Business Model

INNOCENTIVE is an “open source innovation” company founded in 2001 as a venture company within Eli Lilly & Co, a major pharmaceutical company. It is based on the idea that valuable ideas come inside or outside the company, and is distributed widely in markets and around the world. The business model of crowdsourcing pioneer INNOCENTIVE is quite similar to a question-answer web forum on the web.

Main stakeholders in this model

• The “Seeker”- The Company, organization or individual who is looking for an answer to a problem or a question.
• The “Solver” – Individuals who are willing to answer to the questions or problems, usually giving a good solution based on experience or their idea
• The “Observer” –Though this does not appear on their company page, INNOCENTIVE acts as a moderator to guide the two parties.

The “Seeker” (it can be a corporation, governmental entity, nonprofit organization or partners) registers to INNOCENTIVE site and sets:

1. The question or problem to ask,
2. Set the amount of reward when the problem is answer to the “solver”
3. And, set the deadline, by when the problem would like to be solved.

The “Seeker” will also pay a fee each time the problem is posted. The amount of the reward will be decided by the “Seeker” and INNOCENTIVE, based on such criteria as how effective the answer/idea was, or by how much profit it would bring to the “Seeker”.
On the other hand, the uniqueness of this model is that the “Solver” and the “Seeker” remains anonymous, and the “Solver” could have various backgrounds not necessarily linked with the “Seeker’s industry. This has been proven effective in the past when the 2007 Exxon oil spill removal method was suggested on the site by an individual from a totally different industry to that of the oil industry. There are chances where the “Solver” could be a competitor, or even the employee of the “Seeker”. The challenges are mainly R&D problems, and until now more than 345 solutions have been suggested amounting to more than $3million so far. There are some exceptions where the solutions are not rewarded, such as the solution for the recent BP oil spill in the Gulf of Mexico. The reasoning for this challenge is to find solutions not based on rewards, but to “save humanity”.

Revenue Model

InnoCentive Business Model is to be a broker that offers an online platform that allows seekers (profit and non-profit organizations and other entities companies) connects to solvers (engineering professionals, scientists, skilled individuals, etc) worldwide 24/7.
Through this online marketplace InnoCentive generates different revenue streams from its different relationships:

• B2B relationship (InnoCentive and seekers) generates revenues from: the subscription fees paid by the seekers (organizations) when posting the challenge; the sales of different services that InnoCentive offers like: training, consultancy, and workshops; and advertising from sponsors & partners.
• B2C relationship (InnoCentive and solvers); while working as an online community and marketplace, where solvers access to provide their best solution for a problem in exchange of an award. InnoCentive also takes a commission from the prize gained by the solver.
• C2C (among solvers): offering a common place to interact and exchange previous experiences, specific doubts, etc.
Products and services

The product of INNOCENTIVE is the online posting problems and offers (challenges) that need to be provided with research, development and innovative assistance by scientists, inventors, engineers, business people, researchers etc.
The range of services offered by INNOCENTIVE is the following:

• InnoCentive Challenges;
• IC @Work;
• InnoCentive ONRAMP;
• IC Consulting.

Hundreds of thousands of diverse and creative problem Solvers are registered with INNOCENTIVE and ready to solve the Challenges that matter most to the organization.

The IC Challenges can be: Theoretical challenge that doesn’t need lab work and can be delivered as theoretical proposal to the Seeker; Reduction to practice challenge usually it involves lab work and should be delivered with validated solution (research data/samples etc); Ideation challenge is very similar to the Theoretical challenge except an award must be given and the criteria are less stringent and Request for Proposals it is designed to find someone that can take an idea and convert it to practice. Besides INNOCENTIVE team of PhD-trained Client Services professional provide the company with invaluable guidance in developing effective Challenges that bring fast results to organization and transform it into a true Challenge Driven Enterprise. See Apendix1 for Challenge Disciplines.

InnoCentive@Work – is a collaborative cloud-based software-as-a-service (SaaS) platform – everyone in the organization can work together whether they are even away from each other. This platform creates an open forum through a secure web portal that is configured to the unique needs of clients. Employees know they will be rewarded for contributions that lead to solving your toughest Challenges.

InnoCentive Open iNnovation Rapid Adoption Methods and Practices is a proven a suite of professional development services and technical resources developed and delivered by INNOCENTIVE team of experts, PhDs, and consultants to help the company adopt Challenge Driven Innovation rapidly and successfully through technical resources like Planning and Roll-Out, Professional Development and Education, Communications and Ongoing Monitoring.

IC Consulting helps the company to create an innovation capability based on collaboration and openness through following tools: A Roadmap for Innovation Success, Developing the Portfolio and Agenda, Center of Excellence, Innovation Sourcing and Measure Results.
Value Proposition

The value proposition of INNOCENTIVE is to be the go-between for those seeking answers to problems and those providing the answers includes: problem definition assistance; access to a growing network of 50,000 respected scientists; preliminary vetting to screen out ideas which clearly do not meet the criteria; transparency through the process of posting and awarding challenges; providing valuable and credible information to all parties; creation of certain gates in order to keep confidentiality to the party (both to seeker and solver). See more details on Appendix 2, 3.

SWOT Analysis

• Strengths: INNOCENTIVE is introduced to a vast range of challenges, new ideas which with the help of qualified participants are more likely to provide high-quality, feasible solutions, ideas, feedbacks protected by IP. Besides focus increases the relevance of ideas, bringing together people with passion for a topic increases collaboration and depth of thought. Easy IP protection allows giving more direction, helps build relationships and foster stronger collaboration between participants, which increases the depth of thought and quality of ideas. And the most important provides “seekers” with answers.

• Weaknesses: sometimes idea quality, feasibility and relevance vary greatly and the majority of ideas are incremental. Also ideas may not be relevant; experts may be captive to their existing knowledge and not think sufficiently outside the box. Often it is time-consuming to build relationships, taking into consideration risk of participants adopting the biases and assumptions of the organization.

• Opportunities: the crowdsourcing model of INNOCENTIVE can boost engagement and take the pulse of the crowd. It can provide more sophisticated platform for getting both educated opinions and diverse perspectives on a widely understood challenge. Solving complex challenges that demand a high level of expertise, creating intellectual property.

• Threats: It can be that categorizing/evaluating ideas and giving feedback (time-consuming due to the breadth and number of ideas) will decrease efficiency. Not adequate identification of diverse, qualified, creative group of participants. Bad management of picking urgent, actionable, easily explainable issues that enough people will care about and be able to solve. And keeping and building new relationships and trust between participants can be the most challenging to INNOCENTIVE.

Features to continue delivering value

When describing InnoCentives’s Value Proposition, a clear way to define it could be: To be an open, completely secure, anonymous and confidential, online marketplace focused on solving though R&D challenges: faster, better and cost effectively.
In order to ensure the successful continuity of its value proposition these are its key features: • Internet: the effectiveness of this business model, relies on a 24/7 online cloud-based technology platform; allowing communities of people to come together and work towards a common goal. It is a business model which could not work offline
• Global reach: Access to worldwide talent of growing community of scientists, inventors, engineers, business people, researchers etc.
• Glocalization initiative: This allows InnoCentive to respond using global sources, in specific markets & to specific problems.
• Scalable model, to other topics, other seekers, other solvers, other external services, etc.
• Easy to access portal with defined methodology, process & tools
• An open innovation model
• An incentive model
• Strong partnerships with well known entities like: Rockefeller, NASA, etc.

The Competitive Environment

There is a wide range of competitors in this market, as its main competitors we could mention the following:

• NineSigma: Founded in 2000 in USA, offers a full array of state-of-the-art products and services that engage companies with a global innovation community. Since NineSigma's inception, it has done work mainly in the automotive, chemical, consumer packaged goods, and food & beverage industries.

• IdeaConnection: Formed in 2007 in USA. Takes on Challenges from large and small companies with diverse world-class facilitators and solves problems ranging from nanotechnology, virtual reality, biochemistry, to marketing and sociology.

• PhilOptima: Founded in 2008 in New Orleans, USA. …¨Philoptima started by a frustrated philanthropist amidst the difficulty of matching her charitable instincts to hard, cutting edge, science-based methods¨.

Although InnoCentive was not the first mover in the Open Innovation marketplace, its competitors don’t offer such a transparent proposition from the first moment people arrive into their Web Sites as InnoCentive does. The reason for saying that is that when going to the competitors’ web sites, the challenges are not shown to everyone (you have to register), becoming less accessible for new entrants. Additionally, they don’t have such important sponsors as InnoCentive has. Sponsors and partners give InnoCentive prestige and a sense of reliability for anyone who enters for the first time in its website. Finally, the possibility to remain anonymous is an additional value that InnoCentive offers against it competitors.

APPENDIX 1

Challenge Disciplines Pavilions
Engineering/Design Life Grand Challenge
Food/Agriculture NASA
Life Sciences Nature,
Physical Sciences Tec Edge
Requests for Partners The Economist
Math/Statistics Clean Tech
Chemistry Developing Countries
Business & Entrepreneurship Global Health/Public Good
Computer/Info Novel Molecules
Technology Emergency Response

APPENDIX 2
Benefits provided to Seekers and Sovers

BETTER • Identification of the problem and communication to the Solver team with support of Client Services.
• Access to worldwide talent of growing community of scientists, inventors, engineers, business people, researchers etc.
• More brains-more ideas, more solutions and breakthrough.
• Anonymity through the challenge process
FASTER
• Get started takes only 15 min. after fulfilling Challenge template.
• Get to market faster with the opportunity of working hundreds of minds on offered problem by the company from any part of the world.
• Accomplish more by focusing on other priorities meanwhile the challenge is in progress.
• Speed to market, receiving solution in 30 to 90 days after posting.
COST –EFFECT. • Lower the cost.
• Pay for success, no trial or error.
• No royalties or licensing fees.
• Risk free, paying only for results.
• Engage winning solvers on your terms.
• Ownership is covered in the price of award.

APPENDIX 3
Value proposition
CUSTOMERS
“Solvers” • Give access to talent and success at a global level.
• Offers financial rewards.
• Offers the opportunity to become solution finder and as well problem solver.
• Gives opportunity to be recognized as a problem solver.
• Provide with additional revenue or even with the job.
PARTNERS
“Seekers” • Find successful solution for tough internal problems.
• Complement internal research with external ideas.
• Provide quick and cost effective solutions to the problem.
• Find new Human Resources value with high return on Investment.
• Provide powerful solutions without increasing R&D Budget.
• Use the biggest worldwide network of scientists to resolve company Research and Development issues.