InnoCentive...Uniting Creative Thinkers

InnoCentive is a company providing a global virtual platform, connecting companies, academic institutions, public sector and non-profit organizations, that can post complex challenges, they are seeking solutions for.
People can become members (solvers) of the website and suggest creative and innovative solution to the challenges and gain rewards.

The business helps to connect hundreds of thousands of creative thinkers with specialized knowledge or new ideas, trying to help solve problems for the seekers. The solution seeking companies get access to outside knowledge and fresh ideas, which often “inside” people could not have thought of, or when asking consulting companies for help, would have been much more expensive than the rewards offered to the successful solver. At the same time InnoCentive also offers consulting services and helps restructuring the organization in a more innovative one.
At the same time the platform gives the chance to intelligent and creative people to earn important amounts of money by providing new ideas and connects them with companies, they would not have had access to before.
InnoCentive does not charge any fees for solvers, therefore attracts them and increased the creative community they offer to seekers, who of course have to pay a fee to be able to access the community and post there challenges or use InnoCentive’s consultancy services.

InnoCentive offers its service to two basic costumer groups: Corporate and Non-Profit Organizations. Whereas Corporate Companies are paying a fee to be able to post their challenges on the site and pay an award to the successful solver, InnoCentive in collaboration with Rockefeller is providing funding to help Non-Profit Organizations to access the worldwide innovative community.

As mentioned earlier the main revenue source of InnoCentive comes through subscription fees paid by seekers, commissions on rewards paid to solvers and consultancy services, which enhances their possibility of helping Non-Profit Organizations and benefiting the poor.

There are quite a few companies working in the Open Innovation industry, such as Innovation Point (http://www.innovation-point.com/index.htm) for instance. Innovation Point, like many other businesses and in opposite to InnoCentive, is mainly suggesting consultancy services and software, but not a platform connecting companies with creative thinkers.
Another competing business is Philoptima (http://www.philoptima.org). In contrast to InnoCentive, Philoptima is focusing on only philanthropy related topics, such as education, health or the environment for instance. Still they are using a quite similar business model, as they suggest as well an innovation platform, connecting companies to creative thinkers in order to find solutions to their challenges. Besides the fact that Philoptima is only targeting humanity/community related challenges, they also differentiate themselves from InnoCentive, since they are not offering consultancy services to create innovative organizational structures. Nevertheless they offering the service of helping to find an adapted consultant (a member signed up to Philoptima) to a specific challenge.

The business model used by InnoCentive is unique to the web. Outside the virtual world it would hardly be possible to unite so many people, working in so many different fields to find adapted solutions to challenges. The R&D is going through changes and outside opinions are getting more and more important to help finding new, breakthrough solutions, therefore uniting people from different fields, working outside the companies boundaries becomes crucial. The Internet enables companies like InnoCentive to reach creative thinkers around the globe and create a huge database. The interest in the topic and the need for open innovation growing, there is still no end in sight for the creation of new companies using the same or similar business concepts.

Even though InnoCentive is certainly one of the major players in the Open Innovation industry and they are bound to last for still some time according to the reasons mentioned earlier, there are certainly ways for them to expand their business.

The company was founded in 2001, but still seems not to be much known in Europe, where the concept of Open Innovation and crowdsourcing is just emerging. This gives the business the possibility to increase their customer base, by using marketing and advertising, trying to make more people aware of how open innovation can benefit their businesses.

Another possibility would be to expand their consultancy services by creating highly experienced InnoCentive teams which can come inside the company to help with brainstorming and finding new solutions, if the company is seeking for external help but does not want to expose their challenge on the website.

Open Innovation becoming an essential factor to modern management, I believe it would be highly beneficial to offer their consultancy services to management schools to train the talents of tomorrow on how to use external and internal solutions.

I believe that time and evolution in open innovation will bring even more new ways of how to expand a business model as the one discussed above, since the future of successful businesses is based on innovation and united creativity.

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Wagging the Long Tail...

The “Long Tail” concept describes the business niche strategy of companies like Amazon.com for instance, which rather sell a large number of unique or “off” items in relatively small quantities, instead of selling large quantities of a reduced number of mainstream items, as does Blockbuster or Carrefour.

The Long Tail concept believes that for every product there is a somebody willing to pay for it, even if the product is completely out-dated, not well known or of very particular origin. By offering plenty of these kinds of items, the retailer is making up for the low quantity of sold goods.

Another company following the Long Tail concept would be Deezer.com. The website is offering its user to listen to music for free, without being able to download it. The home page is catching its users with known artists and TOP 10 playlists, but once the user clicks on a title or artists a button “similar artists” soon leads the user into an unknown universe of artists which are far from mainstream and therewith pulling its users along the Long Tail.

Musicover.com is using a similar concept, offering the user the possibility of choosing a certain type of music, but then randomly picks up tracks and guides the user into a musical universe he might not yet be familiar with.

I believe the Long Tail concept fits very well in the “customer in charge” environment. The Long Tail niche concepts gives more choice to the customer, offering all different sorts of items, even those less known or not corresponding to mainstream products. The consumers will be offered products, without being obliged to buy or consume, it is within their range of power to decide whether they would like to spend money or simply enjoy the fact of having found something rare to satisfy their individual need.

Freemium as an Economic Concept...

More and more Freemium concepts are popping up, such as social networks, which are basically free, but offering applications or services which need to be paied for. Another form of Freemium can be found in form of an interactive, virutal world - "Second Life".

Second Life is a kind of game, allowing the participant to create one's own avatar and to build up a whole (double) life in the virtual universe, while being able to communicate and connect with the other players. Second Life in its basic concept is free and everybody can enroll, nevertheless to progress in the game and be able to lead a "comfortable life", the player has the possibility to buy items. For instance one can buy or rent a house.
Second Life is also making money through virtual marketing. For example the company IBM invested about 10 million USD to market their company in the virtual universe.
Also those participants who want to make money on Second Life (by creating their own retail stores or virtual “real estate” business for example), they need to subscribe and pay a monthly fee of about US$ 10.
As can be seen, even though Second Life is basically free, they still find their way to make profit through some users, which allows them to offer the basic service at no charge and describes the concept of “Freemium”.

Second Life

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Welcome!

Hey, my name's Eva and I'm happy that you found your way to my Blog! I'm looking forward to sharing brains with you on various subjects which will all of us help to increase our knowledge and progress in our search for increased revenue and profit :)