Crowdsourcing Innovation and Product Development

The assignment delves into the concept of crowdsourcing innovation and its influence on product development. Students are tasked with analyzing the advantages and disadvantages of this approach, examining real-world case studies like Threadless, and discussing its overall impact on markets and welfare.

Running head: INNOVATION AND ENTREPRENEURSHIP
Innovation and Entrepreneurship
Name of the Student:
Name of the University:
Author’s Note:

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Introduction
Successful entrepreneurship lies upon the ability of the entrepreneurs towards effectively
organizing and managing innovation in the business process (Galindo and Méndez 2014). This
study will discuss the innovation and entrepreneurship process of Threadless in Chicago, United
State. The study will provide a strategic summary of the organization through describing its
products, target market, value proposition and competitive environment. The study will also
explore the factor, which makes the organization innovative in the market. The study will also
discuss the importance of the factor towards formulating the bases of competitive advantage of
the organization. Apart from that, the study will identify the types of innovation dominating
Threadless. Furthermore, the study will also demonstrate the ways in which Threadless organizes
and manages the innovation. It will also highlight the importance or organizational initiatives
towards achieving strategic innovation outcomes.
Discussion
Threadless is an online community of an e-commerce and artists, which is actually based
on Chicago, United State. The organization offers ranges of products like clothing, apparels,
prints and many more. It offers highly fashionable design for its all products. Threadless has
clothing and accessories for men, women and even babies. Among the men’s clothing, the
organization provides T-shirts, raglans, tanks, sublimation, V-necks, hoodies, sweatshirts and
many more. On the other hand, among women’s clothing, the organization offers T-shirts, tanks,
sublimation, Deep V-necks, tri-blends, dolmans, long sleeves, leggings, sweatshirts, hoodies and
many more (Threadless 2017). Among the kids, toddler and babies’ products, T- shirts and
hoodies are famous. Apart from clothing products, Threadless offers accessories like i-Phone 8

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cases, phone cases, drinkware, tote bags, hats, notebooks, zip pouches, beach towels, drawstring
bags, sticker bags and others. Furthermore, the organization also offers gift cards, art prints,
pillows, blankets, tapestries, rugs, duvet covers, framed prints and others (Threadless 2017).
Apart from that, the organization also offers print collection on cats, funny, dogs, minimal, pop
culture, outdoor, causes, horror and many more. Moreover, customers can get both online and
offline availability of the products of this organization.
Figure 1: Images of T-Shirts of Threadless
(Source: Threadless 2017)
According to Sahut and Peris-Ortiz (2014), target market defines the market in which an
organization wants to sell its products or services. Moreover, it is the target set of customers to
whom an organization directs its marketing effort. On the other hand, Soriano and Huarng (2013)
opined that a target market is separated from wide scale market a whole by analyzing the buying

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power, demographic and psychographic. While assessing the target market of Threadless, the
organization serves only within the United State. According to Maclean, Harvey and Gordon
(2013), Threadless is mainly popular within young generation customers rather than the older
customers. However, it has targeted all teenage, adult, kids, toddlers and babies around the
country. On the other hand, Edwards-Schachter et al. (2015) opined that Threadless has targeted
the customers, who belong to middle to high income group families. Furthermore, the
organization has targeted both male and female customers for offering their designer clothing
and accessories. While considering the behavioral aspect, Huarng and Ribeiro-Soriano (2014)
opined that Threadless has targeted customers, who seek some extra benefits from the
organizations.
According to Maritz and Donovan (2015), value proposition defines the unique value and
promised value of an organization delivered and communicated to its customers. Moreover,
unique value proposition differentiate an organization in the market over its rival organizations.
On the other hand, Dino (2015) opined that value proposition provides unique reason to the
customers towards choosing the products and services of a particular organization. While
considering the value proposition of Threadless, it can be found that the organization has
differentiated itself from its rivals in terms of its unique design of clothing, apparel and print.
Furthermore, Méndez, Galindo and Sastre (2014) opined that the customers of Threadless get
enough convenience in accessing its products both online and offline channels. Affordable prices
of the products also add to the value proposition of the organization. On the other hand,
Backman and Lööf (2015) opined that Threadless offers huge discounts and offers to the
customers for their products in all categories.

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According to Licuanan, Sengupta and Neelankavil (2015), competitive environment
refers to the dynamic external situation in which an organization operates and functions.
Moreover, the more are the sellers of same products and services in the marker, the tougher the
competitive environment for an organization. On the other hand, Belz (2013) opined that highly
competitive environment imposes competitive pressure on an organization, which raises the
needs for differentiation. While considering the competitive environment of Threadless, it can
be found that the organization faces highly competitive environment in the market. Moreover,
Xu, Ribeiro-Soriano and Gonzalez-Garcia (2015) opined that Threadless faces tough competitive
pressure from its direct competitors like Zazzle, ShirtFall and Design by Humans. Moreover,
such competitor companies are also providing same types of designer T-shirts and other clothing
to the customers. However, the unique design of the Threadless’s products has made it unique in
the market from its rival organizations. Moreover, the attractive and innovative offerings and
discounts of Threadless also make it innovative in the market.
According to Kavaliova et al. (2016), organizational innovation refers to the innovative
business ideas, methods or practices, which make an organization unique from its rival
organizations. Moreover, innovative organizations must have some unique attributes in their
service or product lines towards providing unique value to the customers. On the other hand,
Xue, Ding and Yuan (2016) opined that organizational innovation leads an organization to stand
out unique in the market. Therefore, such innovation forms the basis for the competitive
advantage of an organization. While considering the innovation of Threadless, it can be said that
unique designs of the clothing, accessories and prints have made it innovative in the market.
According to Simula and Ahola (2014) Threadless always provides customized design of the
products to the customers. Moreover, the organization does not have own designers. They source

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the designs to the users and users create designs for various products. Furthermore, Majchrzak
and Malhotra (2013) opined that the designs of Threadless are also selected based on the votes
and scores provided by the users. In this way, the organization always provides customized and
unique value to the customers through their high trendy and innovative designs of the products.
The custom clothing company Threadless has gained high level of competitive advantage
through its innovation and customized design of the clothing, accessories and prints. According
to Balka, Raasch and Herstatt (2014), the customers get unique value from Threadless through its
innovative product design. Moreover, the organization also highly value for the money of the
customers with its high quality and trendy designed products. Therefore, the customers have
become highly loyal on the products of this organization, which can become the base of its
competitive advantage. On the other hand, Dong and Wu (2015) opined that Threadless provides
high level of value to the customers through engaging them in making design of the
organizational products. In this way, increased customer value also adds to the competitive
advantage of Threadless. It is also gradually increasing the revenue of the organization.

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Revenue
0
5
10
15
20
25
30
35
40
45
50
2012
2014
2016
Figure 2: Increase in Revenue of Threadless
(Source: Gambardella, Raasch and von Hippel 2016)
The innovation assessment of Threadless demonstrates that crowdsourcing innovation is
dominant on it. According to Simula and Ahola (2014), crowdsourcing is a specific type of
sourcing model in which organizations use contribution from the internet users towards obtaining
the required business ideas. Likewise, Threadless sources the designs of clothing and accessories
from its users over the internet and set them after getting approval from many other customers on
the internet. Moreover, the organization also uses user ratings in which it asks the customers to
rate the designs created by the users. Digit.hbs.org (2015) pointed out that Threadless selects the
winning design for the product based the high score of the designs over the internet. Such
innovation also facilitates the organization in saving their money in regards to designing and
marketing. Furthermore, crowdsourcing innovation also gives the advantage to Threadless
towards creating user generated value. Moreover, the design generated from the users actually

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meets the customized needs of the customers. In this way, the democratized innovation facilitates
the organization towards gaining high level of competitive advantage.
Threadless also exemplifies the combination of crowdsourcing and user innovation
types through their business process. According to Gambardella, Raasch and von Hippel (2016),
user innovation refers to innovative products and services developed by individual users without
any involvement of the producers. Apart from crowdsourcing innovation, the innovation process
of Threadless is also quite similar to user innovation type. Backman and Lööf (2015) pointed out
that Threadless uses user generated innovation in designing the products. Moreover, the
organization selects the product design based on the approval of product design through the
voting system of the product design over the internet. It enables the users towards providing
unique product design to Threadless. In this way, the organization adds innovation to its business
products and becomes able to gain competitive advantage over the rival organizations. Moreover,
innovating designs from the users provide customized value to the customers, which enhance
their loyalty level. In this way, the combination of crowdsourcing and user innovation dominates
Threadless.
Threadless is one of the most popular crowdsourcing companies, which does not create
designs by itself. However, it provides all unique and innovative designs of the products like
clothing, print and other accessories. It effectively organizes and manages the implementation of
innovation. According to Simula and Ahola (2014), Threadless sources the product designs from
the users over the internet. Moreover, artists from around the world submit the product designs
over the internet. The organization has exploded into huge design community, where nearly
100000 artists submit their innovative ideas for T-shirts. In this way, they get varieties of product
designs for their products. The organization has sold millions of dollar of T-shirts simply by

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relying on the users and its fans to submit, choose and then purchase the wining T-shirts. On the
other hand, Kavaliova et al. (2016) opined that Threadless has embraced the ideas of celebrity
design, where the contributors in product design earn reputation for their design savvy.
Moreover, Threadless community and customers score each design submitted by the users based
on its innovative attributes. In this way, the organization can effective understand customer
preferences for their product design. It actually reduces the cost of the organization in terms of
market research and marketing of products. Furthermore, the organization can always select the
best and innovative design through voting system, which provides unique customer value. The
organization selects the product designs based on the top score provided to the product designs
by the staffs and community.
Digit.hbs.org (2015) pointed out that Threadless starts producing and printing the T-shirts
and gift card and others only after getting approval of the product designs from the customers
and community. New designs are selected for printing every week and the winning artists or
designers are given profit share handsomely for their innovative designs. In this way, the
organization manage to keep the talented designers encourages towards repeatedly submitting
their unique product designs. In some cases, the designers also get big cash prizes for special
themed design challenges. Threadless has apparently found unique ways of maintaining integrity
of the community through encouraging the satisfying the designers, who have made the
organization successful. Furthermore, Sahut and Peris-Ortiz (2014) opined that the products of
Threadless are sold worldwide through online stores. However, the products are also sold in the
retail stores of Chicago. In this way, the organization effective organizes and manages
innovation in their business process.

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According to Huarng and Ribeiro-Soriano (2014), clients are only satisfied once their
demands are fulfilled, however often it is found that due to demand of trendy clothing,
consumers are becoming quite distinctive in terms of their preferences. On the other hand, Balka,
Raasch and Herstatt (2014) highlighted that diversification strategy often stands out to be cost
effective towards meeting the customized client demands with regards to products. Therefore, an
organization needs to make exclusive market research, data analytics and entertain customer
response before launching products. Considering Threadless, it can be said that the organization
has established unique strategy to understand customized market demand. The initiative through
cloud sourcing has helped Threadless to understand market demand.
Most of the organizations try to establish niche marketing by using the social media or
digital platform. However, Galindo and Méndez (2014) pointed out that advertisement and
promotion are the core functions that are actualized trough digital platform. Therefore, for
Threadless, strategic innovation has been established through digital platform where from
client’s interest and direct intension is gathered. Also, the innovation can be considered as
extremely perpetual for following years as well because a pool of users can be confined under
directive platform to provide their responses for specific items which are yet to be launched. On
the other hand, from organizational perspective, it can get the real-time response rate can set up
the future trend for customized product availability in saturated market.
According to Huarng and Ribeiro-Soriano (2014), the product life cycle of an
organization depends on how much it can extend the maturity level and this can only be achieved
through intense marketing and strategic innovation. Threadless strategy has been to engage users
for longer period as both the interest of clients and users are channelized through digital
platform. Once the users post their customized design, those are voted by other users with course

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of time and eventually designs with maximum votes are manufactured. Such strategy is
extremely beneficial for the organization as three aspects such as product design, market
response and cost reduction for research are done simultaneously. This reduces huge time for
introducing new products and therefore limits resource consumption.
Finally, it can be said that Threadless’ strategic innovation is quite sustainable as with the
progress of time, cultural diversity along with nuclear families will lead to new customized
designs, which will surely be appreciated by online users. Once the best design is considered, it
is marketed, which is quite different and a trend setter for future. Such strategy will make
Threadless to gain rapid market share in future.
Conclusion
While concluding the study, it can be said that Threadless is an online community and
organization, which offers innovative design clothing, accessories, apparels and gift cards. The
organization has mostly targeted young generation customers towards providing innovative and
trendy fashionable clothing and other products. The value proposition of the organization lies in
the innovative and unique designs of products. However, the organization is facing tough
competitive pressure from its direct competitors like Zazzle, ShirtFall and Design by Humans.
The innovative designs of the organization provide unique value to the customers, which make it
to stand out unique in the market over its rival organizations. In this way, innovative product
designs form the bases of competitive advantages of the organization. On the other hand,
crowdsourcing innovation dominates Threadless, where the organization sources innovative
product designs from the users. After getting huge source of product designs, the organization
asks the staffs and community to vote the submitted product design. Moreover, the organization

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finally selects the innovative product design based on the high score obtained on a specific
design. Moreover, the organization also effective organizes and manages the implementation of
innovation through adequately sharing profit with the designers from the community. In this
way, such initiatives facilitate the organization towards achieving strategic innovation outcomes.

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