Crowdsourcing & Open Innovation

2011
Karim R. Lakhani and Eric Lonstein. 2011. TopCoder (A): Developing Software through Crowdsourcing (TN). Harvard Business School Teaching Notes. Harvard Business School. Publisher's VersionAbstract

Teaching Note for HBS Case 610-032.

TopCoder's crowdsourcing-based business model, in which software is developed through online tournaments, is presented. The case highlights how TopCoder has created a unique two-sided innovation platform consisting of a global community of over 225,000 developers who compete to write software modules for its over 40 clients. Provides details of a unique innovation platform where complex software is developed through ongoing online competitions. By outlining the company's evolution, the challenges of building a community and refining a web-based competition platform are illustrated. Experiences and perspectives from TopCoder community members and clients help show what it means to work from within or in cooperation with an online community. In the case, the use of distributed innovation and its potential merits as a corporate problem solving mechanism is discussed. Issues related to TopCoder's scalability, profitability, and growth are also explored.

Karim R. Lakhani, Eric Lonstein, and Stephanie Pokrywa. 2011. TopCoder (B). Harvard Business School Case Supplement. Harvard Business School. Publisher's VersionAbstract

Metrology plays a key role in the manufacture of mechanical components. Traditionally it is used extensively in a pre-process stage where a manufacturer does process planning, design, and ramp-up, and in post-process off-line inspection to establish proof of quality. The area that is seeing a lot of growth is the in-process stage of volume manufacturing, where feedback control can help ensure that parts are made to specification. The Industrial Metrology Group at Carl Zeiss AG had its traditional strength in high precision coordinate measuring machines, a universal measuring tool that had been widely used since its introduction in the mid-1970s. The market faced a complex diversification of competition as metrology manufacturers introduced new sensor and measurement technologies, and as some of their customers moved towards a different style of measurement mandating speed and integration with production systems. The case discusses the threat of new in-line metrology systems to the core business as well as the arising new opportunities.

2010
Lars Bo Jeppesen and Karim R. Lakhani. 2010. “Marginality and Problem-Solving Effectiveness in Broadcast Search.” Organization Science, 21, 5, Pp. 1016-1033. Publisher's VersionAbstract

We examine who the winners are in science problem-solving contests characterized by open broadcast of problem information, self-selection of external solvers to discrete problems from the laboratories of large R&D intensive companies, and blind review of solution submissions. We find that technical and social marginality, being a source of different perspectives and heuristics, plays an important role in explaining individual success in problem solving. The provision of a winning solution was positively related to increasing distance between the solver's field of technical expertise and the focal field of the problem. Female solvers—known to be in the "outer circle" of the scientific establishment—performed significantly better than men in developing successful solutions. Our findings contribute to the emerging literature on open and distributed innovation by demonstrating the value of openness, at least narrowly defined by disclosing problems, in removing barriers to entry to non-obvious individuals. We also contribute to the knowledge-based theory of the firm by showing the effectiveness of a market mechanism to draw out knowledge from diverse external sources to solve internal problems.

Karim R. Lakhani and Paul R. Carlile. 2010. Myelin Repair Foundation: Accelerating Drug Discovery Through Collaboration. Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

This case presents the Myelin Repair Foundation's accelerated research collaboration model for drug discovery. It highlights the challenges of building a multi-disciplinary and multi-institutional research collaboration that is attempting to create a treatment for multiple sclerosis based on a novel scientific approach. The case provides details on how norms of academic research and intellectual property had to be updated to enable collaboration. The current dilemma facing the CEO and COO of the foundation relates to setting strategic priorities for research so that a treatment for MS can be ready in the next ten years. The strategic choices need to account for the complexities of drug discovery, the uncertainty of commercial partners' interest in the therapeutic approach and the constrained donor-based fundraising environment.

Kevin Boudreau. 2010. “Open Platform Strategies and Innovation: Granting Access vs. Devolving Control.” Management Science, 56, 10, Pp. 1849-1872. Publisher's VersionAbstract

This paper studies two fundamentally distinct approaches to opening a technology platform and their different impacts on innovation. One approach is to grant access to a platform and thereby open up markets for complementary components around the platform. Another approach is to give up control over the platform itself. Using data on 21 handheld computing systems (1990–2004), I find that granting greater levels of access to independent hardware developer firms produces up to a fivefold acceleration in the rate of new handheld device development, depending on the precise degree of access and how this policy was implemented. Where operating system platform owners went further to give up control (beyond just granting access to their plat- forms) the incremental effect on new device development was still positive but an order of magnitude smaller. The evidence from the industry and theoretical arguments both suggest that distinct economic mechanisms were set in motion by these two approaches to opening.

Karim R. Lakhani, David A. Garvin, and Eric Lonstein. 2010. TopCoder (A): Developing Software through Crowdsourcing. Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

TopCoder's crowdsourcing-based business model, in which software is developed through online tournaments, is presented. The case highlights how TopCoder has created a unique two-sided innovation platform consisting of a global community of over 225,000 developers who compete to write software modules for its over 40 clients. Provides details of a unique innovation platform where complex software is developed through ongoing online competitions. By outlining the company's evolution, the challenges of building a community and refining a web-based competition platform are illustrated. Experiences and perspectives from TopCoder community members and clients help show what it means to work from within or in cooperation with an online community. In the case, the use of distributed innovation and its potential merits as a corporate problem solving mechanism is discussed. Issues related to TopCoder's scalability, profitability, and growth are also explored.

2009
Kevin Boudreau and Andrei Hagiu. 2009. “Platform Rules: Multi-sided Platforms as Regulators.” In Platforms, Markets, and Innovation, edited by Annabelle Gawer. Northampton, MA: Edward Elgar Publishing, Inc. Publisher's VersionAbstract

This paper provides a basic conceptual framework for interpreting non-price instruments used by multi-sided platforms (MSPs) by analogizing MSPs as "private regulators" who regulate access to and interactions around the platform. We present evidence on Facebook, TopCoder, Roppongi Hills and Harvard Business School to document the "regulatory" role played by MSPs. We find MSPs use nuanced combinations of legal, technological, informational and other instruments (including price-setting) to implement desired outcomes. Non-price instruments were very much at the core of MSP strategies.

2008
Karim R. Lakhani. 2008. InnoCentive.com (A). Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

InnoCentive.com, a firm connecting R&D labs of large organizations to diverse external solvers through innovation contests, has to decide if it will enable collaboration in its community. Case covers the basics of a distributed innovation system works and the advantages of having external R&D. Links how concepts of open source are applied to a non-software setting. Describes the rationale for participation by solvers in innovation contests and the benefits that accrue to firms. Raises the issue if a community can be shifted to collaboration when competition was the basis of prior interaction.

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