Open the door to open innovation


By Diane Dierking

Many companies count on their ability to innovate to help them maintain an edge over their competitors. As companies in the chemical industry struggle to stay on top, a new frontier in innovation is opening up , open innovation.

The open innovation approach allows companies to increase the number of people working on a problem without adding to its payroll. Unlike contract research, the approach solicits input from a wide audience.

InnoCentive, Indianapolis, and NineSigma, Cleveland, are two companies that facilitate open innovation. InnoCentive was launched by Eli Lilly and Co., Indianapolis, in June 2001, whereas NineSigma was founded in February 2000.

But why use open innovation? Larry Mitchell, president and senior project manager for NineSigma, says companies have to solicit solutions from outside their organizations to remain competitive. Ali Hussein, InnoCentive's vice president of marketing, believes open innovation is the answer not only for companies that are spending money on R&D with little return, but also for those that want to increase their return on R&D.

These companies have a slightly different approach to open innovation. InnoCentive uses a Web-based forum to connect clients with solution providers, whereas NineSigma selects science and technology providers from their database to receive clients' non-confidential request for proposals (RFP).

Both companies have personnel who work with clients to define the problem and to decide on the best solution. Hussein says InnoCentive has access to about 60,000 solvers in 150 countries, and the company's Web site can be read in seven languages. He says the leading solver market is in China, followed by the United States, India and Russia. Therefore, it is important to formulate a concise challenge so it can be easily understood. Mitchell says NineSigma's RFPs are about three pages long, but they define the problem in simple terms.

What's in it for the solution providers? Hussein says most enjoy the challenge of solving problems , the monetary reward InnoCentive's clients offer doesn't hurt, either (the highest reward is $75,000 to date). NineSigma's solution providers often come from academia, private laboratories and small, entrepreneurial companies. Other than the opportunity to work with a large, industry-leading company, the solution provider receives a monetary reward, which may come in the form of funding for projects related to the client's need.

David Bradin, a patent attorney, first read about InnoCentive in a trade journal. A few days later, he responded to a challenge , and won. "It's a nice diversion to come up with an invention of my own once in a while," he says.

Bradin believes open innovation benefits the chemical industry. "I don't think the world will run out of problems to solve for a long time. The more people who have a chance to participate in the innovation process, the better."

The companies that use open innovation may surprise you. InnoCentive counts Dow Chemical, BASF and Air Products among their clients, to name a few. NineSigma has about 40 clients, including Avery Dennison, Abbott Laboratories and Procter & Gamble, about half of which are repeat customers.

Mark Zettler, leader of Chemistry and Disease Management Discovery and Research at Dow Chemical, Midland, Mich., says his company first started using InnoCentive in 2002. During the last 18 months, the company has posted 20 challenges. Zettler says open innovation represents an "opportunity to solicit input and solutions from thousands of great minds for any single problem."

Zettler says his initial concerns about using open innovation were intellectual property (IP) rights and disclosure of confidential information. InnoCentive provides due diligence services to ensure the solver has all rights to the solution. The solver owns the IP until a formal agreement transfers ownership. NineSigma protects IP of both the client and the solution provider by using non-disclosure agreements.

What about the employees of companies using open innovation? Is their job security threatened? "Open innovation will instantly augment a company's R&D program, not replace it," Hussein says.

Is it time your company opened the door to open innovation?

Diane Dierking is senior editor of Chemical Processing magazine. E-mail her at