Innocentive Case Study

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

There are several reasons Innocentive’s service is attractive to firms, but the three most attractive are reduced costs, access to a diverse pool of expert “Solvers”, and the ability for competition to fuel innovation. In terms of cost effectiveness, Innocentive offers firms an opportunity to ‘pay for results only’ in research and development, effectively increasing an organization’s research and development capacity without the extreme costs associated with failed research. This is especially attractive for organizations who routinely sink large amounts of capital into the ‘testing’ or ‘trial and error’ phases of research and development. By reducing the upfront investment firms are reducing the chance a project is forgone due to the level of uncertainty in solution outcomes.

Second, Innocentive offers a community of over 250,000 experts in scientific and technological fields that come from a diverse range of industries and professions. This enables “Seeker” firms to enjoy fresh perspectives and approaches to problem solving that would be otherwise unattainable by firms who consider research and development an in-house only activity. The diversity of “Solvers” can lead to insights on not only new solutions, but also new markets and industries that a the “Seeker” company may not have considered before. Furthermore, by obtaining ideas from external parties, the “Seeker” firm is also able to more objectively analyze the potential of the solution by ridding themselves of several biases that arise from in-house initiatives, such as the “Not-Invented-Here-Bias” highlighted by Dan Ariely in Chapter 4 of Upside of Irrationality.

2. What are the tradeoffs between choosing an innovation consulting service and a community for problem solving? A consulting service here refers to a firm that relies on its internal pool of experts to provide problem solving capabilities (i.e., a...