Tag Archives: business case

Teqoia: the platform for experts, not stars

March 11, 2019 joranbakema Leave a comment

Work has changed dramatically through digitalization. New forms of organizing work are gaining more and more attention. The emergence of peer-to-peer platforms, collectively known as the “platform economy,” has enabled people to collaboratively connect with each other and thereby link the demand for labour with its supply. Consumers have so far enthusiastically adopted the services offered by firms such as Uber, Lyft, and TaskRabbit (Zervas et al. 2017). These business operate as gig-economy platforms, formally defined as digital, on-demand platforms that enable a flexible work arrangement (Burtch et al. 2018).

The challenges of gig platforms

Although there are a lot of advantages for these gig platforms, there are also a number of challenges that lie ahead. One of the biggest challenges is to keep the work offered on the platform relevant. For the three abovementioned platforms, this is not really the case, because the work that has to be done is not that complex. However, for platforms as UpWork, where experts can offer their work, this is becoming increasingly challenging. When these online crowd experts want to have a viable long-term career option, they must be able to grow and continually refresh their skills (Suzuki et al. 2016).

The downside of stars

Traditional workplaces make use of on the job training and internships to enable employees to develop their skills while providing financial support. Crowd workers, however, are disincentivized from learning new skills, because the time they spent on learning they are not working, which reduces income. Even if a worker does spend time learning new skills, platforms do not make it easy for the investment to pay off, as it is difficult to get hired for new skills. This is caused by the fact that most platforms are based on review systems, as ratings and reviews (Gupta et al. 2015). Users of platforms increasingly rely on online opinions and experiences shared by fellow users when deciding what products to purchase, or who to hire for a job (Shen et al. 2015). Because gig economy platforms have no ratings for the workers in their new skill areas, the possibility to get hired decreases. As a result, the skills of many workers remain static, and workers today often view these platforms as places to seek temporary jobs for their already existing skills, rather than as marketplaces for long-term career development (Suzuki et al. 2016). With online work is capable of expanding many full-time jobs, new business opportunities arise that integrate crowd work and career development.

Teqoia

Since last year this gap in the market has been filled by the platform Teqoia IT Solutions, which has the aim to match supply and demand of labor. Teqoia makes technical knowledge and capacity of highly trained and specialized IT staff accessible to (inter)national clients. It has a clear focus on local for local, learning & development, and entrepreneurship. In the right balance this approach results in an optimal result for all parties involved and there is a win-win situation in which the platforms, workers and suppliers reinforce each other (Teqoia 2019).

The platform doesn’t work with review systems but gives a guarantee that each individual on the platform does meet a certain standard. To realize that promise, they have the Teqoia academy, where different trainings are given to ensure that they keep up with the current changes in technology. Teqoia also offers the possibility to follow the teqoia masterclass to improve their services. This is a traineeship that, through various training courses and modules, ensures that the worker has the required skills within seven months.

Business case

Like most gig economy platforms, the financial model of Teqoia is based on a commission fee for mediating between supply and demand. In terms of strategy, Teqoia is pretty unique. It has positioned itself between traditional employment agencies and purely digital gig platforms; the reasonably fixed group of workers, the training and the quality guarantee of a traditional business, but with self employed workers, as on many different gig platforms. Which ensures a more lean business, which is a main advantage over the traditional businesses (Aloisi 2015).

Downsides of Teqoia

So, the main strengths of Teqoia are their lean business model and their quality guarantee. However, the organization of a platform in this way also has its drawbacks. One of the downsides of this approach is that Teqoia can’t make use of network effects, as most platforms do, because all the workers must be tested and trained to meet the quality requirements. Other platforms have grown exponentially, partly because of the two-sided network effects. This implies that when the number of users one side of the platform increases, the other side will be attracted more as well. In the end, a greater number of users increases the value to each and thus the total value of the platform (Eisenmann et al. 2011).Another, more straightforward downside has to do with the cost of testing and training workers. Most gig platforms charge a commission fee of around the 15% (Aloisi 2015), which should therefore be higher at Teqoia to cover the costs of training and testing.

Future of gig work

The use of review systems to measure quality of workers does not improve the expertise of gig workers on the long term. Therefore, other business models, as Teqoia, arise. However, Teqoia faces some challenges, the idea of not looking at reviews and star-ratings anymore but providing a quality label for workers seems plausible. So I think that the future of experts gig platforms no longer focusses on stars, but on expertise.

For those who are interested in the platform (unfortunately in Dutch only):

References

Aloisi, A. (2015). Commoditized workers: Case study research on labor law issues arising from a set of on-demand/gig economy platforms. Comp. Lab. L. & Pol’y J., 37, 653.

Burtch, G., Carnahan, S., & Greenwood, B. N. (2018). Can you gig it? An empirical examination of the gig economy and entrepreneurial activity. Management Science, 64(12), 5497-5520.

Eisenmann, T., Parker, G., & Van Alstyne, M. (2011). Platform envelopment. Strategic Management Journal, 32(12), 1270-1285.

Gupta, N., Martin, D., Hanrahan, B. V., & O’Neill, J. (2014). Turk-life in India. In Proceedings of the 18th International Conference on Supporting Group Work (pp. 1-11).

Shen, W., Hu, Y. J., & Ulmer, J. R. (2015). Competing for Attention: An Empirical Study of Online Reviewers’ Strategic Behavior. Mis Quarterly, 39(3), 683-696.

Suzuki, R., Salehi, N., Lam, M. S., Marroquin, J. C., & Bernstein, M. S. (2016). Atelier: Repurposing expert crowdsourcing tasks as micro-internships. In Proceedings of the 2016 CHI conference on human factors in computing systems (pp. 2645-2656).

Teqoia (2019). Jouw toekomst. Via: https://teqoia.com/jouw-toekomst/het-begint-bij-jou/

Zervas, G., Proserpio, D., & Byers, J. W. (2017). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of marketing research, 54(5), 687-705.

Business Case

Everyone can become an Instagram influencer

March 11, 2019 francisgroeneveld Leave a comment

If you are active on Instagram, you probably are familiar with so called ‘influencers’. Influencers are people that are extremely active on Instagram and have built a certain credibility in a specific industry. Influencers post a lot of authentic content on Instagram and have often generated large numbers of engaged followers who trust them (Pixlee, 2019). Influencers have the power to affect the opinions and purchase decisions of their followers and more and more businesses are starting to work with them. The influencers post content featuring certain brands in exchange for money or gifts.

In the last couple of years, the influencer marketing industry has grown immensely. In the image below you can see that the industry value this year will be double compared to the value of two years ago (Influencer MarketingHub, 2019).

Why is this marketing channel so popular? On Instagram, people have endless choices on what they would like to see. This is creating a problem for businesses as it is getting harder to reach their desirable audience. Influencer marketing offers a solution because businesses can target large audiences by letting influencers promote their product to their followers (Mathew, 2018). Nowadays consumers are becoming more sceptical about ads created by brands so another advantage of Instagram marketing is the fact that followers trust the influencers (Mathew, 2018).

Influencer marketing might be the perfect solution for large, international businesses who have a large amount of funds but it might be too expensive for small, local businesses. Popular influencers also have an audience consisting from people all over the world which means that the reach is too broad. There is some research that even suggests that a cooperation with influencers that have a large number of followers can be negative for a business as it decreases the perceived uniqueness of the business (De Veirman, Cauberghe & Hudders, 2017)

As a result, a growing amount of businesses is starting to work with micro-influencers, which are influencers with less than 3000 followers. It is less expensive to collaborate with them, they have higher follower engagement and businesses can specifically target the niche that they operate in (Influencer MarketingHub, 2019).

So, Influencer marketing is on the rise, but there is also countermovement that argues that people reached a peak of trust in online influencers. Influencers are moving closer towards traditional media brands. The distinction between sponsorships and authentic recommendations is becoming vague and people do not know who to trust (Quoc, 2017). This is where Cirkle comes in and offers a solution.

What is Cirkle?

Think about your own Instagram behaviour, you’ve probably posted a picture of yourself and your friends in your favourite restaurant or in your new clothes just for fun. But what if you could get a reward for doing it?

Cirkle is a Dutch marketing- and loyalty platform where customers or visitors can promote and recommend their favourite businesses in exchange for discount on their next purchase. Cirkle’s vision is that everybody counts; it doesn’t matter whether you have 10 or 10.000 followers. Everyone on Instagram has a unique reach which can be valuable to businesses. Their idea is that businesses can outsource their social media marketing via the Cirkle platform to their own customers (Cirkle, 2019a).

How does it work for users?

Instagram users can download the Cirkle app and view which businesses participate on the platform. Whenever users create authentic content featuring one of the participating businesses, they can post this content on their Instagram via the Cirkle app and recommend it to their own ‘inner circle’. The Cirkle app will make sure that the user will enclose the right tags and hashtags so the content is on point. As a reward for promoting the business, the user receives a discount. The discount depends on the reach and engagement on the user’s Instagram profile. The user can spend this discount the next time he or she visits the store (Cirkle, 2019b). So basically, users can get rewards for fun pictures they would normally post just by using the Cirkle app.

How does it work for businesses?

Businesses can register themselves on the platform for free and whenever someone posts content via the Cirkle app, the businesses pay a fixed fee of two euros. Cirkle helps businesses to increase their brand awareness and to create more instore traffic. Their own customers or visitors recommend the business on their Instagram which means that businesses reach new potential customers. Next to this, Cirkle also encourages customers or visitors to return to the business as they have discount that they can spend there. Cirkle also enables businesses to accurately track their Instagram presence by offering them data insights via their own dashboard. This way, companies can keep track of their social media presence. In order to make the platform accessible to all businesses, businesses can set a maximum amount of discount that a Cirkle user can earn. This way, it will be affordable for all businesses (Cirkle, 2019c).

I think that the platform is an innovative way to respond to the influencer marketing trend. Users can get rewarded for posting pictures they would post anyway which sounds extremely good. Businesses can outsource their marketing to their own customers, reach a larger audience and gets more loyal customers. Next to this, people on Instagram will get recommendations from their friends who they probably trust more than an influencer who was paid to promote the product.

Currently, Cirkle is still testing their platform so it is not yet available to the public. From 15 March 2019, it will be available to the public and around 500 businesses spread across Amsterdam and Rotterdam already joined the platform. So, if you’ve always dreamed of becoming an Instagram influencer, this is your chance!

Sources:

Cirkle (2019a) Over ons. Accessed via https://www.cirkle.social/about-cirkle/

Cirkle (2019b) User. Accessed via https://www.cirkle.social/user/

Cirkle (2019c) Business. Accessed via https://www.cirkle.social/business/

De Veirman, M., Cauberghe, V., & Hudders, L. (2017). Marketing through Instagram influencers: the impact of number of followers and product divergence on brand attitude. International Journal of Advertising, 36(5), 798-828.

Influencer MarketingHub (2019). Influencer Marketing Benchmark Report: 2019. Accessed via https://influencermarketinghub.com/IM_Benchmark_Report_2019.pdf

Mathew, J (2018, 30 July). Understanding Influencer Marketing And Why It Is So Effective. Accessed via https://www.forbes.com/sites/theyec/2018/07/30/understanding-influencer-marketing-and-why-it-is-so-effective/#d35a9b871a94

Pixlee (2019). What is a social media influencer? Accessed via https://www.pixlee.com/definitions/definition-social-media-influencer

Quoc, M. (2017, 15 Dec) Millenials Are Losing Trust in Online Influencers. Here’s What Marketers Can Do. Accessed via https://medium.com/dealspotr/influencer-marketing-tips-millennials-trust-da946f0bce18

Articles

Moovit – The future of urban mobility?

February 24, 2019 denisceric Leave a comment

By Denis Ceric, 410688

While public transport itself has not changed that much in recent years, the way in which we find information about public transport has. Here in the Netherlands, I can not imagine taking the public transport without looking at either Google Maps or 9292. However, there might soon be an addition to this small list, going by the name of Moovit.

Moovit is a “leading Mobility as a Service provider and the world’s #1 transit app” (Moovit, 2019a). Moovit combines information from public transport operators with live information gathered from their passionate user community. This user community has been dubbed the “Mooviter Community” and helps mapping and maintaining local transit information in cities that could otherwise not be served by the app (Moovit, s.d.). Moovit themselves dub this community the “Wikipedia of Transit” (Moovit, 2019a). Moovit has over 330 million users across Android, iOS and the web, their app is fully localized to 44 languages and they offer their service in over 2,700 cities across 87 countries (Moovit, 2019a). In addition to this, their community of Mooviters counts over 500,000 members, with another 150 employees working for Moovit itself (Moovit, 2019a).

Why Moovit over alternatives?

This large community is one of the largest reasons why Moovit is likely to surpass alternatives such as Google Maps on a global scale. The CEO presented that Moovit amasses up to 500 million anonymized data points a day from transit riders, which they then combine with data gathered from their Mooviter community (Moovit, 2017a). Additionally, thanks to this data, they offer precise and hyper-local transit data that allows them to provide real-time data for thousands of transit operators worldwide in cities where Google does not, such as Hong Kong, Istanbul, Madrid or even Paris (Moovit, 2017a). Next to this, where Google plots (bus) stops using official transit data, Moovit combines this data with their own technology and community of users to avoid inaccuracies (Moovit, 2017a). The community not only allows Moovit to gather the precise location of the stops where people enter, they also sends active reports about their travel experience, such as bus congestion levels, cleanliness and more (Moovit, 2017b). This combination of data leads to the following analytics:

Figure 1: Moovit Urban Mobility Analytics. Source: (Moovit, 2019b)

This provides for an easy to use app for consumers, but all this data gathered also provides a clear business case for Moovit to convince cities to support their app. With these analytics, Moovit offers cities more reliable data than traditional surveys, faster analysis, granular insights and a rich visualization (Moovit, 2019b).

The future of Moovit

All of the above has played a large in securing a total funding of $131.5 million over four funding series, including a number of notable companies such as Intel Capital and BMW i Ventures (Crunchbase, 2019). Despite such a large amount of funding, they have not gathered much revenue to this date. However, this might soon change, as the founder of the app notes that they will be switching from a focus on growth and coverage to making money through selling data (Solomon, 2018). Building on this, they have already closed deals with multiple cities in Europe and are in talks with cities in Latin America (Solomon, 2018). In addition to this, they are preparing for the future of autonomous vehicles in cities and believe that they will play an instrumental part in making cities ready for these autonomous vehicles (Solomon, 2018).

However, whether this passionate user community will remain as passionate when Moovit starts selling all of their data and becomes the Facebook of public transport has to be seen. Amidst growing privacy concerns across the globe, Moovit will have to tread carefully in order to not suffer from backlash. Moovit, however, themselves appear to be aware of this and are taking user privacy seriously. To use Moovit, you are not required to make an account, they are GDPR compliant, all data is anonymized and all analytics are anonymized as well (Meydad, 2019). As such, what the future holds for Moovit, nobody really knows. But, it does not appear as if they will be slowing down their growth as long as they continue the way they have been.

Link to theory

Looking at the four types of crowdsourcing, I argue that Moovit’s app is mostly a form of information pooling but also has some open collaboration elements (Blohm, Zogaj, Bretschneider & Leimeister, 2018). The tools provided by Moovit make it quite easy for Mooviters to provide the data required to map the public transport in a specific town or city, thereby creating quite simple tasks for the Mooviters (Blohm et al., 2018). While the end result provided by Moovit in the app is quite complex, the individual contributions of the community are not, as most data is simply gathered through the app and not much else has to be done in these cases (similar to Google Maps, a prime example of information pooling). However, as mentioned earlier, the community does provide added value by taking into account individual user contributions, such as pictures of bus stops and reports of their travel experience (Moovit, 2017b).

Looking at the recommendations of Blohm et al. (2018) for governance mechanisms for information pooling crowdsourcing platforms, Moovit follows most of them. They provide clear contribution requirements, they have a demographic-based allocation of tasks (as users map the area around them), they make use of reputation systems and framing (e.g. by recognizing extraordinary Mooviters as “Ambassadors” and providing them with goodies and opportunities to meet other ambassadors at exclusive events), and by providing tutorials (Moovit, 2018). Next to this, recommendations by Dellaert (2019) can also be found in Moovit, as the consumers of the map are often also co-producers. The increase in customers’ joint payoff at a network level is most relevant (Dellaert, 2019). The establishment of the community itself, rather than having each user of the app contribute, is an example of this. By encouraging users to join this network and become active in the network, greater utility for the total network is achieved (Dellaert, 2019).

Efficiency criteria

Lastly, I will briefly evaluate this crowdsourcing approach using the efficiency criteria. I believe the joint profitability is currently efficient, but there could be a greater recognition of their Mooviters and for the future, monetary rewards might be in place. Currently, I believe it is efficient as Moovit is not really generating any revenue so it would not make much sense to use their funding to pay their community, but once the selling of data gathered from this community is implemented throughout the platform, it would make sense to share some of this with these Mooviters, whose data is being sold.

In terms of feasibility of required reallocations, I believe it would be relatively difficult to establish the necessary institutional arrangements and institutional environment for most competitors. This is mainly due to the fact that location-based data is gathered continuously, which could lead to large privacy concerns and trust issues among users. Additionally, the largest strength of Moovit’s crowdsourcing approach now is the large network of Mooviters they have built, and the network effects that come with such a large network (in addition to the map they have built using this network). As such, this would only really be feasible for a large company with an established network and the ability to adhere to the instutional arrangements and environment, such as, for example, Google.

References

Blohm, I., Zogaj, S., Bretschneider, U. , Leimeister, J.M. (2018): How to Manage Crowdsourcing Platforms Effectively? in: California Management Review, Vol 60, Issue 2, p. 122-149, doi: 10.1177/0008125617738255

Crunchbase (2019). Moovit. Retrieved February 23, 2019 from https://www.crunchbase.com/organization/moovitapp#section-company-tech-stack-by-siftery

Dellaert, B. G. (2019). The consumer production journey: marketing to consumers as co-producers in the sharing economy. Journal of the Academy of Marketing Science, 1-17.

Meydad, Y. (2019). Supply and demand: how data collection and analysis became the key to unlocking MaaS. Retrieved February 24, 2019 from https://www.intelligenttransport.com/transport-articles/74591/transport-data-maas-solutions/

Moovit (2017a). Moovit “Eclipses” Better-Known Services Like Google Maps. Retrieved February 23, 2019 from https://moovitapp.com/blog/moovit-versus-google/

Moovit (2017b). Moovit Press Factsheet November 2018. Retrieved February 23, 2019 from https://docs.wixstatic.com/ugd/c729fe_82d633f838e44572a129d75ce2e31eaa.pdf

Moovit (2018). Commuter Kate: How To Make A Difference In Your Community. Retrieved February 24, 2019 from https://moovitapp.com/blog/community-crowdsourcing/

Moovit (2019a). About. Retrieved February 23, 2019 from https://www.company.moovit.com/about

Moovit (2019b). Origin-Destination Visualizer. Retrieved February 24, 2019 from https://www.solutions.moovit.com/origin-destination-visualizer

Moovit (s.d.). Join the Mooviter Community. Retrieved February 23, 2019 from https://editor.moovitapp.com/web/community

Solomon, S. (2018). Israeli founder of Moovit app sees himself as the ‘Marco Polo of transit’. Retrieved February 24, 2019 from https://www.timesofisrael.com/israeli-founder-of-moovit-app-sees-himself-as-the-marco-polo-of-transit/

Articles

Lost in Translation?

May 3, 2015 jiaxinhu Leave a comment

“Gengo, the Uber for translations.”

Youtube. Magento. Tripadvisor. Alibaba.com. These companies are using the service of Gengo, namely translations powered by its community. This platform provides professional human translation service and has completed already one million translation jobs. Founded in 2008 and by the end of 2013, Gengo has translated 150 million words. Everyone can join the community and sign up as a translator. Currently, 34 languages and 58 language pairs are available to bilinguals with a network of 14,702 translators across 114 different countries.

Gengo makes it very simple for diverse companies to integrate high-quality language translation through an API. As a homeworker, it is very easy to connect to Gengo and begin translating as a freelancer. The platform allows translators to work and manage their own time similar to Uber. Another neat feature is the education of beginning translators in order to increase the overall quality. In general, Gengo delivers a strong message and an innovative service.

This blog continues the awareness of crowdsourcing and the sharing economy. Like Uber, Gengo is a gamechanger by making an impact in the translation world. Not to mention, this company has already collected $ 24.2 millions from 23 investors. People-powered translation lowers the barrier to make an impact in the society by translating texts.

However, there are some disadvantages. Until recently, translation crowdsourcing already exists that is merely on voluntary basis for NGOs. Here comes Gengo, which mediates between the supply and demand of translators. They aim to turn it commercial and make translations affordable for companies. All bilinguals can join as a translator very easily without prior qualifications. But the most interesting part is the differentiation of ‘pro’ translators and ‘standard’ translators. The firm describes the pro level where accuracy is key whereas the standard level is focused on non-critical texts, such as blog posts and articles. Likewise the pay rates are differentiated. Usually, a professional translator asks $0.25 per word, but the pro-level and standard-level translators from Gengo receive $0.08 and $0.03 per word respectively. The workload and the related pay rate are perceived as unbalanced since many reviewers on Glassdoor.com have complained about the unreasonable pay compared to their effort.

Basically, Gengo enables businesses to scale quickly and to connect with a global audience. The platform let translators easily read and translate with one click. Not only the ease of the platform is important, the quality of human translation makes the texts easier to comprehend and more natural to read. Yet, the translators feel unsatisfied with their compensation. All thing considered, would you join as a Gengo translator?

Sources:

https://www.gengo.com

https://www.crunchbase.com/organization/gengo

http://www.glassdoor.com/Reviews/Gengo-Reviews-E778513.htm

Business Case, News

Tesla Powerwall: you and me can live off the utility grid

May 3, 2015 tlangenberg Leave a comment

Last week, Tesla announced the so-called Powerwall. The Powerwall is a home battery that can be charged via solar panels or via the grid when utility is low. By using the Powerwall, electricity can be stored when the sun is out and it can be used when electricity demand is the highest. Furthermore, the battery can be used as an emergency backup in a power failure as well. [1] Tesla also announced the Powerpack, which “is designed to scale infinitely”[2] and is targeted to (large) businesses. However this article will focus on the Powerwall to see whether it’s you and me can that can add value to a more sustainable world.

So, how is the electricity demand distributed? First, in the morning there is a peak in the amount of electricity used. You are not having breakfast in the dark, right? Then, during the day the electricity demand is decreasing rapidly. For instance, less light is being used and devices are using their batteries (thing about mobile phones). Last, the electricity demand is going sky high in the evening. Think about your own evenings: you are using your oven to prepare your meal, then you’re switching on your TV to watch a movie and then you put on multiple lamps to brighten your living room. Tesla’s Powerwall can store electricity produced during the day, to meet the electricity demand peak in the evening hours.

Electricity Demand Distribution. Source: http://www.teslamotors.com/powerwall?utm_campaign=&utm_source=direct-ts.la&utm_medium=ts.la-twitter&utm_content=awesm-inlinelinkcreator

By using Tesla’s brand new product in combination with solar panels, consumers can become fully independent from the utility grid. Consumers can start adding value to the world’s energy efficiency usage themselves! There is no need to point fingers at the big energy providers; you can take action yourself. But does the Powerwall provide the perfect solution for all of us? No, not yet. In an article about the Powerwall, Christopher Helman (Forbes) describes that Tesla’s latest innovation doesn’t make economic sense unless your house is solar panelled and entirely of the grid.[3]

Although the Powerwall isn’t economically feasible yet, the US government announced 30% federal tax credits of the battery price. Furthermore, California has a 60% be-a-fool-to-not-try-this rebate.[4] These rebates will increase the adoption of the Powerwall among people who can afford it and who are willing to live more sustainable. The income generated via the early adaptors can be used for further development of the batteries, which then will lead to decreasing prices. Besides, prices for solar panels are decreasing as quickly as batteries nowadays. Therefore, there is a huge potential market for Tesla: more and more consumers can start adding value to the worlds energy efficiency.

Battery and Solar costs. Source: http://www.bloomberg.com/news/articles/2015-05-01/tesla-s-powerwall-event-the-11-most-important-facts

To conclude, the introduction of Tesla’s Powerwall allows consumers to start living completely off the grid. Although it’s not economically feasible for the entire world yet, it’s a great first step. Early adaptors and innovation will lead to decreasing prices and more Powerwall users. So from today, let’s start adding value to a more sustainable world together!

[1] http://www.teslamotors.com/powerwall?utm_campaign=&utm_source=direct-ts.la&utm_medium=ts.la-twitter&utm_content=awesm-inlinelinkcreator

[2] Elon Musk during the Tesla Powerwall launch event in Los Angeles on April 30th, 2015: http://www.teslamotors.com/powerwall?utm_campaign=&utm_source=direct-ts.la&utm_medium=ts.la-twitter&utm_content=awesm-inlinelinkcreator

[3] http://www.forbes.com/sites/christopherhelman/2015/05/01/why-teslas-powerwall-is-just-another-toy-for-rich-green-people/

[4] http://www.extremetech.com/extreme/204702-what-the-tesla-powerwall-home-battery-means-inexpensive-time-shifting-for-solar-energy

Business Case

“Style your Smart”: How a not so successful car brand learned us how to successfully generate ideas.

May 3, 2015 331597eb Leave a comment

Five years ago, when consumer co-creation was not yet the hot topic it is today, Smart launched a very successful co-creation contest. Do you still remember Smart? The little city-cars, which eventually were not the success that the company had hoped for. In 2010 they launched a co-creation contest in which consumers could participate and make a design for the Smart car. They did not only engage their consumers in making the best design, but also engaged their consumers in a little game so they could help decide which design was the best. This approach of gamification did not only help Smart to engage more customers in this co-creation process, but also led to high quality designs and have strengthen the bond between consumers and the brand Smart.

For companies co-creation has a lot of advantages. Consumers create value for companies and products. Consumers express their needs, they help the company with (creative) ideas and companies can engage their consumers in deciding which product to launch next. In February 2010, Smart launched the co-creation contest in which consumers could upload their design for the Smart car. The winner could win a monetary reward of $5000. They made an internet platform with a design tool so that even consumers with no experience in designing cars could participate. Besides that, they directly involved customers with the platform by allowing participants to comment on designs and rate different designs. In only a few months, 10.000 members uploaded 50.000 designs to the website. There were 600.000 design evaluations and 27.000 comments.

Smart did not only engage their consumers in designing the Smart, but they also thought: Why not let our consumers choose which design they like the most? Unfortunately, these decision-making processes are often perceived as boring by the public. Therefore Smart decided to gamify this contest. Gamification is a way to make things like an idea generating contest more appealing for the public. Games are often perceived as fun so they are a good way to get more engagement from consumers.

After the expert jury filtered out most of the designs, Smart opened the Matching game. If a participant entered the matching game he/she was connected to a different participant. When the game started they were both shown a few designs. The players were then asked to click on the design of which they thought that their co-player would consider it as the best design. If they both choose the same design, they had a Match and they received points. Despite the fact that Smart never promised any reward for the amount of points a player received, in total 2000 games have been played. This led to the following winning design:

If we look at the statistics we can conclude that Smart launched a very successful co-creation contest which had a monetary reward of only $5000. Is the only trick they used to include gamification of the process? Or do you think that gamification is absolutely not a guarantee for succes?

References:
http://mercedes-benz-blog.blogspot.nl/2010/01/open-innovation-smart-launches-design.html
http://media.daimler.com/dcmedia/0-921-658944-1-1278743-1-0-1-0-0-0-0-0-0-1-0-0-0-0-0.html
http://www.smart-design-contest.com
http://www.autoblog.com/2010/01/06/daimler-encourages-you-to-design-your-own-smart-results-vary/

Articles

Yeloha- Meet the Airbnb of Solar Power

May 3, 2015 kjungnitsch Leave a comment

In the past few years, we having been moving towards a sharing economy- a place where IT allows people and companies to distribute and share goods and services that are in excess capacity (Hamari et al, 2015). Multisided market platforms like Airbnb and Uber have led this trend, creating quickly growing businesses that have other parties provide the product or service and are disrupting existing industries. One industry that has not yet been affected by this growing movement is the energy industry-until now. Enter Yeloha, an Israeli startup that is looking to shake up the US energy market.

Yeloha, has been described as being “like Airbnb, but for solar power.” The company hopes to rapidly expand thanks to a peer-to-peer model. Yeloha’s business model relies on two groups of customers, Yeloha ‘hosts’ and ‘partners’. Hosts are people who have suitable roofs and can apply to have Yeloha install solar panels free-of-charge and who will receive one-third of the energy output free. Partners are customers who would like to benefit from solar energy but do not have a suitable premises to do so and thus can buy energy from Yeloha hosts. Those who opt for long-term contracts can benefit from greater discounts. Yehola is entering the market when at a time where its business model makes a lot of sense. A recent poll revealed that 79% of Americans want the US to develop more solar power. Last year, the US generated a whopping 4.093 billion kWh, however only 7% came from renewable energy and only pitiful 0.4% came from solar. The company is looking to change that and launched its invite-only programme in the solar power-friendly state of Massachusetts just last month, backed by millions of Dollars in venture capital funding.

Yeloha’s business model addresses some of the major issues that hinder the expansion of solar power by reducing these barriers and transaction costs for the customer. One of the biggest barriers is the upfront cost of installing solar panels. By offering them free-of-charge along with free energy, the company hopes to attract a large number of interested customers who would otherwise unwilling or unable to do so themselves. These incentives should help the company quickly grow a large network of hosts by not having to purchase property to hosts solar panels but have customers host them instead. This model has allowed businesses in the sharing economy to grow at astronomical rates. For those who are unable to host solar panels but would like a way to reduce their energy bill or be more environmentally conscious, they can simply buy energy from nearby hosts.

Yehola’s business model, although promising, will have to overcome some potential hurdles, particularly legal ones. Other sharing economy platforms like Airbnb and Uber have recently run into lawsuits, which have cost the firms enormous sums of money as well as negative PR. Some observers are sceptic on the legal arrangements of Yehola’s planned solar installations on apartment buildings and rented premises. Others have noted that it only makes sense in markets where electricity from the grid is very expensive like Hawaii. Nevertheless, the market conditions and timing seem to be in the company’s favour to disrupt an industry that has remained unchanged for too long.

Sources:

Chernova, Y. (2015) “Peer-to-Peer Solar Network Yeloha Gets $3.5 Million to Launch in U.S.”, April 8, Wall Street Journal, (online) available at: http://blogs.wsj.com/venturecapital/2015/04/08/peer-to-peer-solar-network-yeloha-gets-3-5-million-to-launch-in-u-s/

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

Whitford, D. (2015) “Here Comes the Airbnb of the Solar Industry”, April 7, Inc., (online) available at: http://www.inc.com/david-whitford/built-from-passion-yeloha.html

Articles, Business Case

Sustaining success: Lessons from South Korea’s OhmyNews

May 2, 2015 419424ss Leave a comment

If you are one of the billions of people who use social media regularly, then it is most likely that you are familiar with the image on the left. It was diffused very fast throughout the internet, simply because it describes something strange, yet very real. These, and many other companies simply endorse the exchange between customer groups, while they just play the role of coordinator-facilitator. Companies with similar business models, realize that people hold in their hands valuable tangible or intangible property and that they just need the appropriate incentive in order to share it and create value, both for the company and for other people.

Eastern countries have surprised repeatedly the western business world with their creativity. OhmyNews is a company that comes from South Korea and it is an example of customer empowerment. OhmyNews is an online newspaper that was established by Oh Yeon Ho on February 22, 2000, while in 2004 an international website was created. Similarly to the companies of the image, OhmyNews has just 70 Journalists who produce less than 20% of the content, simply because this is a citizens’ job. As one of the most influential news websites in South Korea, the company operates on the principle “every citizen in the world is a reporter”. They allow the citizens to play the role of news hunters by promoting direct democracy at the same time. Specifically, company’s editors screen citizens’ articles before posting them on the website to ensure content integrity without exercising censorship. Consequently, OhmyNews is a representative example of a company that crowdsource almost 80% of its content.

Large news providers hire thousands of journalists around the world in order to support timely and effective news capturing. On the other hand, costs rise along with employees, something that forces them to introduce multiple revenue sources. For OhmyNews this should not represent a dilemma since its model allows access to the most specialized and diversified news with minor costs. However, there is another part of the story that is far from a fairytale.

The international site is inactive since 2010 because 70 employees were overloaded with information from around the world that they could not manage. The company was also struggling financially for a long period, with revenues that were falling dramatically month by month. The founder stated that the website was not a profit seeking move at the beginning, but like every organization, the company had to find a way to finance its expenses. It was clear to the executives that the existing model leads to failure with rapid pace. Thus, in 2009 OhmyNews started to make plans for a new and sustainable business model. The transformation was a great challenge. Back in the days most of their revenues (70%) were generated by advertisements. Now many local portals entered the game and absorb more than 90% of the advertisement revenues, something that does not leave room for fast growth towards this direction to OhmyNews. They introduced two new models that account about 50% of their revenues. The first is the “tip” model which allows readers to donate a tip for a story they like, while the biggest portion of the “tip” is given as reward to news contributors. The second is called “100,000 club” and consists of 100,000 members that pay €7 per month to attend live or recorded lectures organized by the company itself. Thanks to its passionate supporters the South Korean site is still running, but this time more sustainable.

What prevented the company leaders from taking advantage of the huge success of their business? Obviously, innovation and customer involvement do not guarantee success. OhmyNews-international experienced firsthand what a tremendous customer involvement means when you are unprepared. Furthermore, when your service is free, it is necessary to find other sources of income that could be sustainable in the long run. The lesson: Innovation does not last forever, it needs to be continuous. Even disrupters can be disrupted when they do not find new ways to adapt their business model into new situations.

References
Joyce, Mary, (2007). The Citizen Journalism Web Site ‘OhmyNews’ and the 2002 South Korean Presidential Election. Berkman Center Research Publication No. 2007-15

http://www.bloomberg.com/bw/stories/2006-11-01/ohmynews-oh-my-biz-problembusinessweek-business-news-stock-market-and-financial-advice (Last accessed: 2/5/2015)

http://www.businessweek.com/globalbiz/content/jul2009/gb20090714_537389.htm (Last accessed: 2/5/2015)

http://www.forbes.com/forbes/2009/0330/050-oh-my-revenues.html (Last accessed: 2/5/2015)

https://vimeo.com/17184251 (Last accessed: 2/5/2015)

Business Case

Crowdsourcing ad campaigns – the future of advertising?

April 27, 2015 332466bb Leave a comment

With massive amounts of information available online, consumers are increasingly better informed about companies and their offerings (1). These advances increase the bargaining power of consumers and show how focus has shifted from the company towards the consumer (2). The process of advertising and content creation is thus changing. Agency-created advertising is not expected to disappear, but nowadays the demand for continually-refreshed materials is growing rapidly. By crowdsourcing new content, brands can use passion and insights from consumers and provide authentic marketing communications (3). The number of platforms where companies can run open pitches for their advertising has rapidly grown and the European Commission (1) expects the volume to grow to €5.5 billion in 2015. An example is the social crowdsourcing platform Zooppa, which allows for brands and agencies to place advertising contests in order to generate advertising campaigns. It offers ‘a cost-effective, strategic approach to engage consumers, build online word-of-mouth and gain customer insights’ (4). The company states that its main challenge is to open the minds of the industry towards these new ways of working and acquiring content, instead of building on an reusing one ‘hero’ tv ad (3). For each contest, a creative brief is provided. By submitting designs for video, print, concepts, audio or banner advertising, over 300,000 active members (5), both professionals and amateurs, compete for money and other prizes. Users can vote and comment on submissions of others. This peer feedback plays an important role, since it can facilitate additional learning opportunities, but also provides social value and recognition to users (Franke, Keinz & Schreier, 6). By participating in Zooppa contests, users can grow their portfolio and have it seen by millions (7). The company does not pre-select contributors based on their qualifications or context specific as described by Geiger et al. (10). Contibutors only have to register and complete a personal profile (Facebook account or e-mail address). The quality of submissions can be controlled in various ways (8). Zooppa uses e.g. specific terms and conditions regarding ownership of submitted materials and peer evaluation of content. For each competition both Jury awards (assigned by clients) and Community awards (based on community votes) are handed out. Providing several prizes (monetary prizes as well as awards) is described (8) as the best way to target asymmetrically skilled individuals (professionals as well as amateurs). This way, participation from weaker players increases, and competition and effort by strong players increases as well (Sisak, 9). Remuneration is probably a major reason for creatives contributing to Zooppa. But also intrinsic motivations such as glory and love (Zooppa displays ‘featured members’ on the homepage with a picture, the projects they contributed to and how much money they won) (8) can be reasons for contribution. A successful example is the sustainability campaign of Siemens. ‘By crowdsourcing video stories Siemens obtained hundreds of unique, authentic content pieces used across channels, all at less than the cost of producing one average TV commercial’ (3). An example of a smaller brand is Mike’s Hard Lemonade Company, which posted contests to obtain can designs and names for new flavors. The winning designs were voted for by consumers (11) and the company included the names of the winners on the cans (3) to build engagement. Concluding, the Zooppa platform sounds like an ideal way for companies to crowdsource their advertising campaigns. However, it remains unclear how many professionals vs amateurs submit ideas and whether the resulting winning ads are truly user-generated (as the company repeatedly states).

References
(1) Walter, E. (2012).
(2) European Commission (2014).
(3) AdLibbing (2014).
(4) Globe Newswire (2012).
(5) Zooppa (2015).
(6) Franke, Keinz & Schreier (2008). Complementing Mass Customization Tookits with User Communities: How Peer Input Improves Customer Self-Design. Journal of product innovation management.
(7) Zooppa (2015).
(8) Tsekouras, D. (2015). Session 3 Ideas & Designs. Customer Centric Digital Commerce.
(9) Sisak, D. (2008). Multiple-prize contests – the optimal allocation of prizes. Journal of Economic Surveys.
(10) Geiger, D., Seedorf, S., Schulze, T., Nickerson, R.C., Schader, M. (2011). Managing the Crowd: Towards a Taxonomy of Crowdsourcing Processes. (2011). AMCIS 2011 Proceedings – All Submissions. Paper 430.
(11) PRNewswire (2014).

Business Case

Co-creating new advertising formats

April 20, 2015 332466bb Leave a comment

According to Andy Hart, Vice President for Microsoft Advertising & Online Europe (1), studies have shown that an average consumer in a city in Europe receives between 1,500 and 3,500 commercial messages every day. Consumers are increasingly starting to avoid ads and the rules of advertising are changing.

Therefore, between 2012 and 2013, Microsoft initiated co-creation sessions with consumers and designers and separate sessions with partners to redefine the ways that ads appear and to create concepts that would solve problems in and around shopping experiences (2). It was found that consumers want to see less advertising, but more information that can specifically help them get what they want.

According to industry experts, Microsoft’s Windows 8 platform was not getting a lot of advertiser’s attention because it was not as extensively adopted as platforms like Android (3). Therefore, in 2013, the company announced a new ad format for its Windows 8 platforms based on the aforementioned sessions. The company released several prototypes co-developed by brands and agencies (4). With this Ad Pano platform, the company reaches out to consumers on different devices, by offering multiplatform and cross-platform experiences. Supposedly, it will enable Microsoft to compete with iAd, a similar platform offered by Apple (5).

The new Ad Pano ad format is a panoramic format that allows advertisers possibilities to run ads in apps within Windows 8, Bing, Xbox and Skype. It offers an ‘active anchor ad experience, which comes to life with a series of 15 images that can simulate video, similar to a flip-book’ (3). Aim of these co-creations and the resulting new ad format was to create something meaningful for all involved: ‘the brand becomes more relevant while the customer becomes more connected’ (6).

Several prototypes were developed, for instance the campaign prototype for the hip and edgy clothing brand All Saints (below) and an ad experience for Vans shoes within Skype (7).

According to Grönroos and Voima (2013), ‘co-creation is the process by which mutual value is expanded together’ (8). Thompson and Malaviya (2013) have researched whether brands can benefit from communicating to consumers who have not been involved in a co-creation process that a target ad was developed by a fellow consumer. Even though the content of the ads is not necessarily designed via consumer co-creation, the platform itself is. You might expect that consumers would react favorably to this, but that highly depends on how a message recipient perceives the ad creating consumer.

The question is whether the media attention for this new Windows 8 ad platform was beneficial for Microsoft, because it was disclosed that the Ad Pano was co-created by consumers. Thompson and Malaviya (2013) found that if message recipients perceive the fellow consumer as someone more similar to them than a professional persuader, this increases the persuasiveness of the ad through the process of identification. However, if ‘message recipients are skeptical about the ability of ordinary consumers to develop effective advertising’ (9), this can hurt the persuasion of an ad.

Even though this case does not concern ads, but an ad platform, consumers might think that fellow consumers cannot develop an effective platform and that it is something professionals should do. This may influence how they perceive messages via the Ad Pano platform. However, other sources state that ‘by involving stakeholders and customers at the beginning of the process trust and empathy is quickly created’, which improves your position in the market, offering speed and agility (10). It would be interesting to find out more about how consumers have reacted to this platform tailored to their wishes for more tailored information to help them get what they want (9).

References
(1) http://www.12ahead.com/microsoft%E2%80%99s-andy-hart-future-advertising-and-co-creation
(2) https://youtu.be/gvaZ1XE_NRs
(3) http://www.ecommercetimes.com/story/78305.html
(4) http://www.clickz.com/clickz/news/2276494/cannes-lions-2013-microsoft-introduces-panoramic-ad-format-and-conceptual-ads
(5) http://adage.com/article/digital/microsoft-builds-iad-windows-8-apps/242166/
(6) http://www.brandingstrategyinsider.com/2014/06/customer-co-creation-for-higher-brand-value.html#.VTS-ZiGqpBc
(7) https://www.youtube.com/watch?t=38&v=SBFJPJw6-Rc
(8) 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.
(9) Thompson, D.V., & Malaviya, P. (2013). Consumer-Generated Ads: Does Awareness of Advertising Co-Creation Help or Hurt Persuasion? Journal of Marketing, 77(3), 33-47.
(10) http://www.brandingstrategyinsider.com/2014/06/customer-co-creation-for-higher-brand-value.html#.VTS-ZiGqpBc