1. Rob Gleasure R.Gleasure@ucc.ie robgleasure.com
IS3321 Information Systems Solutions for the Digital Enterprise Lecture 9: Open Innovation, Lead Users and Contests
Rob Gleasure
robgleasure.com

2. Open Innovation, Lead Users and Contests
Last session
Social Media
The Crowd and Social Media for Content Distillation
The Crowd and Social Media for Content Distribution
Today’s session
Open Innovation, Lead Users and Contests
Generating creativity from individuals
Incentivising creativity from individuals

3. Consider the Following Problem
We produce protective cases for smart phones. Customers have complained that the transparent part of the cases are difficult to clean without making them cloudy - we want to outsource/crowdsource a new solution for these cases that won’t have this problem
We could go to a specialist but there’s no guarantee they’ll figure it out
We could go to the crowd but what does the average person know about production materials?

4. Jumping Off Point
Up to now, we have leveraged the power of consensus and coordination offered by the crowd as a collective. But some problems are so specialised that the average crowd-member has little to add to the creative process
For this problem we don’t want consensus, we want access to outliers of brilliance!
Put differently, we aren’t looking at the wisdom of crowds, we’re looking for wisdom in crowds

5. Open Innovation
“Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively”
(Chesbrough 2003)
Comes from organisation’s realisation that not all of the smart people work for them, many clever ideas are floating around outside of the organisation’s boundaries
This typically takes two forms
Lead-user innovation
Innovation contests

6. Lead-User Innovation
Lead-user innovation is based on the idea that some users will be more advanced or intensive than others, hence ahead of the needs curve (Von Hippel 1986)
Because they are more invested in the area, these needs also tend to be a high priority, meaning they tend to find creative workarounds, adaptations, and solutions
Organisations may thus try to leverage the power of the web to find, communicate with, and collaborate with these individuals to integrate and improve upon their solutions

7. Lead-User Innovation
Image from

8. Lead-User Innovation
Image from

9. Example: Social Work in Developing Countries
Jerry and Monique Sternin were working in Vietnam in 1990 on a project to decrease malnutrition in 10,000 villages
65% of Vietnamese children under age 5 were malnourished
Government projects were failing
The Sternins decided to find 6 families you were unusually well nourished despite being “very, very poor” and noted they
Ate several small meals, rather than a few large ones
Added small shrimps, snails, crabs, and greens to their rice that others felt were dangerous
Within a year, only 20% of their 1,000 children enrolled in their project were malnourished

10. Example: Manufacturing and 3M
3M is a large materials company in the US producing products such as adhesives, abrasives, laminates, passive fire protection, dental and orthodontic products, electronic materials, medical products, and car-care products
The 3M’s Medical-Surgical Markets Division was making $100 million/year in surgical drapes but there had been no breakthroughs in almost 10 years – doctors loved their drapes but insurers found them too expensive
To combat the price issue, they looked at
Doctors in developing countries
Vets operating on pets
Makeup artists

11. Example: HashTags
The idea of hashtags (e.g. #rivetinginformationsystemslecture) wasn’t introduced by Twitter, in fact Twitter founder Evan Williams thought they wouldn’t catch on as they were ‘too nerdy’ and they would group content themselves using more sophisticated data analysis behind the scenes
A couple of innovative users began using them and it started to take off
Twitter saw how they worked and changed their UI to encourage their adoption among all users
Now common across social media platforms

12. Example: Google Drive
Despite the availability of services like Dropbox, Google noted many users of Gmail themselves files as backups
The growth in storage space wasn’t intended for this purpose but, rather than fight it, Google leant into it
Google Drive launched in 2012
Reportedly over 1 million organizations paying for Google Drive by 2015

13. Advantages of Lead User Methods
Reduced cost of R&D
Potential for improved productivity – you know the solution works
Gather feedback early
Identifying lead users alone is useful for marketing and planning
Potential for future collaborations with external innovators
Potential for viral marketing

14. Disadvantages to Organisations
Potential reveal of sensitive information
Potential loss of competitive advantage as innovations are typically hard to protect
Lead users may have agendas
Multiple lead user groups may exist with different trajectories
Possibility that inviting others into the design process means innovations are travelling both directions

15. Innovation Contests
Sometimes completely new innovations are needed and our lead users haven’t solved them or aren’t willing to share them
For these reasons Innovation Contests have become increasingly popular
A challenge is set, along with a reward for the best solver
Solvers submit solutions
The challenge-setter selects the best solution for the reward

16. Example: Innocentive
InnoCentive is probably the most established contest platform at present
InnoCentive was set up in 2001 within the Eli Lily umbrella, it later spun off in 2005 to form its own company proper
The Solver community includes 375,000 people from nearly 200 countries
Over 2,000 challenges, 59,000 solutions, and $48 million posted
Cash prizes are generally $10,000 to $100,000 (can be as low as $500 or higher than $1 million)

17. Example: Innocentive
The idea is that challenges are posted across areas as vast as
Business and Entrepreneurship
Chemistry
Information Technology
Engineering
Food and Agriculture
Life Sciences
Math and Statistics
Physical Sciences
In 2005 InnoCentive also added a non-profit area designed to generate science and technology solutions to pressing problems in the developing world

18. Types of challenges on Innocentive
Ideation: novel breakthrough ideas
Theoretical: in-depth proposals including implementation options.
Reduction-to-Practice (RTP): prototype that shows an idea in actual practice and requires an artifact (e.g., physical evidence).
Prodigy: A “Big Data” computational challenge
Novel Molecule Challenge (NMC): non-commercial chemical compounds, proteins, extracts, polymers, and DNA sequences.
Electronic Request for Proposal (eRFP): request for a partner or supplier to provide technology, materials, or expertise.

19. Advantages to Companies
Gain access to a large database of innovative thinkers who enjoy difficult problems
No staff outlay (pay on demand)
Opportunity to compare contrasting options
High chance of finding solution, compared to getting in a consultancy

20. Advantages to Solvers Work from home Reputation
Gets to see cutting-edge problems in different fields
Opportunity to apply specific techniques repeatedly
Interesting work

21. Disadvantages Have to post problems in a very public forum
Tends to require/attract one-shot solutions, e.g. hard to come back for ongoing development
What if the requirements had a loop-hole?
Solvers are pragmatic and tend to avoid problems where competition is high – may not be much of a ‘contest’

22. Readings
Chesbrough, H. W. (2003). Open innovation: The new imperative for creating and profiting from technology. Harvard Business Press.
Moore, G. A Crossing the Chasm: Marketing and Selling High Tech Products to Mainstream Customers. Harper-Collins, New York.
Von Hippel, E. (1986). Lead users: a source of novel product concepts. Management science, 32(7),
Von Hippel, E., Thomke, S., & Sonnack, M. (1999). Creating breakthroughs at 3M. Harvard business review, 77,
Brief history of hashtags on Twitter
tter_-_they_s#awesm=~ojXlyc6l507vMl
Description of Vietnamese nutrition project in
Brown, T., & Wyatt, J. (2010). Design thinking for social innovation.Development Outreach, 12(1),