Our series of featured research on open innovation and mass customization continues. Here is a great study by my colleague Chrsitian Luethje and his co-authors on open innovation platforms.
By Karsten Frey, Christian Lüthje and Simon Haag
Published in: Long Range Planning, Volume 44, Issues 5–6
Download full article here: ScienceDirect.com
My dear colleague Christian Lüthje, one of the German pioneers of open innovation research, has just published an interesting study that looks into a different side of open innovation: Design parameters of an OI platform for technical problem solving.
Together with Simon Haag and Karsten Frey he looks into the question how a open innovation platform can attract the right participants into a technical problem solving contest.
The researchers use the Switzerland-based open innovation platform Atizo, which, like InnoCentive, NineSigma or Yet2.com, acts as a virtual knowledge broker between firms seeking support to solve innovation challenges, and skilled external contributors willing to contribute to solving those challenges. Founded in late 2007, Atizo now employs nine people and recently acquired 1 million Swiss francs of venture capital to accelerate its internationalization strategy.
However, compared to its large US competitors, Atizo still is rather focused. Atizo’s innovation platform today consisted of about 8,000 members. A distinct feature of Atizo however is that it offers its participants the option of developing solution proposals not just individually, but also collaboratively.
The majority of the participants who contributed to the challenges investigated in the Frey et al. study chose to work collaboratively via Atizo’s website. Teams working on a proposal for a given innovation challenge are generally formed by contributors who either have similar ideas or who possess the complementary knowledge necessary to advance an elaborate proposal.
At its basic structural level, Atizo resembles most Internet discussion forums: the postings to all solution threads are visible to all other participants, and participants may contribute to whichever thread interests them. There are no means for actively hindering someone from posting on a particular solution thread – but new posters are usually only accepted as discussion partners if existing team members see their contributions as valuable.
All innovation challenges are closed on a predefined deadline, after which the solution seeking firms assess all the proposals submitted and award the prize money to the most promising ideas. The prize is then split among the contributors to the winning solution proposals according to their input in the development process.
So far, more than 80 different new product and service development challenges have been broadcast on the Atizo platform, and its more than 60 clients include telecommunications providers such as O2 and Swisscom, FMCG manufacturers such as P&G, the Swiss bank Credit Suisse, the motorcycle manufacturer BMW and clothing manufacturers Odlo and Mammut. The authors investigate ten innovation challenges that were posted on Atizo’s website by nine different firms in 2008: Some were aimed at finding a technical solution for a specific problem whereas others asked for new service o product ideas.
When analyzing who were contributing to these contests, the researchers found that an extrinsic desire for monetary rewards tends to be positively related to the making of non-substantial contributions. People who are intrinsically motivated however tend to breed more substantial postings, and knowledge diversity facilitates all types of contributions to open innovation projects. The most valuable contributors are those who combine high levels of intrinsic enjoyment in contributing with a cognitive base fed from diverse knowledge domains.
Well, this sounds not too surprising, on the first sight. However, based on my personal experience with running several different kinds of contests as a client of various platforms, I believe that in the long run extrinsic motivation by money is more important. The Atizo structure is set up in a way that price money is rather small. So there may be a strong self-selection effect that those people that have "real" valuable solutions even don't bother to participate at all.
But the study by Karsten Frey, Christian Lüthje and Simon Haag shows clearly that hosts of OI platform and contest shall …
- ideally try to raise intrinsic motivation by creating an enjoyable environment for participation,
- make problem statements divisible into different subtasks, which supports the formation of teams and the division of labor among team members
- provide structures and interaction tools to facilitate task partitioning and task coordination in collaborative problem solving.
- ensure that participants feel empowered to proceed in their solution process autonomously, for instance, by not imposing too many restrictions about what mechanisms and principles are admissible in order to solve a given innovation problem.
- facilitate valuable feedback to contributors both from other contributors and from the seeker firms to ensure that the solutions proposed will meet the firm’s basic requirements. Constant feedback also contributes positively to the contributors’ feeling of competence, which in turn raises their motivation to work on innovation challenges.
Hence, the study clearly showed that open innovation is an art and craft that demands careful management and specific competences, and that it is not just another piece of software.