User innovation and 'emotional property' - How firms can appropriate consumer-generated intellectual property

The following posting was published by the Beedie School of BusinessIt features research by Beedie School of Business faculty Ian McCarthy, Jan Kietzmann and Leyland Pitt, and Pierre Berthon at Bentley University.
New research from Simon Fraser University’s Beedie School of Business reveals that though firms may be tempted to profit from consumer-created modifications to their intellectual property, this is not always advisable – and can in fact backfire.
The paper, CGIP: Managing Consumer-Generated Intellectual Property was co-authored by Beedie researchers Jan H. Kietzmann, Ian McCarthy, and Leyland Pitt, along with Pierre Berthon of Bentley University.
It was published in the Summer 2015 issue of California Management Review 
The study examines the phenomenon of “consumer-generated intellectual property” (CGIP), where consumers rather than firms innovate, modify, hack, or in some way alter an organization’s proprietary products or services.
The research addresses how firms should deal with this intellectual property their consumers create, and the dilemmas this presents for managers.
It argues that consumers’ intellectual property should not be leveraged at the expense of what the researchers call emotional property, defined as: “the emotional investment in or attachment to creations of the heart and mind.”
The study cites several real world examples, including that of Hollywood actor Vin Diesel, who was the first Facebook user to reach the million followers milestone.
It notes that this achievement undoubtedly contributed to the network’s growth, but that Diesel did not receive any compensation for doing so.
Instead, Facebook contacted him to remind him that all the content he had posted now belonged to them, as per their terms, and to inquire how he had achieved his success.
“Much of the value and intellectual property nowadays lies in information generated by customers, consumers, and users, rather than by firms themselves,” says Pitt.
“While a company can capture CGIP, it cannot appropriate or negate the emotional investment that consumers have in their creations.”
In choosing to appropriate CGIP, firms run the risk of financial loss or incurring damage to their reputation if not handled correctly.
In order to help firms manage this CGIP, the research integrates the different perspectives firms can hold into a diagnostic framework consisting of eight strategies.
The framework further categorizes the strategies within each stance ranging according to whether it is positive – cultivate, coordinate, cooperate, or capture – or negative – condone, condemn, crush, or copy.

Berthon, Pierre , Leyland F. Pitt, Jan Kietzmann, and Ian P. McCarthy (2015). CGIP: Managing Consumer Generated Intellectual Property, California Management Review. 57/4: 43-62 

How gamification can transform business processes

The following article by Liisa Atva  published in the Huffington Post on August 26. It features research by Beedie School of Business faculty Ian McCarthy, Jan Kietzmann and Leyland Pitt, current PhD student Karen Robson, and former PhD student Kirk Plangger.

Cheers erupt from the living room where half a dozen teenaged boys are gathered in front of the TV. “Yes! What a goal! That was sweet!” Poking my head in, I ask, “Did the Canucks just make the playoffs?” They laugh. “Mom, it’s NHL 15, a video game,” my son explains. Only a game, yet the energy, the excitement and the emotions are very real.
It’s not just teenagers that are playing. According to the Entertainment Software Association of Canada, the average age of Canadian gamers is 33 years old, and 54 per cent of Canadians surveyed admitted to having played a video or computer game in the past four weeks. There’s no doubt that the gaming industry is big business — a $2.3-billion industry in Canada alone — and the revenues can be astounding — Call of Duty: Modern Warfare 3 raked in $775 million in its first five days alone.
What organization, in any industry, wouldn’t want to generate that degree of devotion with its own customers or employees? Perhaps by studying what makes games so compelling, and applying those concepts, they can. “Gamification,” the term for this process emerged around 2010. Dr. Ian McCarthy, Associate Dean with Simon Fraser University’s Beedie School of Business explains, “It’s not about creating games, its about learning from the world of games, and the psychology and behavior that go in there and why they get such fantastic levels of engagement. It’s about gamifying, non-gaming situations and processes that happen in various industries.”
Businesses have successfully used game-like experiences to increase loyalty and engagement long before the term gamification was coined, for example, frequent flyer programs. However, the rapid rise of gamification, according to McCarthy, can be attributed to several factors: the quest to get a reaction, the pervasiveness of social media, web-based and mobile technologies, and the growth of the video game industry. The initial buzz was such that Brian Burke of Gartner Inc., an American information technology research and advisory firm, predicted that by 2015 forty per cent of Global 1000 organizations would use gamification to transform business processes.
There have been notable successes. One example, as described by McCarthy, was the marketing campaign for rapper Jay Z’s book Decoded. Advertising agency Droga5, in conjunction with Microsoft’s search engine Bing, turned the book launch into an online and on-the-street scavenger hunt. The players, Jay-Z fans, set out to find all 320 pages of Decoded, in various sizes, in unexpected places including at the bottom of a pool in Miami, on cheeseburger wrappers in one of Jay-Z’s favourite restaurants in New York city, and painted on a car parked on a street corner in his old neighbourhood. During the book launch Jay-Z’s Facebook friend base increased by over one million, Decoded spent 18 weeks on the New York Time’s best-seller list, and Bing’s search traffic increased by 12 per cent.
Initial predictions on the success of gamification, however, appear to have fallen short with Burke later stating, “We predict by 2014 eighty per cent of current gamified applications will fail to meet business objectives, primarily due to poor design.”
Burke remained optimistic, adding that in the longer term gamification would have a significant business impact. McCarthy suggests that for gamification to be more widely and successfully adopted by managers it needs to be broken down into simpler steps, and that to date there has been very little research in this regard. A team of researchers from the Beedie School, including McCarthy, aims to change that. One of the early stages of their research was to develop a conceptual framework of the gamification process. They identified three principles that they tagged with the acronym MDE: the mechanics, or set-up and rules; the dynamics, or player behaviour; and the emotions.
“If you get the MDE right then you get powerful games where people are motivated to spend lots of time and money engaging,” said McCarthy.
Next they focused on understanding and defining various types of players, and how to create engaging experiences for each type. For some the thrill of the game is in competing against other players; for others, learning new skills, achieving a personal best, socializing, or a mix of each. I asked my son why he plays NHL 15:
“To have fun with my friends,” he said.
“Do you ever play it on your own?”
“Yes, to get better by playing against the game.”
The attraction clearly more than just “fun.”
While The Beedie School research presents a useful framework and set of recommendations, it still needs to be tested and refined to show how it can be used successfully in various business processes. McCarthy sees the development of the framework as a foundation to build upon, not just for themselves, but also for others who might undertake similar research.
I’m in the minority of Canadians and not a gamer, yet when McCarthy concluded a recent talk on gamification with a game to test how well we’d paid attention, I sat up straight, all ears, finger poised above the answer tab on the just-installed app on my cellphone, eager to win five seconds of fame. It was not to be — now if only I’d had my in-house expert with me.
Also on the Beedie School research team are faculty Jan Kietzmann and Leyland Pitt, current PhD student Karen Robson, and former PhD student Kirk Plangger. McCarthy’s full presentation on gamification can be accessed here
Read the original article on the Huffington Post website

Is it all a game? Understanding the principles of gamification

The rapid emergence of gamification for improving how we engage people has seen some astounding successes in recent years – including innovative marketing campaigns for hip-hop moguls, airline frequent flyer programs, and sticker albums for global sporting events.

But what is gamification, and what can business do to leverage its potential? This was the subject of a lecture I gave at the 2015 Beedie Alumni Reunion. You can view the talk below and access and download the slides here.

The event, held at the Segal Graduate School on March 31, was an opportunity to present for the first time new research published in Business Horizons and Advances in Consumer Research. The research, conducted with Beedie faculty Leyland Pitt and Jan Kietzmann, Beedie PhD students Karen Robson, and Kirk Plangger, examines the effectiveness of gamification as a method of increasing engagement among stakeholders such as employees, customers, and students.

I explained how gamification, defined as “the application of game design principles in non-gaming contexts” (Robson et al 2015) is being used in business. The term “gamification” emerged around 2010, though the phenomenon has been used effectively in business for some time.

Gamification is not about creating games, it’s about learning how the world of gaming and related concepts in psychology and behavioral economics all combine to produce fantastic levels of engagement. It’s about gamifying non-gaming situations: processes that happen in various industries. How can we learn from that in order to understand and control the behavior of stakeholders?

During the talk I examined companies that had gamified certain processes such as training and recruitment in order to understand why they had done so. I also looked at the computer games industry, and so as to propose a framework for designing and management gamification experiences.

I described in detail several examples from popular culture of gamification being used to great effect as a marketing campaign. Jay Z’s book launch campaign in conjunction with Microsoft’s search engine Bing, for example, resulted in Jay Z receiving some one million new social media followers in the space of one month. An interactive Tippex commercial, meanwhile, saw sales rise by 30 percent for what is essentially a dying product. In each case, the key to the success was that the level of player engagement was extremely high.

The research reveals three reasons for the rise of gamification: the quest to attain high levels of intrinsic motivation in employees and consumers; the pervasiveness of technology; and the growth of the video game industry, valued at some $30 billion.

Consider for example, the levels of engagement attained by the popular video game Call of Duty. The most recent edition of the Call of Duty franchise racked up some $775 million in sales within its first five days of release – more than any Hollywood movie. Gamers have spent approximately 25 billion hours playing the franchise, or over 2.85 million years.

Such dedication is down to three intrinsic motivational factors: competency building, where the player attempts to master a task; autonomy, where the player can experiment and customize the experience; and relatedness, with the experience providing the player a sense of purpose.

The participants in a gamified experience fall into four categories: Designers, who design, manage and maintain the  experience; Players, who compete in the experience; Spectators, who witness the  experience but can also influence it; and Observers, whose role is solely to watch.

The framework I introduced can be used for understanding and designing gamified experiences. It consists of three principles: the mechanics, the set-up, rules and progression; the dynamics, or the player behavior; and the emotions, or the players’ state of mind. If you get the blend of dynamics, mechanics, and emotions right, then you will more likely produce an effective gamified experience where people are motivated to spend lots of time and money engaging.

To illustrate the overall gamified experience, I used the example of popular TV show American Idol, ranked the number one show in the US from 2003 to 2011. It uses gamification principles to engage spectators – the audience and TV viewers who influence the show – and the players – the potential artists are potential employees. The show is both an entertainment process and a talent recruitment process. If you consider the level of viewership, voting and related emotions in American Idol it is clear why it is a beacon of gamification. Imagine if we could engage students, voters, employees or customers the way the American Idol audience is engaged.

Be wary though, while gamification is an appealing tool, businesses must understand why it works. Rewards are not enough – it is the playing and the progress that makes the experience fun and pleasurable. And remember, it is not about designing a game per se; the goal is to gamify a business or public process.

This post was adapted from a contribution by the Beedie School of Business.

The ideas and frameworks are based on research presented in the following articles:

Robson, K., Plangger, K., Kietzmann, J., McCarthy, I., & Pitt, L.  Is it all a Game? Understanding the Principles of Gamification. Business Horizons (July, 2015)

Robson, K., Plangger, K., Kietzmann, J., McCarthy, I., & Pitt, L. (2014). Understanding Gamification of Consumer Experiences. Advances in Consumer Research, 42, 352-356

You can view and download the presentation related to this posting here:

Developing and leveraging crowd capital: A valuable resource for organizations both global and local

Typhoon Hagupit, the devastating typhoon that hit the Philippines this past December, was notable for its particular ferocity – marked by 27 deaths and over one million residents evacuated. In some coastal areas, over 80 percent of all homes in the typhoon’s path were destroyed. 

What leaves cause for hope in the aftermath of this tragic weather event was the innovative form of emergency response launched by the United Nations. While the Philippines was recovering from the devastation, the U.N. quickly deployed a crowdsourcing platform to provide humanitarian aid, respond to urgent needs, and assess infrastructure damage. 

Teaming up with the crowdsourcing platform Micro-Mappers, the U.N.’s Office for the Coordination of Human Affairs (OCHA) asked Twitter users to identify posts highlighting damage, emergencies and individuals in need of help, as well as tweeted photos showing the damage. From this people-sourced information, a crisis map comprised of accumulated information showed where emergence response was needed most.

This is a global example of an organization tapping into the power of the crowd to address a problem – this one being particularly acute. But more companies and government bodies, large and small, are also reaching out to their publics via crowdsourcing. The cash-strapped City of Baltimore, for example, is using crowdsourcing on its revamped website to get feedback from city residents about how they want the city to budget their collective taxpayer dollars. Coca-Cola Shanghai, meanwhile, is utilizing crowdsourcing to garner what AdAge described  as “impressionist market research” videos to describe what Coke tastes like – and ultimately deliver some creative marketing ideas for the company in China. 

The simple premise of crowdsourcing for business is the combination of crowds and outsourcing. The activity has seen significant growth in recent years because of the proliferation of the Internet, the uptake of mobile technologies, and the massive explosion of social media usage. That’s not to say that crowdsourcing doesn’t exist offline, but as the above examples illustrate, its biggest advances and growth stories are happening via the Internet. 

Crowdsourcing also represents a rather positive direction that is something new for crowds, which haven’t always been held in such high esteem. In 1895, the French sociologist Gustave Le Bon authored a book entitled The Crowd: A Study of the Popular Mind. In it, he warned of crowd psychology characterized by "impulsiveness, irritability, incapacity to reason, the absence of judgment of the critical spirit and the exaggeration of sentiments”, among other negative sentiments.  Over a century later, crowdsourcing reverses such wariness of crowds, recognizing important crowd traits that were ignored for too long – intelligence, creativity, innovation and enthusiasm. 

A new research paper I have with colleagues in the journal Business Horizons shows four different kinds of crowdsourcing. See Figure 1.

Figure 1. Four types of crowdsourcing (Prpić, Shukla, Kietzmann and McCarthy 2015)

Firstly, there is crowd-voting – think of online popularity contests, or reality TV shows like American Idol. The aggregate vote helps an organization come to a decision that is certainly democratic for voting stakeholders. Secondly, there is micro-task crowdsourcing – where an organization breaks a problem down into much smaller jobs to be completed by the crowd. Thirdly, there is idea crowdsourcing, which solicits creativity and new ideas from the crowd – whether they be t-shirt designs or movie trailers – helping organizations to leverage the diversity and innovativeness of their audiences. Finally, solution crowdsourcing invites real solutions to well-defined business problems. A good example is when video streaming service Netflix invited users to help improve the company’s predictive accuracy, a system that determines whether a particular viewer is going to enjoy a particular movie based on demographics, tastes and historical viewing habits. 

The key here is that various crowdsourcing approaches can be used for different goals, and can even be used in collaboration with one another. In sum, the answer to which approach to use is - it depends!

But how do organizations get started on this path to harnessing both the expertise and the opinions of their respective crowds? How do managers implement a top-down approach to getting bottom-up resources – gaining crowd capital in the process? To this end, our research proposes three key stages to gaining crowd capital: constructing the crowd, developing crowd capabilities, and harnessing crowd capital (see figure 2).

Figure 2 - Constructing and harnessing crowd capital (Prpić, Shukla, Kietzmann and McCarthy 2015)

For the first stage, constructing the crowd, it is vital that the primary purpose for crowd engagement is strategic and aligned with organizational goals. Once addressed, organizations can fine-tune their selection process: How big is the crowd? Where does it exist in the online or offline worlds? What are its characteristics or capabilities? What specific requirements or conditions should it fulfill? 

After deciding on the who of crowdsourcing, an organization needs to turn its attention to the how. Specifically, how does a firm acquire resources dispersed in a crowd, and how does it align crowd contributions with existing organizational operations and processes. Going back to the example of Hurricane Hagupit, the United Nations had to tap into the knowledge of online denizens while synching up their information with the know-how and operations already in place with its emergence response operations.

We know that successful organizations needs to be proficient in identifying and acquiring external resources. In a crowd context, this means they need to understand how to interact with crowds to draw out knowledge, and choosing an appropriate technology that facilitates this engagement. For Coca-Cola Shanghai, this was the crowdsourcing platform platform eYeka. For the city of Baltimore, it was a proper government website. 

The assimilation element in the crowd capital creation process lies in the organizations ability to analyse, interpret and understand the crowd contributions. That is, how does an organization digest all of this new information? This might involve tasking teams or individuals within the organization to curate the crowd contributions and ensure such contributions are on target. 

This leads to the harnessing crowd capital. Our research maintains that an organization’s own employees, for example, can serve as a filter for crowd contributions, while the crowd inversely can help make decisions based on an organization’s groundwork. What matters is that different types of crowdsourcing may be employed simultaneously or sequentially.

The sourcing of crowds to power organizations represents a remarkable milestone in the evolution of business and government. Crowd voting, micro-task crowdsourcing, idea crowdsourcing, and solution crowdsourcing are just a few crowdsourcing concepts that individual organizations are assigning to the many. 

Over 100 years ago, Le Bon was right about the power of the crowd – but was wrong in downplaying their helpfulness to organizations. By both understanding and utilizing crowd capital, organizations can evolve to become more accountable, sustainable, and responsible -- in certain cases even more profitable and efficient. Today’s organizations are wise to draw strength from numbers at this historic confluence of online technology and positive public engagement.

You can view and download a presentation related to this posting here: 

Three Myths of Innovation

In a recent series of video interviews for The Refinery Leadership Partners I explored three common and damaging myths about innovation.
Myth 1 - Innovation is just about products 
With much of the world’s corporate and public R&D budgets dedicated to developing new technologies that are then patented and embedded in new products such as medicines, cars, cell phones, computers, etc., it is easy to believe that innovation is only about new product development. Innovation however, applies to anything that can be changed and then adopted by users to address some form of problem or opportunity. Consider, for example, Pink Shirt Day, a ‘social innovation’. On the 27th February 2007 two Nova Scotia grade 9 students asked their friends to come to school wearing pink clothing as a protest against bullies who were tormenting a boy who often wore a pink shirt. This innovation was a novel way of protesting and raising awareness of bullying. It has since has been adopted by schools in North America, with the 27th February each year known as Pink Shirt Day.

Thus, innovation the verb (i.e. process) and innovation the noun (i.e., result) can be applied to all instances of adopted change. For example, the first time companies used celebrities to endorse their products was a marketing innovation; when the manufacturer Pilkington invented float glass technology this was a process innovation; and when Netflix transformed how we access and consume movies and TV shows this was a service and business model innovation. 

Myth 2 – Innovation is everybody’s job 
I agree that many companies probably need to do more innovation, but I think there is a stronger need for companies to do innovation in a smarter way. So I when hear the mantra that ‘innovation is everybody’s job’ I wince, because if everyone is innovating (and innovating all the time) that doesn’t leave many people to look after existing customers and to make sure they receive existing products and services in a way that will delight them.

Smart innovation is about balancing and adjusting the extent to which employees focus on exploration activities (i.e., being innovative) versus focusing on exploitation activities (i.e., being efficient and reliable). This capability to strike a balance, and when necessary adjust the balance over time, is known as organizational ambidexterity. The extent to which a company’s employees should focus on exploration or exploitation will depend on the rate and direction of change (i.e., the environmental velocity) in a company’s industry. The greater the industry velocity, the more a company should pursue exploration. 

Myth 3 – Listen to the customer 
When innovating, should companies listen to and learn from their existing customers? It depends! If companies want to develop incremental innovations that refine their existing offerings, then listening to customers will very likely be a good source of information. But if companies are aiming to develop radical or discontinuous innovations, then their existing customers are unlikely to value the performance attributes of the innovation. This is the logic behind this quote by Steve Jobs:

“It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them."

Thus, it is doubtful that companies will shape and create new markets by listening to customers who are on the whole comfortable with their current products and services.

One exception to this lesson is when companies observe and understand the actions and needs of creative consumers, defined as: "customers who adapt, modify, or transform a proprietary offering" (Berthon et al. 2007: 39). Creative consumers include individuals such as Walt Blackader, a ‘lead user’ who developed the sport of rodeo kayaking and associated products forit; and households in rural India that use their top loading washing machines to churn curd and make lassi, a yogurt-based drink. Creative consumers are the sources of many radical and discontinuous innovations because they possess and combine information on the problem/opportunity and information on the solution.

More innovation myths

For a comprehensive list of other innovation myths and associated lessons check out ScottBerkun’s excellent blog

Further Reading

This posting is based on research and content from the following publications:

Using Cladistics to Understand and Shape the Evolution of Economic, Social and Technological Systems

"there is natural speculation that organizations,
like species,can be engineered by understanding the evolutionary processes well enough to intervene and produce competitive organizational effects'' (March, 1994)

What is cladistics?
Here is the second posting on how evolutionary concepts can be used to understand and manage both innovation and change.

  The evolution of mobile phones: miniaturization
in the style of a Russian Doll by Kyle Bean.

Most economic, social and technological systems change over time, and in a way that is much like biological evolution. Thus, to map and understand the change in industries, products and technologies, myself and other researchers have borrowed the technique of cladistics (also known as phylogenetic systematics) from the biological sciences, to classify how different types of system have evolved overtime.

The word ‘cladistics’ is derived from the Greek word ‘clades’ meaning ‘branches’; cladistics is concerned with understanding how systems adapt and branch out over time. A cladistics analysis results in a ‘cladogram’ (see Figure 1 and Table 1), a tree-like diagram that depicts the pattern of relationships among different types of systems that share a common ancestor. The creation of a cladogram involves following three core assumptions (see McCarthy, 2005):  

1. The systems in any population (e.g., different organizations in the same industry, or different products in the same market) are related to each other, in that they have descended from a common ancestor. For instance, automotive companies such as the Morgan Motor Company, Tesla Motors, and the Ford Motor Company all have very different strategies and practices, but they can all be traced back to Karl Friedrich Benz and Bertha Benz who founded the first manufacturer of gasoline-powered automobiles – the company Mercedes-Benz.

2. System evolution follows a tree-like branching pattern with large punctuated changes (known as cladogenesis) producing new branches i.e. new systems or new species. For instance, the shift from the Ancient Craft Production method of automobiles, to Mass Producers in the 1920s, and then to Just-in-Time Systems in the 1970s (see Figure 1) represents some of the key branching moments in the history of the automobile manufacturing industry. Also, consider the evolution of mobile phone handsets. In 30 years they have transitioned from large shoe box sized devices, with antennas and keys, that were only able to make telephone calls, to much smaller candy bar sized devices with touch screen communication and no antennas. Currently mobile phones are evolving into multi-media devices that are again slowly increasing in size. 

3. Cladogenetic change is accompanied by a more continuous series of incremental change known as anagenesis. This is the improvement or refinement of a system rather than the creation of an entirely new type of system. Anagenesis is evolution within a branch lineage, while cladogenesis is evolution that results in a new branch.

For more information on how to undertake a cladistics analysis, see the five step process described in section 5 of this article. 

Figure 1 Automotive industry cladogram
(from McCarthy et al. 2000)

Table 1 Operational practices (characteristics) for the
automotive industry cladogram (from McCarthy et al. 2000)

Cladistic studies of industries and products

So what does a cladistics analysis tell us? Here are four core insights that cladograms provide for management scholars and practitioners:

  • System Recipes – the lineage or branching network for each type of system in a cladogram represents the DNA or recipe for that system. For example, if you wanted to know precisely what constitutes a Lean Producer strategy (see Figure 1) you simply trace all the characteristics on the branches that connect the ancestor branch (Ancient Craft Systems) to the Lean Producer branch. Thus, the first three characteristics in this recipe would be 1, 2 and 47, and the final three characteristics would be 15, 23, and 29.
  • Change Sequence – cladograms help us to understand how to transform one type of system to another type of system (e.g., from Mass Producer to Lean Producer) by providing information about the sequence in which changes should be made. For instance, a flexible, multifunctional workforce (characteristic 24) must first be in place in order to practice set-up time reduction (characteristic 25).
  • Path dependency – where you want to take a system, regardless of whether it is a social system or a technological system, often depends on where the system has come from. This is known as path dependency. If an organization wishes to successfully change from a Mass Producer to a Lean Producer it must adopt the characteristics on the Lean Producer branch (e.g., 29, 23, 15, 49, 35, etc.) but also it must drop, unlearn or stop doing those Mass Producer characteristics that will be in conflict with being a Lean Producer (e.g., 52, 46, 20 and 14).
  • The Velocity of Change – whether it is products, technologies or industries, a cladogram depicts the velocity of change. The changes in both the rate and direction of characteristics overtime can be counted to determine how dynamic the system is changing, both in terms of pace and continuity. Once the velocity is determined managers should then ensure that the velocities of their companies innovation processes (organizational, product and technological) are appropriate for their industry and market conditions.

Further Reading