The Crowd and Open Education: resilience and sustainability

Updated July 21 2014

 Update:

A relevant quotation I found in my notes:

Paul Stacey

Crowd learning

Crowd learning describes the process of learning from the expertise and opinions of others, shared through online social spaces, websites, and activities. Such learning is often informal and spontaneous, and may not be recognised by the participants as a learning activity. In this model virtually anybody can be a teacher or source of knowledge, learning occurs flexibly and sporadically, can be driven by chance or specific goals, and always has direct contextual relevance to the learner. It places responsibility on individual learners to find a path through sources of knowledge and to manage the objectives of their learning. Crowd learning encourages people to be active in setting personal objectives, seeking resources, and recording achievements. It can also develop the skills needed for lifelong learning, such as self-motivation and reflection on performance. The challenge is to provide learners with ways to manage their learning and offer valuable contributions to others.

 

Deloitte University Press published an infographic on crowdsourcing. Crowdsourcing is defined as “an approach to harnessing the power of individuals to work to solve problems in a decentralized way”.

They distinguish five different kinds of crowd sourcing, using the crowd’s creativity and knowledge (competition, collaboration and voting), its funds (funding) or its labour power (labor). According to the writers, Rob Hamill, Emily Malina and Elizabeth Pal, each form of crowd sourcing is applicable in certain situations and will be contra-productive in other situations.

The table below gives an overview of the different ways of crowd sourcing, the video has some funny examples, starting with 1714 as start of one of the first crowd sourcing projects.

 

Form Pro Contra
Crowd CompetitionCrowd competition refers to the hosting of contests in which participants work individually or in groups to come up with a solution to a given problem. The outputs may include many viable ideas or solutions.
  • creating actional solutions
  • developing prototypes
  • Generating outside ideas
  • predetermined desired outcomes
  • lack of resources to review submissions
  • building community
Crowd Collaboration
Crowd collaboration requests the input of decentralized individuals to develop, aggregate, and share knowledge and information across a pool of contributors, generally through a loosely controlled web-based platform. The typical outputs of a crowd collaboration effort are collective concepts with shared buy-in.
  • building and sharing knowledge
  • responding to emergencies
  • shared policies
  • User anonymity
  • Small and inactive crowds
  • Promoting individuality
Crowd Voting
Crowd voting is the process of turning to the crowd to reach a decision. This practice typically involves inviting participants to help make a decision based on pre-defined options.
  • Decision making
  • Rating and ranking
  • Quality assurance
  • Strategic decision making
  • Political sensitive issues
Crowd FundingCrowd funding is the process of funding projects through small contributions from a large group of participants. Crowdfunding activities are typically hosted through web-based platforms.
  • Fundraising
  • Disaster relief
  • Start-ups
  • High transparency

 

  • Ongoing operations
  • Loosely structured initiatives
  • High short term expectations on returns
Crowd Labor
Crowd labor refers to the engagement of a distributed labor pool to accelerate the completion of large-scale projects by splitting up a task into components that require little creativity or coordination but that cannot be automated.
  • Creating actionable solutions
  • Data entry and validation
  • Translation (eg language)
  • Digital archiving
  • Unstructured tasks
  • Subjective tasks
  • High-level thinking

As I argued before, the sustainability (or resilience to use a new buzz word) of business models for Open Education will depend on the inclination of people and institutions to cooperate either on the input/production side as on the user/learner/consumer side of the business model. As crowd sourcing is a form of this kind of collaboration, it could generate knowledge on the the potential success factors by reversing this table and apply the pro’s and contra’s to different systems of Open Education.

Crow Labor is one of the most used forms of Crowd Sourcing in the development of Open Educational Resources. Organisations as the Saylor.org, Merlot.org rely heavily on materials of others. However, this kind of free labour has also some aspects of Crowd Collaboration because it is not necessarily about projects which “require little creativity or coordination”.

Crowd Competition is seen in situations in which organisations as the EU, Hewlett foundation or the American government ask for proposals which will be subsidized. On an individual level, these calls will be passed on towards teachers and other educational developers to come up with the creative solutions to win the funds.

It can also be used as an instrument to start-up a new data-base or website on educational resources and programs. By setting a suitable reward, the system can generate a certain minimal critical mass, above which it will be interesting for other partners to participate.

Crowd Voting is often used to give an indication of the quality of the resources or programs. For a ranking to be functioning, there have to be enough votes and the voting public has to be something of an “in-crowd” of experts.

The remaining form of Crowd Sourcing is the financial form, Crowd Funding. According to the authors, this instrument is unsuitable for ongoing operations and loosely structured initiatives. Yet, I have the impression that several non-commercial projects depend on one large fixed subsidizer and a fringe of minor short-term donors.

Concluding, the examples of Open Educational Resources and Open Education show that the forms of Crowd Sourcing as described by Hamill, Malina and Pal is not complete; there are other situations which can only partially described by this taxonomy. Especially the voluntary participation in high-knowledge projects does not fit either the Crowd Collaboration nor the Crowd Labor definitions.

Still, the research in Crowd Sourcing should generate a further understanding of these kinds of collaboration: the free contribution and exchange of educational materials between individuals and organisations. A better understanding of these phenomena will enhance the changes of success of the Open Education movement.

 

The business model of not-for-profit organizations

Solving the big issues of our generation requires bold new business models  
Osterwalder and Pigneur (2010, 265)

In a short time span I encountered two views on the usage of business economics in not-for-profit situations. Firstly, the quote above this blog, in which Osterwalder and Pigneur(2010) claim that a business model approach could help solve present day global problems. Against this, Thompkins(2005) argues that inefficiency is an important characteristic of the public sector as it is the effect of the necessary democratic process and the required transparency of processes in this sector, or as the title of his article says: The distinctive context of public management; implying that there are different kinds of management.

In our view this seemingly contradiction is based on a misunderstanding of the concept of the business model. Although it is developed for analyzing and developing models in the for-profit sector, it is about the creation and deliverance of value. So if transparency is an attribute of the public sector, it should be represented in a business model describing a specific public organization.

This is the challenge Judith Sanderse and myself have taken on. We agree with Osterwalder and Pigneur(2010)  that the business model, and more specific the Business Canvas, can be used to increase the efficiency and effectively of all kinds of organizations, including not-for-profit ones. Hence, the main objective of Judith’s research was the development of a specialized business model canvas for NGOs. The central research question of this study is ‘how is a NGO business model canvas structured?’

 However, by using the Business Canvas for analyzing not-for-profit organizations, we have to take two tings in account:

1. the definitions of terms in the general business model will not be recognized by the managers and employees of these organizations and sometimes even lead to resistance to use the Canvas;

2. given the specific functions of these organizations, the Business Canvas will have to reflect the different attributes of these organizations to increase both the usability as the acceptance of the models.

Judith Sanderse did analyze the potential usage of the Business Canvas in the case of non-governmental organizations. To do so, she used three steps; firstly using the literature (especially that on social enterprises) to adjust the ‘Beyond-Profit-Business Canvas (see Osterwalder and Pigneur, 2010, 264-265), proposing an adjusted model for not-for-profit organizations.

Secondly, she interviewed several experts, to see if the model was usable in terms of form and variables. From these interviews she concluded that the Business Canvas should be adjusted. Different business models have to be used for foundations and ngo’s (see the figure below).

bc_Sanderse

Furthermore, the definitions have to be adjusted and clarified. In the table below the definitions as used are given.

Key definitions
Business model A business model describes the rationale of how an organization creates, delivers, and captures value.
Vision Outlines what the organization wants to be. It can be emotive and is a source of inspiration. For example, a charity working with the poor might have a vision statement which reads “A World without Poverty.”
Key Partners The network of cooperative agreements with other people or organizations (including governments) necessary to efficiently offer and distribute the organisation’s mission and programmes.
Key Activities The main actions which an organisation needs to perform to create its value proposition.
Key Resources The physical, financial, intellectual or human assets required to make the business model work.
Value Proposition The organisation’s mission, its main programmes and brand.
Mission Defines the fundamental purpose of an organization, succinctly describing why it exists and what it does to achieve its vision. For example, the charity working with the poor can have a mission statement as “providing jobs for the homeless and unemployed”.
Relationships The type of relationship the organisation has established or wants to establish with each key beneficiary or donor segment.
Programme delivery methods The method which the organisation uses to achieve its mission or programme activities to the beneficiaries.
Ultimate Beneficiaries The target group who the organisation principally aims to reach and serve to achieve its vision/mission.
Channels The methods of communication, distribution and sales used by the organization to interface with its customer/donor segments.
Customer/Donor Segments The different group of customer and/or donor segments which the organisation targets for its fundraising activities. In this component customers tend to be more related to the merchandising section of the organisation and donors tend to be related to the fundraising section of the organisation.
Revenue The income streams, this could be donations, merchandises/sales, investments or other income streams available for the organisation to work on its value proposition.
Costs The total expenses which the organisation incurred (or will incur) to implement the agreed activities.

Lastly, the adjusted model was used to analyze five NGO-s through interviews with key-managers of these organizations. The split business model was recognizable and usable according to these managers. Functioned mentioned where:

    • Understand the dependencies of the separate elements
    • Change process
    • Visualization of the organisation
    • Staff induction
    • Communication, both internally and externally
    • Alignment

Yet further research should follow the usage of the model in describing and analyzing the workings of the organizations, to see if it is possible to improve or even change the way they try to realize their goals.

Yet, despite the ultimate goal of the organization, be it the public good, education or income for the stockholders, it will require money to make our world go round.

 

 

 

 

Why business models in education matter

Again, and again teachers rightfully state that there is no reason why they should take into account the business model of their course. However, on an institutional scale a business model describes the way an organization defines itself. It is not only an earning model: describing the earnings versus the costs, determining the net income of the organization.
The business model also contains collaborations, essential activities and processes and core competencies. By defining the organization in this way shows clearly what the organization sees as its raison d’être, its competitive position in regard to other institutions and organizations.

The individual teacher teaching a class in Latin may not be interested in the fact that her investment in offering an interesting program is only attended by small groups of students. At an administration level of the university, however, the imbalance between the costs of providing the class and the income generated through direct student fees and governmental subsidies. This imbalance and the financial long term effect of it can be fed back to the individual teacher, providing an incentive to change the way of teaching. In this case, sharing with other teachers over universities could be an answer to the investment costs (eq. through virtual classes, by video appearances). Yet, another measurement taken could be to when the institution sees this course as essential for its identity and does not want to share it with others. In that case, funds will be made available for teaching regardless financial shortages. An intermediary way could be to support the teacher to develop materials which could reduce the actual f2f time by offering online materials.

All these actions (innovative or conservative) require an understanding of the business model of the institution:
– why would we invest in innovation in our present education: this requires a view on the strategy of the institution and on the values of the stakeholders;
– will we cooperate and who are our partners, con-colleagues or co-creators?

A good business model can help in three ways: (1) analyses the present activities: are we still creating value for the present students and other stakeholders? (2) Given our strategic targets, are our activities still in line with these targets? (3) Given the wish for change, what does that mean for our activities, competences and partnerships?

Especially in education were the situation is complex as the stakeholder who provides the finances is not the same as the one who receives the education. Is education the service provided (towards the individual student) or is it the student with a degree who is delivered towards society? Another complicating factor is the interaction between the different business models for research, teaching, valorization and other activities as employed at HE institutions.

Again, a business model without a clear strategy or vision on the organization is like having a roadmap without a destination. If we know what we want to do for who; the next thing is to determine how and when. Describing the different business models could give an internal consistency on each major activity, but also show interdependencies and conflicts between the different business models.

Inside in the business model of an organization will stimulate innovation in a broader sense than only technology or demand driven. By aligning the demands of the stakeholders with the possibilities of the organization, possible improvements can be identified, raising the value for stakeholders, whether students, teachers, governments or society at large.

This should not mean that governments should control either content or methods of teaching, that administrations should make profits the main driver of education, but it isn’t a carte blanche for teachers to use unlimited resources in their teachings.
The acceptance of reciprocal interests and interdependencies should lead to an innovative mixture of alternative financing of new interesting teaching methods.

Education Changemakers: Business Models Matter http://marscommons.marsdd.com/business-models-matter/

Educating the bottom of the pyramid or of the market: the difference between Prahalad and Christensen

On first sight, the approaches of Prahalad (bottom of the pyramid) and Christensen (disruptive innovation) seem very similar. New firms offer products with less functionality at lower prices, making the products affordable for more customers, especially those with lower incomes.

It is even so that firms who aim for the bottom of the pyramid will be disruptive in their market in the sense that their new offerings will replace the old products and so the old firms.

 However, at a more fundamental level both approaches differ substantially from each other. Prahalad tries to combine social responsibility, capitalism and social welfare in a sustainable way. By producing for the millions, a small profit rate can generate enough absolute profits for a sustainable development of the firm.

Christensen describes a situation in which small firms are able to offer a product of a lesser quality for a lower price to both existing and new customers. By offering less functionalities and a lower technological quality they attack the lower end of the market, where the profit rates for the existing firms is lowest. Yet, when the last of the high-cost high-price firms has left this segment, competition will drive the price towards its zero-profit level. This will induce the low-cost firms to innovate their products, adding quality and functionalities, and attacking the new bottom of the market. This process will be continuing until the top of the market has become the new bottom.

[For non-economists: Profits is often used in several ways; here Prahalad uses the word profits for the income of the firms; at the zero-profit level of Christensen, firms have a 'normal' level of income; so not to worry, no people starve because of this kind of competition]

I see the same fundamental difference in the approach to Open Education. People and institutes involved in the production, distribution and research of Open Educational Resources do this because they see a linkage between social responsibility, welfare and offering education towards people whose access is financially or otherwise restricted.

Business models for OER are conducted in line with the approach of Prahalad. Given the need for free education for the bottom of the pyramid, how can this be organized in a sustainable way? This concentrates not only on the kind of earning models, but especially on efficient ways of production and organization.

 

Other initiatives, as Moocs and the online offerings of for-profit educational institutes, have explicit earning models. For example, most Mooc-platforms have contracts which contain regulations about the usage of the courses in commercial settings, about the usage of learning data or about future income selling student data to prospecting employers. For-profit institutions see students as customers, stripping all academic overheads, making the student an offering which is inferior in the eyes of the traditional educational sector, but sufficient in the eyes of the potential student.

This could induce a disruptive development, in which the Moocs and for-profit institutions move upmarket; each time segmenting the market more by offering the lowest quality at the lowest price, adding to this with an increasing price until they replace the traditional institutions.

 

Problem is that once offerings move from the not-for-profit towards the for-profit sector, the price mechanism will not automatically take negative externalities into account. Political agencies which set the goals for not-for profit institutions often take into account other goals. In the case of educational institutions, not only the direct effect on the carrier of the students, but also on social welfare and the relationship between research, education and economic and social growth.

One actual effect can be seen: for-profit institutions which concentrate solely on education can offer educational programs at fees which are below the fees of traditional institutions. One of the reasons for this is the fact that they have lower cost as they have not to pay for the investment in new knowledge (research). Often they work with part-time teachers, who gather their knowledge elsewhere. By acting in this way, for-profit institutions forego both direct research costs and indirect coordination costs.

Assuming education has major positive external effects on general welfare. Most functions associated with these effects will be removed as part of the reduction in quality which is part of the disruptive tendency as described by Christensen and others. In this sense, disruption of education is one of the worse things which could happen to a creative competitive society.

Creative Innovation thanks to the wisdom of crowds

In this blog I would like to return to one of my earlier central themes: business models, co-creation and collaboration. As the Business Canvas of Osterwalder shows, there are two linkages between the value proposition and the customers: the customer relationships and distribution channels.

One of my students, Rick op den Brouw, wrote a Msc-thesis on critical success factors of co-creation. Based on nine case studies, he concluded that -among others- the chosen strategy of co-creation and the actual business model not always coincide (4 of 9). However, most of the theoretical expected results of co-creation, as an increase in sales and a reduction in risks, were realized.

©Business Model Generation by Alex Osterwalder & Yves Pigneur

Romero en Molina (2011) try to describe co-creation on a more concrete level. The role of the customers changes in this approach. No longer are they seen as the destroyers of the value produced by the firms. Instead, the act of consumption is seen as the ultimate contribution to the creation of value. A product or service not consumed is without value.

In this process of co-creation of value are several possible partnerships of the consumers.

  • Co-designers, in which customers are used as partners to generate, develop and test new ideas.
  • Innovators, where organizations give so-called toolkits to make their own products and services; the knowledge gathered in this process is used to improve the original product or service.
  • Marketeer/Branders, customers become marketeers, for example for event marketing or lifestyle marketing. Viral marketing, on-line word-of-mouth commercials is mentioned as one of the most effective instruments.
  • Social Corporate Responsibility, by entering a dialog with the customers as stakeholders, the organization can reach a common perspective with respect to the effects of a product or service on the environment. Customers are not only involved with the CSR of an organization as passive clients, they participate actively by using the products or services.

Technical and social developments facilitate collaborative networked environments, in which organizations collaborate with so-called con-colleagues. Romero en Molina (2011) call these networks collaborative network organizations (CNO). Although these play a central role in Prahalad and Krishnan’s co-creation, Romero en Molina (2011) do not go into the role of the CNO’s in co-creation.

Next to the organizations do customers organize themselves in on-line communities; Romero en Molina (2011) call these Virtual Customer Communities (VCC’s). The VCC’s are aimed at discussing shared experiences with products and services.

These communities can be used to realize eight different kinds of co-creation:

1. Adjusting Products (IKEA);
2. developing new products (Procter & Gamble);
3. Feedback and evaluation (Microsoft Knowledge Base);
4. Mass-customisation (NIKE);
5. Using customer creativity (LEGO);
6. Developing new services using old services (TeliaSonera);
7. Real-time marketing and adjustments to services (FEDEX);
8. Personified value and knowledge creation (IPod/Itunes).

The examples above require new core-competences. To realize the diversity of demands, to react to the increase agility and the increasing complexity, an organization has to be flexible, agible and adaptive.

In the contacts with (potential) customers and co-creators, the Virtual Consumers Communities play a central role. To stimulate the creation of the VCC around your products or services, Romero and Molina (2011) give ten tips:

  1. Invite the right customers, keep the community private and be familiar with the essential characteristics of the customers (which is more than the geographic or demographic facts).
  2. See members of the community as advisers, not as simple marketing instruments.
  3. Focus on the interests of the members, not necessary on those of the organization.
  4. Create common activities and rituals.
  5. Be open and honest, even as the facilitator of the community.
  6. If you want information, ask for it.
  7. Listening is better than talking.
  8. Don’t ignore the negative, learn from these comments.
  9. Don’t ask to much.
  10. Communities are about people, not about technics.

Romero en Molina (2011) concentrate their analyze at the customer side of the organization by describing the success factors of the VCC’s, giving less attention to the collaborative network organizations (CNO).

The research of Bengtsson en Kock (2000) concentrates on collaboration, especially on those firms which are both competitors as collaborators. They analyzed several companies in three different industries. For example, Skega Ltd. and Trellex Ltd. worked together developing new materials, whereas they are competitors in the field of lining materials. In the deary industry, companies work together in developing means of transport, but simultaneously protecting their geographical markets. In the beer industry, bottles are standardized so the collection of empty bottles can be done in cooperation  whereas they compete through lifestyle – marketing and brand loyalty.

The conclusions of Bengtsson en Kock (2000) are:

  • heterogeneity of resources stimulates collaboration;
  • firms collaborate on the input side of the organisation, whereas they compete on the output side;
  • – the decision to collaborate or compete is a strategic decision, it involves the position of the organization within the network;
  • individuals can not be responsible for both collaboration and competition;
  • the combination of collaboration and competition within the same organization will give rise to internal conflicts and stress, which should be addressed by the top management.

Combining Bengtsson and Kock (2000) with Romero and Molina (2011) we can state that with respect to the development of a N=1/R=G strategy, involving co-creation and networks, organisations have developed good practices with respect to the consumer side  but the development of virtual network-organizations lags behind. The rise of the Organization 3.0 (Marco Derksen) might be predicted, but not yet realized.

Literature:

Cover of "Business Model Generation: A Ha...

Bengtsson, M., S. Kock (2000), “Coopetition” in Business Networks—to Cooperate and Compete Simultaneously, Industrial Marketing Management, Volume 29, Issue 5, September, Pages 411-426

Romero, D., A. Molina (2011), Collaborative networked organisations and customer communities: value co-creation and co-innovation in the network era, Production Planning and Control: The Management of Operations, 22: 5-6, 447 -472

Opening up: Open Innovation in a closed market?

When Paul Prinsloo asked me if Chesbrough’s funnel could be open on both sides, the economist in me cried NoNoNo!

This initial reaction is caused by schooling in traditional economic thinking. The concise version of this reasoning is as follows. Firms have to invest funds in research and development. Only 20% of the projects started will survive towards the stage of commercialization, where another part will be lost in the implementation stage. This means that, once the final product or service is on the market, the profits have to be large enough to compensate the firm for all initial investments, including failures and restarts. To generate profits of this size, the firm has to have some kind of monopoly power for a given period. This can be guaranteed through some specific competences, materials but mostly through property rights and patents.

The theory tells us that in a world without protection, the firm which makes the initial costs will not earn enough before its competitors enter the market with imitations or even improvement on the initial innovation. Innovative firms will go bankrupt, so there will be too little or even no innovation in this world.

Open innovation still depends on property rights, but it changes the situation in the sense that inventions, patents and innovations are bought and sold. Firms search externally for usable patents and supply their inventions and patents to the market if they deviate to much of the existing business model. Chesbrough assumes that through this mechanism costs will decrease and efficiency will increase as more research is used in innovations and failures will only influence the innovating firm (how these costs are influence the collective wealth is unclear in his model).

So open innovation is about increasing cooperation, but within a market setting. However, cooperation will lead to shared experiences and this can result in shared values, creating more business opportunities.

Collaboration is also necessary because on the output side of the model things are changing. Firstly, there is the influence of ict. For a lot of business, their main function was to select and stock products, produced by others. For example publishers (both of music and books), who selected the writers and bands of good quality, took care of the distribution of their work and made a living by selling these products. In essence, this is the same for super markets, which decide which goods to offer to the consumers, choosing from a large range of alternatives.

 

However, as Chris Anderson described in The Long Tail, in a web based society producers can place their products on websites, whether self published books, music or specialized goods which were normally not chosen by large risk adverse companies. Although some authors, composers, bands and small producers will act purely on their own, others search for collaboration to share sales channels; using each other traffic on the website to generate trade for themselves, see for example the Strange New Products website or Weird Music.Web.

Secondly, the tendency towards co-creation. Accepting the fact that value is created in the use of products, not in the sales transaction, the buyer plays a major role in realizing the full value of a product or a service. To give a consumer the freedom, to adapt the product or service to his or her own wishes, collaboration with other firms is almost unavoidable.

Taking those two tendencies together, the market side of firms is opening up, requiring the input side to open up. Open innovation makes co-creation and specialization possible, but market developments in their turn push collaboration (and by that open innovation): opening up one side of the process will cause the other side to open up too.

Berkeleyan, Hulda Nelson imageOpenness means different things in different fields. Open in the sense of open source means free. Open access in the sense of the British government means that the producer (author) pays for the deliverance of his product, open in open education can mean without start qualifications or gratis. Open innovation means that the research outputs are shared over the borders of the firm, caused by or stimulating co-creation on the output side of the firm; increasing access to knowledge and innovation without fundamentally changing property rights.

Another difference is that –despite the fact that all behaviour is free- the openness in innovation and co-creation is enforced by the market forces, whereas openness in software and education mostly is voluntary. Perhaps a nice subject for another blog?