MANAGING THE OPEN: HOW ORGANIZATIONS ARE OPENING UP TO A DIGITAL CROWD

Stefan Stumpp, PhD candidateProf. Dr. Daniel Michelis

Anhalt University of Applied SciencesBernburg, Germany

Alexander von Humboldt Institute for Internet and SocietyBerlin, Germany

8th-10th September 2014, LAMIPISA Conference 2014Cape Town, South Africa

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INTRODUCTION

The rise of digital networks is constantly and profoundly changing the environment, businesses and organizations they operate in.

This environment is characterized by rapid changes in the communication behaviour of employees and consumers which is

putting pressure on organizations to embrace more openness:

Users of digital networks become creative outside traditional hierarchies. They produce open source software, write journalistic articles, review products, collaborate on joint projects and sometimes rebel against regimes (McCloskey 2006).

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INTRODUCTION

Source:

peere

conom

y.org

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INTRODUCTIONOpenness can offer tremendous opportunities for an organization. The integration of a crowd into businesses enables new potentials for collaboration, e.g. joint developments and production of new products or services.

But while opening up, organizations are also facing conflicts; the clash of open network concepts with traditional hierarchies and its

division of labor and linear processes.

We decided to investigate what is happening in the German market

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STRUCTURE

1 Research Question2 Models of Open Organizations3 Crowdsourcing4 Data Sample: Crowd Study 2014 5 Research Results 6 Critical Points References

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1 RESEARCH QUESTION

Charlene Li (2010) developed three models of open organizations to describe how organizations can embrace more openness and engage with new creative users outside traditional hierarchies: Organic, Coordinated & Centralized Model.

We examined characteristics of the models through the example of Crowdsourcing. For this purpose qualitative and quantitative data

from interviews and a survey of the “Crowd Study 2014 – The Crowd as a Partner of the German Economy” is used.

RQ: “What are the specific characteristics of the Organic, the Coordinated and the Centralized Model in practical application of Crowdsourcing?”

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2 MODELS OF OPEN ORGANIZATIONS

Fig. 1: The Organic Model. Source: Michelis 2014, p. 5.

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2 MODELS OF OPEN ORGANIZATIONS

Fig. 2: The Coordinated Model. Source: Michelis 2014, p. 5

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2 MODELS OF OPEN ORGANIZATIONS

Fig. 3: The Centralized Model. Source: Michelis 2014, p. 5

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3 CROWDSOURCING

The term Crowdsourcing was coined with the intention of accessing the collective intelligence of an undefined network of people in the form of an open call (Howe 2008).

Organization

undefined network of people

Fig. 4: Crowdsourcing. Source: own representation, based on

Michelis 2013.

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FIATSource: http://www.fiatmio.cc

3 CROWDSOURCINGCROWDSOURCING EXAMPLES

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SAP Community Network Source: http://www.sap.com/communities/hub.html

3 CROWDSOURCINGCROWDSOURCING EXAMPLES

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clickworker Source: http//:www.clickworker.com

3 CROWDSOURCINGCROWDSOURCING EXAMPLES

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4 DATA SAMPLE: CROWD STUDY 2014

METHODOLOGY

3 steps:

1 Qualitative semi-structured expert interviews Crowdsourcing practitioners to aggregate collaboration experiences with the Crowd2 Online survey among 212 companies in Germany

3 Results analysis based on the theoretical framework

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4 DATA SAMPLE: CROWD STUDY 2014LARGE-SCALE SURVEY

0 to 10 11 to 250 251 to 500 more than 500 0

20

40

60

80

100

120

140

How many people does your organization employ?

Absolute frequency

Fig. 5: Number of employees in the organizations surveyed. Source: Own representation, based on Al-Ani et al. 2014, p. 13.

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4 DATA SAMPLE: CROWD STUDY 2014LARGE-SCALE SURVEY

Fig. 6: External stakeholders that are involved in the value creation of the organizations. Source: Own representation, based on Al-Ani et

al. 2014, p. 13.

Consumers

Supplie

rs

Consulting

Researc

h insti

tutions

Competitors

Crowd

Start-

Ups0

10

20

30

40

50

60

70

80

Which external stakeholders are involved in the value creation of the organization?

Percentage of positive answers

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5 RESEARCH RESULTS

KEY LEARNINGS FROM EXPERT INTERVIEWS

Collaboration with a Crowd often starts organically: (a) sceptics tend to prevent an opening while forcefully arguing with security arguments and the concern for know-how drain, (b) pioneer employees make use of special circumstances

Only a few Crowdsourcing activities advance from an organic origin up to a coordinated or centralized approach

Even if Crowdsourcing projects are successful, it is not guaranteed, that Crowdsourcing becomes a component of the business policy

Many experiences with Crowdsourcing remain on an individual level

1

4

2

3

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5 RESEARCH RESULTS

KEY LEARNINGS FROM SURVEY

Relatively little attention to Crowdsourcing: (a) limited knowledge of the concept within the organizations, (b) different working styles of the Crowd

Crowdsourcing seems to be more difficult in the strategic areas like research & development, human resources and production

Those organizations that are already collaborating, use existing digital networks as interfaces (e.g. social media): Crowdsourcing in the focus of customer service, market research and marketing

1

4

2

3

Crowdsourcing is often used to support particular business functions, which leads to the assumption that a coordinated model is an appropriate approach

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5 RESEARCH RESULTS

KEY LEARNINGS WITHIN THEORETICAL FRAMEWORK

Depends on individual Crowdsourcing activities introduced by pioneer employees without the instruction of the management board

Organic Crowdsourcing

Leads to blind spots within the organization and experiences often remain on an individual level

1

2

3Most common model of Crowdsourcing!

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5 RESEARCH RESULTS

KEY LEARNINGS WITHIN THEORETICAL FRAMEWORK

Advanced approach as a result of the development of an organic model or a follower strategy where experiences are gained from external sources

Coordinated Crowdsourcing

The management coordinates Crowdsourcing activities centrally but provides employees and departments with a maximum degree of freedom

1

2

3Not widespread!

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5 RESEARCH RESULTS

KEY LEARNINGS WITHIN THEORETICAL FRAMEWORK

Depends on central decision by the management for Crowdsourcing

Centralized Crowdsourcing

Does not find many practical applications because Crowdsourcing is often used for specific problems of business processes like customer service or marketing

1

2

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In the process we identified two critical points: (a) the survey is focusing on the German market and should be expanded

(b) The category of the “Data Mine Crowd” couldn’t be measured directly

6 CRITICAL POINTS

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References

Al-Ani, A., Stumpp, S., Schildhauer, T. (2014). Crowd Study 2014 – The Crowd as a Partner of theGerman Economy. HIIG Discussion Paper Series No. 2014-02. Online availablehttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=2437007 (last accessed on 01/07/2014).

Howe, J. (2008). Crowdsourcing. Why the Power of the Crowd is Driving the Future of Business. NewYork. Crown Business Publishing.

Li, C.: Open Leadership (2010). How Social Technology Can Transform the Way You Lead. NewYork: John Wiley & Sons.

McCloskey, D. (2006). The Bourgeois Virtues. Ethics for an Age of Commerce. Chicago.

Michelis, D. (2013). Vertikale und laterale Wirkungsdimensionen. Digitale Unternehmung. Online available: http://www.digitale-unternehmung.de/2013/03/vertikale-und-laterale-wirkungsdimensionen/ (last accessed on 03/09/2014).

Michelis, D. (2014). Managing the Open: How Organisations Can Use Social Media to Open Up.Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ) GmbH. Online availablehttp://10innovations.alumniportal.com/fileadmin/10innovations/dokumente/GIZ_10innovations_Open-Organisation_Brochure.pdf (last accessed on 30/06/2014). Bonn.

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CORRESPONDING AUTHOR

Anhalt University of Applied SciencesAlexander von Humboldt Institute for Internet and

Society

Stefan Stumpps.stumpp@wi.hs-

anhalt.de