Jun 26

Open Innovation – Why you should know what “Ideagora” means

Open Innovation. The holy grail of modern innovative companies. So all you have to do is connect with innovators around the world and, hey presto, all¬†your innovation worries are gone! Of course, in real life it’s not quite that simple, for a start how do you go about connecting with all these innovators in the first place. The trouble with Open Innovation is that it’s open – do you really want to open up all your strategic issues to the world in the hope of gettting a solution? What about IP, how do you handle that? well, there are a number of idea marketplaces (Ideagoras) which¬†help companies get through this process. The top three, in my view, are:

Nine Sigma¬†who source innovative solutions for their clients (Innovation Seekers) by using a global network of up to 1.5m Solution Providers. They cover a broad range of technical disciplines…chemistry, materials, electrical/electronics, packaging, food, formulation, consumer preferences, health/life sciences, renewable energy and more. Interestingly, many large organizations are registered as Solution Providers as well as Innovation Seekers. Nine Sigma posts new, often annonymous¬†Request For Proposal (RFP) documents on it’s website on a weekly basis. The Client typically pays an up-front fee of $15K (2007 prices) per RFP with risk sharing “success commission” based on paying Nine Sigma a percentage of the final contract value. RFPs are sent by e-mail notification each week to registered Solution Providers and Affiliates. Solution Providers are offered a prize for the best solution(s) generally ranging from $5K to $50K. In my experience as a Solution Provider, it can take a very long time (nearly 2 months and counting) to get a response if you submit a proposal. I’ve heard from others that they never received¬†a response.

Nine Sigma has a very rapid rate of growth of their¬†Solution Provider¬†base, primarily through Affiliates. Large client organisations have had some big successes through Nine Sigma and are expanding their agreements, increasing the number of RFPs that they are posting. However, for smaller innovators it’s worth noting that many of the transactions are between large companies with complementary capabilities and strong IP awareness.

Innocentive¬†connects companies, academic institutions, and non-profit organizations (Seekers) with a global network of more than 145,000 of the world’s brightest minds (Solvers) and aims to Become the “Google” of the innovation search. Challenges are posted annonymously normally and solutions have come from more than 30 countries with over 550 postings for innovation challenges since starting, 192 awards to date. Recognition is given to successful solvers on the InnoCentive website and in my view Innocentive is aimed more at the research scientist community than Nine Sigma. InnoCentive is also innovating the way it markets itself e.g. use of Youtube (here¬†is¬†an example of a¬†seeker and solver video). The cash awards for solving challenges are in the range $5,000 to $100,000 (but can be as high as $1m). InnoCentive have so far paid out over $13m in prizes. As with Nine Sigma, there is an initial posting fee which varies according to the type of challenge but is in the range of $6,000 to $15,000. There is also a success fee based on the value of follow-on contract or award value. Innovation Challenges are sent by e-mail to Solvers once a week. Innocentive have experienced extremely rapid growth (45% per month) of solver base, number of challenges and value of awards. I haven’t actually answered any Innocentive Challenges although I have recently seen one that I might have a go at.

With both Nine Sigma and inncentive, as a Solver/Solution Provider, you need to have a look at their contractual terms and conditions. Both sites talk about “Non-confidential disclosure” which they say is mainly intended to prevent the client being compromised by IP. However, as a¬†Solver/Solution Provider you should also think about your rights and if you think you have something that is new (after a quick prior art search) then the best thing to do is protect it by filing a patent. This needn’t be a scary experience. I’ve recently filed 3 patents; it was cheap and once you get the style of the lingo it is relatively straightforward. More on this in another post.¬†

Which brings me on to the third Ideagora:

Yet2.com¬†is a bit different as it is focused around buying and selling IP. They exist “to help technology companies realise value from their Intellectual Property”. Yet2.com claims to operate the¬†largest Global online marketplace for technology transfer. The yet2.com internet presence is said to be a unique resource to facilitate deals¬†with 120,000+ registered users, 40,000 companies, Network of 12,000+ smaller companies ($10-500m). Yet2.com also says it holds 500,000 data points of known solutions and specialises in “In-licensing ” and “out-licensing” IP for large companies and SMEs.¬†Yet2.com closed 20+ deals last year and completed transactions for 10 F500 companies in Q4 2007 with 71% of the deals¬†between companies from different industries.¬†Yet2.com provides consulting support throughout a project and stays engaged in the deal-making process and Yet2.com claims that it is very well placed to help companies acquire technology because it also helps clients exploit technology.

Typical client rates (2007 rates):
Membership fee $4,000 to $30,000
Consulting service fee $30,000 to $40,000
Success fee: % of value to the deal but capped

There is some interesting stuff on Yet2.com and it is certainly worth a look if you’re cruising fro technology to answer your specific problem. I’ve¬†already found useful technologies in here for my clients. It might be a good place to post your technology IP, if you can afford it.

So, what do I think about these new marketplaces? Well I reckon that they do present an important new resource for technology sourcing for Innovation Managers and¬†R&D¬†Directors, and as they have got bigger they are beginning to approach the critical mass necessary to deliver meaningful innovation. For innovation minded companies, they can no longer be ignored. However, don’t expect¬†them to solve every problem you have – one statistic to bear in mind is that on average (Nine Sigma and Innocentive figures) they only manage to get suitable answers to 40% of their postings.¬†Here is a downloadable powerpoint¬†presentation:¬†the-ideagora-an-emerging-innovation-marketplace

2 comments

2 Comments so far

  1. Liz Moise June 26th, 2008 3:12 pm

    Hi John,

    Thanks for a fantastic analysis of the open innovation space, and competitors in the space. I’m impressed with your depth of research. If you haven’t taken a look already I thought you might find the Solver Profiles on our blog interesting – we just launched it a few week ago. http://blog.innocentive.com. We’re finding many of our Solvers share a similar experience of wanting to work on Challenges that matter, and have practical applications.

    If you’d be interested in doing an interview with me at some point I’d love to hear more of your perspective on this space, and your perspective as an InnoCentive Solver. Feel free to email me directly.

    Regards
    Liz Moise
    Marketing Communications Manager
    InnoCentive

  2. David Kutcher June 26th, 2008 7:20 pm

    Would a site like the RFP Database at http://www.rfpdb.com fit the bill for these types of sites? It seems to be in the same sector, without the monkey-in-the-middle approach and onerous fees.

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