As it might not be the “average” business model transformation we have witnessed over the past years, I firmly believe that this concept deserves a spot on a website that calls itself; Consumer Value Creation. I am not talking about another application that helps us find hedonic goods or that makes our life just a bit more easier. I am talking about a system that can shape our future by providing an incentive to transact and use green energy. I am talking about SolarCoin.

What is it?

The SolarCoin is based on the same concept as its older brother the BitCoin, namely blockchain technologies. After having experienced a difficult phase in the Gartners’ hype cycle, the potential of the Bitcoin has been higher than ever, and that is not only because of the growing demand from China. And yes I am aware of the recent plunge of the BitCoin. However, this is only a matter of growing pains (BusinesInsider, 2017).

Since it is evident that the middle class is not putting up longer with third party (political) power, the potential of these blockchain driven concepts are enormous. In case of the SolarCoin, anyone that produces solar energy could claim one SolarCoin per megawatt. Since the coin is currently worth around €0,11 it does not seems that attractive. However, it is expected that the coin will hit the €30 in the next couple of years which will provide people an incentive to start producing green energy (MO, 2016). Figure 1 shows the grant process of the solar coin.

 

Efficiency Criteria

When assessing the current energy market, several problems come to mind. Of course, the major problem is the hunt for clean renewable energy, but also issues like third-party seizure, taxes, tracking, transaction costs, risks and theft should not be underestimated (Stanford, 2010). As these issues are widely acknowledged, the number of start-ups in energy land, which are using the SolarCoins as a currency, is booming. Power Ledger, for instance, is a Perth start-up that eliminates the current difficulties with one single solution. According to its CEO, this company aims to enable producers and consumers to trade their (green) energy directly, saving money, hassle and maximizing the use of rooftop solar. Carros (a village in southern-France) is another example of the use of blockchain in renewable energy. Note here that (1) not a single energy company is involved, (2) since it is private generated energy, initially no taxes will be paid, (3) there are no transaction costs, (4) risks and thefts are minimized and finally (5) because of this, people get stimulated to use and generate rather green energy instead of traditional energy (Cleantechnica, 2016) (GE, 2017) Figure 2 shows the village of Carros as an example and provides a simple overview of how this system could be designed.

Peer-to-Peer

Despite the fact that this could be a silver bullet for our energy problem, I believe that the traditional incubents will keep on playing a role in the market. It is likely that companies like Power Ledger and currencies like SolarCoin will not replace anything. Where the blockchain technologies cover the transaction part of energy, it will remain unknown how questions like “Did those people deliver the power they promised they’d deliver?” and “Did they consume the power they promised they’d deliver?” would be answered (Microgridknowledge, 2016). The utilities industry is conservative for a reason; people are desperately relying on it.

Agencies like SolarCoin, Power Ledger and Carros are changing the way we deal with energy. Emphasis will mainly be put on the rich and middle-class communities since this is another form of peer-to-peer trading. In that perspective, the growing middle class in Asia and Latin America might provide us with a solution in terms of climate change instead of a problem.

References

https://microgridknowledge.com/blockchain-energy-trading/

http://cs.stanford.edu/people/eroberts/cs201/projects/2010-11/DigitalCurrencies/advantages/index.html

https://cleantechnica.com/2016/08/13/blockchain-based-peer-peer-solar-energy-trading-trialed-perth/

http://www.mo.be/nieuws/betrouwbaar-geld-voor-zonne-energie

https://www.businessinsider.nl/bitcoin-price-plunges-suddenly-and-sharply-march-8-2017-2017-3/?international=true&r=US

http://www.geenergyconnections.com/inspire/blockchain-how-renewable-energy-taking-page-bitcoin

 

 

Don’t want to spend a lot of money on an Uber but still want to be faster than a transportation bus that is stuck in traffic the whole day? You should get in a Chariot van! According to CEO Vahabzadeh, “Chariot is a great way to take the risk off our table and get the community involved in putting together better commuting options for themselves” (Techcrunch, 2015).

At first sight Chariot was ‘just another’ transportation service that managed 15-passenger vans in Austin and the San Francisco Bay Area. Passengers could pay for one-time-only rides but they could also go for the subscription option whereas the number of rides is unlimited. However, there is one major difference in comparison to the traditional transport companies. Where the routes of the traditional busses are getting determined by the city councils and the firms themselves, Chariot is using the wisdom of the crowd in order to determine the best routes. This new business model has led to an expansive growth of the company over the past years, and they are not willing to stop (Techcrunch, 2017).

In the Bay Area for instance, public transportation during rush hour is slow, overcrowded and not satisfactory in terms of convenience. At Charity commuters get the option to put forward a new route through the platform that seems more attractive than the existing routes. If at least 14 other people feel the same about this route, Charity will consider taking up the route in their portfolio, making the public transport more flexible than ever. The service at this moment is such a solution that in the end it could funnel away 30% of the public transport revenue alone. However, the San Francisco supervisors are in such a difficult situation that they have no other choice than supporting this startup (Techcrunch, 2015).

Now your question is; why doesn’t Chariot just use services like Waze whereas traffic and other information is just obtained by other road users? (which is another form of wisdom of the crowd by the way). Well, knowing about the particular traffic situation is one thing, but it is even more valuable if you know what person will benefit from this information. A commuter reveals his/her profile by sending information to Chariot that not only will be used to dodge traffic, but it also will be used to lay connections with other commuters. This way it would be possible to deliver the same personalized experience, for a big group of people. As shown in figure 2, this is therefore one of the purest forms of Value Co-Creation (Saarijärvi et al., 2013).

Given the fact that the idea itself is quite simple, Chariot was certainly not the only one offering these services. Uber, Lyft, Night School, Leap and Loup are among those companies that are forced out of the market Chariot is operating in. Whereas the latter three were failing due to financial issues, Uber and Lyft were suffering from a strange loophole. Because Chariot is using vans instead of busses, they are more likely to receive licenses, insurances and other requirements according to California law (Forbes, 2015). However, as this problem seems quite solvable (when the concept gets rolled out to other states/countries or when Uber is going to use vans as well), it is expected that also in this industry the strongest competitor will survive. Now, since Ford Motor Company recently has acquired Chariot, it might come to an interesting fight.

References.

Forbes (2015) forbes.com. Available at: https://www.forbes.com/sites/scottbeyer/2015/09/08/chariot-wins-first-round-of-san-franciscos-private-transit-battle/#52c6dfa063e6. Accessed on 01/03/2017

Saarijärvi, H., Kannan, P. K., & Kuusela, H. (2013). Value co-creation: theoretical approaches and practical implications. European Business Review, 25(1), 6-19.

TechCrunch (2017) techcrunch.com. Available at: https://techcrunch.com/2017/01/09/fords-chariot-ride-sharing-service-will-expand-to-8-cities-in-2017/ Accessed on 01/03/2017

TechCrunch (2015) techcrunch.com. Available at: https://techcrunch.com/2015/01/26/chariot-new-route/ Accessed on 01/03/2017

 

 

The increasing bargaining power of the consumer enabled the concept of crowdsourcing communities to grow substantially in the past years. The power to the people has resulted not only in a lot of success for companies like Facebook, which is a crowdsourcing community in the form of an open source platform. Also, firms like Netflix and Starbucks seem to profit heavily by listening to the ideas of loyal customers. However, in the latter case this payoff only lasts for a short time due to the fact that ideators are doomed to repeat their success idea, which results in a decline of creativity.

Skeptics would wonder if these communities are a valid solution for the ongoing innovation problems companies are dealing with nowadays. Like Henry Ford said: “If I had asked people what they wanted, they would have said faster horses”. Isn’t the consumer an ignorant man that is just there to buy our products? The answer is no. Crowdsourcing, and in particular crowdsourcing communities, enables companies to stay in direct contact with their consumers, to gain better and cheaper information and consequently to become a great innovator (Bayus, 2013). The question here is not whether crowdsourcing is a good thing (because it is). The question is how to ensure that people will participate and more importantly, how to ensure that these people stay connected to the community over time.

Ideally, companies receive a continuous stream of quality ideas that will keep them competitive. Bayus (2013) acknowledged this issue by primarily focusing on the idea generator rather than the idea itself. By assessing the dynamics the Dell Ideastorm Community, a ‘typical’ idea submission platform, it appeared that the majority of the ideas came from one-time-only ideators, which is validated by Bockstedt et al. (2016). However, if the focus is on successful, actual implemented, ideas, it appeared that the serial ideators were in the vast majority.

The importance of the fact that these serial ideators should be interacting more with the company lies in the fact that their subsequent ideas tend to be less innovative and creative (Bayus, 2013). Given that a submission is popular and therefore implemented, ideators get the assumption that this is the right way to generate ideas and therefore it is unlikely that they will deviate from their path. This ‘cognitive fixation’ has a negative influence on the most talented idea generators, which is a shame for both parties.

Luckily Bayus (2013) provided us with a silver bullet by analyzing the community Dell has created. It appeared that this negative effect on the talented ideators practically disappeared when people got the opportunity to review and criticize ideas from others as well, which emphasizes the importance of communities. The higher the diversity of the ideas people are dealing with, the lower the effect of cognitive fixation is. It is acknowledgeable that this is the way to keep the most creative and promising ideators loyal, diverse and motivated, which consequently will lead to greater innovations!

I am not saying that ideators repeatedly should fire any idea whenever they want. I am saying that the firms should adopt successful ideators in a cooperative manner. This study showed that a diverse set of “out-of-the-box” ideas, if managed correctly (Alexy et al., 2012), is of great importance for companies that aspire to be our new pioneers of innovation. Now the only way to properly manage innovations is to bring them in-house and this is something that companies also should consider when it comes to their best ideators.

 

References:

Alexy, O., Criscuolo, P., & Salter, A. (2012). Managing unsolicited ideas for R&D. California Management Review, 54(3), 116-139.

Barry L. Bayus, (2013) Crowdsourcing New Product Ideas over Time: An Analysis of the Dell IdeaStorm Community. Management Science 59(1):226-244.

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