Crowdfunding, in particular in its presales form, has proven an excellent channel to accelerate the process of innovation and lower its risk. It enables entrepreneurs to get early feedback and submit their prototypes and service concepts to the ultimate market test: the customers’ willingness to pay. But why not appeal to the crowd even earlier in the innovation process, why not crowdsource idea generation and selection as well?
The answer to that question lies in the concept of “crowdbusiness” developed by innovation expert Dr. Reinhard Willfort. Reinhard is the CEO of Austria’s Innovation Service Network (ISN), and the creator of the crowdsourcing network Neurovation.net and the crowdfunding platform Tausend Mal Tausend.
I caught up with Reinhard at CrowdTuesday in Paris where he spoke as a board member of the European Crowdfunding Network.
Therese: What is “crowdbusiness” and who needs it?
Reinhard: Every company that must innovate –and that is nowadays every company– needs crowdbusiness. Corporations like media and telecom, for example, have neither the skills nor the tools or the processes required to generate new ideas and develop them into successful businesses. Their innovation process is stalling. They’re falling behind and come under enormous competitive pressure.
Crowdbusiness is a framework that enables companies to drastically increase their innovation capacity by drawing from the power of the crowd at all stages of the innovation process: idea generation, selection, and funding. It enables companies to produce more ideas, speed the innovation cycle, increase its efficiency and lower its risk, hence its cost.
Take two examples. First, an example of crowdsourcing: a regional institute for the promotion of wood products launched a campaign on our Neurovation.net platform to crowdsource innovative design ideas for a wooden bench. Within two months, they received 88 incredibly diverse proposals. These in turn triggered more than 7,000 reactions among the crowd. They would never have had reached such creativity and a wide range of feedbacks through a traditional innovation process.
Another example, from crowdfunding this time: an Austrian manufacturer was looking to produce a prototype of a revolutionary portable solar power generator. He launched a presales campaign on our rewards-based crowdfunding platform Tausend Mal Tausend. The goal was easily beaten within less than two months. The company gained not only the funds it needed (over 600,000 Euros) but, most importantly, it received the feedback of 1,000 crowdfunders who also became as many product advocates.
Therese: You have three different businesses that work together to support your clients’ crowdbusiness for innovation. Can you explain?
Reinhard: Our three businesses enable us to combine professional innovation services provided by our innovation experts with the input from the crowd gained through crowdsourcing and crowdfunding. These three businesses are the three legs of a crowdbusiness workflow designed to support the innovation process from A to Z, from ideas to financed and marketed products.
The first leg of this crowdbusiness framework is the crowdsourcing network, Neurovation.net, founded in 2007. It is an open platform which gathers “the crowd”, a social network of 11,000 people profiled by sociodemographic criteria as well as by their affinity with different topics, their reliability, their creativity and their activity. Subsets of them are identified as experts. We use gamification and other social media techniques to engage the community and drive its participation. This is where new business ideas are crowdsourced, challenged, and preselected. Client companies may also use the platform software to crowdsource new business ideas from their own network of employees and partners.
The second leg of the crowdbusiness approach is my historical company that I founded in 2001, Innovation service network (ISN). ISN is a professional services firm with 32 analysts and consultants specialized in driving innovation projects. We use proven methodologies such as Design Thinking that are fully in synch with crowdsourcing. We use them to translate selected new business ideas into viable business models, business plans and prototypes. It’s also here that we develop our crowd-based platforms’ technology.
The third leg, the most recent one, founded in 2012, is the crowdfunding platform Tausend Mal Tausend or 1,000 x 1,000 in English. This is where the innovation projects are put to the real life test of adoption: convincing investors, lenders or buyers to fund them. The platform supports multiple forms of crowdfunding, rewards-based, lending, equity, etc. We use mostly the presales form of crowdfunding. As of now, we have 4,000 crowdfunders on this platform.
We believe that involving a “crowd” of people engaged in trusted communities such as Neurovation.net and TausendMalTausend as co-creators of innovation helps our clients create tremendous value.
Therese: What are your expansion plans?
Reinhard: As I said before, we see an enormous potential for our business given the extreme pressure to innovate that all companies, big or small, are under. Our customers are increasingly open to the idea. Once they tried it, they will come back for more because innovation never stops. It is an iterative process.
As of now, we’re working in Austria and Germany. In terms of geographical expansion, our focus is on expanding our crowdsourcing network to Northern European markets such as Scandinavia. Our goal is to have 100,000 members by 2018.
We also have innovative plans for the software development of our platforms and are currently searching for strong partners. We want to track and analyze the connections and interactions of the crowd in order to use them as operational indicators and searchable parameters for trend scouting.
Therese Torris is an entrepreneur and consultant in eFinance and eCommerce based in Paris. She has covered crowdfunding and P2P lending since the early days when Zopa was created in the United Kingdom. She was a director of research and consulting at Gartner Group Europe, Senior VP at Forrester Research and Content VP at Twenga. She publishes a French personal finance blog, Le Blog Finance Pratique and curates crowdfunding news on Scoop.It.