Inno centive


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Inno centive

  2. 2. AKSHAY BORHADE, 4007/20 ICT FOR ORGANIZATIONAL EFFECTIVENESS EXECUTIVE SUMMARY This case is about the concept “Open Innovation” i.e. the practice of being open to external sources for fulfilling ones R&D requirements. Open Innovation is a more efficient, effective and fair way of innovating. It is faster, cheaper and more efficient. However, they are some privacy issues associated with the benefits. Open Innovation approach to managing innovation calls for a paradigm shift in the way R&D divisions work. Fig 1.1 Traditional innovation approach In traditional innovation approach, as shown in figure above, lots of effort has to be put in for the R&D department. Some innovation has to be done from scratch in spite of that being done by the competitor. Thus, it is tantamount to the wastage of effort and R&D funds which can be directed elsewhere. Whereas, in the open innovation approach, the organization can aggregate all the ideas pertaining to the technology and carry forward the same. Thus it asks for well-directed effort by the R&D department. As shown in fig 1.2, the marketing department aggregates all the ideas from the external resources and analyzes it to forward the report to R&D department. The R&D then couples it with the internal innovative capabilities, thus saving effort and funds. Fig 1.2 InnoCentive (open innovation) approach MARKETING DEPT. INNOVATIVE IDEA 1 INNOVATIVE IDEA 2 INNOVATIVE IDEA 3 INTERNAL INNOVATION THROUGH R&D MARKETING 1. Predicts the future needs in the market 2. Ask the R&D department to develop products/processes which can profitably satisfy these needs better than the competitors R&D 1. Innovates internally 2. Takes input from various stakeholders from inside (and to a limited extant outside) the company 3. Comes up with the desired products PRACTITIONERS EITHER ACCEPTED OR REJECTED SOLUTION
  3. 3. AKSHAY BORHADE, 4007/20 ICT FOR ORGANIZATIONAL EFFECTIVENESS ORGANIZATIONAL AND MANAGERIAL CHANGES OF THE INNOCENTIVE BUSINESS MODEL FOR INNOCENTIVE 1. Image of being the most powerful crowdsourcing platform in the world. 2. Facilitates global collaboration with number of powerful organization in different industry and maintaining relations with the same. 3. Repositories of tons of creative solutions for a same problem which can be sold and revenue can be generated. 4. Become an interface between creative people and companies at large. 5. Develop a new economic, sustainable and creative business model. FOR CORPORATIONS USING INNOCENTIVE Advantages 1. Find successful solutions to an internal problem through number of available creative solutions. 2. The burden of R&D for innovation reduced tremendously. 3. R&D budget for finding a solution for the problem saved. 4. R&D workforce required also reduces as most trivial problem solved by InnoCentive. Thus, very high Return on Investment for Human Resources. 5. Complements internal research with external ideas. 6. Access to worldwide network of highly qualified and intelligent scientists. Problems 1. Loss of privacy and exclusivity – the competitors get to know what the organization is up to. E.g. Samsung using open innovation will expose it strategy of launching new smartphones to all the cell phone manufacturing companies. In addition, the local Indian companies like Micromax gets the leader’s technology free-of-cost and with no effort. 2. Loss of competitive advantage – the competition in the industry becomes meaningful only because of the R&D talent of an organization. With open innovation, R&D of different firms aggregate virtually forming an single entity, thus no competition. 3. Another major concern which holds back organizations from adopting the open innovation model is the ownership of Intellectual Property. FOR USERS POSTING CHALLENGES 1. Gives access to big organizations and companies worldwide which otherwise seem impossible for these talents. 2. Recognizes the talent, gives them the platform and pays appropriately (reward generators) for the ideas. 3. Permits to be recognized internationally as a problem solver as well as solution finders. 4. Interacting platform for this group of intellectuals.
  4. 4. AKSHAY BORHADE, 4007/20 ICT FOR ORGANIZATIONAL EFFECTIVENESS KEY MANAGERIAL CHALLENGES FOR THE INNOCENTIVE BUSINESS MODEL 1. Retaining talents and pool of revenue-generating intellectuals from going with the competitors. This talents can be seen as “Temps” and are easily approachable by any organizations. Thus, paying them appropriately, training and other customized benefits needs to be designed. 2. Partnerships with organizations – Designing contracts of medium to long-term partnership. Thus locking in both the organizations and the temps working on the problem of the organization for a long time guarantees continued revenue. 3. One of the key problems is the organizations repugnancy towards open innovation because of the concerns of IPR. InnoCentive tries to solve this problem in two ways – firstly, it has well defined policies regarding ownership of IPRs which are communicated to all parties in advance. Secondly, it promises handsome financial rewards to successful parties, in exchange of their IPRs. These financial rewards are also announced in advance. Till date InnoCentive has paid out more than $3.5 million in awards to over 300 winning Solvers without ever having an issue around payment or IPRs. 4. Maintaining the reputation of the solutions posted by the “solvers” associated with InnoCentive. Any worthless or insensitive ideas has to cropped out of the system which require a team to analyze the solutions. Thus, proposing a winning solution and maintaining the validity of the solutions by InnoCentive gives them competitive advantage over competitors.