Open business – A method for crowdcreating new products and services

Abstract

This thesis presents a method to crowdcreate new products with an ideology called open business method that derives from open source movement. In addition to designing products, this thesis suggests that the model could be applied to services and physical manufacturing also. Key feature is the remuneration method, how a crowd can be compensated for their work in a flexible way. The way it works is that instead of getting salary, the net revenue is divided among the participants based on the worked hours. This requires splitting the work into tasks. And the amount of working hours that each task take, is estimated by the crowd. According to a concept called wisdom of crowds, this estimation would be very accurate. Another key feature is how to capture value from crowdcreated products. Open source products are usually free. This thesis analyses how traditional business models, such as patenting can be used on an open, crowdcreation platform. Main issue with patenting is the disclosure of the innovation. In Europe this would prevent patenting and therefore an innovation should be revealed first only to a small review committee and later for the rest of the community. In some countries, such as USA, a grace period is applied and it allows the disclosure of an innovation before patenting, which is more friendly system for a crowdcreation platform. Not all products need patenting and for some it is not even possible. Advantages of a crowdcreated products against closed company counterparts is fast product development, efficient marketing through the crowd and the possibility to include the clients tightly to the product development. In addition to presenting the open business method, this thesis explains the background theory of open movements, crowdsourcing and wisdom of crowd. Open source is a way to crowdcreate software, open hardware is the design of circuit boards according to open source ideology and open design is the same in other physical products. These concepts, as well as wisdom of crowds, are used as a basis for deriving the governance model, decision-making method and work breakdown structure presented in this open business model. The model requires work to be broken into smaller tasks. Mechanical Turk serves as a good example of how work breakdown can be taken into extreme. Other case studies include examples of crowdsourcing companies, such as Innocentive for technical challenges, Quirky for crowdsourcing new product ideas, LocalMotors for crowdcreated cars and Assembly, a software development platform that utilizes the compensation method of sharing revenue based on tasks.