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OPEN FOR BUSINESS:The New Innovation Contest Does More than Deliver Solutions

The race to invent, reinvent or simply improve products has become so fast and furious that traditional development processes and cycles can’t cut it. Open Innovation has become a proven and well-established method for reducing development times by sourcing solutions that already exist in other fields. But Open Innovation itself is being reinvented as companies become more comfortable with the practice and want to align their brand with ‘openness’ while still accomplishing their goals for accelerated product development. The Innovation Contest has emerged as a finely tuned Open Innovation option that delivers speed, transparency and ultimately solutions that can be applied more quickly in the market.

The benefits of Innovation Contests are far reaching, including some truly transforming results, such as:

• Ford’s Traffic Tamer App Challenge that created an app which provides a single source of information covering all possible parking restrictions in the city of London to save time for drivers, thus reducing traffic congestion.

• The Federal Trade Commission (FTC) Robocall Challenge led to a solution, “Nomorobo”, which allows incoming calls to be routed to a second telephone line that can identify and hang up on illegal robocalls before ringing to the user. To date, almost 955,000 robocalls have been blocked.

• Phase Two of GE’s Industrial Internet Flight Quest which identified breakthrough solutions that will allow airlines to determine the most efficient flight route in real time, potentially saving the airline industry $3 billion per year.

By: Denys Resnick, Executive Vice President, NineSigma

NineSigma, Inc. • 23611 Chagrin Blvd., Suite 320 • Cleveland, Ohio 44122 • +1 216.295.4800 • www.ninesigma.com

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ABOUT THE AUTHOR

Denys Resnick is responsible for incubating and launching NineSigma’s new products

and services. She interfaces with clients to identify their evolving innovation needs and

collaborates with NineSigma’s operations, sales and marketing teams to develop the

initiatives that make NineSigma a global innovation leader. Resnick previously served

as NineSigma’s Director of Operations and Vice President, Strategic Programs.

Before joining Nine Sigma in 2008, Resnick was founder and President of TradeQuest,

Inc., a consulting firm that developed and implemented international business growth

strategies for global manufacturing and service companies. She brings 20 years of

manufacturing and business development experience from companies like RPM, Faber

Castell, and FedEx.

Resnick earned an MBA in International Business and Finance from New York

University, and a BA in International Relations from Tufts University.

Denys Resnick,Executive Vice President

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WHAT IS AN INNOVATION CONTEST?

The Innovation Contest is a competition that enables rapid development of an actionable solution through a prize-based competition. The Innovation Contest, which combines the best practices of a well-crafted technology search with carefully integrated PR elements, catalyzes solution provider response while publically positioning the Sponsor as an organization that is open to working with external innovation partners. Swiftly and tightly managed, the Innovation Contest drives rapid development of solutions, which can include prototypes that are guaranteed to meet the evaluation criteria because they’re built to tight criteria and specifications through the contest format.

An Innovation Contest is similar to its higher profile relative, the ‘Grand Challenge’, in that it uses a transparent contest structure to engage innovators on a challenge and employs PR to raise awareness and align the Sponsor’s brand with the solution being sought. The key differences can be found in the topic and scope of the challenges themselves. Grand Challenges typically address broad societal issues, can run for years, and can sometimes be part of a bigger research initiative from the sponsoring organization(s). In contrast, Innovation Contests are generally more focused on addressing specific technology needs. While they can be multi-phased, Innovation Contests are completed in months rather than years. The speed and flexibility of Innovation Contests makes them a highly repeatable process for organizations looking to change their approach for taking new or improved products to market.

1”Inducement Prizes and Innovation”; Dec. 2011; Liam Brunt, Norwegian School of Economics; Josh Lerner, Harvard Business School;

Tom Nicholas, Harvard Business School.

PRIZES TO PATENTS: A LOOK BACK

A recent study of prizes awarded by the Royal Agricultural Society of England from 1839-1939 revealed:Winners of innovation contests are more likely to receive and renew patents, and doubling the prize purse led to a 33+% increase in patented innovations.1

HOW DOES IT WORK?

Launching an Innovation Contest starts with the sponsoring organization identifying the innovation need it wants to address. Working with a facilitating organization helps the sponsor to design key components of the contest such as criteria for evaluating responses, contest timeline, milestone definition and prize strategy. The prize is an important feature of the contest program as it demonstrates the commitment of the Sponsor to finding a solution and reflects the value of that solution. A typical Innovation Contest is comprised of two phases and can be run in under six months. Below is an outline of a typical approach when the desired outcome is a prototype:

Phase 1: Launch In preparation for the launch of the Innovation Contest, the Sponsor works with a facilitating organization to create tight specifications for a solution prototype. As materials and technological performance expectations are being specified, the facilitating organization is also identifying a community of potential participants based on their known competencies for working with the specified material or materials and making the prototype. At the launch of the Innovation Contest, there is a global outreach, inviting identified potential participants plus

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a broader community to review and submit proposals. All of the information about the Contest is generally presented on a website, where participants can learn more about the need, background information and required specifications. The Contest site also houses the submission information and documents, including the submission criteria and documents where participants detail their relevant expertise and experience with the ‘technology need’ as well as a description of their proposed approach.

Based on responses from Phase 1, the facilitating organization and Sponsor cull the list of potential participants down to a select group of finalists. Those still in the running are incented to participate in Phase 2, the actual prototype development phase, with a fair and commensurate stipend that guarantees some level of compensation whether or not their entry prevails. Not only does the stipend encourage more participation, it sends a message to solution submitters that the Sponsor puts value on the development process – not just the outcome. As a result, it’s easier for submitters to treat the assignment as “real work” versus a moonlighting project that may or may not pay off. This directly impacts the quality of their final entries.

Phase 2: Prototype CreationContest finalists that make it to Phase 2 are given identical “solution kits” that can contain production budgets, technical drawings and materials for building the prototypes. This ensures that everyone uses the same materials and that the resulting prototypes are of comparable design.

Prototypes are submitted by a defined deadline and then judged by a panel of evaluators that consists of technical experts that can be within or outside the sponsoring organization. The winner is subsequently announced and the prize, in some cases $20,000 — $75,000 depending on the size of the sponsoring organization and the potential commercial value of the solution, is awarded.

To really bring the idea home, let’s take a look at a recent example of an Innovation Contest, the GE 3D Printing Production Quest. The contest challenged participants to use additive manufacturing to produce complex parts with high precision using refractory metals. In Phase 1, respondents identified themselves as having the appropriate experience, expertise, and resources to be able to fabricate a test coupon. GE selected the 10 most promising respondents to advance to Phase 2 where they had 90 days to deliver their best test coupons, using materials and technical drawings supplied by GE. GE evaluated the test coupons and selected three winners who each received a $50,000 prize and the potential for future collaboration with the company. With the global medical imaging market projected to grow to $35.5 billion by 2019, GE envisions additive manufacturing enabling new component designs that will significantly simplify manufacturing and reduce cost, while improving image quality and diagnostic capability. (For more information, see GE press release, April 22, 2014).

SOLUTION PROVIDER BENEFITS:

• Identity of sponsoring organization is clear

•Sponsor commitment to the solution is established

•Potential for ongoing collaboration with Sponsor

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WHAT THE SOLUTION PROVIDER ACHIEVES

At its core, Open Innovation has always been about competition and solution providers vying for contracts with solution seekers. Open Innovation is both exciting and anxiety-producing to innovators who are eager to get their foot in the door with a large corporation, but worried that the deck may be stacked in favor of someone else — or that their work will be in vain because the project doesn’t have complete buy-in from the company. For solution providers, an Innovation Contest signals first and foremost an organization’s commitment to finding a solution for a very specific need. It also offers a transparent process in which they can have total confidence. The sponsoring organization, evaluation criteria, timing for decisions and winners are all communicated openly. Participants know that the playing field is level and that there is a clear and reliable method for reaching an outcome.

Financially, they may not win — but they can’t lose either, thanks to the stipend and potential solution kits that are meant to offset their labor and defray much of the development costs.

Looking to the future, all participants that go on to Phase 2 become part of the Sponsor’s ecosystem of potential solution providers. Once opened, the door stays open even if their prototypes aren’t selected.

Of course, the winning entrant not only gets a nice monetary prize, but the very real prospect of a long-term engagement with the organization as the prototype moves to the commercialization phase.

WHAT THE SPONSORING ORGANIZATION ACHIEVES

The primary objective of an Innovation Contest is to accelerate innovation by seeding a large field of potential solution providers and reaping more viable prototypes or solutions. In addition to these obvious benefits, less tangible but equally important is the expansion of the organization’s qualified solution provider network. All participants in a contest become part of a valuable ecosystem for additional near- and long-term engagements.

Within the sponsoring organization, an Innovation Contest has a galvanizing effect, compelling project development teams to commit to a shared initiative and goal defined by a very specific outcome. It clearly states, “This is our priority” as a company or division.

Finally, the sponsoring organization garners quality public attention from an Innovation Contest. It can not only boost awareness of the company and build its reputation as an innovator in its industry; it can also lead to reputation building within the much larger business world. A strategic PR plan ensures that the right audiences — potential solution providers, industry leaders and influencers, current and potential customer industries and the organization’s internal audiences of employees, partners and vendors — know about the Innovation Contest, who is sponsoring it and why. As with all successful communications strategies, having a plan and executing diligently against it are critical to getting the type of attention that pays dividends.

SPONSOR BENEFITS:

•Open and transparent contest structure attracts quality responses

•Contest prioritizes need within sponsoring oranization

•Positive publicity aligns Sponsor with solution being sought

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IS AN INNOVATION CONTEST RIGHT FOR YOUR ORGANIZATION?

For organizations experienced or new to Open Innovation, the Innovation Contest is an approach with broad application and actionable outcomes that meet today’s pressures for quick answers. It is quickly becoming a staple in some organizations’ innovation portfolios. Unlike the traditional technology search where the name of the sponsoring organization is typically withheld, the Innovation Contest is an Open Innovation search that signals the global community that the Sponsor is, in fact, ‘open for business’. It is based on transparent communication and is wrapped in an exciting contest structure that creates interest and a sense of urgency.

To know whether the Innovation Contest is right for your organization, you can start by assessing your innovation needs, the urgency of solving those needs and decide if your organization would be more competitive if you generated solutions or prototypes faster from outside of your typical community of providers. Key to success is knowing exactly what you need and then implementing the Innovation Contest process to get you there.

WHY IMPLEMENT AN INNOVATION CONTEST?

•Receive actionable solutions

•Accelerate technology development

•Create a sense of urgency

•Engage openly with innovators

•Position your organization as innovative

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ABOUT NINESIGMA

NineSigma is currently working with leading organizations in the public, private and nonprofit sectors to find solutions and partners through prize-based innovation programs. Our clients are achieving excellent results with Innovation Contests and Grand Challenges that are not only uncovering game-changing technologies but are transforming the way they innovate. Contact us to learn more about these and other solutions.

FOR MORE INFORMATION ninesigma.com/contactus

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