Innocentive

1) Why would firms use InnoCentive’s service to solve scientific and technical problems?

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InnoCentive is a so-called innovation marketplace founded in 2000 that connected “Seeker” firms posing scientific problems (“Challenges”) with a community of more than 285,000 “Solvers” who submitted solutions. By joining InnoCentive’s open innovation revolution, “Seeker” firms’ institution increases their R&D capacity while reducing the risk and cost associated with research failure. Essentially, Seekers pay for solutions, not work, failure, trial and error.

This is possible thanks to the three main paradigms which characterize InnoCentive: open innovation, crowdsourcing, and prize-based competition. In particular, the first two concepts are strictly related to Seekers’ decision to use InnoCentive’s service to face the Challenge-solving problem. The first main idea behind InnoCentive is “open innovation” and its power. The open innovation paradigm can be understood as the antithesis of the traditional vertical integration model where internal R&D activities lead to internally developed products that are then distributed by the firm.
Open innovation assumes that firms can and should use external as well as internal ideas, and internal and external paths to market, in order to generate additional value for the firm. This paradigm considers R&D an open system. From this point of view the fundamental role played by InnoCentive is to provide an innovation marketplace where Seekers (such as progressive, innovation-driven companies, government agencies and non-profit organizations) can find the right solutions to their tough business and R&D problems. Strictly connected to this important aspect, there is the second main concept: crowdsourcing. It indicates a type of participative online activity in which an institution, a non-profit organization, or company proposes to a group of individuals (the “Solvers”) the voluntary undertaking of a task.

These Solvers are people belonging to different fields and with different backgrounds (academics, students, consultants, etc.) and, thanks to this heterogeneity, Seekers can obtain a wider set of solutions. In this way, solutions and innovations come also from unexpected fields of knowledge that were not taken into account
before. Crowdsourcing is different from an ordinary outsourcing since the task or problem is outsourced to an undefined, public group rather than to a specific, named one; in this way it underlines the power of crowd to make the difference. The undertaking of the task, whose complexity can vary and in which the crowd should participate bringing its work, knowledge and experience, entails mutual benefit.

In particular, as far as the crowdsourcer is concerned, the Seeker will obtain and use to its advantage the solution found by the Solver. For all of the solutions found, InnoCentive provides ongoing support, coaching and training. The aim of InnoCentive is to achieve a measurable innovation providing faster, less risky and “richer” solutions, while ensuring that companies remain competitive earning their profits and continuing to grow.

2) What is the motivation for Solvers to participate in InnoCentive?
The first and most evident motivation is the monetary reward that the Seekers offer to the Solver that provides the best solution to their problem. What is important to notice is that among the different Solvers of InnoCentive we don’t find just students or retirees but they represent diverse fields and included private-sector participants, academics and consultants. This fact let us understand that there must be also an intrinsic motivation that pushes people to spend their time and to put their efforts in searching for solutions for problems of unknown Seekers.

Dr. Konjeti and D. Tracy, two top InnoCentive Solvers, have been interviewed and they have explained what has convinced them to join InnoCentive. Initially both were worried and skeptical about the concept of the firm. Konjeti thought he could lose his intellectual property rights if his idea for a problem was not chosen for the winning solution. The same was also for Tracy who believed that the InnoCentive approach was not the right one for him. At the end they have decided to join InnoCentive because the anonymity is considered inviolable for the company.

Solvers are kept anonymous, so they do not know who else is working on the same challenge, how many solutions have been submitted and also they do not know the identity of the Seeker. The condition of anonymity is important because it permits an objective and free from bias evaluation and judgement of the solutions by
the Seeker. Also Solvers work completely independently, they choose on their own the challenge they prefer to work on and if to present a solution or not. Moreover the organization has decided that Seekers have to sign a contract about the transfer of intellectual Property. Only the Solver whose solution has been accepted and have received the reward must transfer all the IP rights to the Seeker. Regarding all the proposals, the Seekers relinquish any rights to use in any future work the information provided in the submission of a solution that was not accepted.

These security measures taken by InnoCentive are not the only reason that brought Dr. Konjeti and Tracy to become Solvers of the organization but as they said there is another intrinsic motivation, probably the most important one: the personal satisfaction and gratification coming from the activity of solving other’s difficult problems. In fact these challenges stimulate the passion and curiosity of experts such as Tracy and Konjeti. We can summarize these key concepts with the words of David Tracy :”the challenge of attacking novel real problems and the prospect of actually getting paid for doing so was highly attractive”.

3) What kinds of problems are appropriate for Broadcast Search?

A wide range of Problems can be solved using the Broadcast search. The Main reason is that InnoCentive takes problems from (Paying) Companies, called Seekers, and reformulates those problems in an understandable way for the Solvers (which are like employees to InnoCentive). Reformulating tangible problems into challenges allow every kind of problem to be solved. For example for Practical problems you have the RTP Challenges, than you have Theoretical Challenges for problems that require theoretical solutions, and you also have Brainstorm challenges and Grand challenges, aimed to solve difficult problems belonging to the whole world (with a Money prize from 100°000 $ to 1°000°000$). Usually firms use Broadcast Search when they have problems that are not directly solvable within the firm, maybe because their R&D department does not have the appropriate knowledge. In fact, the main strength of the Broadcast Search is that lots of people (usually from 200 to 2000 for challenge) with different backgrounds, professional and personal
experiences, work on the same challenge, so that problems are more likely to be solved.

In relation to the advantages we have:
More likelihood for the Solver to be “correct” and higher possibilities to receive the solution to a problem because of the high number of people who have the possibility to solve it. The speed at which the task is performed is high because it is possible to limit the time in which a task should be done. The cost of completing the task for InnoCentive is low because it has to pay only the best performer who has complete the task statement satisfactorily.

On the other hand there are some problems regarding the Broadcast Search: “If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it”, Albert Einstein said. Submitting a solution to a problem without dealing face to face with “customers” (in which the everyone’s needs, expectations and capabilities gradually become clear) can create some misunderstandings and this is the reason why the winner who has been picked can be only partially understood. People solve problems in a competitive way instead of in a cooperative one. In order to implement the cooperation among Solvers the idea would be to create “team project rooms” with the kinds of group-work tools like digital white boards, wikis, Voice over IP, shared file space and group/virtual meeting capabilities. This is not easy because it creates some doubts regarding for example the impact on deadlines or the number of people that have to be involved in the solving process.

4) What are the trade-offs between chosing a market or a community for problem solving?

The main problem of the organizations nowadays is that they do not have the ability to monopolize the knowledge in a given field. For this reason they have to choose whether to solve their problems in house with their own resources or to ask an external community of solvers for help.

The main advantages of turning to a community for problem solving are: External innovators will explore innovation landscapes that are often unknown and unexpected by the organization that, in this way, is able to achieve higher quality solutions. The company is just rewarding the winning solution instead of paying people to produce ideas in house incurring the risk that they are not able to solve the problem efficiently. External innovation appears to be faster since the organization decides the deadlines of the submission of the solution. Instead of looking for solutions the organization has just to evaluate them. Assuming that the organization is inflexible and it is not able to change its culture it is better for it to achieve innovation through external communities.

On the other hand the organization can have some worries such as: Core intellectual property (IP) might be compromised by working with outside innovators. Nevertheless, the advantages gained in terms of speed, quality, and cost of solution can typically outweigh such worries.

Moreover, the firms can selectively revealing core issues in ways that their IP is protected. In a similar way there is concern about loss of secrecy but, in reality, the organizations know very well the strengths and weaknesses of their competitors. Instead of involving secrecy, firms should ask themselves: “Why are we not more open about this issue?”. Good outcomes are not guaranteed and poor performing results are also likely. This happens because the organization is not in direct contact with external communities and so it cannot control the activities performed by them.

The organization, when choosing a market or a community for problem solving, should take into account two aspects: 1) The nature of the innovation problem regarding the technologies. If these technologies are mature, they are available in the market and so the organization should work using its own resources. On the other side, if they are nascent they can be better developed through communities. 2) The motivation of the external innovators. If it is related only to the monetary reward, the firm should try to solve the problems by itself, on the other side if the main motivation is the satisfaction or curiosity, the organization should prefer the community approach.

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