2 – Describe a company that is using crowds (external or internal) in an innovative manner. Describe how they incentivize participation and manage the crowd. What are the challenges? Describe how value creation and value capture occur, and the growth potential of this business.
Waze, a company that “relies on its millions of users to act as traffic cops, field ops, and cartographers, flagging and recording update on accidents, bottlenecks and traffic as they drive”.
The mission statement of Waze, founded in Israel in 2009, is to “help people create local driving communities that work together to improve the quality of everyone’s daily driving”. By updating maps in real time with crowdsourced information from drivers, Waze provides its users with “the best route, every day, with real-time help from other drivers”. Waze users contribute information by reporting accidents, road closures, speeding traps, police cars, which are then visible to other drivers on a map and can be confirmed or refined by each additional user. Waze is then able to generate a route for users to avoid heavy traffic or road closures as reported on by other drivers.
Waze can refine maps with more accurate information provided by their user base, even those who aren’t heavily engaged; they are able to use passive journey data to “calculate average road speeds at the time you are driving, check for errors and improve road layout, and learn the direction of roads and which turns are allowed.” That even the passive user community of Waze provides so much data from passive users gives them an incredible advantage is map and navigation.
Waze manages their users and keeps them incentived to participate in several ways. First, they built a “gamified” aspect of the system. Drivers who report accidents get points, show up on a leader board, and achieve different status levels (“Waze Baby” to “Waze Royalty” through accruing points. For those who even more involved, users can become “map editors”, after gaining a certain amount of points, and progress in their status to be able to edit maps more extensively (see Exhibit 1). Waze also incentivizes extreme users by creating a community around them and connecting users, making them feel recognized for their valuable contributions to the ecosystem. It also has a more casual social component, allowing friends to see where other friends are on the map, etc.,
The concept of “MapRaids” is a combination of the gamification and community building that works so well. MapRaids is “time-limited event during which map editors join together to resolve MP’s, UR’s, add & update “Places”, fix connectivity problems, add missing roads, and add/edit speed limit data in a pre-determined area of the map”. MapRaids also facilitate a mentor/mentee relationship in the map editor community, which essentially has the senior users train junior users to become better contributors. Waze also has community managers on its full-time staff to manage the relationships and local communities that are so important to its success.
The challenges, as with any crowdsource platform, are to keep the users engaged so Waze can continue to mine the data and improve the experience. If users feel that their data and/or privacy is violated, that their contributions are underappreciated or undercompensated, then the valuable user generated content dries up and Waze is no longer able to deliver on its value proposition. On the contrary, the growth of the user community implies that Waze to take on more sophisticated infrastructure (community managers, state manager, area manager etc.,) to support them. Although they are owned by Google, who can subsidize any loss-making efforts, this may create pressure to monetize more quickly, which could in turn isolate users.
Waze creates value for drivers by giving them the most accurate information available for mapping and navigation that they could not have access without the crowdsourced information. They can also point users to the cheapest and most convenient gas, incorporate coupons when available. Waze is also beginning to partner with local governments, the first being Rio, Brasil, to help them manage traffic patterns and city planning by provide more robust user data, which may improve conditions for drivers overall. Their value capture is currently in the form of localized advertising, which is very attractive to firms who can specifically target consumers who are near them or frequently near them. Having been acquired by Google, Waze is under significantly less pressure to monetize than they might have been if they were an independent company.
 Rip Emerson, “WTF Is Waze And Why Did Google Just Pay A Billion+ For It?” TechCrunch.com, June 11, 2013, https://techcrunch.com/2013/06/11/behind-the-maps-whats-in-a-waze-and-why-did-google-just-pay-a-billion-for-it/ accessed March 2017.
 Parmy Olsen, “Why Google’s Waze Is Trading User Data With Local Governments”, Forbes.com, July 7, 2014, https://www.forbes.com/sites/parmyolson/2014/07/07/why-google-waze-helps-local-governments-track-its-users/#2bf962cc39ba, accessed March 2017.