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The CrowdAsset Framework in the EC Open Innovation Handbook

Open Innovtion Hanbook Cover

Open Innovation Handbook Cover

The European Commission is very supportive of the idea of Open Innovation. They promote it, research it , and endeavour to utilise it with projects like FI WARE and similar initiatives, and they also bring together examples of creative and inspiring cases and thinking.

They do this curation role via web materials, events and conferences and publications. One of those publications is the European Commission Open Innovation Handbook 2014 which is, as the name suggests, an annual publication bring together a series of chapters identifying examples, research and thinking around the theme of Open Innovation.

The 2014 edition has recently been released, it’s free and is available for download from here. Earlier this year Dan Marom and I were asked to submit a chapter for inclusion in the book and it is a tremendous honour and privilege to find our work alongside so many other leading and distinguished thinkers and practitioners.

In our chapter we introduce what we refer to as the CrowdAsset Framework which is an analytical sensemaking and decision support tool for use when contemplating how the crowd might be able to resolve problems and create value for your organisation. The evidence of how “opening out” is a sound approach because it is both viable and invaluable grows ever stronger. Commercial models of reaching out to the crowd through crowd sourcing and crowd funding are increasingly familiar with big names like Proctor and Gamble and GE embracing this model for real benefit.

The concept of the Quadruple Helix of effective open innovation particularly on the civic realm is creating new and novel solutions to embedded and what were once intractable social issues. But for it to embed itself further better frameworks, to make the apparently complex and difficult process much re readily understandable, are required.

The crowdasset framework is one of our contributions to that development and we both recommend it to you and welcome your comments on it. We will blog about the framework increasingly but for the time being why not download and read the book.

Crowdfunding and Social Networks

Crowdfunding and Social Networks

Last week we were invited in Brussels to give a presentation at a major  event organised by the European Commission, DG Internal Market and Services to explore issues, potential and risks related to crowdfunding. The event, Crowdfunding – Untapping its potential, reducing the risks – was the first coordinated by the EC and saw the participation of many important players and experts in the field. Our presentation was focused on the role of social media in crowdfunding and the interrelation between the two. Below the major points touched during the presentation. 

The crowdfunding evolution has been developing in parallel with the social media revolution

We’ve approached crowdfunding as a product of social media, and we’ve always been looking at it mainly from that perspective. Social Media reduce some geographical and mental barriers allowing for the rise of crowdfunding, and then served as a tool to facilitate it. The idea of ??collecting funds from various donors or investors is certainly not new, but crowdfunding goes far beyond this, and it does so by adding the power of social networks to collective funding.

Of course, the viral reach of social media has a great impact, but it’s not only about that. Crowdfunding is also about community, engagement, participation, empathy, all enabled and fostered by web 2.0 technologies.

Screen shot 2013-06-07 at 16.35.27

A new mindset and the sense of empowerment

Crowdfunding is a phenomenon which emerged from and is facilitated by the new behaviours and the mindset that come out from the constant and almost invisible interactions happening online everyday. These interactions are allowing for a continuous conversation with our “peers” at a global level, thus helping on one side to increase our knowledge of society as a whole, on the other side to grow a sense of identification with the crowd, and to get that validation from the masses that empowers us to do something that we would have never thought ourselves to be able of. Everybody can be an inventor or an investor today. Whereas social media lowered the barriers to access (and production) of information, crowdfunding lowered the barriers to access (and sharing) of capital, fostering a democratisation of innovation and philanthropy.

New expectations of return

This mentality explains also the emergence of a new type of transactions on a web 2.0 environment, transactions that are not always activated in order to buy something. In many cases the expectations of return have changed. Already with the emergence of crowdsourcing we have seen the birth of economic models based on reputation and recognition rather than on money. With crowdfunding the same can be true: the rewards are often non-monetary and, in most cases, they represents a collective return rather than an individual one.

Social Proof, the value of relationship capital and the viral power of social media

In crowdfunding, relationships are important, all the social ties, weak or strong, that we have online and offline. We refer to them as social and relationship capital, the first being measured in quantity (so how many friends, fans, followers we have), the second in quality (actual interactions, conversations and reciprocal trust). Again, social media plays a great role here, lowering geographical boundaries and allowing for more of those ties to emerge. Now the social networks of entrepreneurs can be much wider, and this is fundamental to crowdfunding. Social ties provide a signal to the public that the project is worthy, it’s the so called social proof: we all tend to look to the actions of others to guide and validate our actions. When we fund a project, we are more ready to vouch for it and to engage some of our most immediate networks. And so do our contacts. And social media gives an unlimited potential to the expansion of the networks.

Social Media provide the right tools to go beyond our most immediate circle of contacts and get to a broader group of strangers. The strength of weak ties, or social capital, can have a value, especially in the aggregate. But the role of strong ties or relationship capital is often bigger: they are the first helpers, building trust and providing proof of legitimacy to a project, they validate it for late-supporters. The networks, and crowdfunding, expand to the rhythm of community advocacy.

Trust, transparency and crowd validation

The vicinity, the sense of identification and confidence brought in by the continuous interactions on social media also allowed for the rise of a new value: trust. Trust is established because we know each other better, we interact with each other every day, and because all the social media infrastructure allows for a transparency that has never been experienced before. Trust tags are vital to crowdfunding because trust is also what can transform a social tie in an economic tie. Trust, enabled by transparency, in turn facilitated by all the social media infrastructure, is a new currency in economic transactions.

Trust is also what allows to a large extent  this environment to regulate itself. Crowdfunding, occurring in a web environment, generates an obvious worry: the possibility for fraud. But let’s not forget that crowdfunding is facilitated by social tools: the public, transparent nature of it should help identify and stop bad behaviours. Probably, transparency could have a great impact in weeding out fraud, and the use of social and public components in a crowdfunding campaign can provide a high level of protection in what is essentially a self-regulating and self-monitoring environment.

 

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