user-led innovation - focus on car pooling market - paper presentation - sim 2013

The emergence of user-led business models and insights from the Italian carpooling market

Why is my car less mine?

Andrea ParaboschiElena Casprini Alberto Di Minin

Simone Corsi

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X Convegno SIM 2013 Why is my car less mine? The emergence of user-led business models and insights from the Italian carpooling market

Andrea Paraboschi, Elena Casprini, Alberto Di Minin, Simone Corsi - Scuola Superiore Sant’Anna - Pisa

Andrea Paraboschi Elena Casprini Alberto Di Minin Simone Corsi

Ph.D Student Ph.D Student Assistant Professor Post-doc researcher

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The role of users in firms’ BMs

Users

Firms or individual consumers that expect to benefit from using a product or a service (Von Hippel, 2010)

Some users want something that is not yet available on the market and are able and willing to pay for its development (von Hippel, 2010)

Final recipient of products/services provided by the firm

Offer co-creator (part of the company BM)

Enablers of innovation for the company

(active in the BM innovation)

Entrepreneurs (reinterpreting the BM in a new owned company)


Andrea Paraboschi, Elena Casprini, Alberto Di Minin, Simone Corsi - Scuola Superiore Sant’Anna - Pisa��3

Users are not all the same...



Some examples - 1

Windsurfing Invented by “the Hawaiians” (7 people) in 1970s 40% of major improvements came from users

(Shah, 2000)



Some examples - 2

Rodeo Kayaking Invented by Walt Blackader in 1970

63% of major improvements and 83% of minor improvements came from users

(Baldwin et al., 2006)



Some examples - 3

Facebook Developed as an hobby

by Mark Zuckerberg in 2003



Some examples - 4

Big Mac Invented by Jim Delligatti, who had a franchise

restaurant in Uniontown, in 1968 The name “Big Mac” was given by Esther Glickstein Rose, a 21 year-old Advertising

Secretary in Chicago headquarters (from Wikipedia)



points of interest a firm should look at while implementing a

user-led business model

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The role of users needs to be seriously taken into account and constantly monitored by firms (Kotler, 1986), especially nowadays...

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The presence of a community of active users

Community of Users

A group of users of a product or service who have a relationship consisting of trading, sharing and disseminating information and knowledge about that product or service or other products based on it (Parmentier and Gandia, 2013)

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The presence of a platform providing guidelines to users

Platform

Technological building blocks (that can be technologies, products or services) that act as a foundation on top of which an array of firms, organized in a set of indipendent firms (sometimes call an industry ecosystem) develop a set of interrelated products, technologies or services (Gawer, 2009)

Multisided platform

The platform has lost its physical/industrial aspect to become a mere exchange marketplace, built to make transactions easier between two or more counterparts (Rochet and Tirole, 2003)

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The presence of a basic product/service that is customizable by users

Add photos

Add description

Promote the auction

Buy it now!

Schedule the auction starting time

Payment options

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Product families are product that share common features, but at the same time have specific functionalities required by different sets of customers (Meyer and Utterback, 1992)



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The presence of interfaces, providing tools to users

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Interfaces

Inside each platform’s modular structure, interfaces provide access to other companies/users for customization and innovation. (Gawer & Cusumano, 2009)

Platform’s core GUIAPI

Final recipient of products/services provided by the firm

Enablers of innovation for the company

(active in the BM innovation)



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The value co-creation

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Depending on the industry context, the belongingness to a user community allow members to share and exchange experience and knowledge (Haelfiger et al., 2010).

Toolkits help the community to innovate, making at the same time the company able to intercept this knowledge and to innovate (von Hippel, 2010; Parmentier and Gandia, 2013).

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The presence of reward mechanisms

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Most of the users do not have economical incentives to participate in a community, since the main asset is, apart from benefiting from the product/service, their reputation and fun (Werbach & Hunter, 2012).



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The focus on user experience and service usability

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User experience is among the most important asset for a user-centered company.

With the progressive use of web technologies, users can now influence others through WoM.



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The key-role of lead users

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The higher involvement and their higher willingness to collaborate make them playing a crucial role for companies (von Hippel, 2010; Eisenberg,

2011) that may find the next breakthrough innovation through them.



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The customization of the product by lead users

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Users were the agents of innovation in roughly 80% of scientific instruments innovations.

In order to foster the participation of lead users in the innovation process, firms need to proceed by acknowledging them and involving them in the creative process, letting them free to experiment and customize the product/service (von Hippel, 1988).



User-led Business Models in the carpooling market

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What is carpooling?

It’s about sharing the car ride, making seats available to other people going the same place.

• Passengers pay the driver a fixed fare

• Started as a way to save money for commuters and people making medium-long range travels

• Spreading inside urban contexts

• Win-win for drivers and passengers



User-led Business Models in the carpooling market

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Market size (EU)

• 250 million vehicles in Europe (ACEA)

• ˜ 1 million carpooling rides available in 9 countries (0,4% are carpooling)

• 2 web companies in the market, many more are coming



Who is driving this market?

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• 10 m€ from Daimler and VC

• Started as a student’s project

• 5m members, 900.000 trips available

• 70 employees

• 7,5m€ from private investors/VC

• Started as a student’s project

• 3m members, 600.000 trips available

• 60 employees

• Small VC investment

• Started by 3 brothers

• 2 web companies in the market

• 10.000 rides available



What BMs are adopted by carpooling web companies?

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• Advertising based

• Commercial partnerships with other transport companies (not yet implemented in Italy)

• Revenue sharing model: platform acts also as a payment tool - 11% of revenues are withhold by the website (not yet implemented in Italy)

• B2B revenue model: trip certification tool to certify rides, commercial agreements with partners (events)



The nine points in the carpooling market

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Communities of users are present. In each community users can play two interchangeable roles: drivers and passengers.

Multi-sided platforms aggregates users, providing guidelines to them.

Users can customize their profiles, providing more information about their car, traveling preferences, trip details, in order to attract passengers.

Interfaces to external social networks are used to certify the driver’s and passenger’s reputations. External APIs are offered to commercial partners.

Value is co-created and shared among all the community participants.

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Reward mechanisms are present in terms of feedbacks (that acts on reputation) and profile completion bars. Social contests are often arranged.

User experience is constantly empowered with interface’s upgrades. Mobile apps extend the platform’s usage on portable devices.

Lead users are identified through the database. Special activities are dedicated to them, they can be considered as “evangelists” and are often invited to special events .

Lead users can contribute to the platform’s evolution through customer care channels or contacting directly managers. Some lead users may start their own company.

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The nine points in the carpooling market



Conclusions

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In the paper, we presented a literature review on user-led business model, identifying nine characteristics that are essential for its effectiveness.

Furthermore, we have introduced the carpooling example, pinpointing the key common aspects and the differences in terms of offer and execution.

Further research may explore the execution implications of this paradigm change and the nine key points may be tested in further works approaching different business sectors other than the carpooling market.

The emergence of user-led business models and insights from the Italian carpooling market

Why is my car less mine?

Andrea ParaboschiElena Casprini Alberto Di Minin

Simone Corsi

THANK YOU Andrea Paraboschi

[email protected] www.paraboschi.it

mailto:[email protected]

http://www.paraboschi.it

user-led innovation - focus on car pooling market - paper presentation - sim 2013

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