrich (2015) define unblind contests as contests where others’ submissions are fully visible to participants while the contest is still live. Seeing others’ submissions including the feedback from the contest holder, could have an influence on the submission behavior of a participant. Figure 1 shows the difference between blind and unblind contests on Logomyway.com, a popular innovation contest website which matches graphic designers with organizations in need of a new logo. As unblind contests are quite new and not that well-explored in the literature, Bockstedt, Druehl and Mishra (2016) analyze the effect of unblind contests by examining the implications of participants’ submission behavior for contest outcomes.

Figure 1a. Unblind contest on Logomyway.com

Figure 1b. Adapted version of blind contest on Logomyway.com

Theoretical background
Logomyway.com is a consumer co-production network (Dellaert, 2018) in which the consumer co-production is high and the unit of co-production is the network, as the contest holders have the main benefit of this platform (Dellaert, 2018). In that way, value creation takes place in the interaction between customers and the platform (Gronroos & Voima, 2013). A logo is a useful product to crowdsource as it contains a clear question, is easy to implement, there are no obvious skills needed to create a logo and there is no established best-practice (Tsekouras, 2019).
Logomyway.com creates benefits on social needs of the contestants, as their ideas are seen, they can be part of a community. Through receiving positive feedback, or even winning a contest, their social needs are met, leading to higher self-esteem. Moreover, contestants can have a monetary motivation and it is also fun and instructive to create logos. The four main reasons for organizations to use crowdsourcing are to solve problems, generate ideas, outsource tasks or pooling information (Tsekouras, 2019). Logomyway.com especially focuses on idea generation and outsourcing the task of designing a logo. In this way, the contest holders gain benefits by lowering branding-costs (Tsekouras, 2019), gathering insights in the product perception of the consumer and having the choice in picking from a broad range of possible logos / solutions.

Methodology & Findings

In order to take a closer look at how contestants solve problems in unblind innovation contests, a case study was conducted. By using a HTML scraping tool, researchers collected data from 1024 logo-design contests hosted on Logomyway.com. In addition to contest data, profile information and historical performance of contestants was gathered. As contestants were not aware of this data collection, their submission behavior was not biased.  Results of this study show how submission behaviour could impact contestant’s success in unblind innovation contests. First of all, a lower position of first submission is associated with a greater likelihood of success due to greater potential for obtaining intermediate evaluations from contest holders, shaping the contest holder’s taste and participating actively in the contest.

Secondly, the number of submissions have a positive impact on the likelihood of success up to a certain point. Beyond this point, marginal knowledge gained about the problem specification and the contest holder’s taste diminishes as more submissions are handed in (Figure 2). Therefore, contestants should focus their efforts on high quality submissions as a quantity-quality trade-off was indicated.

Figure 2. Graph on the likelihood of success x number of submissions

Furthermore, contestants who participated in a contest for a longer period were more likely to succeed as it allows them, via emerging information structure, to observe and assess their submissions with respect to the competition and update their understanding of contest holder’s requirements (Figure 3).

Figure 3. Submission participation time frame

Strengths

A main strength of this study is that it examines unblind submissions in an innovation contest, whereas previous studies mainly focused on examining blind contests (Bockstedt et al., 2016). As unblind contests are on the rise due to their feedback and co-learning system, knowledge about their way of working is invaluable for academic literature. Besides filling a gap in academic literature, outcomes may provide substantial benefits for the contest holders in obtaining the design results they seek. Another strength is the methodological approach. Namely, the contestants subjected to the study are unaware of their participation and therefore participant bias will decrease and internal validation will increase (Smith & Noble, 2014). Lastly, Logomyway.com handles a “winner takes it all” policy in which they define first place as ‘success’. The study however, deploys a top-3 listing based on the judging process as a definer of success, which accounts for a broader scope of definition.

Managerial implications

By optimizing the value system design, the joint payoff of the partners involved will be maximized (Carson et al., 1999). Therefore, Logomyway.com should invest in motivating contestants on different levels. First of all, logomyway.com, and other platforms alike, should motivate contestants to submit their creations early. This could be achieved by installing a rewarding incentive for early submission and by dividing the contest in separate phases. There will be both social (e.g. social capital or self image) and monetary rewards after each phase, until the final product is build. Secondly, they should promote participation for a longer period of time, by keeping contestants up to date about the contest. By doing so, contestants will likely feel more motivated to participate, possibly resulting in more submissions per contest. Lastly, Logomyway.com should motivate contestants to only submit after receiving additional valuable knowledge about the contest and previous designs, by setting a boundary amount of submissions of one per two days. This will improve quality of the designs, which in turn is favourable for the contest holder and co-contestants who can learn from the quality designs and implement it into their own designs.

References

Bockstedt, J., Druehl, C., & Mishra, A. (2015). Problem-solving effort and success in innovation contests: The role of national wealth and national culture. Journal of Operations Management, 36, 187-200.

Bockstedt, J., Druehl, C., & Mishra, A. (2016). Heterogeneous Submission Behavior and its Implications for Success in Innovation Contests with Public Submissions. Production and Operations Management, 25(7), 1157-1176.

Carson, S., Devinney, T., Dowling, G., & John, G. (1999). Understanding Institutional

Designs within Marketing Value Systems. Journal Of Marketing, 63, 115. doi: 10.2307/1252106

Dellaert, B.G.C. 2018. The consumer production journey: marketing to consumers as co-producers  in the sharing economy. Journal  of the Academy  of Marketing Science, forthcoming, 1-17.

Füller, J., Hutter, K., Hautz, J., & Matzler, K. (2014). User Roles and Contributions in Innovation-Contest Communities. Journal of Management Information Systems, 31(1), 272-307.

Gronroos, Chr. & 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.

Smith, J., & Noble, H. (2014). Bias in research. Evidence Based Nursing, 17(4), 100-101. doi: 10.1136/eb-2014-101946

Tsekouras, D. (2019) Customer Centric Digital Commerce Lecture 1 & Lecture 3 [Lecture 1 &3]

Wooten, J. O., & Ulrich, K. T. (2015). The Impact of Visibility in Innovation Tournaments: Evidence From Field Experiments. Wharton Faculty Research, 1-36.

A review of the article “The Value of Marketing Crowdsourced New Products as Such: Evidence from Two Randomized Field Experiments.” by Nishikawa H., Schreier M., Fuchs C. and Ogawa S (2017).

Maybe you have realised it yourself; in just a few years, nearly all muesli bars in your local supermarket have been labeled as organic. Or when you are standing in front of the twenty different pastas offered, your eyes are immediately drawn to the most italian named and looking packaging. Of course, these are marketing tools, used to show a certain quality and lure you into buying this product. The next new marketing buzzword, as identified by Nishikawa et al. (2017), might very well be customer-ideated.

Most prior research is focussed on the positive effects of wisdom of the crowds and how the customers know the pains and gains of a product best (Garcia Martinez & Walton, 2014). In this paper, Nishikawa et al. (2017) pay attention to the psychological value of crowdsourcing product development and the potential positive effects of marketing on sales.

Crowdsourcing: Objective vs. Psychological Argument

The research question the authors ask themselves is how customers perceive crowdsourced new products and whether the inferences they make affect their product choices. Quite some research has been conducted on the objective arguments of crowdsourcing new products (Bayus 2013; Poetz and Schreier 2012; Stephen, Zubcsek, and Goldenberg 2016). The general finding is that crowdsourcing can lead to promising new ideas. However, this can only happen under certain conditions. As such, there should be a necessary match between user expertise and design task complexity. Next, the size and composition of the crowd plays an important role. In comparison, the psychological argument which makes this research paper unique, argues that “customer-ideated” should be used as a cue that sells. Specifically, the authors predict that actively marketing the source of design can increase the product market performance. This because of if-then linkages between information users pick up and conclusions.

To test this prediction in the real world, the authors conducted a field experiment. By labeling crowdsourced new products as “customer-ideated”, the effect on the product market performance increased by 17%. However, the experiment holds some limitations. Namely, the sample size is too small, and only one product type is used. Therefore, the authors test their prediction in a second field experiment, using two product types and a larger sample size. Moreover, the authors wanted to test if the effect of “customer-ideated” is not because of more specific information on the product display. Again, the effect was positive.

After having established their findings in the real world, the researchers wanted to validate the results and performed two control studies. The first study had the aim to verify if it was actually the customer-ideated cue that caused the increase in sales. This study consisted of an online customer survey in Japan in which participants were randomly assigned to a few different conditions. They were asked which of the two products they preferred and had to explain the reason for their preference. The outcome  of this control study further strengthens the conclusion found in the field experiment, namely: consumers prefer crowd-sourced new products, if recognizable as such, because they infer these products to be 1) of higher quality and 2) better at addressing consumers’ needs.

The aim of the second control study was to measure the quality inference of consumers. It consisted of a control test in Europe in which participants were randomly assigned to either right or wrong information about the source of ideation. As a result, the participants chose the product labeled as ‘customer ideated’ more often and labeled this product as having higher quality. This outcome confirms earlier findings; products that are labeled as ‘customer-ideated’ are believed to be better because they are more useful to customers and more effectively address their needs.

My thousand dollar (customer-ideated) designer bag

The article has a new take on the use of crowdsourcing for product labeling to create marketing advantages. The fact that this has been studied in different environments, adds to the prove that the effect can be observed for certain products. However, the question remains whether this still applies for other product categories such as luxury brands and high-tech products. For luxury brands, such as Louis Vuitton, customers pay a high premium for exclusively designed products. A label inferring that customers designed the product might lower the value of the bag as the designer him or herself did not put its ‘magic touch’ to it. Furthermore, for high-tech products, consumers might not have the right knowledge to make valuable contributions to the product development process. Therefore, a label indicated the customer contribution might indicate lesser value to other customers who do not feel like their peers can grasp the complexity of the product to design it (Schweitzer et al., 2012).

How about business operations?

The results of the research point out a 17 percent growth in sales, which indicates that it is worthwhile investing in labeling your products as crowdsources. Nonetheless, the results might be offset by the increase in operational costs of including customer in the ideation process. Whether costs of including the customer into the process are higher (additional steps in the process) or lower (lower investment in designers) is not included in the research. Therefore it is not known whether the 17 percent increase is high enough to cover potential costs.

A future of customer-ideated products

Considering how these results will influence what our future would look like is not that easy. However, logically if the effect is positive, more and more producers will start labeling the product as customer-ideated. Once it becomes more common, the uniqueness effect might be lessened, cancelling out the increase in sales. In this scenario, the way of putting the message will become increasingly important for producers to differentiate in the looks of their product. This includes using different wordings and color palettes to avoid sameness. And who knows, once all products are labeled as customer-ideated, the label designer-ideated might conquer our hearts.

References

Bayus, Barry L. (2013), “Crowdsourcing New Product Ideas over Time: An Analysis of the Dell IdeaStorm Community,” Management Science, 59 (1), 226–44.

Garcia Martinez, M., Walton, B. (2014), “The wisdom of crowds: The potential of online communities as a tool for data analysis” Technovation, 34 (4), 203-214.

Girotra, Karan, Christian Terwiesch, and Karl T. Ulrich (2010), “Idea Generation and the Quality of the Best Idea.,” Management Science, 56 (4), 591–605.

Poetz, Marion K., and Martin Schreier (2012), “The Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?” Journal of Product Innovation Management, 29 (2), 245–56.

Stephen, Andrew T., Peter P. Zubcsek, and Jacob Goldenberg (2016), “Lower Connectivity Is Better: The Effects of Network Structure on Redundancy of Ideas and Customer Innovativeness in Interdependent Ideation Tasks,” Journal of Marketing Research, 53 (April), 263–79.

Schweitzer, F. M., Buchinger, W., Gassmann, O., & Obrist, M. (2012). Crowdsourcing: Leveraging Innovation through Online Idea Competitions. Research-Technology Management, 55(3), 32–38.