Open Innovation From A Practitioner's Perspective

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What Went Wrong With The Crowdsourced Ideas For BP Oil Spill?

BP has received a lot of criticism for failing to respond adequately (or in a timely manner) to the thousands of ideas that it received, both solicited and unsolicited. If they (BP) would have followed a few key elements of open innovation and crowdsourcing, perhaps this would have had a better result. As of this post, I am aware that BP is currently reviewing the submissions and hopefully they’ll glean something of value to prevent future disasters of this scale.

Where did they go wrong?

1) Asking the Question: Trying to present a single solution that addressed all of the challenges facing BP is like trying to cure cancer with one experiment. What BP should have done is break the challenge down into various key categories (containment, recovery, clean up, etc) and posed a series of requests in each category. That would have directed the crowd to focus on one area or another.

2) Collaboration: To my knowledge, both the solicited and unsolicited ideas were brought forward by individuals and/or companies, with no ability to see each others ideas and build or improve them. A more collaborative process would have gone a long way to improve the quality of ideas and perhaps even reduce the total number of ideas (since people would find other ideas to build on before entering their own).

3) Filters: clearly with this number of ideas you need filters. Again, with a truly crowdsourced and collaborative process the crowd can act as a filter. Not sure how BP is filtering / analyzing the ideas submitted but I’m pretty sure that at this point the crowd isn’t involved.

Perhaps one thing they did achieve (not by design, I might add) was diversity. It looked like they were getting ideas from all over the world and from a diverse group of participants. What a wasted opportunity.

Lastly, perhaps there is a chance for BP to open up these submissions to the global community and see if they can salvage some ideas to prevent this from happening again in the future. I’m sure there are a few diamonds in that pile of information.

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NY Times: The Crowd Is Wise (When It’s Focused)

Here’s an article that came out today in the NY Times on open innovation titled “The Crowd Is Wise (When It’s Focused)”.

I couldn’t agree more with the argument. I would also submit that one way to focus the crowd is to properly frame the question. They also point out that it’s not always the size of the network that matters, it’s what that network can do. I also agree but only on the type of challenge that is specific in nature. Jeff Howe (Crowdsourcing) calls this crowdcasting. Another form of crowdsourcing is where every member of the community can participate such as the NASA Clickworker Project (http://clickworkers.arc.nasa.gov/top). In that project, the size of the network DOES matter. The collective intelligence (or capacity) increases with every new member.

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Crowdsourcing the Patent Application Process

Very interesting story for the US Patent and Trademark Office (USPTO) on using volunteer labor to help evaluate patent applications and uncover prior art which may be relelvant:

http://www.onthecommons.org/content.php?id=2414

It’s a great idea, one that makes a lot of sense, and perhaps it is the ONLY solution that can address the enormous backlog of applications (> 1 million). While still in it’s very early stages I applaud the move by the USPTO.

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Mapping Innovation Clusters (McKinsey Report)

So McKinsey released a report on innovation clusters. You can find their interactive map here:

http://whatmatters.mckinseydigital.com/flash/innovation_clusters/

My biggest problem is that this map is created based solely on patent data: total number of patents, patent growth, diversity of patents. This is one of the most over-used metrics possible! As some may have expected,  Silicon Valley stood out as the leader of the pack. I happen to live in Silicon Valley and do believe it is one of the most innovative regions of the world. But not because of patents. It’s because of the tolerance for failure, the diversity of of it’s labor force, the world class universities, the presence of a dynamic investment community, and probably one hundred other reasons.

I believe in the value of protecting ones ideas, but I also value even more those companies that are willing to SHARE their know-how. It can be done. By some estimates, up to 80% of filed patents are never commercialized. So by definition that makes Silicon Valley the LEAST productive region in the world!! And we all know that is simply not true.

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New metrics from InnoCentive and NineSigma

In two recent stories on NineSigma and InnoCentive, we learned a little more about what kinds of performance numbers they are generating – still quite modest, in my opinion, when you consider the US industrial R&D spending of over $250 billion per year.

Here’s what NineSigma reported in their recent press release:
* $10 million in open innovation contracts between innovation seekers and solution providers,
* dramatic 40 to 50% increase in rate of transactions,
* more than 70 companies have active projects in the pipeline.

InnoCentive, in a recent interview published in Fast Company, said the following:
* global network of 160,000 solvers,
* non-profit challenges have grown to about 20 percent of the InnoCentive portfolio,
* they solve about 40 percent of all posted challenges, closer to 60 percent for non-profits, philanthropies.

Those are very, very modest numbers from both organizations. I also don’t know if the $10 million from NineSigma was for 2008 or cumulative since its founding. Also, if they facilitated $10 million, how much did they actually earn from those deals – 10%, 15%? And while it’s true that both companies have some impressive stories to tell with regards to solution rates, number of solvers, incredible stories about how problems were solved, the sum total of their metrics is very small. This doesn’t mean that open innovation isn’t happening on a much larger scale. Many companies have their own ‘direct-to-market’ strategies that probably funnel a lot of $$ in transactions (I would love to get my hands on that data!).

With regards to other third-party innovation models, I would bet that Threadless and TopCoder, two companies you don’t hear that much about, are some of the largest in terms of revenue.

This also means that there are new opportunities for third party innovation brokers to enter this market. If you did some simple math, assuming that 10% of all R&D spending is external and 10% of that external spend could go through an innovation broker, you would quickly realize the addressable market would be $2.5 billion dollars. Not a bad market at all.

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