A Business Model Framework for Crowd-Driven IoT Ecosystems

1. Introduction

A hyperconnected world is emerging; a world where people (Internet of People) and things (Internet of Things) are linked together providing anyone with “anytime, anywhere” access to information (Gomez et al., 2013). This environment intensifies collaboration and facilitates the emergence of new participatory value creation models driven by users and empowered by technological advancements. This era of hyper-connectivity is no longer characterized by centralised firm-centric business structures but rather from distributed, ecosystemic structures that utilise cutting edge technology in order to harness the collective power, co-creation ability and intelligence of the crowd. In these complex technologically advanced and constantly evolving inter-connected ecosystems, it is the ecosystem’s ability to bring together a variety of strategic business elements in order to jointly co-create shared value; defining this way its success.

The Internet of Things (IoT), as a network that links digital and physical entities via information and communication technologies, has moved to a new era that goes beyond the introduction of new types of services and applications, focusing upon the introduction of new ways of leveraging distinct, distributed and embedded value. As such, the role of IoT is catalytic in the emerging crowd-driven value co-creation paradigms as it introduced new user-centric archetypes, like mobile crowd sensing (MCS) (Burkel et al., 2006; Ganti et al., 2011), that go beyond traditional sensing techniques (e.g., sensor networks, etc.). These archetypes leverage the power, the devices (user-owned mobile devices and wearable devices) and the wisdom of the crowd to observe, measure, and make sense of phenomena (crowdsourcing). In this context, co-creation occurs both among and between crowd participants and systems (mobile crowdsourcing and mobile crowdsensing (participatory and opportunistic sensing)). A number of crowd-driven IoT ecosystems (Ziouvelou & McGroarty, 2017) have emerged elevating the role and collective efforts of people for enhancing the shared value creation under a “contextual open innovation 2.0” model that integrates the “environment” as an underlying value component in an IoT setting. Such ecosystems evolve in a “Quintuple Helix” innovation system where cooperation is established between five helices, namely: university, industry, government, civic society and the environment (Carayannis & Campbell, 2010; Carayannis & Campbell, 2014).

However, despite this change in the business logic of emerging IoT ecosystems, there is still a limited understanding of the business dynamics and business models of these emerging, technologically advanced, crowd-driven ecosystems. Based on the analysis of Ziouvelou & McGroarty (2017), the prevalent view of existing research in the area of IoT business models is still primarily firm-centric (Bilgeri & Wortmann 2017; Ju et al., 2016; Weinberger et al., 2016; Dijkman et. al., 2015; Chan 2015; Fleisch, et al., 2015; Hui 2014; Qin & Yu, 2014; Fleisch et al., 2014). Only a few studies adopt an ecosystemic view (Schladofsky et al., 2016; Rong et al. 2015; Turber et al., 2014; Westerlund et al., 2014; Leminen et al., 2012). However, even these studies tend to adopt firm-centric analytical modeling tools such as the business model canvas (Osterwalder & Pigneur, 2010) and only a few propose ecosystem-centric models placing emphasis upon value creation and value capture components (in the context of: (a) Industrial IoT (Iivari et al., 2016) and (b) IoT (Westerlund et al., 2014)) among others¹. On the contrary, there are no studies defining business models for crowd-driven ecosystems in the context of IoT. However, given the nature of the crowd-driven ecosystems, current approaches to developing business models (firm-centric approaches) fail to capture their dynamics and thus their full potential (Ziouvelou & McGroarty, 2017). This indicates the need for new business model frameworks and components that reflect the dynamic nature of these emerging value ecosystems.