1

Crowdsourcing for R&D

InnoCentive Case

http://www.youtube.com/watch?v=u6XAPnuFjJc

1. What is the core idea behind InnoCentive’s innovation model? Why would firms use InnoCentive’s service to solve scientific and technical problems?

 

2. What is the motivation for Solvers to participate in InnoCentive?

 

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

 

4. What are the tradeoffs in choosing a market or a community for problem solving?

2

Vote

Is collaboration a good idea? Bad idea?

3

InnoCentive - Update: 2010 Added collaboration as a core feature of the platform in steps:

Experimented by embedding collaborative platform within one client, Eli Lilly.

Results: Collaboration contributed to idea diversity & helped build personnel networks in the firm.

Refined the tool and marketed to other clients

Success with collaboration IC expands their offerings Introduced team project rooms. Provided clients the ability to enable collaborative problem

solving among 5-6 solvers. Value Distribution

• Established a robust legal framework for prize & IP distribution among team members.

• Allowed for minority dissenting opinions from team members in award distribution.

InnoCentive Update: By the Numbers…

Nov., 2011 April, 2012 Oct., 2013

Registered Solvers 250K in 200 Countries

250K in 200 countries

300K in 200 countries

Solver Reach 1M+ via partnerships

12M+ via partnerships

13M+ via partnerships

Challenges posted 1300+ 1420+public & 1000s of internal

employee challenges

1650+ public & 1000s of internal

employee challenges

Project rooms opened to date

381K 409K 500K

Solution Submissions 27K 30K 40K

Total # of Awards 1000+ 1140+ 1500

Total Awards $34M $35M $40M+

Award Range (f(problem complexity)

$500 – 1M $500-1M $5K-1M

Average Success Rate 50% 50% Prem. Challenge Success Rate:

85%

Local Search: Discovery within a specific knowledge domain

A solver or community member has experience or expertise in the domain the problem space & the problems found in it are local.Focus becomes: exploiting accumulated knowledge.

3 Problems/Challenges:Functional fixatedness: solvers have difficulty in using

familiar tools or knowledge in a novel way. Individuals have a tendency to cling to history of success

when solving similar problems but past experience may bias attempts to reach superior solutions.

Individuals exposed to a solution to a complex problem often apply the same complex solution methodology to solve simpler problems.

Be Clear on the Purpose: What type of knowledge is needed? Local vs. Distant?

Distant (or broadcast) search: Discovery outside the local knowledge domain.

A solver or community member may have experience or expertise distant from the local domain. Focus becomes: tapping knowledge from diverse &/or multiple

(non-local) domains Applying and/or combining knowledge from distant domains may

yield very novel solutions.

Problems/Challenges: Competition effect: larger # of solvers (N) reduces an individual’s

Pr(winning) a low perceived Pr(winning) reduces effort lowers the overall quality of solutions.

As N increases increase in amount of content generated increases cost of content management

Be Clear on the Purpose: What type of knowledge is needed? Local vs. Distant?

7

When do the different forms of Search work best?

Distant search works best when: Problems are complex & a solution is highly uncertain, Problems are codifiable (not abstract),Solution development requires low asset specificity on the

part of the solver, Content evaluation criteria are well defined, andSolution diversity is valued by the seeker

Local search works best when: Community members hold domain specific & sticky

knowledge useful to product innovation, A firm wants to engage the same community members on a

repeated basis, andThe firm & community benefit from real time interaction

during the innovation process.

Time Limits for Community Activities: When & Why?

Time limits for a community’s tasks/activities:Promote active participation of community members (vs.

postponing participation), Motivate individuals to prioritize their activities, and Induce more focused effort from community members➔ Increase an individual’s Task Orientation

Strong task orientation enhances the the quality of contributions. Higher average quality of contributions:

• increases the value created by the engagement and• reduces the time required for content screening and

evaluation.

➔ Overall: increases the value created and lowers the cost to create it.

Time Limits: Other Potential Advantages Time limits combined with using internet-based collaboration tools,

set the stage for rapid content exchange and iteration. Implications: Faster solution development (vs. traditional approaches) Also, may provide opportunities for identifying flaws/issues

earlier in the product development process increasing the efficacy of outputs

When a community is involved for a repeated process (all stages of a product dev. process), time limits for each stage or subactivity: Help to accelerate the innovation process reducing total cycle

time

Faster cycle times also may provide an opportunity for firms to perform a task multiple times vs. once Replication may help a firm refine or optimize it’s design and in

turn, enhance market acceptance.

➔ Overall: increases the value created and lowers the cost to create it.

Time-Limits: Disadvantages?

Limits the amount of time for content or an idea to evolve.May limit the range, quantity and/or scope of a

community’s contributions.

However, content does not have equal value so more content might not necessarily equate to “better” content.

Challenge: identifying the appropriate balanceSufficient time to interact and iterate on the content but not

so much time as to lose the community’s attention/focus.

11

Motivations

http://www.ted.com/talks/dan_pink_on_motivation.html