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The impact of internal crowdsourcing in accelerating
innovation. The case of TNT.!
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Master Thesis!
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Student:! Nikolaos Stathoulas (10605185)! Faculty of Economics and Business !Master in Business Studies: Entrepreneurship & Innovation Management!
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Supervisor:! Dr. G. T. Vinig!!
Date: ! July 2014!!
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Innovation is the process of creating and delivering new customer value in the market place (Carlson & Wilmot, 2006). Erickson (2012) states that organisations are looking to enhance innovation related to current products/services and target crowds who have knowledge/skills of the current product/service offerings. The recent research of Gassman (2012) demonstrates an increasing amount of companies seek to leverage the distributed intelligence of their customers, suppliers, employees, and internet users by setting up crowdsourcing platforms and broadcasting their problems and tasks to the internal and external crowd. Previous research on internal crowdsourcing (Villarroel & Reis, 2010) indicate the possibility to address to employees from various geographic location, different divisions or even different hierarchical levels. Simula (2013) underlines that employees possess rich knowledge and leveraging this knowledge through internal crowdsourcing lead to innovation that is vital for the competitiveness of the firm. This research examines the impact of internal crowdsourcing in accelerating innovation in TNT considering the aspects of company’s strategic objectives, employee motivation and organisational culture. The main contribution of this research is to add a fresh perspective on this newly created concept by examining the connection between these concepts and their effect on internal crowdsourcing. Of the limitations of the research design is that it focuses on a single unit (case study). To minimise this issue and improve validity, the analysis of the results are processed by Nvivo qualitative software. The research findings suggest that internal crowdsourcing has not yes reached its maximum capabilities inside TNT to accelerate innovation. The perception inside the company is getting back to basics and pursue incremental innovation and improvement to secure its financial future. Consequently, even though internal crowdsourcing is utilised it is are considered as a primary strategic objective. However, there is a positive outcome in employee engagement and motivation
Nevertheless, the current organisational culture does not sufficiently support internal crowdsourcing as there is no overarching structure and Senior management support. As a result, the research findings suggest that the current internal crowdsourcing process inside TNT is not accelerating sufficiently innovation and corrective action should be considered by the Senior management. Finally, external crowdsourcing such as the involvement of customers, and suppliers is significant. External parties could offer an outside-in perspective and a fresh view on the company’s services and processes and provide novel solutions, apart from those suggested internally.!
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Keywords: innovation, crowdsourcing strategy, internal crowdsourcing, organisational
culture, motivation!
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This thesis is the final assignment for the Master Business Studies at the University of Amsterdam. This Master thesis gave me the opportunity to explore the radical concept of crowdsourcing, utilise significant knowledge gained during my study and enable me to start working in TNT.!
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I would like to express my gratitude to my supervisor Dr. Tsvi Vinig for his insights and feedback during the research process. Our discussions not only were informative but his constructive criticism guided me to the right direction and understanding the academical research perspective. Thank you for your excellent supervision and your consistent belief in my capabilities all this year. !
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Furthermore, I wish to thank TNT for supporting my research. Especially I would like to thank Chris Goossens for granting me the opportunity to conduct research at TNT and believing in my future potential. My appreciation goes out also to Taner Karakan, Simon Hopkins and Janet Verden for connecting me with relevant stakeholder of the crowdsourcing projects. Moreover, I would like to thank the people who agreed to meet with me for interviews and talks concerning my research subject. I feel extremely glad by the fact that they were willing to share your experience with me. I hope that the results of this research could possibly contribute to promote innovation as a primary objective inside TNT. !
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Most of all I would like to thank my family and my girlfriend Alexandra for their constant psychological support and patience during this academic year. This thesis means the end of my studying period and start of a very promising professional carrier in TNT.!
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Thank you all, !
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NIkos Stathoulas!
July 2014!
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Executive Summary! 2! Acknowledgements! 4! 1 Introduction! 7! 1.1 Research Objective! 7! 1.2 TNT! 8! 1.3 Crowdsourcing! 8! 1.4 Research question! 9! 1.5 Theoretical Framework! 9! 1.6 Academic Relevance! 10! 1.7 Thesis Structure! 11! 2 Literature Review! 12! 2.1 Innovation! 12!2.2 Leveraging crowdsourcing as a form of Innovation! 13!
2.3 Defining Crowdsourcing ! 14!
2.4 Configurations for crowdsourcing innovation! 17!
2.5 Strategic objectives for Internal Crowdsourcing! 19!
2.6 Motivation to participate in crowdsourcing ! 21!
2.7 Organisational Culture for Innovation and Crowdsourcing! 24!
3 Research Methodology! 31!
3.1 Data Collection! 31!
3.2 Sample! 32!
3.3 Data analysis! 33!
3.4 Strengths and limitations of the research design! 34!
4 Empirical Results ! 35!
4.1 Innovation perception inside TNT! 35!
4.2 Leveraging internal crowdsourcing for ideas! 36!
4.3 Strategic objectives for Internal Crowdsourcing! 42!
4.4 Motivation to contribute in crowdsourcing! 43!
4.5 Organisational Culture impact in crowdsourcing projects! 44!
5 Discussion ! 50!
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5.3 Strategic objectives for Internal Crowdsourcing! 52!
5.4 Motivation to participate in crowdsourcing! 54!
5.4 Organisational Culture impact in Crowdsourcing! 55!
6 Conclusion! 59!
6.1 Research contributions, limitations and future research! 61!
6.2 Managerial Implications! 62!
References! 63!
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Innovation is the process of creating and delivering new customer value in the market place (Carlson & Wilmot, 2006). Erickson (2012) states that organisations are looking to enhance innovation related to current products/services and target crowds who have knowledge/skills of the current product/service offerings. The recent research of Gassman (2012) demonstrates an increasing amount of companies seek to leverage the distributed intelligence of their customers, suppliers, employees, and internet users by setting up crowdsourcing platforms and broadcasting their problems and tasks to the internal and external crowd. Previous research on internal crowdsourcing (Villarroel & Reis, 2010) indicate the possibility to address to employees from various geographic location, different divisions or even different hierarchical levels. This research examines the impact of internal crowdsourcing in accelerating innovation in TNT considering the aspects of company’s strategic objectives, employee motivation and organisational culture.!
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1.1 Research Objective!
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The objective of the Thesis Project is to study the impact of internal crowdsourcing in accelerating innovation in TNT. In order to achieve this goal we investigate the existing crowdsourcing platforms that TNT developed to gather, organise, select and manage innovative ideas supplied by employees at all levels. The research further aims to provide an insight for improvements and managerial implications. !
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1.2 TNT!
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TNT Express operates in what is commonly referred to as the Courier, Express and Parcel (CEP) market. TNT Express, headquartered in Hoofddorp, the Netherlands, has a worldwide presence, operates in 200 countries and employs almost 64.000 people. Presently, TNT is tapping into innovation is through internal crowdsourcing, although innovation is not considered a top strategic priority. However, this experimentation could lead to new ways to gain competitive advantage against competition. As a result TNT has launched three initiatives with a primary objective to extract ideas from the employees to accelerate innovation.!
1.3 Crowdsourcing!
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Companies are leveraging the crowd to resolve various tasks, to realise advertising and market research and to generate ideas related to product innovation (Erickson, 2012). For these diverse tasks, companies are turning to crowds inside the company (internal crowdsourcing) as well as leverage the expertise external parties (external crowdsourcing). Internal crowdsourcing leverages the expertise and heterogeneous knowledge of an firm's employees from various geographic location, different divisions or even different hierarchical levels. (Villarroel & Reis ,2010). While, external crowdsourcing leverages the expertise external parties. There are three types, community crowdsourcing (i.e. open source software development), open crowdsourcing (i.e Connect & Develop open innovation initiative in P&G) and crowdsourcing via a broker firms that connect potential ideators and problem solvers ( i.e. InnoCentive) (Simula, 2013)!
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1.4 Research question
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This research aims to study the impact of internal crowdsourcing in accelerating innovation in TNT. To accomplish this objective, the following research question is to be answered:!
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What is the impact of internal crowdsourcing in accelerating innovation in TNT?!
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In order to answer the main research question, the following sub-questions will be addressed:!
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Sub-Questions!
1. What type of innovation is requested and produced through internal crowdsourcing?! 2. How effective TNT is leveraging internal crowdsourcing and implements ideas?! 3. How aligned is TNT with the strategic objectives for using internal crowdsourcing? ! 4. How effective are the incentives in motivating TNT employees’ to participate?! 5. How the current organisational culture affects internal crowdsourcing?!
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1.5 Theoretical Framework
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To research internal crowdsourcing and its impact on innovation as phenomena we draw relevant literature on innovation (Carlson & Wilmot, 2006; Amabile, 1996;Crossan & Apaydin, 2010;Kim & Mauborgne, 2005), on crowdsourcing (Erickson, 2012;Howe, 2006;Gassman, 2012;Villarroel & Reis, 2010; Simula, 2013), on the strategic objectives for utilising internal crowdsourcing (Stieger ,2012; Li & Bernoff ,2008), organisational culture (Martins, 2003; Arad et al.,1997; van Dijk and van den Ende ,2002; Leach, 2006) and motivation incentives (Deci & Ryan, 2000; Gassenheimer ,2013; Hossain ,2012). We investigate how strategic objectives along with organisational culture and motivation affect internal crowdsourcing initiatives and subsequently their impact on innovation. The arrows in figure 1 depict this.
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Figure_1: Research model!
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1.6 Academic Relevance!
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This research will strive to understand the impact of internal crowdsourcing in accelerating innovation in TNT. Although companies are leveraging the crowd to generate ideas related to product innovation (Erickson, 2012; Villarroel & Reis ,2010) the effect of strategy, organisational culture and motivation combined have not yet received considerable research attention. Therefore it is vital to connect the concepts with each other and explore their effect on internal crowdsourcing. The objective is to draw general and valid assumptions through a literature review and investigate the impact of internal crowdsourcing on accelerating innovation. This research can add value by analysing if internal crowdsourcing helps TNT to increase its innovational capabilities and propose improvements on the current process. Simula (2013) underlines that employees possess rich knowledge and leveraging this knowledge through internal crowdsourcing lead to innovation that is vital for the competitiveness of the firm. Crowdsourcing is a relative new
interesting phenomena and therefore it is important to contribute new information to this broad research area.!
1.7 Thesis Structure!
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The remainder of this thesis is structured as follows. First, the literature review will be presented on the topics based on the theoretical framework (innovation, crowdsourcing, strategic objectives, motivation and organisational culture). Then, the research methodology section will follow. In this section the data collection method, data analysis method and the strengths and limitations of the research design will be explained. After, the analysis section will follow were the empirical results will be discussed. Thereafter, the discussion, conclusion, answer of the research question, limitations and managerial implication sections of this study will follow.!
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The literature review identifies important aspects of crowdsourcing for further understanding its relation to innovation, strategy, organisational culture and motivation.!
2.1 Innovation!
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Steve Jobs once quoted that ‘Innovation distinguishes between a leader and a follower’. Innovation is the process of creating and delivering new customer value in the market place (Carlson & Wilmot, 2006). Amabile (1996) points out that innovation is the successful implementation of creative ideas within an organisation. From impact (magnitude) perspective, innovation is can be characterised either radical or incremental. Radical innovation induces fundamental changes and a clear departure from existing practices in the organisation, while incremental innovation represents a variation of existing routines and practices in the organisation (Crossan & Apaydin, 2010). Regarding a strategic perspective, Blue Ocean Strategy is related to value innovation. Blue oceans are defined by untapped market space, demand creation, and the opportunity for highly profitable growth. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. (Kim & Mauborgne, 2005). In general, large organisations invest enormous amounts of time and effort in fostering innovation programs in order to achieve growth, meet new customer needs, create new experiences for customers and incorporate new technologies. Moreover, according to the PwC’s 14th Annual Global CEO Survey (PwC, 2011) , CEOs see innovation as the vehicle best suited to put them on the road for growth, expecting their innovation developments to drive efficiencies and create competitive advantages and new sources of revenue over the next years.
2.2 Leveraging crowdsourcing as a form of Innovation!
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According to Gassman (2012) an increasing amount of companies seek to leverage the distributed intelligence of their customers, suppliers, employees, and internet users by setting up crowdsourcing platforms and broadcasting their problems and tasks to the internal and external crowd. Gathering consumer insights in the early stages of the product innovation process, also described as the fuzzy front end, requires tools for identifying opportunities, generating concepts, and evaluating ideas (Gassman, 2012). Idea generation is a highly creative process that requires a sound understanding of customer needs from which to develop attractive ideas. In this process, companies can use two basic approaches—either a closed or an open innovation approach (Chesbrough, 2003). In the closed case, the company must retrieve customer insights and then internally apply creative techniques to find product ideas that fit identified customer needs. In an open innovation setting, the company directly involves customers or other external participants in the idea generation process. Similarly, Erickson (2012) argues that organisations looking to enhance innovation related to current products/services, target crowds who have knowledge/skills of the current product/service offerings. However, Erickson (2012) clarifies that when it comes to value extraction related to innovation, due to crowdsourcing usage in the early stages of product innovation benefits may be delayed and therefore difficult to immediately quantify. Following the literature on innovation management and new open models of innovation , there is another research stream on Stock Market for Innovation. In line with Villarroel & Reis (2010) online communities can interact to generate, trade and cumulate ideas that lead to innovation for the benefit of the firm. As a result crowdsourcing could facilitate knowledge exchange among the different actors in the innovation process. !
2.3 Defining Crowdsourcing
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Web technologies have made it possible to democratise innovation process enabling companies to broadcast an issue to a diverse audience (either internally or externally) and ask them to contribute ideas to solve the problem. This phenomenon is known as crowdsourcing. Crowdsourcing has been a hype since it has been introduced by Jeff Howe, a writer for Wired magazine in 2006 and more and more companies begin to experiment with crowdsourcing initiatives and try to take advantage of online collaborative technologies to harness the power of the crowd. Companies are leveraging the crowd to resolve various tasks, to realise advertising and market research and to generate ideas related to product innovation (Erickson, 2012). For these diverse tasks, companies are turning to crowds inside the company (i.e. employees) as well as outside their corporate boundaries (i.e. customers). According to an IBM Global CEO Study (IBM 2006), companies view employees as most significant source of ideas (42%), followed by business partners (36%), then customers (35%) . In a similar research of PwC, the 14th Annual Global CEO Survey (PwC, 2011) companies try to unlock employee’s knowledge and creativity, understanding that employees have a diverse collective knowledge better than any of their executive teams, and soliciting that knowledge results in surprising solutions to difficult problems. !
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When it comes to defining the term there is little consensus within the academic and business literature. Estelles-Arolas & Gonzalez-Ladron-de-Guevara (2012) found 40 different definitions of crowdsourcing in the literature. For example, Brabham (2008) regards crowdsourcing as a collaborative problem solving and co-production model. Heer & Bostok (2010 p.1) perceives crowdsourcing as “a relatively new phenomenon in which web workers complete one or more small tasks, often for micro-payments on the order of
$0.01 to $0.10 per task.” From the other hand, Huberman et al. (2009) consider YouTube as crowdsourcing, while Kleeman et al. (2008) do not. !
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Crowdsourcing can also be easily confused with other related Web 2.0 phenomena, such as social networking, communities of practice or social commerce, because on the surface all of them involve interaction and participation of individuals through the Web. different definitions extend our understanding of the phenomenon, inconsistent conceptualisations of the term can lead to confusion in identifying which applications are crowdsourcing and which are not. (Vreede, 2013). Howe (2006) identifies three main types of crowdsourcing : (1) Prediction market, with similar function to a stock market, (2) Crowdcasting is broadcasting a problem to a large, undefined network of potential solvers (3) Idea jam is an online brainstorming session with the objective to generate new ideas without particularly solving a problem. !
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From a conceptual point of view, crowdsourcing can be based on the framework of collective intelligence (Lévy, 1997), and the notion that ‘’all of us together are smarter than any one of us individually.‟ The opposite of collective intelligence is relying on a single agent, for example, a knowledgeable expert. The concept of collective intelligence has been popularised as the ‘’wisdom of crowds’’ (Surowiecki, 2004), and crowdsourcing can be defined as a tool to harvest collective intelligence for certain tasks. According to Aitamurto (2011), crowdsourcing differentiate itself by including an organization-participant relationship, where the organization engages in a top-down, managed process to seek a bottom-up, open input by users in an online community. !
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Another concept that seems to overlap with crowdsourcing related with the notion of collaborative innovation is open innovation . Open Innovation, term coined and defined by
Henry Chesbrough in 2003, is a paradigm that assumes that firms can and should use ideas both internal and external channels to market. Many authors tend to correlate crowdsourcing with Open Innovation, for example Jeffrey Phillips, in the book “A Guide to Open Innovation and Crowdsourcing” (Sloane, 2011) , identifies the crowdsourcing as a way of implementing Open Innovation. The resemblance between the two processes is because both, Open Innovation and Crowdsourcing, are based on the same paradigm: knowledge is distributed and utilising it could lead to a competitive advantage. Regardless the resemblance there are two main differences that prevent the full and clear identification between the two types of processes. Schenk & Guittard (2009) explain that that Open Innovation focuses only on the innovation process, while crowdsourcing can strive other objectives like funding through crowdfunding. They argue that, Open Innovation describes the interaction among firms (i.e. patents), while crowdsourcing describes the interaction among the crowdsourcer (i.e. a company,) and the crowd.!
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Finally, Howe (2006) that describes crowdsourcing as a special form of outsourcing and defines it as “…the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call. Hoerever ”Afuah and Tucci (2012) extend the definition as “crowdsourcing is the act of outsourcing a task to a ‘crowd’ rather than to a designated ‘agent’ (an organization, informal or formal team, or individual), such as a contractor, in the form of an open call”. Despite the above definitions, we could argue that if an organization is sufficiently broad and heterogeneous; its employee “pool” also can “act” as a crowd. For instance, large multinational corporations such as IBM frequently, and systematically, draw on their employee bases for innovative ideas (IBM‟s Innovation Jam). Consequently, the notion of ‘internal sourcing’ by Afuah and Tucci (2012) can be termed internal crowdsourcing (Villarroel & Reis).!
2.4 Configurations for crowdsourcing innovation!
Simula (2013) reviewed the literature on crowdsourcing and identified four distinct configurations of innovation crowdsourcing available to (industrial) firms namely: internal crowdsourcing; community crowdsourcing; open crowdsourcing; and crowdsourcing via a broker.!
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Figure 2 : Categorisation of configurations for innovation crowdsourcing (Simula, 2013)!
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Internal crowdsourcing: The fundamental idea of internal crowdsourcing is to leverage
the expertise and heterogeneous knowledge of firm's employees. Arguably, employees possess rich and often tacit information on their firm's customers, the firm's product and service offering, production processes, and many other areas that are vital for the competitiveness of the firm (Simula, 2013). The possibility to address to employees from various geographic location, different divisions or even different hierarchical levels trigger the research of Villarroel & Reis (2010). Villarroel & Reis (2010) refer to internal crowdsoursing as ‘’Intra-Corporate Crowdsourcing (ICC) and define it as “the distributed organizational model used by the firm to extend problem-solving to a large and diverse pool of self-selected contributors beyond the formal internal boundaries of a multi-business
firm: across business divisions, bridging geographic locations, levelling hierarchical structures.’’!
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Community crowdsourcing: Community crowdsourcing taps in the expertise of densely
connected networks of experts working on a specific topic or challenge. Ultimately, participants become known in community crowdsourcing when the selection or joining process is completed (Simula, 2013) However, if the call to join the community reaches a sufficiently large audience, it is felt that this network also can be included in crowdsourcing. Several examples can be found in the software industry; in particular, within open source software development. For example, in open source coding, communities of coders want to create better software than that available from commercial firms (Howe, 2008).!
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Open crowdsourcing : The aim of open crowdsourcing is to gain access to the brightest
of ideas by involving as many actors as possible in the innovation challenge, and making it as easy as possible for any actor to contribute. In other words, there is no pre-selection and the call to participate is open to everyone — something that “purists” would claim the only way to run crowdsourcing. In any event, there are several successful examples of open crowdsourcing in consumer industry. Procter & Gamble has also been a forerunner with its Connect & Develop open innovation initiative that reaches out to the crowd, so that anyone can help them identify new innovations across their business. (Simula, 2013)!
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Crowdsourcing via a broker: Crowdsourcing via innovation intermediaries (Lichtenthaler
& Ernst, 2008), or innovation brokers (Lopez-Vega & Vanhaverbeke, 2009) relies on a particular type of firm that connects potential ideators and problem solvers with organisations seeking new ideas or specific solutions to their problems. In practice, this
means that no existing relationship is required for crowdsourcing to operate between the parties. Innocentive, Yet2, YourEncore, and NineSigma are examples of crowdsourcing brokers (Hossain, 2012).!
2.5 Strategic objectives for Internal Crowdsourcing!
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Internal crowdsourcing uncovers meaningful innovations from employees , which in other way could not be explored due not having relevant to job description (Yap, 2012). In the same context, Carlson & Wilmot (2006) highlight that all employees have the ability to innovate, and they should to innovate in order for their company to have a competitive advantage. Furthermore, It is important that employees understand the vision and mission of the company to support innovation, something that resides from an innovation strategy. An innovation strategy, is a strategy that promotes the development and implementation of new products and services. Top management defines a set of strategic goals and objectives, that reflect current the innovation strategy and regarding the crowdsourcing projects, Li & Bernoff (2008) suggest five objectives that companies can pursue:!
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Energising: The first objective for internal crowdsourcing is energising employees. Every
individual employee in the company has a voice and can be engaged in discussion on an equal basis. An important sign of the company being open and demonstrate that employees’ ideas are welcome. Surowiecki (2004) argues that “the more responsibility people have for their own environments, the more engaged they will be. !
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Listening: The second objective for an internal crowdsourcing project is actively listening
to employees. Hamel (2007) claims that there are always reservoirs of information in any company that cannot be shared and processed easily. People lower in the company hierarchy possess information, such as customer feedback that frequently has the
character of decentralised, private information. Most of this information is not captured in formal management reports, which are the cornerstones of decision making in traditional companies. Stieger (2012) argues that listening to dialogues and proposals spreads (discomforting) information, so that it cannot be ignored or simply explained away as it moves up the hierarchy.!
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Talking: The third objective for an internal crowdsourcing project is initiatives to convey
information concerning employees. For example, the responsible department can take advantage of an activity inside a company by communicating important information about competitors, competitor products, market demand, and customer problems. Li & Bernoff (2008) point out that employees are engaged in conversations and exchange opinions and understand each others’ point of view. !
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Supporting: The fourth objective is supporting by applying a communication tools. This
helps employees support each other by simplifying direct contact. Inside a company, crowdsourcing could be a possible way to become acquainted with employees from other departments or other geographical regions. Thus, employees can get the support they need from around the company, not just from within their local branch. (Li & Bernoff ,2008)!
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Embracing: Finally, one objective of collective activities can be embracing new talent and
entrepreneurial thinking (Stieger, 2012). By analysing the contributions of participating employees, management can identify people with problem-solving skills, with innovative ideas or even with new business models. The collective action can become a new approach to boost new ideas and recruit talented employees for projects. The goal is to give employees freedom and the opportunity to raise and discuss strategically important topics and provide detailed information and proposals. !
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table 1: Objectives for Collective Actions Inside a Company!
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2.6 Motivation to participate in crowdsourcing !
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Successful crowdsourcing requires an active and motivated crowd. The is a number of motivation that might promote participation in crowdsourcing. However since there is a limited crowdsourcing literature, the self-determination theory is used a basis to describe the most engaging crowd motives for crowdsourcing. As stated in self-determination theory, autonomy, competence, and relatedness are three constitutional needs inhibiting all motivations (Deci & Ryan, 2000). Autonomy indicates the desire to self-organize experience and behaviour, meaning a free will to command one’s own behavior. Competence indicates the ability to influence the environment and obtain value from that environment. Relatedness indicates the feeling of connecting with people, particularly to care for people and to be cared for by people. Gassenheimer (2013) is applying the
self-Energising
Every single employee in the company has a voice and can participate in the discussion on an equal footing. An important sign of openness— employees’ ideas are welcome
Listening
Listening to employees and harbour reservoirs of information. Gather private information from people down the company hierarchy in order to identify unknown problem domains.
Talking
Employees can participate in stimulating conversations to understand each others’ point of view. Improvement of understanding regarding the strategic questions raised.
Supporting
Employees can get acquainted with employees from other departments. Direct support from responsible employees/departments should be fostered. Information known by special groups of employees can be spread.
Embracing Identify engaged employees with outstanding understanding of problems
or with innovative ideas. Surface ideas and talent inside the company.
determination theory and its extension to virtual communities. The three types of motivations denoted for crowd participation in crowdsourcing are intrinsic, extrinsic, and internalised extrinsic motivation. !
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An intrinsically motivated crowd is keen to participate, share, be engaged and support an activity without financial reward. Every participant in an intrinsically motivated crowd perceives its contribution as a selfless assistance to the community and the organisation, as a further development of relationships with other crowd participants and individual personal enjoyment (Howe 2008; Kleeman et al. 2008). When the company (crowdsourser) utilises a platform to address to the crowd for a particular problem, form one hand the crowd contributes with solution, form the other hand the crowd obtains the ability to interact and share knowledge within a community nurturing the fundamental need of relatedness. Sharing views and suggestions, related to the quality of their own working environment is also noted by Yap (2012) as a motive for internal crowdsourcing. A crowdsourcing platform supports asynchronous work and collaboration between the crowd participants. This feature provides the ability to the participants to choose the time, place, and content of their work, nurturing the essential need for autonomy, as supported by self-determination theory. Part, of the crowdsourcing platform and the process is feedback to the participants. Gassenheimer (2013) states that negative feedback decreases intrinsic motivation, while positive feedback reinforces intrinsic motivation and cultivates the fundamental need of competence.!
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Hossain (2012) explains that an extrinsically motivated crowd is driven by financial, social, and organisational incentives. Financial incentives comprise cash, job opportunities, revenue, etc. Social incentives comprise peer recognition, status and reputation, power, skill development, experience and knowledge gathering, networking and collaboration, etc.
Organisational motivations comprise responsibility, prestige, career, recruitment and employees need to market themselves. Prior research on motivation assumes that self-interest seeking individuals are cautious to share knowledge with others. Without a sufficient rewarding system, an extrinsically motivated crowd participants could withhold sharing knowledge and act opportunistically to capitalise on the knowledge of others. According to self-determination theory findings, extrinsically motivated participants stop participating as rewards are removed and are more likely to act opportunistically. (Hossain, 2012). Consequently, the company (crowdsourcer) has to successfully use financial incentives to motivate some crowd participants to contribute knowledge, so to create a win-win situation.!
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An internalised extrinsic motived crowd is driven by a combination of extrinsic motivation that is incorporated into the crowd participant’s own value system. In other words, the crowd participants have synthesised the original external motive with their own internal motivational system. (Gassenheimer, 2013). Internalised extrinsic motivation is closely related with Psychological ownership. Psychological ownership is “the state in which individuals feel as though the target of ownership or a piece of that target is ‘theirs’” (Pierce et al. 2003, p. 86). An example of psychological ownership experience is when companies give the crowd the opportunity to select which products are to be marketed, or allowing crowds input into the new product development or design process. In consensus with self-determination theory, the autonomy need is fulfilled by the ability to choose a design, the competence need by having the design or design choice approved by the community, and relatedness by interaction within the community (Ryan & Deci, 2000).!
Consequently, a mixture of motivations is strongly suggested to inspire the crowd participation. Parts of the crowd participants will exchange knowledge for an opportunity to be socially connected, others to have an economic gain and others to experience psychological ownership. Having a system emphasise in only one aspect might limit participation. !
2.7 Organisational Culture for Innovation and Crowdsourcing!
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As stated by Aiman-Smith (2004) organisational culture is a commonly held in-the-mind framework of organisational members. This framework contains basic assumptions and values. These basic assumptions and values are taught to new members as the way to perceive, think, feel, behave, and expect others to behave in the organisation. In accordance to Edgar Schein (1999) organisational culture is developed over time as people in the organisation learn to deal successfully with problems of external adaptation and internal integration. It becomes the common language and the common background.!
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To examine the impact of organisational culture on innovation and crowdsourcing Martins' model (Martins, 2003) is utilised since as a starting-point. According to the model the determinants of organisational culture that influence innovation are (1) innovation strategy, (2) organisational structure, (3) support mechanisms (4) behaviour that encourage innovation and (5) communication (figure 3). These determinants are interrelated and significantly impact internal crowdsourcing process characteristics. (Table 3)!
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Literature Review !
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Figure 3: Determinants of organisational culture that influence creativity & innovation (Martins,2003)!
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Innovation Strategy: An innovation strategy is a strategy that promotes the development
and implementation of new products and services (Robbins, 1996). Covey (1993) claims that the origin of creativity and innovation lies in a shared vision and mission, which are focused on the future. As a result employees should understand the vision and mission. Judge et al. (1997) describe successful innovation as chaos within guidelines; in other words top management prescribes a set of strategic goals, but allows personnel great freedom within the context of the goals. With respect to crowdsourcing, Booz Allen-Hamilton ( 2011) explain that a clear statement of the objective coupled with a well framed plan outlining on how to run the project and how to engage participants.!
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Structure : Organisational culture has an influence on the organisational structure. With
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supports innovation are values like flexibility, freedom and cooperative teamwork. On the contrary, values like rigidity, control, predictability, stability and order mostly associated with hierarchical structures will hinder innovation. Moreover, literature reveals that the degree to which employees have freedom and authority to participate in decision making in solving problems determines the level of empowerment, which is positively related to the level of creativity and innovation in an organisation (Arad et al., 1997). Such a level of freedom could be provided by a crowdsourcing initiative. Villarroel & Reis, (2010) research a platform which enables the employees to post their ideas, comment, collaborate, suggest improvements posted by others and then trade the ideas as viral currency. The outcome suggested that innovation performance increased if employees were lower in the corporate hierarchy and had a geographical distance from the corporate and innovation epicentres, leading to the fact that employee hold unique knowledge that proves valuable in turning up with novel solutions to existing problems the company faces.!
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Support mechanisms : Support mechanisms include rewards and recognition and the
availability of resources, namely time, information technology and creative people (Martins, 2003). Behaviour that is rewarded reflects the values of an organisation. Since creative behaviour is rewarded, then it become the dominant way of behaving (Arad et al., 1997). Resulting that employees should be rewarded for risk taking, experimenting and generating ideas. According to Howe (2006) crowdsourcing works best when an individual or company gives the crowd something it wants. Another way of thinking about this is successful crowdsourcing involves satisfying the uppermost tier on Maslow’s hierarchy of needs. People are drawn to participate because some psychological, social, or emotional need is being met. And when the need isn’t met, they don’t participate. What this means for companies is they must reverse the thinking that normally goes into employee relations. Research suggests that employees are more likely to submit ideas on a regular
basis if they are intrinsically motivated to do so (Amabile, 1996), but extrinsic rewards are often also seen as an important stimulant to suggestion-making (Frese et al., 1999). Indeed, van Dijk and van den Ende (2002) propose that both non-financial and financial rewards should be used, such as a combination of recognition and monetary awards. Based on this argument, Leach(2006) argues that the size of financial rewards typically are relatively modest, and that the use of both non-financial and financial rewards will be more strongly related to scheme effectiveness than when one or other type is used alone.!
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Moreover, organisational culture that promotes innovation should allow employees time to think creatively and experiment. In parallel, it is necessary to motivate employee participation and provide them sufficient time. While employees are typically enthusiastic about providing input for new initiatives, there is no guarantee of universal participation. Companies often ask employees to innovate, yet many are unwilling to grant them the time to do so. PwC (2011) research has shown a direct correlation between teams that are given time to innovate and those that submit a winning crowdsourcing idea. Perhaps the best-known proponent of this strategy is Google, which allows engineers to spend 20% of their time working on personal side projects, an initiative that has resulted in products such as Gmail, Google News, and AdSense.!
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Shattow (1996) states Information technology as a support mechanism is an important resource for successful innovation. Crowdsourcing enables communications and ideas exchange. In addition, when the crowdsourcing platform is built in-house involving internal discussion with employees (Leach, 2006) it provides an opportunity for employees to comment on the platform design and thereby enhancing employee ownership.!
Recruitment, selection, and maintaining employees are an important part of promoting the culture of and specifically innovation in an organisation. Assigning people of diverse backgrounds should lead to richer ideas and processes that should stimulate creativity and innovation (Martins, 2003) Equally, the power of crowdsourcing lies in its ability to systematically engage a large, diverse group of people in collaborative problem solving. Referring to PwC (2011) research significant advantages arise from including people with a diverse range of problem-solving approaches, backgrounds, and personal experiences. Employees can contribute with their local information that is not available to the top management or can effectively falsify assertions made by other participants. (Stieger, 2012).!
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Behaviour that encourages innovation : This refers to values and norms that encourage
innovation and manifest themselves in specific behavioural forms that promote or inhibit creativity and innovation. Tolerance of mistakes, experimenting, generate ideas and fairness treatment are essential elements in the development of an organisational culture that promotes creativity and innovation. Successful organisations reward success and acknowledge or celebrate failures, for example, by creating opportunities to openly give feedback and discuss and learn from mistakes (Tushman and O'Reilly, 1997). Leach (2006) points out the role of feedback in enabling individuals and teams to perform effectively. The findings of Zhou’s (1998) laboratory experiment showed that the most creative ideas were the product of an interaction between positive feedback, an informative style of feedback and high task autonomy. In an applied setting involving operators of advanced manufacturing technology, the findings of a change study showed that feedback can increase operators’ self-reliance and lead to substantial performance gains. With regard to internal crowdsourcing, providing feedback to employees on their
ideas should demonstrate that the crowdsourcing project is well run, thus facilitating sustained participation.!
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Moreover, taking risks and experimenting are behaviours that are associated with creativity and innovation. A culture in which too many management controls are applied will inhibit risk taking and consequently creativity and innovation (Judge et al., 1997). This where the Senior Management support plays significant role. According to Leach (2006) management support is widely viewed as an essential requirement to promote employee creativity, grow participation and ideas submission. In crowdsourcing, Senior management must remain engaged and informed, so they can support project leaders in their day-to-day management of the projects. Booz Allen Hamilton (2011) argue that is important that leaders must show commitment to implementing useful ideas obtained through crowdsourcing. This will build the trust and buy-in of participants.!
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An organisational culture in which personnel are encouraged to generate new ideas and these ideas are submitted to fair evaluation, will also support and encourage creativity (Amabile, 1996) In the crowdsourcing context and according to Gassmann (2014) one way to achieve a high level of fairness can be community voting, where the employees decide which idea is best. Indeed, this method corresponds to the democratic ideal, but while community voting might work in some situations, it also has its drawbacks. Especially with a small number of participants, community voting is often influenced by human characteristics, such as personal sympathy, antipathy and alliances. When idea reviews within some communities are analyzed, it becomes apparent that some innovators mutually exchange good reviews. Still, many platforms offer participants the possibility to comment on other ideas. The final evaluation, however, is normally made within the company seeking ideas. The company’s internal evaluation committee might take the
community vote into consideration, but is not obliged to do so, and can attribute higher importance to other (preferably pre-defined) criteria.!
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Communication : An organisational culture that supports open and transparent
communication has a positive influence on promoting creativity and innovation (Barret, 1997). Employees have to feel emotionally safe to be able to act creatively and innovatively and should therefore be able to trust one another, which in turn is promoted by open communication. Regarding crowdsourcing communication is related to Integrating the entire world into the innovation process and that relates to publicity. Publicity for the crowdsoursing project is most likely to contribute to effectiveness in several interrelated ways. The minimum that publicity should do is to create an awareness. Publicity can also serve as both a conduit for reaffirming management commitment to creativity, suggestion making and innovation, and a type of feedback as it informs individuals of successfully implemented ideas and awards. Leach (2006) envisages that publicity will help to create a climate in which making suggestions is perceived to be welcomed and valued.!
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Table 2 : Interrelation of Organisational Culture for Innovation and internal Crowdsourcing!
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Organizational
Culture Strategy Structure
Support
Mechanism Behavior Communication
Crowdsourcing Clear Statement Diversity Rewards Freedom IT Evaluation Feedback Senior Support Publicity
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A research design constitutes a conceptual framework for the study and a plan of action to get from the research questions to conclusions (Yin, 2003). The research utilises a qualitative approach due to the infancy of the research area. When little is known about a phenomenon, qualitative methods are advocated for their ability to discover the underlying nature of the phenomenon in question (Strauss,1990). A qualitative approach with semi-structured interviews, consisted of open-ended questions will support to gain deeper understanding of different opinions of the chosen research area. Since people is the main actor of internal crowdsourcing, identifying various opinions and views of the concept is considered crucial in order to answer the key research question. However, there could be downsides of qualitative data research . A lot of people argue that qualitative studies are often biased by the people who conducted the research (James et al., 2008). For example, during an interview the researcher might unconsciously ask so called leading questions, which induce certain answers from the interviewee (Emanuel, 2007). Nevertheless, a qualitative approach seems suitable for the specific topic of this study.!
3.1 Data Collection!
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To begin with, information about the current situation on crowdsourcing is collected from previous literature research, websites and other online content. Next examine previous literature in order to provide a background of the academic debate regarding this topic. This is in agreement with the idea of triangulation, studying converging findings from various sources of evidence, and strengthens construct validity (Yin, 1994). Primary data is obtained from the conduction of sixteen in-depth interviews. Interviews can be considered the interaction between data collection and analysis. A brief analysis of individual situations can be performed and possible new themes may be identified as a
result of which information collection can still be somewhat adjusted (Brohm and Jansen, 2010). The interview method embeds the quality of the dialogue that offers the possibility to reflect on each other’s opinions and beliefs. (Brohm and Jansen, 2010). As a result, with dialogue, what is believed to be true can be discussed anew, and insight into alternative opportunities can be gained.!
3.2 Sample!
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The sample of subjects is selected based upon the participation in three different internal crowdsourcing projects (view table 3.). In total 16 formal semi-structured interviews were conducted, consisted of open-ended questions. The interviews examine 3 different crowdsourcing initiatives/projects, one in TNT UK, one in TNT Germany and one in TNT N.America. The UK interviews were conducted while visiting the TNT in the UK. The interviews for TNT Germany and TNT N.America were conducted in TNT Headquarters in Netherlands through personal meetings or by phone. For the crowdsourcing platform in the UK, 10 interviews were conducted, consisting of 4 interview of Management level employees and 6 with TNT UK Customer Service employees. The Management level employees have the following positions : Customer Promise Manager, Product General Manager, General Manager of Business Insight and Customer Excellence Manager. For the crowdsourcing platform in Germany 3 interviews were conducted, of them 1 was made in TNT Netherlands and 2 to TNT Germany by phone. The interviewees had the following positions: ICS Manager, HR Manager, and HR Assistant who was interviewed as a platform user. For the crowdsourcing platform in N.America 3 interviews were conducted, of them 2 were made in TNT Netherlands and 1 to TNT N.America by phone. The interviewees had the following positions: Internal Communication Manager, Global Sales Communication & Engagement and Marketing Director.The reason that these people were enlisted in the study, is to better understand TNT’s scope for implementing the
crowdsourcing platform. These interviews assist to improve the awareness of how Senior Managers considers Strategy, Culture and Innovation since they are the key decision makers. From the other side, interviewing employees that participated in the platform by submitting ideas, could help to better understand the motivation of participating and the organisational culture as an enabler of the crowdsourcing initiatives/projects.!
table 3: Interviewees!
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3.3 Data analysis!
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The interviews were recorded with permission and with an average duration of 45 min to 1h. An in-formal confidentiality agreement is agreed upon with the company and interviewees to keep their names undisclosed. The interview questions are based on
Interviewee Position in TNT Crowdsourcing
Platform
Interview Type
UK1 Customer Excellence Manager UK 1to1
UK2 Product General Manager UK 1to1
UK3 General Manager of Business Insight UK 1to1
UK4 Customer Promise Manager UK 1to1
CS1 Customer Service Representative UK 1to1
CS2 Customer Service Representative UK 1to1
CS3 Customer Service Representative UK 1to1
CS4 Customer Service Representative UK 1to1
CS5 Customer Service Representative UK 1to1
CS6 Customer Service Representative UK 1to1
DE1 Country ICS Manager Germany 1to1
DE2 HR Manager (Quality Audit Specialist) Germany Phone
DE3 HR assistant Germany Phone
NA1 Internal Communications Manager N.America Phone
NA2 Marketing Director N.America N.America Phone
NA3 Global Sales Communication & Engagement
literature review on Innovation and Crowdsourcing. Examples of the question asked are : Why you started the crowdsourcing initiative? What innovation is pursued by the crowdsourcing initiative? What was your motivation to submit an idea? How do feel of the reward and how quick was the feedback? The responses to these questions assisted to answer the research sub-questions and provided insight into the main topics of crowdsourcing. The recorded data were then transcribed by the researcher. Following transcription, the interview data were coded and imported to Nvivo Software to organise textual data in themes. Data were coded into Nodes based on the Literature review: (i) Innovation (ii) Crowdsourcing (iii) Motivation (iv) Organisational Culture. Analysing the data with Nvivo provided a structured way of thinking. Also, re-contextualising raw data assisted in discovering unexpected insights like the importance of idea platform’s need for publicity and internal communication. The raw data of the interviews are not included in the appendices due to the employee interviews containing confidential information.!
3.4 Strengths and limitations of the research design!
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Of the straights of the research design is the use of Nvivo software. Nvivo computer software helps and supports researchers in the analytical process of coding and analysing textual data, makes data easily accessible to collaborators and thus strengthens credibility, replicability and substance of research results. Yin (2003) encourages the use of good protocols to substantiate qualitative research. Of the limitations of the research design is that it focuses on a single unit and company and could cause the issue of generalizability (Sharam ,2009). However, this qualitative case study is limited by the sensitivity and integrity of a single investigator. The current researcher has the advantage of being the primary instrument of data collection and analysis, but there is a lack of training in interviewing.
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4.1 Innovation perception inside TNT!
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In this section interviewees are discussing on the importance of Innovation and its connection with the crowdsourcing initiatives/projects described in the following section 4.2. The content analysis of the interview transcripts demonstrated that TNT is focusing on incremental service innovation (Crossan & Apaydin, 2010) and not searching for a blue ocean space in the market (Kim & Mauborgne, 2005). Most interviewees believe is that since TNT is in the transport industry, the innovation capability is incremental compared to other industries like automotive, technology and that since the product is defined, the service can be improved with incremental changes. However, innovation was part of the strategy map to along with operation excellence and customer value until 2007. TNT focus on how to innovate as a business lead to bring to the market innovations before competition such as overnight delivery and track and trace. A failed M&A effort between TNT and UPS in 2008 had as a consequence TNT’s efforts on innovation to decrease and to be left behind of competition. As a result TNT currently is trying to insure a long term sustainable future and ensure business continuity by getting basic building block right. As stated by an senior management level interviewee:!
‘’TNT is about surviving and insuring to have a long term sustainable future and ensure business continuity about getting basic things right. Our CEO is not looking for blue sky innovation, but for thing that we can leverage. We need some basic building blocks to catch up with competition because we have left behind. ‘’ [NA1]!
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From the stated above we can point out that the CEO is not looking for a blue ocean space, but for things that TNT can leverage to catch up with competition. As long as for the crowdsourcing initiatives, the participants were asked how do they perceive the crowdsourcing projects. The response was that they consider crowdsourcing as idea
sharing and collaboration that are ingredients of innovation. In a contradictory statement the same manager mentioned above argued that:!
‘’Idea sharing and collaboration are ingredients to innovation. We want to bring ideas from the employees and best practises from the countries. So, harnessing ideas from employees is something that we embrace’’. [NA1]!
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Moreover, crowdsourcing projects are linked to Lean methodology followed by TNT. The operation process in TNT is using Lean methodology across the businesses for incremental improvement and use new technology. The ideas coming up from the Idea platform in the UK are fed to Lean experts to become a source of projects. Also, Lean Experts validate the ideas to push it forward to the local managers or national managers for implementation. !
‘’There a lean structure links with the idea platform. The ideas are fed to lean experts and become a source of projects’’. [UK1]!
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This quote indicates states that crowdsourcing project in the UK linked with the Lean methodology focusing on incremental innovations and improvements.!
4.2 Leveraging internal crowdsourcing for ideas!
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TNT is trying to leverage the distributed knowledge of its employees by setting up internal crowdsourcing platforms.This paper examines three initiatives: I’dea platform in the UK,
Talk-it-up collaboration platform in N. America and BVW portal in Germany. In this section
participants were asked to describe the internal crowdsourcing from a process perspective and to provide their views on the ideas submitted and the implemented ones.!
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The I’dea platform is online in the UK for 4 years now with the objective to give employees the opportunity to submit ideas, like or comment on ideas. The online platform replaced the old suggestion box system in order to provide visibility to the ideas submitted and to
have the ability to produce analytics reports. There is an official workflow that has the following steps (1) Create campaign (2) Generate ideas (3) Pre-screening (4) Evaluation (5) Decision (6) Implementation. Campaigns are created by Division Managers, the pre-screening is done by the platform’s moderators that distribute the ideas according to function and if is national or local. The Evaluation and Decision and Implementation is completed by the General manager either in local or national level. In the following charts and tables are basic analytics of the ideas submitted, rejected and implement through the
I’dea platform. The following statements summarise the perception of the current
crowdsourcing projects in terms of ideas and implementation.!
‘’Its the business structure that enables the company to be really effective in terms of idea generation, however in the UK the design is for incremental improvements.’’ [UK1]!
‘’ We need to quantify an idea, to find out the ROI but it might take up to 6 months to understand the benefits of an idea.’’ [UK3]!
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6%
94%
ideas rejected ideas implemented
2011 2012 2013 total
Ideas submitted 197 570 182 949
ideas rejected 184 540 168 892
The BVW portal in Germany is an intranet portal with the objective to enable employees creativity to improve the efficiency, to revamp TNT’s process, to increase employee motivation and help on customer solutions. Employees similar to the platform described above can submit ideas, like or comment on ideas aiming to improve the efficiency and competitiveness. The process is similar to the crowdsourcing process steps in the UK. First the idea is submitted by the employee explaining the benefits of implementation. Then the BVW evaluator prepares a report examining further the advantage of implementation of the idea. Further the BVW team sets a date with the according department - function that the proposal is a addressed to. And finally, after that proposal is reviewed by both the team and the department, it moves forward of implementation n or not. From a system perspective the platform operates under. In the following charts and tables are basic analytics of the ideas submitted, rejected and implement through the BVW
portal. The following quotes summarise the perception of the content of the ideas
crowdsourcing projects in terms of ideas and implementation.!
‘’There are really good ideas which save a lot of money and its good that they use the tool, however it needs to be driven seriously by senior management.’’ [DE1]!
‘’We implement a lot of ideas based on how to simplify the processes on a daily base and help the business to improve results’’ [DE2]!
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Talk-it-up collaboration platform in the USA is a pilot program that was initiated last year
with the objective to accelerate collaboration and innovation. The rational behind the pilot was that idea generation, best practice sharing could lead to cost saving and innovation. Also, employee engagement, cross-functional collaboration, knowledge sharing and recognise and reward performance could lead to positive impact on TNT’s Employee Value Proposition. The pilot is based on the open-call principle, were a General Manager is addressing the crowd to come up with ideas i.e. the Sales Manager asked ‘What ideas do
you have to grow our business to $100 million in N. America’. As a result, employees
respond to the open-call by posting ideas or commenting on other employee’s ideas. From a system perspective the platform provides an excellent reporting tool that can visualise, ideas, replies, votes, participants, departments, locations and word frequency. The following charts and tables demonstrate basic analytics of the locations, posts (ideas submitted), comments and votes through the Talk-it-up collaboration platform. The
7%
93%
ideas rejected ideas implemented
2010 2011 2012 2013 totals
Ideas submitted 142 144 47 98 431
ideas rejected 126 139 45 89 399
