Innocentive : Incentivizing Innovation

Innocentive pioneered the concept of crowdsourcing for R&D especially in the Pharma Industry which is highly dependent on innovating novel ideas. It lent challenge a new meaning through sourcing ideas from a wider auudience.

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Innocentive, launched in 2001 by the Venture Capital arm of Eli Lilly, is the leader in prize based open innovation. InnoCentive provides innovative crowdsourced solutions to business, social, policy, scientific, or technical problems by connecting corporations, government agencies and nonprofits with talented freelancers to collaboration on major projects. The prize money awarded the winning proposals ranges from $500,000 to $1million for grand challenges. It works with nearly 380,000 problem solvers, using cloud-based technologies to allow businesses to communicate with them to develop the best solutions to their problems.

The Innocentive Way – Value Creation

The website lists ten challenge areas: Business & Entrepreneurship, Chemistry, Computer & Information Technology, Engineering & Design, Food & Agriculture, Life Sciences, Math & Statistics, Physical Sciences, Requests for Partners and Social Innovations. These fields being highly technical in nature, the challenge projects require professional expertise and can even run into months at times. Clients, use the InnoCentive cloud-based system to post their problems or ideas. InnoCentive decides a prize in consultation with the client which includes legal fees, cost of IP transfer and other expenses. The InnoCentive team of experts which are usually PhD’s formulates the needs of the client into challenges that are posted to employees, groups and teams, who then post their suggested solutions. The challenge is then discussed among experts who rank the solutions before sending them to the business, which chooses the best solution. InnoCentive grants the award money to the contributors and transfers the appropriate rights to the business. The Solvers are required to register on the platform and sign a confidentiality agreement only after which they can access the challenge platform and get details of the project they express interest in. It also allows Solvers to set up a Team Project room and invite other Solvers to collaborate on a project.

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Challenge Types

To address a wide range of requirements, InnoCentive offers four types of Challenges.

InnoCentive Ideation Challenge: is a brainstorming platform for producing a novel idea from creating a new product line to a commercial application for a current product.

Theoretical Challenge: creates a design to implement an idea which has not yet taken the form of concept.

RTP Challenge: is a prototype that eventually proves an idea and requires Solvers to prove the viability of their solution within the organization’s manufacturing parameters.

eRFP Challenge: is handled jointly with the partner or supplier. Organizations can access the InnoCentive network to find consultants who have already developed the solution they are looking for.

Value Capture

The company monetizes its model by charging a subscription fee to the ‘seekers’ which includes consulting and training services, a fee for posting the challenge and earns a commission on the reward given to the ‘solver’. The partnership with organizations like the Rockefeller Foundation has helped it add a non-profit area designed to generate science and technology solutions to pressing problems in the developing world. Between 2006 and 2009, The Rockefeller Foundation posted 10 challenges on InnoCentive with an 80% success rate.

The Crowdsourced Advantage

InnoCentive is for businesses that require heavy-duty brainpower to solve major challenges. The process is though not cheap, costs much less than the normal R&D cost and provides access to millions of experts in the listed sub-fields. Also, the use of crowdsourcing platform has enabled the companies to find solutions to their biggest challenges in 45 to 90 days on an average. It also helps businesses take some of the risk out of the Research & Development process and transfer it into a shared pool. Therefore, the amount of risk owned by each solver is usually less than the total amount of risk actually transferred by the company. This is addressed to a great extent by the fact that the solvers self-select the projects based on the inherent risk and their ability to solve it which is not possible in a closed innovation setting.

Road Ahead for Innocentive

The major challenge for Innocentive is to battle the cultural barrier within the organization which may not benefit from this approach if it is not able to articulate and pose the right question and the problem it needs a solution for as it may best be known to the internal R&D team or the company may be hesitant in sharing it with an external network without involvement of its employees. To address this issue Innocentive launched “InnoCentive@Work” which was aimed at addressing this issue. This is an enterprise application that enables clients to engage its employees, customers, partners and suppliers and allows them the control to offer the challenge to the entity that they choose. Innocentive while the pioneer now has competitors like NineSigma, Brightidea, Kaggle etc. and thus needs to expand into other geographies. While it has 50% of its registered solvers from Russia, India and China its client base is still concentrated in United States and Europe which it needs to diversify. A little crowdsources advertising and marketing its brand might also help it to go a long way.





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