Opportunities and Challenges with

Crowdsourcing in Smart Regions

Birgitta Bergvall-Kåreborn Luleå University of Technology

Luleå

Birgitta.Bergvall-Kareborn@ltu.se

Anna StåhlbröstLuleå University of Technology

Luleå

Anna.Ståhlbröst@ltu.se

Agenda

• Smart Regions

• Living Lab

• Crowdsourcing: hobby, labor, work, or

exploitation

• The case of IoT Lab

• The case of Apple and Google

• Reflections

What do we mean by Smart Regions?

Smart refers to when investments and

innovations contribute to sustainable

growth with a high quality of life and a wise

use of natural resources through active and

open involvement of citizens

Strengths in our region

• Strong economical growth

• Entrepreneurial people

• Unique natural resources

• A magnificent nature

• Broadband for “all”

• Attractive living environments

• Changing and rich cultural life

• Collaboration between the university and the society

• Cold, Dark, Slippery, Snowy, Silent, Distances

• Small villages and cities –

shorter ways to decision, trust

Challenges for the region

• Geographical distances – most remote in Europe

• Decreasing population – decreasing tax income

• Growing amount of elderly– increased societal

costs

• Power structures –increase young peoples

influence

• Need of infrastructure (transport/IT/service)

• Cold, Dark, Slippery, Snowy, Peripheral

• Small villages and cities – many want their own

solution – unhealthy competition/protectionism

People

Places/spaces

Education

eHealth

Transport

eGovernment

Infrastructures

Living

eBusiness

Digitalization enabling a “smarter” region

Background of EnoLL

• Started to emerge in 2003 in Europe

• About 420 Living Labs today– Work in different thematic areas,

e.g. energy, e-manufacturing, e-participation, rural LL

• EnoLL office situated in Belgium, IBBT– Yearly waves of LL recruitment

• Build on the assumption that large user communities situated in real-life contexts and build on Public-Private Partnership can support the innovation process

Living Lab – Quadrouple Helix

COMPANIES

RESEARCHERS

PUBLIC ORGANISATIONS

CITIZENS

Living Lab - An Open environment for

human-centric ICT development

Characteristics of Living Lab approach

• Design, test and experiment in real-life contexts

• Encourage humans (e.g. potential users) to be engage to

take active part in innovation processes form early

needfinding to market launch

• Design digital service innovation with humans and their

needs in the center

• Adopts an open approach and strives to elicit resources of

different types from the environment

• Partly distributed

• Multi-stakeholder involvement

Living Lab

A Living Lab is a user-centric innovation

environment, built on realistic activities

and research where all relevant partners

are involved in open processes, with objective

to generate sustainable values for LL partners

and stakeholders

Living Lab as a Milieu

• ICT & Infrastructure: the

role technology play in

innovation processes

• Management: ownership &

organisation

• Partners & Users: The

collective knowledge

• Approach: methods and

techniques for LL practice

• Research: learning and

reflections

Key-Principles in practice

Openness;

Engage multi stakeholders to participate

Openly share ideas and designs

Have an open mind

Influence:

The input from stakeholders must be used

The results of the input should be communicated

Users are active, competent partners and domain experts

Value

Experienced value of the innovation

Focus on understanding needs and motivators

Values arising from experiences and reflection of use

Key-Principles in practice

Realism:

Make real world implementations

Stimulate real use situations

Understand stakeholders different views on reality

Sustainability:

Continuous learning – development of theories, models and

methods

Minimise environmental impact by developing sustainable

innovation processes

Living Lab Activities

Happens wherever the people are or could be

Different types of involvement

Design for UsersDesign with Users

Design by Users

Crowdsourcing –

Hobby, Labour, Work, or

Exploation

Crowdsourcing

• In 2006 Jeff Howe presented crowdsourcing as

a new level of outsourcing, arguing that instead

of sending jobs to countries such as India and

China, companies now outsource functions once

performed by employees to an amorphous and

generally large pool of individuals

Crowdsourcing

• In the beginning many of the crowdsourcing

activities were not perceived as ‘work’ in the

traditional sense, but interpreted as socialising,

blogging, or contributing towards creativity and

innovation.

• US Berkerlys SETI@home (lending processing

power from millions of computers to search for

extra terrestrial life)

• Wikipedia

• MySpace

Crowdsourcing

• Crowdsourcing are often portrayed as the

‘democratization’ of idea generation and as a

form of creative commons

• BUT the significant commercial value some of

these platforms have created is not shared

equally

IoT Labs: The power of the crowd

och IoT

Example: The Living Lab process of

citizens outreach and end-user involvement

User-recruitment

by invitationUser engagement

User interaction

and support

Dataanlysis

and closing

1. Define user-activities

2. Find people to be invited

3. Invite users and ensure

the right users to

be engaged

1. Choose users

2. Contact and commit

users

3. Formalize user-

involvement with the

individual users

1. Stimulate user-actions

2. Support users

3. Gather user-data

1. Analyse result

2. Finalize user-

involvment with

users

3. Report result to users

4. Archive user-data

Researcher/

Industry/Public auth.

propose investigations

?

LL user-panel

operator

Opportunities with crowdsourcing

in IoT Lab

• Empowerment of citizens

• Gather human data - Knowledge about peoplesmovement etc, to accomplish social change

• Inspiration for future innovation/research areas

• Direct feedback on ideas, concepts, prototypes, solutions from the crowd

• Creative and innovative research processes

• Real life experiences

Crowdsourcing & Privacy

Crowdsourcing

• Crowdsourcing are often portrayed as the

‘democratization’ of idea generation and as a

form of creative commons

• BUT the significant commercial value some of

these platforms have created is not shared

equally

• Huffington Post, launched in 2005, was sold to

AOL in 2011 for $315 million

Crowdsourcing as a labor model

• at iStockphoto a photo of typical size and quality can be

purchased, royalty-free from between 1-5 US dollars (50

dollars).

• The crowd photographers receive 20% of the purchased

price any time one of their images are downloaded.

iStockphoto’s revenue increased with 14% per month in

2005 and they estimated a bulk of 10 million photos

available in 2006

Many companies such as IBM and United Way, have

used iStockphoto for many years

• It is also clear that the contributions from crowd are

essential for the company.

Crowdsourcing

• In 2006 Threadless was selling 60.000 T-shirts a month,

had a profit margin of 35 percent, and were close to

gross $18 million, all with less than 20 employees.

• Winning designers receive $2000 but sacrifice all rights

to their design in the process.

• Over roughly five years Threadless has acquired 500

designs, about 15 percent of which have been reprinted

in response to demand within Threadless' community of

350,000 users

Crowdsourcing

• Elance-oDesk as an example reveals both the

scale of operations and global reach of crowd

employment platforms.

• 2013 more than two million businesses used the

site (Microsoft, Unilever, Walt Disney), with eight

million freelancers within 180 countries

completing asks and generating revenues

of $750 million.

Crowdsourcing

• Differences between crowdsourcing and

traditional workforce

– its flexibility in scalability and on-demand labor access,

– the broad range of skills and experiences of the workforce,

– the absence of physical job sites, work performed and

compensated entirely in cyberspace,

– involve many-to-many relationships between employees

and employers,

– the low reimbursement cost for jobs carried out, the low

overhead coast, low personal and administrative costs,

– lack of employment regulations and employer security

The Apple and Google Case

Apple and Google Case

• In 2008 Apple introduced a development and

distribution platform and the rest is history…

• Opened up a new market for micro and small

companies (before the carriers worked as gate

keepers)

• Platforms offer development tools, customer

base, strong brand, paying function, …

• Created a new market for the platform owners

and strengthened their existing products

The Apple and Google Case

• Hobby

– Some people watch TV, I develop software program

• Labor

– As a micro company one need to enter new markets early,

before the big companies take over

– I see it as competence development

– I have my normal job and do this on the side

• Work

– We moved our business to mobile platforms and apps

• Exploitation

– Why should we pay 30% of our revenues to the platform owner

when we create great value to the platform and take all the risk

Value Creation and Capturing

• Value creation enhanced by platform ‘

– “If third-party software applications and services cease

to be developed and maintained for the Company’s

products, customers may choose not to buy the

Company’s products” (Apple 2012: 13)

• Apple significantly increase their proportion of

value by avoiding the direct costs of software

development

• Apple extract rents of 30% of price or in-app

advertising revenue

Power asymmetries

• The platform owner:

– Is the one in charge

– future strategies are not disclosed; cyclical nature of IT

industry

– ultimately decides whether applications are permitted

on the App Store

– apps can be easily replaced and often have a short

shelf life, marketplace is crowded and highly

competitive

Reflections

• Based on Apple, Google, AMT, Task Rabbit

• Democracy

• Power asymmetry

• Value Creation and Value Capture

• Risk (Economic, Personal, Social)

• Hobby, Labour, Work and Exploitation