What is Web2.0?
Exploiting Web2.0 & Crowdsourcing
to Boost Innovation
  User-generated content
  Examples: Facebook, YouTube, Wikipedia, … where the
main attraction is what other people upload!
Christopher L. Tucci
Chair in Corporate Strategy & Innovation
Ecole Polytechnique Fédérale de Lausanne (EPFL)
April, 2012
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
Facebook users spend
388 million hours
a day on the platform
(July, 21, 2010)
College of Management of Technology
Google.com
2004 2. 
2005 3. 
Facebook.com
Yahoo.com
2001 5. 
Wikipedia.org
6. 
19997. 
2006 9. 
All-Ireland Innovation Programme, April 2012
Live.com (MSN)
Twitter
~$ 8 billion (2005)
10.  QQ.com
20 million man hours
Christopher Tucci
College of Management of Technology
Baidu.com (Chinese search engine)
Blogger.com (Google)
8. 
Panama Canal
~ $ 15 billion (2007)
$ 1.65 billion (2006)
YouTube.com (Google)
4. 
7 million man hours
Copyright © EPFL, Lausanne, Switzerland
A new history, the Web2.0 way
1. 
Empire State
Building
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
1
Excellence, Digitization, & Crowdsourcing
  Encyclopedia Britannica has been the gold standard since 1768
–  Private company = 100K articles, primarily in print
–  Available online since 1999, English language.
  Encarta is a digital multimedia encyclopedia launched in 1993
–  Microsoft = 62K articles, movies, tools, etc., on CD
–  Available online since 1998, 8 languages.
From Britannica, to Encarta, to Wikipedia
wikipedia
Nature magazine study finds Wikipedia as
accurate as Britannica. December 15, 2005
$ 321 K was Wikipedia’s total budget for 4Q
2005.
britannica
http://www.microsoft.com/learningspace/Products.aspx?prod=encarta
encarta
  Wikipedia is an open source encyclopedia launched in 2001
–  Crowdsourcing = 2.7 million articles in English
–  Available online, 262 language editions.
FREE !
http://en.wikipedia.org/wiki/Wikipedia:Multilingual_statistics
Christopher Tucci
Christopher Tucci
All-Ireland Innovation Programme, April 2012
College of Management of Technology
Copyright © EPFL, Lausanne, Switzerland
Problem Complexity
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
INNOVATION and exploiting Web2.0
Individual Capability
-4.2
-3.7
-3.2
-2.7
-2.2
-1.7
-1.2
-0.7
-0.2 0.2
del.icio.us
Tagging
0.6
1
1.3
1.7 2
2.3
Wikipedia
2.7 3
3.3
3.7 4
Netflix
Prize
Facebook
Google
Image Labeler Translation
Eli Lilly
Innocentive
1.  Product and service innovation that takes advantage of
Web2.0 for a better customer experience
2.  Using the power of Web2.0 to improve products and
services directly (crowdsourcing)
3.  Using Web2.0 to seek input on innovation activities
4.  Developing products and services that meet the
infrastructure needs of end-users
–  Bandwidth and physical infrastructure
–  Web2.0 platforms
Amazon
Mechanical Turk
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
2
INNOVATION and exploiting Web2.0
Product innovation pre-Web2.0
1.  Product and service innovation that takes advantage of
Web2.0 for a better customer experience
2.  Using the power of Web2.0 to improve products and
services directly (crowdsourcing)
3.  Using Web2.0 to seek input on innovation activities
4.  Developing products and services that meet the
infrastructure needs of end-users
  What was the last innovation you can think of in a travel
(bookings) web site?
–  Ability to store and retrieve records?
–  Faster search for fares?
–  Nicer interface?
–  Ability to book both flights and cars?
  These are all relatively incremental innovations
–  Bandwidth and physical infrastructure
–  Web2.0 platforms
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
CASE: TripIt
Christopher Tucci
College of Management of Technology
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Combining travel and social networking
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
3
CASE: CNN iREPORT
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
CASE: LEGO UNIVERSE
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Ideas for retailers
INNOVATION and exploiting Web2.0
Sharing purchases with your “friends”
Sending the customer information on related purchases
Friends who bought what you bought also bought…
Informing your friends that you are going to / are in the
store
  One of your friends is actually in the store right now
  Real-time ads based on things your friends bought / like
1.  Product and service innovation that takes advantage of
Web2.0 for a better customer experience
2.  Using the power of Web2.0 to improve products and
services directly (crowdsourcing)
3.  Using Web2.0 to seek input on innovation activities
4.  Developing products and services that meet the
infrastructure needs of end-users
 
 
 
 
  (I realize that these are kind of invasions of privacy, but so is
Facebook!)
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
–  Bandwidth and physical infrastructure
–  Web2.0 platforms
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
4
Case: Netflix Prize (background)
Case: Netflix Ratings Database
  The permanent contest was meant to last at least 5 years
  Condition: “to win…, you must share your method with (and
non-exclusively license it to) Netflix, and you must describe to
the world how you did it and why it works”
  Within 15 months, 30’397 contestants had registered, grouped
in 24’836 teams from 167 different countries
  21´345 submissions were received from 2’925 different teams
  The leading team (two AT&T researchers) achieved an
improvement of 8.57% after one year, winning them $50K
  Within three years the same team, combined with another
leading team, had won the Netflix Prize!
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
Progress in Netflix
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
CASE: Facebook Translation Project
  Launched on December 27, 2007
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
5
CASE: Facebook Translation Project
CASE: Facebook Translation Project
3 weeks later (Jan. 18, 2008)
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Case: Google Image Labeler
Ideas for retailers
  What is this picture?
  When you and your randomly assigned partner pick the
same words, you get “points”
  What for?
  Guess how much time
the winners spend?
  Algorithms for store layouts given customer purchasing and
demographic data
  Algorithms for purchase recommendations (online or instore)
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
6
INNOVATION and exploiting Web2.0
1.  Product and service innovation that takes advantage of
Web2.0 for a better customer experience
2.  Using the power of Web2.0 to improve products and
services directly (crowdsourcing)
3.  Using Web2.0 to seek input on innovation activities
4.  Developing products and services that meet the
infrastructure needs of end-users
Examples of getting input from the crowd
•  In 2001, GoldCorp put their company’s geological
data online, offering $575’000 in awards to those
who could pinpoint the location of gold mines. The
winners found real mines from the data alone.
•  In 2006, IBM conducted two public worldwide
brainstorm sessions on-line, to get feedback on
promising technologies, backed with $100 million
–  Bandwidth and physical infrastructure
–  Web2.0 platforms
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Ideas for retailers
INNOVATION and exploiting Web2.0
  Designing promotions
  Evaluating new clothing styles
  Voting on features / models of electronics
1.  Product and service innovation that takes advantage of
Web2.0 for a better customer experience
2.  Using the power of Web2.0 to improve products and
services directly (crowdsourcing)
3.  Using Web2.0 to seek input on innovation activities
4.  Developing products and services that meet the
infrastructure needs of Web2.0 users
–  Bandwidth and physical infrastructure
–  Web2.0 platforms
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
7
Growth in demand forecast
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
CASE: Amazon Mechanical Turk
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Appie (Albert Heijn)
  Scan your bar code at home with your iPhone
  Pick your store
  Recipe finder, including ratings on each recipe
–  how to find all the ingredients
Who are these people ?
  When you input your entire shopping list, the app calculates
the best route through the store
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
8
Data: Amazon Mechanical Turk
Data: AMT breakdown emerging markets
–  Demographics
• 
• 
• 
• 
• 
• 
• 
• 
• 
Age: Gender:
Employment:
Education:
Industry:
Income:
Geography:
Hours week:
Team size:
Christopher Tucci
College of Management of Technology
14 to 71 (median 30)
54% females, 46% males
71% employed, 29% students, retired, unemployed
99.9% high-school or higher, 64% college educated, 5% PhD 25 out of 28 proposed industries
$0 to over $150,000 (US median $30-40k)
26 countries (76% US, 8% India, 3% Canada)
6.7 (median 4)
1 (median)
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Variable
Emerging
Industrialzed
Age
17-65 (26)
14-71 (31)
Gender
F 19%; M 81 %
F 65%; M 35%
Employment
72% employed
71% employed
Education
HS 100%; Univ 82%
HS 99%; Univ 62%
Industry
17 / 28
24 / 28
Income
$0-80K ($7.5K)
$0-150K ($35K)
Geography
Hours / week
India 55%; Phil 7% (19
countries)
11.5 (7)
USA 87%; Canada 4% (16
countries)
5.9 (3)
Team
size
Christopher
Tucci
4 (1)
1 (1)
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Data: Facebook Translations
–  Demographics
• 
• 
• 
• 
• 
• 
• 
• 
• 
Age: Gender:
Employment:
Education:
Industry:
Income:
Geography:
Hours week:
Team size:
Christopher Tucci
College of Management of Technology
14 to 50 (median 24)
33% females, 67% males
56% employed, 44% students, retired, unemployed
99% high-school or higher, 60% college educated, 4% PhD
26 out of 28 proposed industries
$0 to over $150,000 (median $5-10k)
26 countries (9% US)
8 (median 3)
1 (median)
All-Ireland Innovation Programme, April 2012
What motivates them ?
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
9
I would keep working on this even if I were never paid at all
I share an interest with others in this community
challenge
fun
cause
frequency
How satisfied would you be
if you were contracted to work on
the same tasks…
duration
N=115
I'd love a job like this.
Being able to do this at home on my own schedule is very important to me. I can work in the middle of
the night if I want to. I have had some days where I started at 6 am and worked until midnight, with
no breaks except the meal and bathroom kind.
N=259
To be able to do this as a paid profession would be great. But home based work would be my
preferred method. Being part of an online collaborative enterprise allows flexibility not normally
associated with regular activities.
Christopher Tucci
Christopher Tucci
All-Ireland Innovation Programme, April 2012
N=391
College
of Management of Technology
Values
Copyright © EPFL, Lausanne, Switzerland
Free Time
Understanding
-
Fun
College of Management of Technology
Performance
+++
Crowdsourced
Teams: small, local, internal
Online Communities:
large, distributed, external
Central Product-oriented
Distributed Task-oriented
Tight IP protection
‘Loose’ IP
Formal Contractual ties
Informal Collaboration
Money
Protective
+
Career
Social
Volunteerism
Christopher Tucci
College of Management of Technology
Unsatisfying Job
Challenge
Non-Volunteerism
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Copyright © EPFL, Lausanne, Switzerland
Insourced
+++
Enhancing
All-Ireland Innovation Programme, April 2012
Physical work environment
Virtual work environment
Personal synchronous interactions
Impersonal asynchronous contributions
Monetary and Power incentive
Altruistic, Fun and Monetary
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
10
What if…?
  …you are selling to a monopsonist?
  …you have to keep your products secret?
  …you need to tap into an extremely specialized talent
pool rather than the general public?
Boundary conditions
  These are three situations where crowdsourcing to the
general public may not be as effective
  As it turns out, many firms find themselves in all three of
these in many of its markets.
Christopher Tucci
Christopher Tucci
All-Ireland Innovation Programme, April 2012
College of Management of Technology
Copyright © EPFL, Lausanne, Switzerland
Problem Complexity
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
All may not be lost!
Individual Capability
  Crowdsourcing can be applied internally to innovation
projects just as well as externally
-4.2
-3.7
-3.2
-2.7
-2.2
-1.7
-1.2
-0.7
-0.2 0.2
0.6
1
1.3
1.7 2
2.3
2.7 3
3.3
3.7 4
???
del.icio.us
Tagging
Wikipedia
Netflix
Prize
Facebook
Google
Image Labeler Translation
Eli Lilly
Innocentive
–  Direct product innovation can be crowdsourced via prizes,
contests, and payments just as we have discussed, but only open to
employees
–  Likewise, input on innovation activities, such as a Global Innovation
Jam can be crowdsourced company-wide
  Finally, firms can place themselves to take advantage of the
growing demand for Web2.0 infrastructure
Amazon
Mechanical Turk
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
11
CONCLUSIONS
  Take advantage of Web2.0 by building services that exploit the
valuable information provided by users
  If you are making money directly from a crowdsourcing
initiative, consider paying contributors, either a small amount
directly or via a large prize, to induce effort.
  If you are indirectly making money from the distributed
innovation effort, you may induce effort via a leaderboard and
perhaps a feeling of belonging to a community
  Also use Web2.0 / crowdsourcing to seek input on innovation
activities
  Develop products and services that enable Web2.0 interactions
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
1.6 billion people connected
to the Internet in 2009
Empire State
Building
7 million man hours
Panama Canal
20 million man hours
Christopher Tucci
Copyright © EPFL, Lausanne, Switzerland
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
Thank you!
Christopher L Tucci
[email protected]
http://csi.epfl.ch
Christopher Tucci
College of Management of Technology
All-Ireland Innovation Programme, April 2012
Copyright © EPFL, Lausanne, Switzerland
12