By: Virna do Brito Lopes, 401903
For this week we had to read three articles in relation to the topics crowdsourcing, crowdfunding and prediction markets. The first article, ‘Which kind of collaboration is right for you?’ by Pisano and Verganti (2008) elaborates on the importance of choosing the right mode of collaboration for your business to successfully develop new technologies. 4 different modes of collaboration are mentioned in the article:
- The open network with hierarchical governance (‘Innovation mall’), where anyone is free to post a solution but the sponsor makes the final decision.
- The open network with flat governance (‘Innovation community’), where anyone is free to post a solution, and in which the community together decides the solution.
- The closed network with hierarchical governance (‘Elite circle’), where the sponsor defines the problem and also decides what the solution will be.
- The closed network with flat governance (‘Consortium’), where a closed group works on a chosen problem and together decides what the solution will be.
The second article by Malone et al, (2010) proposes a framework for understanding how businesses can gather and utilize collective intelligence. There are a number of ‘building blocks’ that can be combined in various ways to build a collective intelligence system. For constructing one a manager needs to ask the following four questions: 1.What is being done? 2. Who is doing it? 3. Why are they doing it? 4. How is it being done?
The third article ‘Prediction markets: A new tool for strategic decision making.’ By Borison and Hamm (2010) elaborates on the existence of uncertainty when making important strategic decisions in the public and private sector. Making use of prediction markets, next to approaches that are already utilized, can be an outcome for this. They argue that prediction markets, in which individuals can gamble on the outcome of future events for real/or play money, can help businesses minimalize the risks and improve their chances of success.
In relation to the topic ‘crowdfunding’ I chose for the article ‘Crowdfunding: Tapping the right crowd’ by Belleflame et al, (2014). This article provides two modes of crowdfunding. 1. Inviting the crowd to pre-order a product, so that an entrepreneur can gather money for the launch of production. 2. Asking the crowd to advance a fixed amount of money and offer a share of future profits in return. Choosing for option 1 or 2 depends on the initial capital requirement in relation to the market size. Besides this, the existence of uncertainty and information asymmetry in crowdfunding projects are also discussed in this article.
Finally, I searched for two mini-cases related to the topic ‘crowdfunding’. The first one I found was about the pedestal for the Statue of Liberty, which was built thanks to crowdfunding. This project became a success due to a campaign started by Joseph Pulitzer who succeeded in raising $101.091, in five months, from over 160.000 donors.
http://therealdeal.com/wp-content/uploads/2015/07/50.png
The second case I found was about the musician Amanda Palmer, who broke the Kickstarter record for a music project, in 2012, when she raised $1.2 million from over 25.000 fans for the album ‘Theatre Is Evil’.
http://www.granadatheater.com/files/2015/03/tumblr_nhl2siAVha1qzdv4io1_1280-300×170.jpg
References
Belleflame, P., Lambert, T., & Schwienbacher, A. (2014). Crowdfunding: Tapping the right crowd. Journal of Business Venturing, 29(5), 585-609.
Borison, A., & Hamm, G. (2010). Prediction markets: A new tool for strategic decision making. California Management Review, 52(4), 125-141.
Dredge, S. (2015). Amanda Palmer is crowdfunding again, but this time on Patreon. Accessed at: http://www.theguardian.com/technology/2015/mar/03/amanda-palmer crowdfunding-patreon-kickstarter-fans
Gaylord, C. (2015). How crowdfunding brought the Statue of Liberty to America. Accessed at: http://www.csmonitor.com/Technology/2015/0617/How-crowdfunding-brought the-Statue-of-Liberty-to-America
Malone, T. W., Laubacher, R., & Dellarocas, C. (2010). The collective intelligence genome. IEEE Engineering Management Review, 38(3), 38.
Pisano, G. P., & Verganti, R. (2008). Which kind of collaboration is right for you? Harvard business review, 86(12),
