InnoCentive is a Market Place structured by a web company which enables companies searching for R&D solutions to reach an extensive number of unknown professionals worldwide which may help to find effective answers to questions which puzzled them.
innoCentive, which has its name designed by a fusion of the words innovation and incentive, set up a platform which creates this Market Place, where a revolution can take place on the way companies or non-profit organizations seek for people who have capability, inventiveness and, through this tool, possibility to bring out to the world their innovative solutions for what initially seemed to be impossible to be solved through traditional methods of R&D.
The beauty of this process relies on its simplicity. Who needs a solution for any sort of problem, in all field of acknowledgement (from Chemistry to Business and Entrepreneurship, from Physical Sciences to Engineering and Designs), the SeekerTM, as so-called by InnoCentive, post it on InnoCentive website and offer a prize for who else, the InnoCentive SolversTM, believe can come up with effective answers for the puzzle. The prizes vary essentially from $10.000 to $100.000 per problem solved.
This new concept of relationship between companies and individuals is known as Open Innovation. The central idea of Open Innovation, as defined on Wikipedia, is that “in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (i.e. patents) from other companies. In addition, internal inventions not being used in a firm’s business should be taken outside the company.”
Problems solved
From the customer’s point of view by adopting Open Innovation model companies can dramatically reduce the pitfalls, costs, and risks associated with closed innovation. Companies who have realized its business model is more important than its technology, its Intellectual Property – IP or Patents by itself have acquired more motivation to spend more time on thinking about different ways to reinvent its business model leaving the origin of the best ideas for its technology for its products to be developed outside. Small and big companies are learning it.
There is no time wasting on trial-and-error sort of problems most of R&D companies departments normally pass through on its day-by-day attempt to develop new products or needed solutions. The company posts its challenges on the Market Place along with some guidance of what it is searching for solution, set accomplishment time line and the prize for the winner. Only the solver who come up with the solution that accomplished company’s query gets its award.
Advantages of the use of Open Innovation by companies or Non-Profit Organizations can be long listed as described below:
Creating and capturing value ahead of the competition
Reduce the risk of innovation
Less risk guessing what the market wants
Let the market / community tell you what they want
Integrated community innovation
Innovation can come from anywhere and anyone
Some of the best ideas are outside of your organization
Lower your R&D and operating costs
Supplement your R&D
Tap into the virtual R&D community
Shared IP can create a formidable barrier to entry
This is a pathway to companies to maximize the dollars they have got for Marketing and Research and Development.
From the suppliers’ point of view, where individuals will sell products to companies, it is established a completely new and inverted position on commercial relationship. A broad world of opportunity is open to their inventive minds. They have just sign in, with no cost, to the web site and search for puzzles posted. Normally it is posted as questions to be answered followed or not by a few formulas or scratches. Professionals who have found no rooms to show their abilities on its own place of work can be the source of a brilliant solution for a much bigger company that the one he works for, besides he can raise good cash as a competition winner. This is a place for everyone shows its inventiveness.
As a sort of Ebay of Ideas, Open Innovation adheres to the laws of globalization. Noticeably large numbers of Russians and Indians participate in InnoCentive's competitions, for example. For them, the prize money can often mean an entire year's salary. Professional recognition achievement is also an outcome normally as important as financial awards.
Creative thinkers, engineers, scientists, inventors, and business people with expertise in life sciences, engineering, chemistry, math, computer science, and entrepreneurship can join the InnoCentive Solvers™ community to solve some of the world's toughest challenges”.
The downside for solvers lays on the secrecy on which businesses insist to protect intellectual-property rights, they are not able to know anything beside whether they won or lost. Losers' knowledge isn't widely shared.
Non-Profit Organization such as Rockefeller Foundation has become partner of InnoCentive, aiming to expand its capacity to invest its philanthropic funding in a broader community of scientists. Rockefeller Foundation is one example among several others Non-Profit entities which has adopted the model of web scale searching for inventive answers to a few specifics human common challenges they have catch as proper goals to solve.
The same way Open Innovation works for companies (clients) it works for these entities. The web platform posting problems, along with appropriate awards, are open to a much larger community of possible thinkers and problem solvers while reduce cost and risks of non success for Philanthropy. Only the successful response gets its prize.
Also, InnoCentive Seekers and Solvers are anonymous. The judgment is based on the sciences, not on who is standing behind it.
As nothing can be really perfect, this new form of R&D cost-cutting has its problems, too, as Frank Piller, a researcher at Massachusetts Institute of Technology has discovered: "Some full-time researchers, apparently worried about losing their own jobs, are intentionally flooding online innovation marketplaces with unsolvable problems, in order to frustrate their competitors on the Internet."
Groups served
The customers’ group served is wider as the number of companies and Non- Profit Organizations existing around the world. Non-Profit entities have entered in this market more as partner of the web platform companies. The hottest start-ups and handful of innovative Fortune 500 companies are just a few to mention, among many others, who understand that some of the best ideas come from the outside.
Adopting the Open Innovation model is just something that organizations should not only be discussing but aggressively adopting.
As well as for customers, suppliers can be as large as to the extent of the human being who can have internet access. No need to be a Star Rocket scientist, anyone can be inventive. The people who use a particular product are often the better experts, simply as a result of daily use. However, it is not a physics law and surprising results can really come from anyone.
After examining 166 problems posted by 26 research labs on the InnoCentive site over four years, Karim Lakhani, a Harvard Business School professor, found 240 people, on average, examined each problem, 10 offered answers and 29.5% of the problems were solved.
One surprise: The further the problem was from a solver's expertise, the more likely he or she was to solve it. It turns out that outsiders look through a completely different lens. Toxicologists were stumped by the significance of pathology observed in a study; within weeks after broadcasting it, a Ph.D. in crystallography offered a solution that hadn't occurred to them.
Around 80,000 inventors have already tried their hand at solving the various problems posted on InnoCentive.
Source of Revenues
InnoCentive has only one visible source of revenues. The web site charges the companies and the Non-Profit Organizations a fee to post their challenges. In return, they remain anonymous, in order to protect organizations secrets.
It is not totally clear if the partnership with Rockefeller Foundation generates extra income other than the mentioned fee posted by them on the site.
Sustainability and Scalability of the model
New technology start-ups companies have making use of Open Innovation business model involving internet as part of their core strategy to come to the market. The number of Fortune 500 companies which has adopts the now so-called crowdsourcing has seen remarkable growth. Wikipedia defines Crowdsourcing as “a neologism for the act of taking a task traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people, in the form of an open call.
For example, the public may be invited to develop a new technology, carry out a design task, refine an algorithm or help capture, systematize or analyze large amounts of data”, which is basically what InnoCentive provides through its created web platform. Some examples of companies who are embracing open Innovations as intelligence source.
Apple
Amazon
Zimbra
Meebo
Skype
Salesforce.com
Eli Lilly
P&G (Procter & Gamble)
BASF
DuPont
Dow Chemical
General Mills
Kimberly-Clark
GSK (Glaxo Smith Kline)
Even companies which have crowdsourcing as a normal source to new technologies, the use of it is growing fast. Alan Lafley, CEO of P&G and one of the most admired CEOs in the world, proclaims, as he did in 2003, that “50 percent of all P&G discovery and invention could come from outside the company”. This is even more remarkable when you think that only one-fifth of P&G’s R&D came from the outside in 2002.
Clearly some of these new initiatives reflect the commercial viability of open innovation and business models. In the early days, most open source projects had no commercial intent. Also is interest to remark that a handful of companies like Google, Amazon, and Salesforce.com found it strategically advantageous to use free open source software (FOSS) for their own infrastructure. Now, the perception of the need of being more “open to innovations” lead companies to thrown away old believes regarding creating its own IP as it is not a determinant or a pre-requisite for success.
According to Kameran Ahari, an information technology e-marketing and strategy consultant, “75% to 95% of patented technologies stay on the shelf and go to waste. Not to mention the fact that 90% of all products fail. Moreover, if your IP management policy prohibits reassignment, then your patents are not assets. With rising technology development costs and increasingly shorter product life cycles, the risk of innovation is almost certain. Technology life cycle has gone from 4-5 years, from a decade ago, to 6-9 months. In other words, your window of opportunity to recoup your investment got even shorter. Having your innovation, business model, and community aligned is more important”.
The crowdsourcing model itself neither it’s not new nor did not born on internet. “In 1714, Britain offered £20,000 (roughly equivalent to £2.5 million, or $5 million, today) for a way for mariners to determine their longitude. Sir Isaac Newton was convinced the solution lay in astronomy. He was wrong: John Harrison, a working-class joiner with little formal education, built a clock that did the job. In 1919, hotel owner Raymond Orteig offered $25,000 for the first nonstop flight between New York and Paris. Eight years later, Charles Lindbergh won”.
“Prizes prompt a lot of effort, far more than any sponsor could devote itself, but they generally pay only for success. That's "an important piece of shifting risk from inside the walls of the company and moving it out to the solver community," says Jill Panetta, InnoCentive's chief scientific officer.
Repeating what was previously stated which summarizes the perception of the future and sustainability of the Open Innovation model, “Adopting the Open Innovation model is just something that organizations should not only be discussing but aggressively adopting”.
Stretching
The increase of users or customers are already growing fast, however I would expand platforms capabilities to reach people native from countries different of English, French or Spanish spoken. The limited use of these languages restrain access to people who is as inventive as others but without abilities to understand the challenges in other language rather than your own.
I would develop a team with very special languages skills to make fair translations to spread out the challenges bring many other possible solvers to this Market Place.
I couldn’t see revenues coming from advertising. Initially, I supposed that companies which seek for crowdsourcing would not like to see its image related to a web site which provides this sort of solution. It might harm its image of technical competence. However, as many major companies are clearly declaring its strategies towards crowdsourcing, I would invest in selling advertising through my site. Also, partnership with Non-profit Organizations could utilise its relationship in a more publicly form by advertising its achievements such as success on challenges, cost reductions on the search for answers and the enlargement of public taking part of its challenges.
I believe that the expansion of challenges to new language solvers will attract new customers from many other countries which are also restrained by language limits. The growth of the existing market can come faster along with as the world for solutions has expanded as well.
Other industries in Open Innovation market
Beyond regular high tech companies, which in its desperate search for new discoveries spend millions of dollars to keep up-to-date with market demands and ahead of its competitors’ fast movements, many sort of companies which is in the fast-paced industries can take advantage of the Open Innovation source of solutions.
A great market for Open Innovation is on the marketing sector. Marketing companies might post challenges to outsourcing inventive people to find solutions to every task of its own work, like products and logo designs, digital graphics solutions and many others.
Another example come from the fashion industry; the Chicago-based company Threadless prints T-shirts that its designs are based on ideas people submit to its web site. Only the designs that win the most votes actually make it onto the company's T-shirts. The winners receive a $1,000 reward and a tiny shot at fame. The competition gives young designers the opportunity to make a name for them, while helping Threadless to cut down on flops -as well as employees.
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