Communities in the Crowd Economy: #CSWEurope15

This week I am participating in Crowdsourcing Week Europe 2015 in Brussels. The conference has an amazing range of speakers from both the public and private sector sharing their ideas about, and experiences from, the Crowd Economy.

My session focused on the critical role of Communities in the Crowd / Collaborative Economy, and covered:

• Why 20^th century businesses aren’t adapting to 21^st century realities;
• Why we need a fundamentally new and more expansive approach to building online communities in our evolving global economy;
• Emerging opportunities for businesses to create and exchange new forms of value with their communities and in the process, become more sustainable.

Key points detailed below:

1. Networked Companies Thrive
2. Connected Customers Create More Value
3. A Lens on the Collaborative (Crowd) Economy
4. Crowd, Communities & Collaborative Organization
5. An Example of a Market Network

1. Networked Companies Thrive
In a recent article from Harvard Business Review, a study between Deloitte and a team of independent researchers examined 40 years of S&P 500 data to examine how business models have evolved with emerging technologies. The study had 3 key findings, including the emergence of a distinct new business model of “Network Orchestrator”. As defined by the study:

Network Orchestrators. These companies create a network of peers in which the participants interact and share in the value creation. They may sell products or services, build relationships, share advice, give reviews, collaborate, co-create and more. Examples include eBay, Red Hat, and Visa, Uber, Tripadvisor, and Alibaba.

Network Orchestrators outperform their peers on revenue and profitability.

2. Connected Customers Create More Value
The 1:1 relationship between a company and a customer is increasingly perishable. The customer is blessed by an abundance of choice in the market, and increasingly (especially for technology) the lifespan of a relationship can last only days, weeks or months — not years. As an example: most software companies are moving from a perpetual license to term-based licensing that can be as short as 24 hours. Creating a great customer experience and minimizing churn are key. One key strategy is to develop customer communities where customers connect to people in the business (as hosts) as well as other customers and prospects (as peers). This creates a network of many to many connections, where bonds strengthen over time and value is exchanged in the form of knowledge, content, advice and help. These communities translate into real value for the customer and for the host business. When I led communities at Autodesk, we found that community members were more loyal and more likely to recommend than non-members. We also were able to quantify cost savings from our support community to be several million dollars. When I led communities at Dell, we discovered our IdeaStorm community members spent 50% more than non-members, and members’ purchase frequency was 33% higher than non-members. Community member ideas from IdeaStorm created $100’s of millions of dollars in revenue in the period between 2007–2011.

3. A Lens on the Collaborative (Crowd) Economy
My POV on the Collaborative Economy is that it is a set of trends, movements and technologies reshaping how we make, market, discover and use products and services. It was born out of the global financial crisis of 2008, enabled by global communications networks and digital technologies, and powered by people. I would also assert that Collaborative Economy initiatives should be focused on sustainable methods and equitable outcomes for all stakeholders.

The purpose of defining, identifying and studying the collaborative economy is to understand how business models need to evolve to thrive in this new economic context. Based on my experience building online communities and collaborative experiences, as well as research I’ve conducted, I’m convinced that a new and comprehensive approach to online communities is the way forward.

An approach where:

• What we thought of as “social” is really the networked marketplace
• Your market is synonymous with your crowd
• Online communities build lasting relationships amongst your customers, prospects, employees and partners and
• Collaboration looks like a partnership with customers, not an internal social network no one really uses.

There are two great resources I would recommend to see the range of sectors and technologies that make up the Collaborative Economy:
Collaborative Economy Honeycomb – via Jeremiah Owyang / Crowd Companies
The 14 Parts of The Crowd Economy– via Sean Moffitt / CSW2

4. Crowd, Communities & Collaborative Organization
In order to begin exploring business opportunities in the collaborative economy, businesses need to shift their mindset to think about markets as networks. Their total addressable market(s), connected via platforms & social networks.

There are three important contexts to think about in the Network Marketplace:

• Crowd: A group within a Market Network that has:
  • A shared interest or goal
  • The ability and assets to participate in a shared marketplace, task or activity via common platforms
    
• Community A connected & hosted group within a Market Network that has:
  • 1 or more shared interests or goals, leading to shared identity & purpose
  • The ability, motivation and assets to work towards a common purpose over time
  • A host with intention to support & manage community over time
    
• Collaborative Organization Collaboration amongst organizations, partners and customers essentially functioning as one organization:
  • Shared IP & Common resources
  • Shared vision of activities and outcomes
  • Shared risks and equitable outcomes

These contexts are not mutually exclusive, meaning, a Collaborative Economy initiative could engage a crowd, community and a collaborative organization context.

5. An Example of a Market Network
As a thought exercise, I chose Levi’s as a brand to explore opportunities with. Please note: this is not client work.

The three key opportunities I see for Levi’s:
1. Hosting a peer to peer marketplace where customers can sell / trade used and custom goods, possibly partnering or including listings from external marketplaces.
2. Extending their innovation function online (think a more modern IdeaStorm for apparel), as well as partnering with other communities to develop specific crowdsourcing and challenge initiatives. An example would be partnering with Hackster.io on a smart apparel.
3. Hosting their global fan and denim connoisseur community, while continuing to develop great content on their Unzipped blog. The community feeds all digital activity.

My slide deck from my Crowdsourcing Week session:

The Net-net:
Networked companies are more valuable and resilient. Connected customers are more valuable to companies. To create long-term growth in a sustainable way, companies need to evolve their business models to address the “networked marketplace”. A new approach to online communities can provide a path for business model transformation.

Next Steps: I have developed a worksheet, based on my business model innovation workshop, to help businesses begin to explore new Crowd / Collaborative Economy initiatives. Please email me for the worksheet or to discuss participating in a facilitated workshop.