Crowdsourcing-Based

Business Models:
HOW TO CREATE AND CAPTURE
VALUE

Thomas Kohler

Technology has transformed individuals from mere consumers of products to empowered participants in value
co-creation. While numerous firms experiment with involving a crowd in value creation, few companies turn
crowdsourcing projects into thriving platforms with a powerful business model. To address this challenge, this
article analyzes successful platforms to identify patterns of effective crowdsourcing-based business models. The
results provide guidance for managers who need to create new (or adapt existing) business models.
(Keywords: Crowdsourcing, Open Innovation, Business Model Innovation, Co-Creation, Platforms)

T
he emergence of crowdsourcing-based business models is driven by
technology, active users, and the move towards open innovation.1
Crowd-based businesses enable organizations to harness the collective
energy and creativity of a large number of contributors. Through differ-
ent crowdsourcing processes, companies reach out to a large, unknown population
by inviting users to create value. They capture a share of the value created as profit
and, depending on the platform model, share revenue with the crowd. This busi-
ness model innovation represents a fundamental shift in the way business is done.
Today, users not only contribute ideas and input to product development,2 but they
also share goods, services, space, and money to deliver solutions that traditionally
have been performed strictly by the companies themselves.
A number of prominent new ventures have made crowdsourcing the back-
bone of their business models. By successfully capitalizing on the participation and
collaboration of the crowd, these businesses are rapidly transforming industries.
They empower users to leverage their creativity (Zooppa’s community creates
advertisements for leading brands), share their skills (Threadless’s community sub-
mits designs), or use their product domain knowledge (Innocentives’s community
tackles challenges). Existing companies are under pressure to reinvent their busi-
ness models as company borders are dissolving and the value creation process is
changing from linear to networked, from top-down to bottom-up, from centralized

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

to decentralized, and from closed to open.3 Lego,

Thomas Kohler is an Associate Professor of
for instance, is transforming consumers into active
Marketing at Hawaii Pacific University and a
visiting scholar at UC Berkeley and the participants in an effort to innovate beyond their
University of Innsbruck. <tkohler@hpu.edu>
traditional mass-market model. They now help
users design their own Lego sets online and
through their retail stores. Successful crowdsourcing-based business models are
powerful and hard to replicate because of their inherent community dynamics.
However, creating a thriving business built upon the crowd is difficult. The goal
for any crowdsourcing platform is to engage a crowd that has both the willingness
and capability to engage in value creation. We have applied a qualitative research
design to investigate the value creation and the value capture process of over 30
crowdsourcing platforms, and we have examined the building blocks of effective
crowdsourcing-based business models. The findings are applicable to innovators
of entirely new business models and to managers who need to reinvent or comple-
ment their existing business models. The experiences of today’s thriving platforms
can help startups and established businesses work out the kinks that come with any
new business model.

Crowdsourcing-Based Business Models

In essence, a business model explains the process of how a company creates
and captures value;4 it represents the architecture of the value creation, delivery,
and capture mechanisms an enterprise employs;5 and it helps us understand how
the firm is embedded in and interacts with its surrounding ecosystem.6 For Amit
and Zott,7 a business model is a bundle of specific activities (activity system) to sat-
isfy the perceived needs of the market, along with specifying who conducts which
activities and how these activities are linked together. They suggest that changing
the governance of the activity system is one driver of business model innovation.
Businesses built upon a crowd are novel, particularly because they change the
governance of who performs the activities that satisfy the needs of the market.
Crowdsourcing-based business models consist of three elements. First, compa-
nies building their business upon the crowd need to adopt an open business model.8
Opening up certain processes and resources to external creators can transform a prod-
uct into an interactive platform. This makes a significantly greater set of resources
available to the company and allows it to share ideas and technologies with others.
Second, crowdsourcing platforms leverage technology to exploit social networks, peer-
to-peer technologies, user-generated content, and mobile connectivity to invite users
to participate in value creation activities. The internet’s high degree of openness and
connectivity as well as the immense reach and the richness of information have stim-
ulated many new participatory methods of how value can be created and consumed.9
Third, these business models transfer value-creating activities to a crowd. By taking on
certain activities, crowd members co-create value with the platform provider or by
interacting with other groups of users. As the platform leader,10 the company facili-
tates interactions and exchanges along the entire process of value creation.
The possible constellations of crowdsourcing-based business models go
beyond the dyadic interactions between corporations and individuals that are

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

typical for co-creation or user innovation projects. Categorizing by who-sells-to-

whom, Boudreau and Lakhani propose three types of platform business models
for external innovators: integrator, product, and two-sided platform. For each
model the company takes a unique position within the value network that links
creators and consumers.11
§ In the integrator platform model, the platform takes contributions from the
crowd and sells them to consumers. The platform owner has a relatively
high degree of control and is able to shape developments by owning the
relationships with the end customers.
§ With the product platform model, creators build on top of a technology or a
basic product and then sell the resulting products to customers. In this case,
the creators directly transact with end customers. The platform owner con-
tracts with the creators or influences control through the technical design
of the core technology. A company pursuing this model seeks to establish
its technologies as the basis for a platform of innovation. In this inside-out
open innovation, a company utilizes external paths to market.12 Successful
product platforms create innovation ecosystems where the platform benefits
from any value-crating member of the ecosystem.13
§ On two-sided or multisided platforms, creators and customers interact directly.
The two sides can overlap when the producers are also consumers.

The Potential of Crowdsourcing Value Creation

According to Teece: “A good business model yields value propositions that
are compelling to customers; achieves advantageous cost and risk structures; and
enables significant value capture by the business that generates and delivers prod-
ucts and services.”14 We discuss the strength of using crowdsourcing to generate
good business models along these characteristics.
Company-centric business models often fail to systematically and continu-
ously meet changing user needs. Crowdsourcing-based business models are
increasingly considered to be the answer to fast-changing user needs, shorter
product life cycles, and an increasingly competitive climate.15 Turning users into
creators gives the company insights into what customers really want and hence
offers a compelling value proposition. Rather than developing products behind
closed doors that might fail to meet the needs of the market, crowdsourcing often
relies on input throughout the product development process to align needs and
offers.16 Thanks to the interdependencies among business model actors, thriving
platforms grow rapidly because of network effects. More creators will attract more
consumers, which in turn attract more creators. These dynamics increase incen-
tives for business model participants to stay and transact within the platform.
Crowdsourcing firms depend both on internal assets as well as the resources
that the crowd contributes. By getting users to create value for the company for free
or for a small fee, the company’s cost structure can be substantially better than
those of their competitors. Reducing fixed costs such as salaried employees often
translates into higher operating margins. By leveraging users’ resources, platforms
are able to get complementary skills and assets as well as broaden their talent pool.

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

This in turn results in higher productivity for companies. Collaborating with a great
number of contributors can reduce the time it takes to get new offerings to market
or to solve problems. Consider the example of the Quirky community. Since its
launch in 2009, it has created almost 400 products. This is unlikely to be matched
by companies that rely solely on closed internal development. Quirky crowdsources
the entire product development process and coordinates activities from collecting
initial ideas to naming the product. Then, it manufactures and distributes the prod-
ucts online and through retail partners.
Many crowdsourcing models are structured in ways that improve risk struc-
tures.17 The integrator platform often employs collective customer commitment
where users are asked for their vote or commitment before the product is manufac-
tured.18 Threadless employs this strategy. Unlike a traditional t-shirt manufacturer
that employs designers to come up with new products, Threadless is built upon a
creative and passionate art community of 120,000 designers who compete for
designs that will be produced by the company. The crowd is also involved in evalu-
ating the quality of submissions and helping to market the products. Two-sided
marketplaces share the risks of delivering products and services with external
parties. Airbnb is a good example. It became the largest hotel chain without owning
a single hotel (and the associated risks).
The success stories of companies embracing crowdsourcing-based business
models illustrate their effectiveness in enabling significant value capture. Lego
Ideas, for instance, is highly profitable by sourcing the product ideas from the
community and then selling them through their mass-market channels. Every
product co-created by this community has sold out. Many two-sided platforms
also successfully restructured value capture. The iPhone App Store, for instance,
operates as a marketplace that takes a cut from each transaction, which goes to
the bottom line.
Crowdsourcing platforms that manage to build a thriving crowd as a resource
are hard to imitate by competitors. Replicating the technology for a platform is a
considerably smaller challenge compared to replicating its community of creators.

The Challenge of Designing Crowdsourcing-Based Business Models

Many companies setting out to exploit the affordances of the internet to estab-
lish a crowd-driven business struggle to build and scale their platforms. Consider
three illustrative examples of companies who failed to deploy a business model based
on crowdsourcing. CrowdSpirit,19 the former collaborative platform that enabled
communities to design innovative products, is one example that failed to deploy a
business model based on crowdsourcing. In 2007, it was praised as one of the most
promising startups at a TechCrunch conference. However, in 2013 the venture
folded and the founder admitted: “Hopefully, the concept of asking a community
to crowdsource products was fine and did work fine, but our business model was
totally wrong.” Another failure is Myoo Create, a company that employed crowd-
sourcing contests to tackle environmental and societal challenges. The hope that
users are driven to use their skills to help and are not motivated by prizes did not
materialize. After less than two years, Myoo Create disappeared.20 As the case of
Genius Crowds exemplifies, an initial traction with crowdsourcing projects often

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

does not translate into a thriving platform that is needed to repeat the successes. The
platform strived to help individuals bring their ideas to market, was able to build a
committed crowd of 5,000 active users, and partnered with companies such as Mattel
to run contests. However, after three years, they closed down after announcing that
they had to reevaluate their business model.21
Why do many companies struggle to create an effective business model built
upon the crowd? Why do most crowdsourcing platforms never take off? Why are
they difficult to sustain and scale? One explanation is that crowdsourcing platforms
coordinate an astonishingly complex array of human actions that require a different
set of skills. Considering the shifts that occur when moving from a traditional busi-
ness models to one that is built upon crowdsourcing, some key challenges include:
§ Role of the Customers: From Passive Consumers to Empowered Co-Creators—Embrace
customers as co-creation partners rather than as consumers at the end of
the value chain requires new business models. Organizers need to provide
the appropriate structure and incentives to motivate users to participate in
value co-creation.22
§ Role of the Company: From Selling Products to Enabling Interactions—Crowdsourcing
allows the radical alteration of the long-standing role of companies as the pro-
ducers. Instead of hierarchical and centralized decisions, crowdsourcing leads
to distributed input, decision making, and ownership. Success is less a function
of traditional product design than system engineering. Competition shifts from
value delivered by the product to value creation enabled by the platform. The
challenge for business strategy is how to enable interactions and orchestrate the
company’s and the crowd’s activities.
§ Value Creation: From Linear to Networked—Crowdsourcing has created a new
logic of value creation.23 While traditional business models work in a sequen-
tial fashion, with the company as the creator of value and customers as the
consumer of value, today everyone can create and contribute to value crea-
tion. Crowdsourcing-based business models are networked and call for differ-
ent strategies and activities to enable value creation. If companies aim to build
a crowdsourcing platform with traditional strategies, they are setting them-
selves up for failure.
§ Value Capture: From Centralized to Distributed—Companies opening up their
business models to follow a more collaborative approach are challenged with
issues related to value capture.24 Before the advent of crowdsourcing, value
was mostly captured by transferring ownership to consumers through a sales
transaction or charging customers for a service. Since the value is created in
interactions and not transferred in a one-way transaction, the power is shared
between the company and the crowd. This calls for new models of value
capture to account for the contribution of value-creating participants.

Description of the Research

We focused on the business model and its components as our unit of anal-
ysis. To start our qualitative empiric study, we explored a diverse pool of over

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

100 crowdsourcing sites. For each company, we analyzed the value creation and
value capture mechanisms by studying the platform and available publications.
Next, we narrowed down this initial selection to 35 cases for an in-depth analysis
based on certain criteria. First, we aimed to collect diverse cases with different forms
of crowdsourcing processes. Second, we chose sites that have crowdsourcing as a
core standalone platform, rather than those involving peripheral and time-limited
crowdsourcing projects. Third, we were particularly interested in platforms with
solid traction. To estimate the traction we identified key metrics around the
number or value of the unit that is created on the platform.
To generate data we conducted interviews with managers (n=35) and crowd
members (n=14). We interviewed executives and managers to understand the
company’s business model design and how they engage the crowd. With the partici-
pant interviews, we aimed to gather insights about their motivation and their
perspective on the value co-creation and co-capture aspects. Primary interview data
was complemented through observations of the platform and publicly available
material. All interviews were transcribed and coded. To guide our analysis, we added
a “crowd layer” to the business model canvas developed by Osterwalder and
Pigneur.25 We chose this structure because the template has gained significant recog-
nition among practitioners and scholars26 and studies demonstrated its usefulness
for generating business model innovation.27 We studied similarities and compared
differences to identify common patterns of crowdsourcing-based business models.28
We asked the company to verify the final case write-up for correctness. Exhibit 1 lists
the cases, segmented by primary platform type and captures the interviewees.

EXHIBIT 1. Case and Interview List (n = 49)

Platform Name Platform Type Interview Partner(s)

Athlete Originals Integrator Founder

Appirio Integrator SVP, Crowdsourcing and Strategy
eYeka Integrator Research Fellow
Distributed Proofreaders Integrator General Manager
IdeaConnection Integrator CEO
Innocentive Integrator Marketing Manager
Innosite Integrator Manager
Lego Ideas Integrator Head Of Open Innovation
Local Motors Integrator Head Of Innovation
NineSigma Integrator Senior Director Of Strategic
Marketing
Threadless Integrator Former Community Partnerships
Manager (Informal)
Open@Citrix Product Community Manager & Individual
creator and company creator
(NetApp)
AirCasting Product Executive Director
Kaltura Product Community Manager
Keen IO Product Open Source Community
Manager & Creator
Kaltura Product Former Employee, Then Startup
Kaltura Product Was Hired Out Of The Community
continued on next page

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

Platform Name Platform Type Interview Partner(s)

Leap Motion Product Director Of Developer Programs

Mozilla Product Program Manager, Global
Community Support
Pimcore Product CEO
Red Hat Product Community Architecture &
Leadership
Salesforce Product Community Manager & Creator
Twilio Product Developer Evangelist (Participant at
Salesforce) & Creator
WSO2 Product VP Of Technology Evangelism
Airbnb Two-Sided Head Of Community (Informal) &
Head Of Groups
48hourslogo Two-Sided Founder
AdTournament Two-Sided Founder & Creator
Arcbazar Two-Sided Community Manager/Co-Founder
Crowdsite Two-Sided Founder
CustomMade Two-Sided Director Of Community And
Support
NeedaJingle Two-Sided Founder
Red Clay Two-Sided PR Manager
Twitch Two-Sided Director Of Community And
Education & Two Creators
Yutongo Two-Sided Founder
Zooppa Two-Sided CEO & Participant

Creating Value with the Crowd

The results are organized as they apply to the nine building blocks of the
business model canvas. Exhibit 2 provides an overview of the value creation
across the different platform types.

EXHIBIT 2. Value Creation Patterns

Integrator Product Two-Sided

Customer § Creators § Developers § Creators offering

Segments submitting CVU building on top CVU
§ Clients running of platform § Consumers
contests § Consumers using buying CVU
§ Consumers CVU § Clients running
buying CVU contests to
connect with
creators
Value § Production § Openness § Customization
Propositions § Community § Efficiency § On-demand
§ Sales channel § Purpose § Cost reduction
§ Purpose § Risk reduction § Sales channel
§ Business
Opportunities
continued on next page

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

Integrator Product Two-Sided

Company Key § Integrate § Support § Connect creators

Activities creations developments and consumers
§ Collect § Provide core § Provide platform
contributions technology or to facilitate
(Contest) or product interactions and
coordinate § Aggregate transactions
activities developers § Provide access to
(Communities) contributions market
§ Distribute § Develop
products to technological
customers or standards
offer to the public
Crowd Key § Submit Core § Extend Core § Offer Core Value
Activities Value Unit Value Unit Unit
§ Support and vote § Build on top of
on other platform
submissions § Provide support
Customer Rela- § Co-creation § Open source § Marketplace
tionships § Competition § Ecosystem § Competition
§ Collaboration § Long tail
§ Peer-to-peer
Channels § Mobile app or § Collaboration § Mobile app or
website platform website
§ Meet ups and § Collaboration § Meet ups and
networking events sites (e.g., Github) networking events
§ Direct sales § Hackathons
§ Retail partners § Meet ups /Summits
Key § Community of § Basic product or § Community of
Resources creators technology creators
§ Community of § Network of
developers consumers
Key Partners § Partnerships to § Affiliations with § Partnerships to
acquire creators Open Source acquire creators
§ Retailers products and consumers
§ Developer
communities

Customer Segments: Know the Platform Actors

Every crowdsourcing platform has three main actors: the company, creators,
and consumers. The role of the company is to enable interactions with creators as
well as between creators and consumers. Creators are the group of users who
create and contribute to value creation. There are various ways creators add value
to a platform, such as submitting designs (designers on 48hourslogo), solving
technical problems (engineers on Local Motors), or composing audio (musicians
on NeedaJingle). Product platforms creators are “complementors” to the platform.29
For many platforms, creators are also adding value by curating the content of a

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

platform through reporting, voting, or commenting on creations. If a platform fails to

engage creators, the business model will not work.
Consumers use the value created. They can be clients who sponsor contests
on integrator platforms or end users transacting with creators on two-sided
platforms. Thriving platforms have enough consumers to make it worthwhile
for creators to create. A lack of consumers discourages creators to engage in
creation activities and the crowdsourcing platform will collapse.

Value Propositions: Clarify the Core Value Unit

Companies must identify a clear value proposition to attract a crowd to
participate. To tackle the complexity of crowdsourcing platforms and to under-
stand the value that is created on the platform, companies need to clearly define
the core value unit (CVU).30 The core value unit can be content (videos on
YouTube), information (description of how to solve a problem on Innocentive),
products (t-shirts on Threadless), technology (Kaltura’s video platform), or
designs (logos on 48hourslogo). While each platform has a unique value proposi-
tion, companies capitalize on the advantages of crowdsourcing to deliver the core
value unit in a more efficient, effective, reliable, personal, or faster way.
Integrator platforms make the process of creation more efficient. Athlete
Originals, for instance, can produce a personal clothing line for athletes in less
than two weeks. The athlete challenges the design community to come up with
ideas, selects the winning design, and then the company produces the crowd-
sourced designs and provides the athletes with a cut of the revenue.
To convince other firms and users to built on top of a product platform,
companies must perform a relevant technical function and solve a business prob-
lem.31 The platform managers we interviewed made it clear that contributing to a
product platform needs to provide leverage for their business or career: “It’s not
about philanthropy. So they are either doing it to reduce their operating or
R&D tasks or they are doing it to help their customer acquisitions.”32 Particularly
for product platforms, the value proposition is fueled by the value of the overall
ecosystem. The Leap Motion controller is integrated into many other digital devices
and inspires a community of developers to build on top of the product. If the
platform successfully attracts the crowd to invest their efforts and resources, the
platform’s value is extended without extra investments by the platform leader.
Two-sided platforms often attract users by focusing on personalization. The
CustomMade platform, for example, connects consumers who want a product with
makers who will craft the product. Marketplaces use crowdsourcing to make a
service more efficient. Consider 48hourslogo. As the name implies, the company
offers affordable logo designs in a short amount of time by connecting businesses
with designers. The core of Twitch’s value proposition is the ability to effectively
broadcast games. It provides the crowd of creators with tools and an audience to
help users achieve their goals.
It would be a mistake, however, to conclude that market-based mechanisms
are always sufficient to ensure a strong value proposition. Our results show that
what unites crowd members isn’t the company or a product, but collaborating

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

around a shared purpose. Bonding with like-minded people who contribute to a

common goal drives participants. As more organizations adapt crowdsourcing
strategies, platforms need to continuously strengthen their value proposition. Our
interviews with managers of design platforms confirm that competition for users
is getting fiercer with a plethora of platforms that are all very similar.

Key Activities: Enable Interactions

In line with Bonchek and Choudary,33 the core interaction of crowdsourcing
platforms is to connect companies, creators, and consumers with the overall purpose
of the platform. The type of platform shapes the core interaction, which is the key
activity the company and creators perform repeatedly to create and deliver value.
The value-creating activities are divided between the company and creators. Crowd-
sourcing forces companies to rethink what they do internally. Which activities does
the company perform in-house and which activities are crowdsourced?
For integrator platforms, the company’s key activity is to integrate crowd
creations. The company coordinates individual creators’ activities and transforms
inputs from the crowd into a product that is sold to customers. Contests are a prom-
inent form of integrator platforms. The platform leader or sponsoring client calls for
ideas and contributors receive a small reward or have the chance to win a prize if
their solution is chosen for production or sale. Lego Ideas takes such an approach:
The crowd is involved in idea creation and voting on the top ideas, which are then
produced and distributed. Collaborative communities are another variations of an
integrator platform. Rather than separating contributions and maximizing diverse
experiments, the key activity for community platforms is to aggregate the crowd’s
contributors into a value-creating whole.34 For example, Distributed Proofreaders
modularizes the task of turning classic books into e-books. The platform has coordi-
nated 100,000 crowd members to preserve almost 30,000 titles. From the crowd’s
perspective, users take a range of value-creating activities including providing ideas
for new products or improving existing ones, solving innovation challenges, design-
ing products, and curating or collecting content.
For product platforms, the key activity is to support crowd development.
Companies orchestrate the developments of users who build on top of the
platform. At the technology layer, platform leaders offer tools such as application
programming interfaces (APIs) and software development kits (SDKs) to encour-
age external developers to extend the platform’s functionality. For software prod-
ucts, the source code is often not kept proprietary, but is freely accessible for
others to use in order to contribute to the product. At the business layer, platforms
provide access to the functions and information in the core product to inspire
prospective partners (users or other companies) to create value on the platform.
The goal is to orchestrate members of the innovation ecosystem for mutual benefit
and to increase the value of the platform. Generally, this could be applied to any
technology details of any product. Think of Apple’s IOS or Google’s Android
ecosystem. By inviting thousands of users to develop apps, both companies gener-
ated billions in new revenue and increased the value of their platforms. They
tapped into a vast stream of inventors and innovation. Salesforce is another
example. Unlike legacy IT systems, their platform has many ways to link in other

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

software on top of its own code. This characteristic has extended Salesforce
beyond a product into a platform. The activities of the crowd are focused on
building products on top of the platform, testing new platform features, and
shaping development decisions.
The main activity for businesses that choose a two-sided platform model is
to connect creators and customers. These companies facilitate the exchanges and
interactions between the interdependent groups. The creators don’t need to inter-
act directly with the platform owner. The company offers an online meeting
point, online database, and a communication service that connects these individ-
uals. The value of the platform increases as more groups or as more individual
members of each group are using it. For example, iStockphoto is a crowdsourcing
platform that allows individual artists to create photos and other visuals. All con-
tributors are rewarded directly for their value creation. Transactions rather than
relationships are the focus on these open markets. Users’ activities for this model
are to supply the inventory and to market the offerings by diffusing information
about their listing.
The rise of the Maker Movement and the growing democratization of 3D
printing have led to the producer platform business model. The core interaction is
between the creators (who are also the consumers) and the company that produces
the creations. The key activity for the company is to produce crowd innovation. An
online platform provides the customer with the product design tools and necessary
manufacturing support in order to design and manufacture the product. There are
two main differences from the integrator model. First, a user is both the manufac-
turer and the consumer. Second, the company takes the creation of the crowd and
produces what the crowd creators request. Thus for this form of user manufacturing,
the company only supports the customers in their undertakings. Users benefit from
the potential to realize entrepreneurial ideas without having to provide the required
infrastructure. For example, Shapeways gives designers the possibility to quickly
realize any product they can imagine at an affordable price. The platform also helps
designers sell their products through the company’s own marketplace. This elimi-
nates traditional entry barriers by providing creators the instruments to create and
distribute their work through an online marketplace. The distribution typically relies
on a long tail of user-generated niche content. Lulu.com is another example that
turned the traditional publishing model on its head by enabling anyone to publish.
Thanks to Lulu’s self-service tools, anyone can publish and sell books. Books are
printed only in response to actual orders. This business model is often combined with
the two-sided model, where the platforms also provide creators access to the desired
audience in the form of an online shop to sell their product. User activities for the
producer model are to create the product innovation based on the specifications of
the provided tools and to submit the design to the manufacturer.
While companies that start a business model based on crowdsourcing should
focus on one core interaction, they may use a combination of the above activities to
create value. In the early stages of crowdsourcing, the activities that are shared with
creators are limited. However, the most successful platforms crowdsource increas-
ingly more activities. For example, The Noun Project, a community that is building
a visual language of icons anyone can understand, is a two-sided platform that opens

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up their APIs for platform extension. The marketplace connects icon creators with
buyers of icons. In addition, they rely on a product platform approach and encourage
developers to use their API to build on top of their platform. Similarly, product plat-
forms are building out marketplaces, as in the case with Salesforce’s app store. These
cases show that the strength of crowd-based business lies not in the activities the
company performs to create value, but how well it enables and empowers the crowd
to create value through multiple interactions.
All platform types need to focus their activities on enabling creation, cura-
tion, and consumption.
First, the company needs to help creators create. This starts with designing
the crowdsourcing process and the definition of the task. Platform managers need
to work towards optimizing how they ask the crowd to engage in value creation.
The higher the complexity of the core value unit, the more attention needs to be
directed to this initial step. A number of the design platform managers we inter-
viewed pointed out that they decided to start with a simple product for this very
reason. The requirements of a logo design are easier to convey to the crowd than
a redesign of a website. Athlete Originals created a visual way for their athletes to
specify their design requirements to a community of designers. Zooppa seeks to
make the clients’ needs clearer by bringing clients and creatives together in a
webinar. Platforms often follow the strategy of “plug and play” as they strive to
make it easy for creators to plug-in and create on the platform. Providing the
crowd with off the shelf applications lowers creators’ start cost. During the process
companies need to provide resources to the crowd to enable innovation. Manag-
ing a community of creators depends on empowering them to do the best job they
can. How Local Motors thinks about supporting the crowd is inspirational: “You
are essentially asking external recreational participants to come in and participate
at a level of an internal professional employee, so how can you expect that from
them if you give them anything less than the puzzle pieces you give to the inter-
nal employee?”35 So when asking a community member to contribute at the
same level as an employee, they need to be given the resources. Forums and
workshops are helpful to equip creators across all groups with the skills to partici-
pate. Platforms with a strong community are able to share the support of the cre-
ators with the crowd, and the members of the community support each other.
Second, companies need to ensure curation of the core value unit. This
ensures the quality and quantity of value creation. The curation mechanisms—
whether social, algorithmic, or editorial—show high-quality contribution and sepa-
rate the signal from the noise. If a platform fails to encourage curation, it gets
loaded with poor quality and fails to stay relevant, useful, and engaging. Leading
platforms create different feedback loops that encourage users to participate in the
curation process through reporting, voting, or reviewing the core value unit. A con-
sistent theme from our interviews related to curation is building trust within the
company’s system. Many or the multi-sided platforms in our sample have solved
this problem. Leading platforms, for example, often institute a feedback system
for both creators and consumers. Zooppa plans to include reciprocal voting to
enhance the trust among creators and clients. User profiles and ranking are other
features to keep participants reliable and honest. It also conveys status, which can

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

satisfy the members’ desire to receive recognition. The platform leader needs to
communicate openly and facilitate conversations to earn the trust of participants.
Third, companies need to bring consumers to the platform. Once a crowdsourc-
ing project has led to the creation and curation of a product or result, a lack of attention
can keep it from thriving. Engineers contributing to cars want to get the attention from
Local Motors and the community, logo designers want to be seen by the client, and
musicians want their songs to be purchased via NeedaJingle. The Salesforce app store
provides a marketplace on top of their product platform, which gets developers
excited: “There is no other app store that you can develop an app for and earn a
reasonable income on scalable basis. I think if they wouldn’t do anything else apart
from that they would get 80% of the developers that they are getting right now.”36

Customer Relationships: Attract and Engage the Crowd

Crowdsourcing companies need to clarify the types of relationships they
want to establish with creators and consumers. Customer relationships for plat-
forms are driven by two main motivations: attracting and engaging the crowd.
The success of crowdsourcing platforms hinges on the ability to attract the
crowd in order to maximize the breath and quality of creators. Our research shows
that competitions and hackathons are helpful in attracting initial creators to tackle
the cold start problem of platforms. Kaltura, for example, encourages creation on
top of their platform through hackathons. An increasingly popular mechanism to
build the ecosystem around a product is to run corporate accelerators. Nike recently
invited ten startups to a three-month program to build complementary products on
top of their NikeFuel platform.
Once the initial user base is built, platforms have a variety of mechanisms
to engage the crowd. One strategic question that arises is whether to focus on
acquiring new creators or on converting existing users into new creators. Our
results suggest that turning consumers into creators is often more efficient. Strat-
egies that help achieve this include simplifying the creation process to involve
more users with lower skills to work on modular and incremental tasks.
A strategy that aims to scale interactions is empowering top creators. The
Kaltura community manager recommends focusing on the top creators of a com-
munity and empowering them to take on more and more responsibilities. They
become the advocates. This strategy brings creators closer to the company and
helps with community growth. The Salesforce developer community manager
agrees with the effectiveness of using the community to grow the community.
Salesforce is taking advantage of their developers’ passion for teaching other
developers. The company then elevates those leaders and provides them with
the skills to support new community members. Managers need to find the sweet
spot between guidance and empowerment.
To replicate the behavior of top creators, we suggest highlighting behaviors
you want to see amplified. Platforms should recognize outstanding community
members and their work. This provides recognition to the creators and forms
stronger ties between the creators and the company. It also inspires other commu-
nity members to emulate the behavior of these top performers.

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

Channels: Optimize Interaction Points

All platforms have an infrastructure that provides the basis for interactions.
Typically these channels are a web or mobile application. In addition, there are
many different interfaces between the company and the crowd that serve as inter-
action points. Our study shows that thriving platforms have multiple interaction
points online and offline. Rather than touch-points to reach consumers, platform
leaders need to think of these channels as interaction points to connect with
creators and connect them to each other.

Key Resources: Recognize the Community as the Most Valuable Resource

For the crowdsourcing companies we studied, the community that a com-
pany builds is considered the most important resource. Effective business models
built upon the crowd don’t consider the crowd as an external entity from which to
source cheap labor, but rather as an integral part of their business where the com-
munity members support each other. For instance, in the case of Leap Motion
community members support each other by translating documentation voluntar-
ily for developers across the world.

Key Partners: Strengthen the Platform through Partnerships

The motivations for partnerships can take three forms:
§ Partnerships to grow and support creators: Tapping into the user base of part-
ners is a quick way to grow a community. Zooppa is constantly building
relationships with creative media programs at universities to bring in
talented designers and filmmakers. Lego and Shapeways partner with com-
panies who provide access to their intellectual property for the crowd to
use. Local Motors partners with established car companies such as BMW
to bring in additional revenue and creates opportunities for the crowd to
engage in creative problem solving. Crowdsite recently partnered with
the language platform Duolingo to help their creators enrich their profiles
with language skills. This helps differentiate the site from competition:
“Of course when new customers see that Crowdsite has a partnership with
Duolingo, it will build trust and the customers will choose you above a
competitor for instance, so it definitely helps.”37
§ Extend the value of platform: Particularly in the product platform, collabora-
tion with partners in the ecosystem becomes a central source of value cre-
ation. Companies pursuing this model actively search for novel ways of
working together with customers or complementors to extend their busi-
ness. By creating partnerships with device manufacturers, Leap Motion
extends the value of their platform. Twitch added an engaging feature to
their video platform thanks to a partnership with Teespring (a customer
t-shirt company) that allows the Twitch community to provide custom
apparel to their audiences directly on their channel.
§ Partnerships to grow consumers: Integrators partner with distribution channel
companies to get the crowd’s creation in front of consumers. Threadless
partners with GAP; and the creations of the Quirky community are available

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

at large retailers such as Target or Best Buy. Partnerships can be helpful to

build the client side of two-sided design platforms. Arcbazar reported that
the first year of their partnership with AngelList (the startup-listing site)
accounted for half of their clients.

Capturing Value with the Crowd

Once value is created, the question for the company is how to capture part of
this value as revenue. For traditional business models, the answer is straightforward:
The company charges the consumers for the value created. For crowdsourcing-based
business models, monetization is often different. The revenue mechanisms depend on
the position of the company within the value network and companies have to figure
out who to charge for the value that was created in collaboration between the com-
pany and the crowd. The question is even more complicated than how to make
money. How can companies share part of the value captured with the community
in a fair and viable way? What constitutes a reward for community members who
participate in value creation? Answering these questions is critical to building and sus-
taining the community as the basis of any crowdsourcing-based business model.

EXHIBIT 3. Value Capture Patterns

Integrator Product Two-Sided

Company § Platform § Product/technology § Platform

Cost development development development
Structure § Marketing § Marketing § Marketing
§ Production costs
Crowd § Time & energy § Licensing fees § Listing fees
Costs § Sharing IP rights § Time & energy § Subscription
membership fees
Revenue § Product sales § Licensing § Transaction fees
Streams (largest share of § API usage fees § Subscription fees
revenue remains
with the company) § Selling § Service fee for
complimentary clients running
§ Sponsoring, services contests
Donations (for
communities) § Advertising
Crowd § Money: Relatively § Money: Selling § Money mainly
Rewards small compensation product to § Glory and love to
in the form customers a lesser extent
of prize money § Love: Giving back
or revenue share and contributing to
§ Glory: Being common goal
recognized as the § Glory: Getting
creator respect and
§ Love: Being recognition from
challenged and other developers
pursuing passion

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

Cost Structure: Reduce Costs for the Company and the Crowd
While companies are able to reduce their operating costs by sharing the
work with crowd members, the activities performed by the company and the
crowd lead to other costs. The costs that all crowdsourcing companies share are
the expenses related to building and maintaining the platform. For two-sided plat-
forms, their operating costs are low and their percentage margins are high.
Because integrators must produce and then sell their offerings, they typically have
higher revenues but also have higher capital and operating costs and lower per-
centage margins. Crowdsourcing can create new costs, as creators demand a
larger share of the value created.
While the crowd reduces costs for the company, the crowd also has its own
costs to cover. Costs for creators include time, efforts, money, giving up intellec-
tual property rights, and sharing resources. For intellectual property rights, there
is a range of options for establishing ownership rights of crowdsourced creations.
Companies may pursue outright ownership of the created product or seek joint
ownership. There are also various levels of usage rights. Although we are seeing
the early stages of a movement toward more favorable terms for the crowd, the
common form is that the company takes over the usage rights. Reducing the
costs of participating can increase value. For instance, the crowdsourced music
product platform NeedaJingle lowers the costs for crowd contributors by struc-
turing the music rights in a way that artists retain the copyright and the client
only licenses the created track. As the founder explained, this leads to increase
value capture for the crowd: “We’re a music licensing company. There is no
transfer of copyright and the musicians love that.”38

Revenue Streams for Companies: Devise New Ways to Capture Value

Companies can rely on several ways to generate revenue streams. The
most prominent are:
§ Product Sales: Many integrator platforms sell the products that are co-created
by the crowd. Threadless sells t-shirts, Quirky sells electronics, and Minted
sells cards.
§ Subscription Fees: Selling access to a platform generates this revenue stream.
Fees may be payable by either producers or customers or both to partici-
pate in the platform. At The Noun Project, membership grants buyers
access to a certain amount of the crowd creations every month.
§ Licensing: Many product platforms generate revenue by giving customers
permission to use protected intellectual property in exchange for licensing fees.
§ API Usage Fees: Some platforms that support developers with their APIs
charge a usage fee for the use of this service. The higher the API call volume,
the more the customer pays. A platform may employ a freemium model to
give away a test version and charge for an upgraded professional account.
§ Selling Complementary Services: For the product model, money is typically
earned with services that are complementary to the product, such as consult-
ing and support.

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

§ Transaction Fees: When producers and consumers transact, one or both sides
pay the platform a transaction cut. These are especially applicable where
crowd platforms are essentially acting as a broker. Two-sided platforms
receive revenue from their intermediation services performed on behalf
of two or more parties. Etsy, for example, earns revenues by taking a per-
centage of the value of each transaction executed between artist and
seekers. Two-sided marketplaces allow for a long tail strategy where indi-
viduals provide niche products. Individually, these neither demand high
volumes nor allow for a high margin. If a vast variety of these products
are offered in sufficient amounts, the profits from resulting small sales
can add up to a significant amount.
§ Advertising: Many high-traffic platforms rely on advertising revenue. YouTube
is a prominent example for highly profitable user-driven advertising model,
where the platform monetizes consumers’ attention for the user-generated
content.
§ Service Fees: Producer platforms charge a service fee for their revenue mech-
anism. Intermediary integrator platforms like eYeka that connect brands and
creatives through online challenges charge a service fee for running the con-
tests. A similar case is Jovoto, which also charges for additional services such
as coordinating the jury evaluation or documentation of the contest out-
comes.
§ Donations, Grants, or Sponsorship: Platforms that are built upon the collabora-
tive community model, where volunteers create something that is given
away for free to the public, often rely on noncommercial revenues.

Rewards for the Crowd: Cater to Creators’ Motives

The choice of the reward for the crowd is a strategic element of business
model design. The key question to answer is why do people participate in plat-
forms? What incentives are at work? The central tenets of crowd motivation are
well understood,39 but the nuances of human motivation are complex, multi-
faceted, and context specific. It’s a central challenge for any community manager,
as illustrated by this quote: “But how do we make it viable long-term for the peo-
ple that are actually the engine of the success of the model—which is the creativ-
ity and the ideas and the contributions that the individuals push forward? I don’t
think we solved that yet.”40 Consistent with social exchange theory,41 crowd
members participate when their rewards outweigh their costs. What is considered
a reward may differ depending on the crowd’s motivation. Platforms rely on
different sources of value to incentivize and engage the crowd. Our insights on
the ways to reward creators are based to the high-level motivations of money,
glory, and love as suggested by Malone.42
In terms of money, companies need to achieve fit between a crowd’s value
co-creation and value co-capture. When a crowd contributes to value creation
and the platform benefits financially, the crowd is likely to rely on monetary
compensation. There are two main ways to involve the crowd financially in value
capture: revenue sharing and prize money. Many platforms practice some form of

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

revenue sharing and pay rates that vary from model to model, depending on the
position and the power of the platform. Integrator platforms retain the largest part
of the revenue and pass on a smaller share to the crowd of creators. Two-sided
marketplaces pay out the largest share to the crowd members and retain a small frac-
tion. For instance, iStockphoto takes a 20% cut from each purchase. User-driven
content sites share ad revenues with their content-producing members as incentive
strategies. There are numerous examples of idea competitions, where many individ-
uals are involved in value creation but only a few receive some form of prize money.
The amount of prize money varies from a substantial reward for large competitions
(several million for the XPRIZE), to solid payouts for solving complex problems
(Innocentive: $10,000-$1,000,000) to smaller amounts for consumer product chal-
lenges (eYeka: $1,000-$10,000). When platforms promise direct returns for their
creative accomplishments, platform hosts need to pay careful attention to fairness
to avoid negative reactions. Research by Franke and colleagues43 confirms that par-
ticipants’ likelihood of joining a crowdsourcing contest depends on their expectations
for the distribution of value between the firm and contributors (distributive fairness)
and the fairness of the procedures leading to this distribution (procedural fairness).
The equity rule44 aptly applies to the crowdsourcing context, where individuals draw
comparisons between perceptions of their own outcome-to-input ratio to the out-
come-to-input ratio of reference parties. While many companies might have started
with an opportunistic approach, systems that encourage many to participate but
benefit a few are setting themselves up for failure. For crowd-based companies to
endure, they must get the crowd’s value creation and crowd’s value capture in the
right balance. Participants who feel treated unfairly will terminate their relationship
with the crowdsourcing host. Users are also aware of their powerful position within a
business model that leverages crowdsourcing. This is best described in the words of a
user who reminded us that Threadless “is community based and can only be as big
and strong as the community will allow.” Many interviewees from integrator and
product platforms agree that monetary incentives are a valid way to attract new cre-
ators, but are unsustainable as scalable incentives. A one-time incentive such as prize
money attracts initial attention, but to sustain a crowd, ongoing emotional rewards
are required.
To provide glory for the crowd, companies need to recognize creators’ con-
tributions. Across all platforms members are driven by the potential recognition
they may get for their contributors. Programmers in open source software com-
munities are driven by the desire to be recognized by peers, and respect was men-
tioned as the only currency that matters to developers. For those that don’t win in
contest models, many platform managers expressed that recognition is the key to
keep participants coming back. The quality of the relationship between the plat-
form host and the crowd depends on users’ perception of being valued by the
company. Henry James’s quote offers guidance for platform managers: “The deep-
est principle in human nature is the craving to be appreciated.” Successful plat-
forms treat the crowd not as cheap labor but rather as a respected partner. One
mechanism to show appreciation for the crowd’s effort is to provide visibility for
contributions. Platforms compile and publish top contributor lists or give out
performance-based memberships to convey various degrees of status. Events are

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

another way to recognize key contributors. Blog posts or stories about their con-
tributions or showcasing the contributions in user profiles are other ways to
acknowledge crowd members. The recognition received fuels further value crea-
tion activities.
Love as a motivational category challenges companies to find ways to fuel
participants’ intrinsic motivation. Many creators are driven by purely intrinsic
motives such as enjoyment of an activity, socializing with others, or when they
feel they are contributing to a cause larger than themselves. If there is a strong
intrinsic motivation, users can be “paid” in the currency of having fun, learning,
a sense of belonging, and recognition.45 If participants are driven by social
motives, platforms need to provide systems to connect the people to each other.
Learning is another strong intrinsic motive platforms need to address. Several
managers emphasized their efforts to provide learning opportunities through
offering resources, advice, or connecting them with each other.

Evolving the Business Model

As a platform grows and the market environment changes, the value crea-
tion and capture processes need to continuously evolve. For instance, eYeka piv-
oted from a two-sided platform—where creatives could showcase and sell their
content directly to brands and media outlets—to an integrator model. They
learned that they could capture value from offering creative contests to leadings
brands. With over 700 successful contests, they are among the leading platforms
for creative crowdsourcing. Lego also fine-tuned their model several times. They
started off with Design byME, a platform that empowered Lego fans to order cus-
tomized bricks, but because the revenue did not justify the high operational costs,
they initiated Lego Cuusoo. On this new platform, fans could upload their ideas
and bring them to life by getting community members’ votes. While this model
was successful, managing the 700,000 community members let to scaling prob-
lems. The challenge was dedicating enough attention to the core members since
many were only active for one or two ideas. Lego’s business model evolution con-
tinued with a re-launch as Lego Ideas. The new platform uses gamification mech-
anisms such as ranking members according to their contribution as well as
awarding points and badges to reward the core members with status.
When making changes to the business model, managers need to be aware
that subtle changes can affect the crowd’s value creation. Since a business model
is a complex system full of interdependencies and side effects, changing any part
of the business model is likely to ripple through the entire system. Firms need
to manage the system to encourage upward spirals and avoid downward spirals.
Our recommendation for crowd-based business is to make the business model
reinvention a continual and inclusive process. Any change is subject to the scru-
tiny of the crowd. Being transparent about changes and listening to input from
the crowd is crucial. As a Threadless member indicates: “What’s really cool about
Threadless is that we can rely on them to make some awesome changes to
the site. But what might be even better about Threadless is that they’re willing
to listen to our ideas, too.”

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

Conclusion
Crowdsourcing raises a new set of strategic choices related to how value is
created and captured. Following are questions managers should ask when creat-
ing crowdsourcing-based business models.
Crowdsourcing platforms have emerged over the past decade as some of
the most powerful and valuable business models around. However, achieving suc-
cess with crowdsourcing platforms can be difficult. Crowd-driven business models
are fundamentally different from traditional producer-consumer transactions. By
studying crowdsourcing platform strategies that have worked, managers can find
ways to innovate their business models to prosper and endure.

Customer Segments Who are the primary creators on the platform?

What are the groups of people value is created for?
Value Proposition What is the core value unit of this platform?
What is the value that the platform creates for creators and consumers?
Customer Relationships How does the company attract and engage crowd members?
Channels Through which channels is the company reaching the crowd?
Key Activities Which activities does the company perform to create value with the crowd?
Which activities does the crowd perform to create value?
Key Resources Which resources does the crowd provide that the company requires for
creating value?
Key Partnerships Which partners are required for the business model to work?
Cost Structure What are the costs for the company to create and deliver value?
What are the costs for the crowd to participate?
Revenue Streams How does the company generate revenues from customers?
Which rewards are offered to the crowd for participating?

Notes
1. H.W. Chesbrough and M.M. Appleyard, “Open Innovation and Strategy,” California Manage-
ment Review, 50/1 (Fall 2007): 57-76.
2. For a discussion of different user roles see S. Nambisan and P. Nambisan, “How to Profit from a
Better ‘Virtual Customer Environment’,” MIT Sloan Management Review, 49/3 (Spring 2008):
53-61; V. Zwass, “Co-Creation: Toward a Taxonomy and an Integrated Research Perspective,”
International Journal of Electronic Commerce, 15/1 (Fall 2010): 11-48.
3. H. Chesbrough, Open Business Models (Boston, MA: Harvard Business Press, 2006).
4. C. Zott, R. Amit, and L. Massa, “The Business Model: Recent Developments and Future
Research,” Journal of Management, 37/4 (July 2011): 1019-1042.
5. D.J. Teece, “Business Models, Business Strategy and Innovation,” Long Range Planning, 43/2-3
(April 2010): 172-194.
6. C. Zott and R. Amit, “The Fit between Product Market Strategy and Business Model: Implica-
tions for Firm Performance,” Strategic Management Journal, 29/1 (January 2008): 1-26.
7. R. Amit, C. Zott, and A. Pearson, “Creating Value through Business Model Innovation,” MIT
Sloan Management Review, 53/3 (Spring 2012): 41-49.
8. H. Chesbrough (2006), op. cit.
9. R. Amit and C. Zott, “Value Creation in E-Business,” Strategic Management Journal, 22/6-7
(June/July 2001): 493; C. Zott, R. Amit, and L. Massa, “The Business Model: Recent Develop-
ments and Future Research,” Journal of Management, 37/4 (July 2011): 1019-1042; P. Timmers,
“Business Models for Electronic Markets,” Electronic Markets, 8/2 (1998): 3-8; L. Dahlander and
M. Magnusson, “How Do Firms Make Use of Open Source Communities?” Long Range Plan-
ning, 41/6 (December 2008): 629-649.
10. A. Gawer and M.A. Cusumano, Platform Leadership (Boston, MA: Harvard Business School
Press, 2002), p. 316.

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 Crowdsourcing-Based Business Models: How to Create and Capture Value

11. K.J. Boudreau and K.R. Lakhani, “How to Manage Outside Innovation,” Sloan Management
Review, 50/4 (Summer 2009).
12. H. Chesbrough, W. Vanhaverbeke, and J. West, Open Innovation: Researching a New Paradigm
(Oxford: Oxford University Press 2006), pp. 69-76.
13. J. West and D. Wood, “Creating and Evolving an Open Innovation Ecosystem: Lessons from
Symbian Ltd,” available at SSRN 1532926, 2008.
14. Teece (2010), op. cit.
15. C. Hienerth, P. Keinz, and C. Lettl, “Exploring the Nature and Implementation Process of
User-Centric Business Models,” Long Range Planning, 44/5-6 (October 2011): 344-374.
16. C. Prahalad and V. Ramaswamy, “The Co-Creation Connection,” Strategy + Business, 27 (2002).
17. Note that crowdsourcing models face different risks that need to be managed. Contests, for
instance, have an uncertain outcome and all platform types need to manage the risk related
to the level of quality.
18. S. Ogawa and F. Piller, “Reducing the Risks of New Product Development,” Sloan Management
Review, 47/2 (Winter 2006): 65-71.
19. The case is described by V. Chanal and M.-L. Caron-Fasan, “The Difficulties Involved in Devel-
oping Business Models Open to Innovation Communities: The Case of a Crowdsourcing Plat-
form,” M@n@gement, 13/4 (2010): 318-340.
20. C. Rover, “Myoo Create Wants to Teach the World to Scheme,” 2010, <www.triplepundit.com/
2010/09/myoo-create-wants-to-teach-the-world-to-scheme>; A. Walker, “Myoo Uses Crowd-
sourcing for Sustainability Solutions,” Fastcompany, June 22, 2010, <www.fastcompany.com/
1662684/myoo-uses-crowdsourcing-sustainability-solutions>.
21. Crowdsourcing.org, “Genius Crowds Closes Its Doors,” May 21, 2013, <www.crowdsourcing.
org/editorial/genius-crowds-closes-its-doors/25946>.
22. J. Fueller, “Refining Virtual Co-Creation from a Consumer Perspective,” California Management
Review, 52/2 (Winter 2010): 98-122.
23. Suvi Nenonen and Kaj Storbacka, “Business Model Design: Conceptualizing Networked Value
Co-Creation,” International Journal of Quality and Service Sciences, 2/1 (2010): 43-59.
24. Chesbrough and Appleyard (2007), op. cit.
25. A. Osterwalder and Y. Pigneur, Business Model Generation: A Handbook for Visionaries, Game
Changers, and Challengers (Hoboken, NJ: John Wiley and Sons, 2009).
26. H. Chesbrough, “Business Model Innovation: Opportunities and Barriers,” Long Range Plan-
ning, 43/2-3 (April 2010): 354-363.
27. M.J. Eppler, F. Hoffmann, and S. Bresciani, “New Business Models through Collaborative
Idea Generation,” International Journal of Innovation Management, 15/6 (December 2011):
1323-1341.
28. To reduce individual coding biases, synonyms were corrected in several team sessions by nego-
tiating meanings and checking with the transcripts. Through joint discussions and iterative
referrals to the theoretical foundation, we reached consensus and ensured that each pattern
appeared in the data repeatedly to achieve concept saturation. Qualitative analysis software
(Dedoose) was used to assist with coding.
29. Adam M. Brandenburger and Barry J. Nalebuff, Co-opetition (New York, NY: Crown Business,
2011).
30. S. Choudary, “The Three Design Elements for Designing Platforms,” 2015, <http://platformed.
info/the-three-design-elements-for-designing-platforms>.
31. Annabelle Gawer and Michael A. Cusumano, “Industry Platforms and Ecosystem Innovation,”
Journal of Product Innovation Management, 31/3 (May 2014): 417-433.
32. Personal interview with Mark Hinkle, Community Manager, Citrix.
33. M. Bonchek and S. Choudary, “Three Elements of a Successful Platform Strategy,” Harvard
Business Review, January 31, 2013, online.
34. K.J. Boudreau and K.R. Lakhani, “Using the Crowd as an Innovation Partner,” Harvard Busi-
ness Review, 91/4 (April 2013): 60-69.
35. Personal interview with Alex Fiechter, Head of Innovation, Local Motors.
36. Personal interview with Roel Masselink, Founder, Crowdsite.
37. Personal interview with Evan Buist, Founder, Needajingle.
38. Personal interview with Rob Spectre, Developer Evangalist Twillio.
39. Fueller (2010), op. cit.; S. Nambisan and R.A. Baron, “Different Roles, Different Strokes: Orga-
nizing Virtual Customer Environments to Promote Two Types of Customer Contributions,”
Organization Science, 21/2 (March/April 2010): 554-572.
40. Personal interview with Stiven Kerestegian, Head of Open Innovation, Lego Ideas.

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California Management Review, Vol. 57, No. 4, pp. 63–84. ISSN 0008-1256, eISSN 2162-8564. © 2015 by
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