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What would you do with a bounty? Decentralized collaboration on an open innovation platform

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Would you like to create a bounty to get your trash picked up without registering on Handy? Would you like to receive a bounty by giving someone a lift on your way home without being an official Lyft driver? Would you like to use a bounty to crowdsource innovative approach to your next big startup idea? In a world powered by The Bounties Network, user can easily create or fulfill tasks, getting paid with tokens on the Ethereum blockchain.

The Bounties Network is created based on the philosophy of Open/Distributed Innovation, a mindset that advocates organization to look beyond their institutional boundaries for innovative solution or industry insights.

Many technology firms have leveraged Open Innovation to create business models that harness ideas for their internal usage. For example, Apple feeds its users with content and apps created by external developers on its Apple Store. Amazon outsources its tasks to global workforce via Amazon Mechanical Turk. Latecomers such as Threadless organizes design competition to identify its best-selling t-shirts. As digital technology increases human connectivity, along with a global supply of technical workforce, open innovation has fueled a new wave of platformization, which has grown stronger across all sectors. [1] [2]

However, there is an inherent limitation to the platform-oriented business model. As Bergvall-Kareborn and D. Howcroft point out, existing players serve as centralized platform owners that design, control and liason among a Network of external participants. They are the final gateway to consumers, and thus have the final say over who gets to be included and when the game rule gets changed.[3] Besides, there are also issue such as Intellectual Property, Labour, and Payment settlement issues that further complicate the business model. This  form of tight control has led some scholars to consider such platforms as “open but not open”. [4]

A real open network is a decentralized network

To solve the centralization issue of existing crowdsourcing platforms, The Bounties Network leverages blockchain technology, a distributed technology that records transaction in a peer-to-peer fashion. Similar to traditional Open Innovation ideology, blockchain advocates collecting and trusting wisdom from the crowd. But more importantly, through tokenization and smart contract, blockchain adds a flavor of decentralization to Open Innovation, meaning that rather than relying on platform owner to dictate the rule of crowdsourcing, users design the mechanism of how each bounty is created and fulfilled. [5]

Specifically, through the Bounties Network, users engage directly with each other on problem-solving, voluntary participation, and self-organizing collaboration. For example, the WWF created a bounty that requires any user to pick up trash, submit verifiable proof. Once done so, user will receive 10 DAI token as a reward. There is no criterion or approval agency that controls whether a user’s bounty is valid or not, nor is there dispute over when and whether a bounty is paid out or not. Users have complete control over how initiator and fulfiller wish to manage the bounty [6]

Most importantly, due to the programmable nature of blockchain, all rules can be written in a smart contract and execute when conditions are satisfied. Audit trail of asset/token ownership is recorded on a shared ledger to prevent potential dispute. [7]

How to sustain a bounty network?

Blockchain-oriented Open Innovation is still a nascent concept, and faces many challenges both from short term and medium term perspective.

Short term: to initially attract users to the Network, there has to be a diverse range of tasks associated with good rewards. As Lakhani and Panetta emphasizes in their paper, “distributed innovative system is driven by the granularity and diversity of the tasks available in a given context”. [8] Therefore, the initial set of tasks determine the type of users and tasks dominating the platform in the future

Medium term: once users are on boarded, the key is to continuously engage them so that more bounties are created and fulfilled. After all, why would a firm seek external ideas when it has an internal team to solve problem? For a user to stick with the platform, there has to be either extra insight drawn from the platform, or a sense of identity and community that motivates participation. Therefore, the Bounties Network must design mechanism so that talented users are intrinsically motivated to stay with the community. These can be achieved by assigning extra bounty to exceptionally good fulfillments, or create a social network community so that top performers are recognized, rewarded, and incentivized to stay longer in the community.

It’s all about the community

An ancient Chinese proverb says that “the fire burns higher when everybody adds a little bit wood to it 众人拾柴火焰高”. Indeed, having wisdom of the crowd does not just mean having a larger pool of resources, but having the freedom to work in a complete peer-to-peer fashion.

However, the vision of shifting all future tasks to Bounties is without question, as not all tasks can be fulfilled through external participants. [9] Therefore, the Bounties Network must be realistic about the type of community it aspires to build:  is the community targeting B2B users or B2C users? are the tasks mainly innovation-oriented or lower skill sets? Would people utilize it for crowdfunding or ideation?

Maybe we should put these question as bounties on The Bounties Network.

[WC:775]

 

Reference:

[1] L. Christopher. Tucci, H. Chesbrough. F. Piller, and J. West, “When do firms undertake open, collaborative activities? Introduction to the special section on open innovation and open business models,”Industrial & Corporate Change,25, 2 (April 2016): 283-288. DOI: 10.1093/icc/dtw002

[2] H. Chesbrough .and M. Bogers,‘Explicating open innovation: Clarifying an emerging paradigm for understanding innovation,’in H.Chesbrough, W.Vanhaverbeke and J. West (eds.), New Frontiers in Open Innovation. Oxford University Press (2014): Oxford, UK,pp.3-28 .

[3] B. Bergvall-Kareborn and D. Howcroft. Crowdsourcing and open innovation: A study of Amazon Mechanical Turk and Apple iOS. Presented at The 6th ISPIM Innovation Symposium –Innovation in the Asian Century, Melbourne, Australia (December 2013).

[4] M. Cusumano.  Platforms and Services:  Understanding the resurgence  of Apple, Communications of the ACM (2010), 53:10, 22-24.

[5] Y. Chen. Blockchain tokens and the potential democratization of entrepreneurship and innovation. Business Horizons, Volume 61, Issue 4, July–August 2018, Pages 567-575

[6] Simona Pop. Bounties for the Oceans: Philippines Pilot. (Accessed: November 2018). https://medium.com/bounties-network/bounties-for-the-oceans-philippines-pilot-db4319b0012

[7] Mark Beylin. The Importance of Standards for Bounties on Ethereum. (Accessed: November 2018). https://medium.com/bounties-network/the-importance-of-standards-for-bounties-on-ethereum-93b518d14f9c

[8] K. Lakhani and J. Panetta. The principles of distributed innovation.Innovations: Technology, Governance, Globalization 2, no. 3 (Summer 2007): 97–112

[9] K. Boudreau and K. Lakhani. How to manage outside innovation. MIT Sloan Management Review 50, no. 4 (Summer 2009): 68–76.

9 thoughts on “What would you do with a bounty? Decentralized collaboration on an open innovation platform

  1. Interesting article, with some parallels to the Aspiring Minds strategic decision of whether to go B2B or B2C. Given the importance of network effects in this type of business, how does The Bounties attract an initial network of users/consumers and tasks (i.e., how does the company incentivize potential users to get “boarded”)? Additionally, how does The Bounties develop a monetization strategy?

  2. My question concerns the definition of open innovation. (I wrote on one of the other trends, so I know very little about this one!) Our assignment note said that organizations use open innovation “to seek contributions from those outside the firm” in order to (1) generate content, (2) improve processes, and (3) develop products. Which one (or more) of these uses is happening for the Bounties Network? If none of the above, then would you argue that all platform businesses involve open innovation by definition?

  3. I was intrigued by you comment that “not all tasks can be fulfilled through external participants” and that led to my conclusion that “not all tasks should be allowed to be posted and fulfilled through an external participant”. One related underlying concern for me, that I did not find in the outlook, is that there seem to be no mechanisms to prevent misuse of this open innovation platform to source ideas for societally unadvantageous or even illegal actions – creativity of the crowd can become a danger when it is focused on devious plans. I think that prevention of abuse of the platforms innocent purpose to connect people for idea sourcing is a topic that needs to be adressed urgently.

  4. This is a really thought for provoking piece, thank you for sharing. You made what initially seems like a very abstract idea incredible tangible. While I first pictured this as a technology between individuals, your question on B2B vs B2C really challenges my assumption. This concept could allow for widespread community service, a job board, an opportunity to pick up side hustles, and so many things in between!

  5. As someone who is unfamiliar with the blockchain (and related terms like smart contract, etc.), I found this digestible and interesting. I can see why people give credence to the idea that these open platforms are “open, but not open” because there is a centralized party that has control of the network and facilitates the meeting of buyer and seller. The decentralized, open network gives us the ability to remove this party, but I wonder if that would be a net benefit. Without fully knowing how a smart contract works, I see these companies like Handy, Lyft, etc. adding real value to these service-based industries from a trust perspective. Their legal accountability, internal protocols, service ratings, etc. all add value to the buyer / seller transaction, and I wonder how the decentralized platform solves for that.

  6. Thanks for sharing your insights on a fascinating business.

    There are clearly network effects to content creation and trust is key in these platforms – I have questions around the bidding process however: as the platform grows, I worry that competition for fulfilling Bounties increases and there is no guarantee that a user’s efforts will pay off if they spend time on a Bounty and someone else’s work is selected. Also, the reason some tasks are outsourced is because people do not have the skills in-house – it may therefore be difficult for a person to judge quality of the work and award the Bounty e.g. if the task is to translate text into another language.

  7. Great article! Two areas where I would love more thoughts are around quality of content and achieving a critical mass of users. The quality of a platform is naturally going to depend on the dept of the ideas and hence it would be interesting to see how Bounty is looking to build the requisite critical mass. Additionally, a natural downside to crowd sourced content is the possible misuse of the open platform. It would be interesting to see how this evolves!

  8. Thank you for writing this, Shuyao!

    I wonder, though, is cryptocurrenfy necessary for this system of bounties? Or, rather, can we accomplish the same thing by using digital USD? As an ordinary citizen who wants to do good for money, I am sometimes a little concerned about receiving payment in cryptocurrency. And since cryptocurrencies require resources to mine and accumulate, why not just use regular USD?

  9. Fascinating article. I wonder what other applications this technology could be used for? Could we use these types of decentralized contracts in healthcare between large hospital groups? Alternatively do we run the risk that this system could be used for malicious purposes if it is truly decentralized? I look forward to learning more about how I can use Blockchain Open Innovation in my own life.

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