We asked Dwayne Spradlin, CEO of InnoCentive, and Simon Schneider, CEO of OmniCompete, to share their thoughts on the acquisition and what it means for Seekers, Solvers and the overall open innovation landscape.

Why did InnoCentive acquire OmniCompete?

Dwayne:

OmniCompete has played a significant role in establishing the Grand Challenge category – finding big solutions to daunting, world changing problems.   Under Simon’s leadership, they’ve done very well.  They’ve been aggressively expanding their name and presence in Grand Challenges and building their business in the United States and Europe.  Their heritage in security, the leadership they bring to Grand Challenges, combined with InnoCentive’s Challenge platform; capabilities and experience create substantial value for our customers.  Culturally, the OmniCompete and InnoCentive teams share the same vision of innovation being transformative for organizations.  There’s a tremendous coming together of the minds that is good for companies and customers – it’s good for everyone.  It was an easy decision from our end.
Simon:

Simon:

As the prize industry matures, we’ve noticed that clients are becoming better informed and increasingly requesting specialized services. At OmniCompete, we’re very good at these front-end services: custom consulting, design, marketing and branding, but we need to reach more Solvers. This is where InnoCentive excels, so the joining of our companies will mean a one stop shop for clients.  Our work is about problem-solving, and above all we are client-driven, so with this acquisition our whole team is looking forward to being able to give our clients more. It’s never an easy decision to sell a company that you started from nothing, but we see this as the beginning of a lifelong partnership, rather than an exit.

What does the acquisition mean for Solvers?

Dwayne:

InnoCentive Solvers will have now additional Challenges to undertake and more world changing problems to work on.  OmniCompete’s strength in connecting Solvers to end users and investors is demonstrated by the $117Million that winners and finalists have generated through complex Challenges with multiple stages.  Solving more end to end Challenges,  creation of business plans and non-monetary competitions may create additional opportunities for Solvers to gain value outside of monetary awards.

We’re excited to invite OmniCompete’s Solvers to become part of our combined, richer global Solver community.  In addition, InnoCentive’s traditional Solver base will have more direct access to a number of Challenges that OmniCompete has underway, including a new Challenge about urban design.  The OmniCompete Challenges will be listed on our site very soon.

Simon:

Our Solvers are part of OmniCompete family, and we strongly believe that the relationships built during a competition should not end after the prize is awarded. We keep in close contact with our Solvers, particularly with previous finalists and winners, and will continue to do so. We particularly look forward to merging OmniCompete and InnoCentive communities; giving our Solvers more opportunities to share their innovations and apply their expertise to new Challenges.

Will InnoCentive Solvers see any difference in the way they work on Challenges?

Dwayne:

There will be no change to our Solvers in how they work on current InnoCentive Challenges.  In the coming months we’ll be featuring the OmniCompete Challenges on our site, so that Solvers can work on them the way they’ve worked on any other InnoCentive Challenge.

What does the acquisition mean for InnoCentive Seekers?

Dwayne:

For organizations that want to build larger custom programs, from biomarker programs or ambitious product development efforts, to solving world hunger, this acquisition allows them to engage InnoCentive much more broadly.

Customers will have access to enhanced services and experts, to ensure that they can not only run the Challenges they’re used to running, but also grand Challenges on the same platform, using the  same methodology and with world class service.

OmniCompete also has very successful systems in place that combine broad expertise in competition design with delivery mechanisms including custom web sites and a global outreach – custom marketing campaigns, event series, PR, to name a few.  Certain of these elements can be accommodated on our platform and certain will become new capabilities for our customers.

Simon, what opportunities will this create for OmniCompete’s customers?

Simon:

Perhaps the most exciting aspect for our clients is the expansion of our team. Combined, we have several offices worldwide with plans for further expansion, giving more clients local representation. Our clients will also benefit greatly from InnoCentive’s many in-house experts and their experiences in certain types of Challenges, such as predictive analytics.

How does this acquisition fit into InnoCentive’s long term plans?

Dwayne:

InnoCentive is committed to bringing our vision of open innovation to customers in every industry and sector.  This is the next step in bringing a world class capability into our product portfolio so we can create more value for our customers.

Will there be other acquisitions in the near term?

Dwayne:

We clearly see areas where companies provide highly valuable and critical services to enable open innovation.  We believe that a number of these organizations could fill out critical areas in a broad product portfolio with end to end delivery of open innovation.  We are always looking for opportunities to bring the best and brightest into the family.

Simon:

Our interactions with InnoCentive throughout the acquisition process have been overwhelmingly positive. We’re looking forward to combining to create a strong team, and look forward to any future opportunities that would see us welcoming more innovative organizations to join the family.

In our book “The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise” published this year by FT Press, Alph Bingham and I explored Open Innovation and the Challenge Driven Enterprise. As we continue our discussion of Challenges and why they are profoundly important in this four part series, we turn our attention now to Challenges as a better way to organize and distribute work.

There are many kinds of work. There’s work on the assembly line, analyzing water for impurities, delivering newspapers, and fighting wars. And loosely speaking, Challenges may have a role to play in all these kinds of activities. And there is a different kind of more intellectual work requiring more creativity and invention, whereby a need is identified and a solution sought. Examples include development of a marketing strategy, a new plastic material for manufacturing, or an innovative approach to engaging customers.

In this latter kind of work, well-defined Challenges represent a powerful tool for organizing human activity and motivating innovative outcomes.

Organizations have spent years defining efficient organizational forms, writing Standard Operating Procedures (SOPs), crafting job descriptions, and even developing robust platforms for planning and tracking work. And they are becoming more efficient. Use of contract labor and outsourcing of work, even whole functions, is more commonplace than ever. These approaches have often improved the bottom lines of businesses by increasing flexibility, lowering costs, and enabling projects to be accelerated. However with notable exceptions, these exercises in efficiency and shifting labor costs have done little to fundamentally change the rules of the game—to create anything like a “step change” in business performance and breakthrough innovation. In most instances, the 20th-century approach is essentially institutionalized resource planning and labor arbitrage that is simply commoditizing work and trading high cost labor for lower cost alternatives. It is not creating a unique competitive advantage. And it is certainly not tapping the creative capacity of organizations and the world to innovate. In some cases, it has actually achieved the opposite effect. Consider how many companies arguably lost their innovative edge by focusing so singularly on cost reduction that they lost the very resources and capabilities needed to be competitive over time (for example, Dell, General Motors). Some even created their next generation competition by turning their suppliers and partners into the only true sources of innovation (for example, semiconductors).

Clearly a less simplistic and more intriguing model for remaining both competitive and innovative must exist. If you are to fundamentally transform the economics of businesses, while achieving heightened levels of innovation performance, it is clear that a substantially more scalable approach will be required.

Such an approach would leverage network efficiencies, better economics, and modern technology. Organizations will open up their processes, inviting in thousands or millions of individuals and organizations to participate in their business processes.

Thanks to the Internet, you can now engage a global platform in your problem solving and use this platform to deliver against your goals with precision and consistency, while better leveraging your in-house resources.

But how can you engage this nearly unbounded marketplace of knowledge workers, creative and inventive minds, and productive capacity? You need a robust mechanism of engagement. It must be lightweight. It must be simple. It must be enormously flexible. It must be universally understood. Again, the “Challenge” fills that role, meeting all these requirements. In effect, the Challenge uniquely represents the enabling capability, the universal language, and the rules of engagement in neutral terms in order to empower a truly “open” access to human capital inside and outside the organization. It is magnificent in its simplicity. And in many respects, it has been hiding in plain sight for generations.

What is the inducement to this network of potential problem solvers to answer the call? For a simple idea, a small reward or inducement may be sufficient, whereas a technological innovation may require a team to spend months of time and capital to develop a winning solution, requiring substantial incentives. Internally focused Challenges may reward employees with reputation, points for the company store, or lunch with the CEO. Inducements may be peer recognition or once-in-a-lifetime experiences. (InnoCentive and NASA recently offered a unique viewing of a space shuttle launch.)

All these things must be assembled into a Challenge before it is exposed to the world of problem solvers. This also enables what some call the transition from Not Invented Here (NIH) to Proudly Found Elsewhere (PFE).

In the next and final post in this blog series, we will explore Challenges as a powerful Strategy tool.

Warm regards,

Dwayne Spradlin

In 2011, we added many thousands of people to our Global Solver Community.  We distributed more than $2m in Challenge awards.  And we welcomed Popular Science and EDF as strategic partners, resulting in a wealth of new Challenges for Solvers to tackle and an expanded pool of diverse minds for our Seekers to tap into.  We elevated Novel Molecule Compound (NMC) Challenges, providing higher award amounts and introducing fingerprinting technology, which resulted in greater uptake in Solver engagement and renewed confidence from our Seekers, ultimately leading to a doubling of NMC Challenges posted and solved as compared to 2010.

But we did something much more important. We accomplished the goal we set for ourselves when we embarked on this journey together – and I don’t say this lightly – we changed the world.  Together we brought solutions to light that would never have been uncovered any other way.  Below are a few of the Challenges that were awarded in 2011 that I’m particularly proud of.

Prize4Life – this was our “walk on the moon” Challenge.  The big, audacious goal that we weren’t sure was even achievable, but was so important that it carried a $1m award.  First launched in 2006, the Prize4Life Challenge sought a biomarker for ALS, also known as Lou Gehrig’s Disease – a rare disease with such a rapid rate of advancement that there was literally no way to measure its progression.   In 2011, Solver Seward Rutkove was awarded the full $1m for his biomarker, which used a method called electrical impedance myography (EIM)  to measure the flow of a small electrical current through muscle tissue.  This biomarker has the potential to reduce the cost of Phase II clinical trials by more than 50%, and by correlating closely with disease progression, to remove one of the primary obstacles to industry investment in potential ALS therapies.

EDF Nitrate Capture System – PhD candidate Patrick Fuller submitted an innovative solution for the capture of toxic nitrates – and won the award on his first Challenge.  This solution could mitigate the 50-80% of fertilizer applied to commercial crops in the U.S. that is not absorbed by plants and is instead lost to water and air, causing dangerous environmental and health impacts in a growing number of watersheds around the country.

Cincinnati Children’s Hospital Games for Health – anyone who has cared for a chronically sick child knows the challenges that adolescence brings.  The increasing need for independence and social interaction makes following a prescribed health regimen difficult.  Cincinnati Children’s Hospital came up with a unique approach to inspire teenagers and pre-teens to take care of themselves – a video game.  The solution to this Challenge has the potential to dramatically improve health care outcomes for sick kids.  We’ll have more news on this solution in the coming weeks.

Humanitarian Air Drop – The Challenges posted by the Air Force Research Labs have truly captured the attention of our Solvers and of the media.  Of the seven posted so far, the humanitarian air drop Challenge hits closest to home for me.  The notion that distribution of aid to the most vulnerable communities, often in the middle of a war zone, could actually cause harm to people needing that aid, is difficult to accept.  Two Solvers, one from Indonesia and one from Peru, solved the Challenge, one of them referencing a well-known mechanism for moving coal from a mine shaft.  This is a perfect example of diversity and the uniquely prepared mind at work, as my colleague and InnoCentive Co-Founder Alph Bingham might say.

These Challenges represent just a few of the highlights of 2011.  The year 2012 is positioned to be even more impactful – we’ll be awarding new delivery options for the polio vaccine, better sanitation for billions of people in developing countries, and viable disposal options for environmentally toxic electronics.  Over the coming weeks and months we’ll be posting new Challenges that promise to be just as interesting, fulfilling, and earth shattering as those we saw in 2011.

Thank you for your continued participation in the InnoCentive Solver Community.

Warmest regards,
Dwayne

by Alph Bingham and Dwayne Spradlin

Clearly the notion of a challenge as a tremendously powerful and versatile tool for innovation is gaining credibility quickly.  We explored this idea in depth in our book “The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise” published this year by FT Press.  Below and over the next few weeks we share some of the discussion on Challenges from our book and would love to have your thoughts and feedback.  Enjoy!

What Is a Challenge?

Dictionary.com defines a “challenge” as “a summons to engage in any contest” or as “a job or undertaking that is stimulating to one engaged in it.” However, it is much more. Well-constructed “Challenges” are an astonishingly powerful and uniquely effective tool for focusing the energies of multitudes of creative, inventive, talented people on the important problems facing organizations, nations, and the planet on which we live.

The Challenge is core to InnoCentive’s business, and its power has been on display now for several years. We see early, though isolated, glimpses of this approach throughout history well before InnoCentive’s founding. Striking examples of its use range from the Longitude Prize offered by British Parliament in the 1700s to the Ortiz Prize that induced Charles Lindbergh to cross the Atlantic. It has been shown to have broad and general applicability.

InnoCentive has more experience with Challenges than any organization in the world and provides an intriguing sampling of the potential of Challenges in areas as diverse as business entrepreneurship, life sciences, mathematics, and manufacturing.

Challenges can deliver breakthrough strategies or highly technical solutions and apply to every business function and every type of problem, large and small, strategic and tactical.

But Why Does It Work?

We first began to understand the Challenge as a powerful business tool a few short years ago. It was at this time that a number of key concepts were beginning to converge, namely that a Challenge exhibits three important properties. The Challenge is:

• The fundamental unit of problem solving;
• A better way to organize (and distribute) work;  and
• A powerful strategy tool.

Over the next few weeks, we will explore each of these three properties in more depth.

Warm regards,
Dwayne Spradlin and Alph Bingham

By Dwayne Spradlin, CEO, InnoCentive

I recently attended NASCAR Racing School as a birthday present from my family. And it was an incredible experience. In the midst of the searing Texas heat, I was given several hours of instruction on both the car and the rules of the road. Somehow, Texas Motor Speedway looks less daunting on television than when you’re sitting in an actual racing car. Did I call it a car? My mistake. It is a rocket engine with a steering wheel. And the banked areas of the track have a much more severe incline than you could imagine. I must say that even though I pride myself on being even keeled, my heart was pounding.

The highlight of the school is taking several laps around the track at whatever top speed you feel comfortable with. In reality, you follow an experienced driver, so when you are ready to go faster, you signal to the car in front of you by coming within a few yards of their car, which is the sign to accelerate – both terrifying and invigorating at 140 MPH (not actually sure why a headset isn’t a better idea).

I grew up learning to drive near Chicago and I assure you, I-94 is not sufficient coursework for being a NASCAR driver. Although it felt like an eternity, I was driving on the roadway for less than 30 minutes. My top speed? Just under 150 miles per hour, not even close to the speeds professionals must manage every day. This was the adrenaline rush of a lifetime!

Adrenaline or not, stepping on the gas was not a natural act. Every fiber of your being senses danger because, in your head, you know that man should not be going this fast. There was an ever present fear that something bad was right around the next bend. Self-preservation and fear of the unknown are hard to overcome because they are instinct. Professional drivers must have a certain skill set, including a level of fearlessness.

The same is true of change agents within organizations. They know that the organization conforms to a certain set of rules. The safety margins are built in and the performance of the vehicle is well understood. Standard operation procedures, culture and management systems ensure that; employees follow their “experienced drivers” to reach a desired destination at their comfortable speed. To go outside that comfort zone is to take an organization into new territory, to push the comfort level. Suggesting an organization can deliver higher performance levels is suggesting that current systems are inadequate. Pulling ahead puts you right in the sights of all the other cars on the track, signaling to all the spectators that those other cars are falling behind. And those other cars are not going to exit the track. They are going to fight to keep things just as they were. Although challenging the status quo within an organization may not feel life threatening, it may feel career threatening.

Open innovation change agents in corporations today know exactly how this feels. Quite honestly, the stories are all the same. Yield arguments are met with risk arguments (fear of the unknown). Money requests for new innovation programs fail to materialize because returns cannot be guaranteed (fear the programs may actually work). Addressing a “not invented here” culture, compensation systems and closed attitudes are met with apathy and passive aggression (fear we may lose control of management systems we understand today). The list goes on and on.

My advice to organizations is this: step on the gas. Organizations need the next class of leadership to be fearless. There is always risk on the track, but the spoils go to the winners, the drivers that push the limits. Let the fearless break some of the rules and accelerate into the next turn. Let them nudge the cars in front of them and accept a few setbacks along the way. Better, faster and cheaper innovation—which is often achieved through the adoption of open innovation—will make or break your organization in the future.

And for the change agents? Prove yourself. Take some risks. Be prepared to execute and deliver. Over time, if current leadership is not lined up behind you, there are many other organizations looking for that extra nudge in the form of an effective guide to open innovation to help push them into the winners circle. They recognize that winning will require perseverance, dedication, precision and fearlessness. This is a rare combination indeed, but a combination that is vital for organizations intent on adapting to innovation realities in the new millennium.